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COPYRIGHT 2001 Management Futures
More and more of the developing countries are seeking membership in the World Trade Organization. One of the consequences of WTO membership is the necessity of competing with the "best-in-class" companies in the international marketplace. Unfortunately, many developing countries are plagued by archaic bureaucracies, which constitute a major impediment to competitiveness, at a time when it is crucial for developing countries to create a vibrant private sector in order to assimilate the large numbers of new entrants into the workforce. This paper attempts to identify the causes of bureaucracy and the ways by which organizations can de-bureaucratize. Although intense competition is by far the best prescription for de-bureaucratizing, other strategies must also be pursued simultaneously. The economies that will prosper in the future are the ones that will be able to re-invent themselves periodically, something that bureaucratic societies find difficult to do.
INTRODUCTION
As the world evolves into a global economic village, more and more of the developing countries are seeking membership in the World Trade Organization (WTO). Even countries that currently rely on oil and natural gas revenues are diversifying their economy in anticipation of the da when those non-replenishable resources are depleted. One of the consequences of WTO membership and the integration into the "global economic village," which WTO membership makes possible, is the reality that companies of the developing nations will, perforce, have to compete successfully with some of the most efficient enterprises in the world. Many of the developing countries are also experiencing the largest population growth rates. Hence, developing countries have no choice but to create a vibrant private sector, since it is this sector that must absorb the young people entering the workforce. Reliance on the public sector to absorb new entrants into the workforce is no longer practical because typically the public sector in thes e countries is already saturated.
Clearly, developing nations wishing to compete effectively in the global marketplace should understand and exploit what Porter (1990) calls the national "diamond," which consists of the following facets:
1. Firm strategy, structure and rivalry
2. Factor conditions (factors of production are the inputs necessary to compete in a given industry).
3. Demand conditions.
4. Related and supporting conditions (clusters of interconnected firms, suppliers, related industries, and specialized institutions in particular fields that are present in particular locations).
It is interesting to note, however, that Porter fails to mention bureaucracy directly as an obstacle to productivity, which is the key to competitiveness not only among firms, but also among nations. At best one can imply that it is implicitly subsumed under the first facet of his "diamond" theory -- i.e., firm strategy, structure, and rivalry. Since one of the major impediments to efficiency happens to be bureaucracy, which inhibits the efficient deployment and utilization of economic inputs, appreciating the need to de-bureaucratize, understanding the causes of bureaucracy, and ascertaining the means to de-bureaucratize is vital, if developing countries are to prosper in the face of intense international competition. Toward those ends, the authors investigate causes of bureaucracy, ways of debureaucratizing, and the results of debureaucratization in the remainder of the article.
HISTORICAL PERSPECTIVE
When Weber (1947) developed the theory of bureaucracy as an ideal organizational form, he could not have anticipated the many dysfunctions that would arise over time as attempts were made to implement his ideas; if for no other reason than many aspects of Weber's model reflected organizational circumstances of the early twentieth century. Indeed, by the 1940's scholars were already providing significant insights into the theory of bureaucracy (Merton, 1940; Selznick, 1943 & 1948). By the 1950's and 1960's, the many unintended and undesirable consequences of bureaucracy became the focus of criticism in academic literature (Gouldner, 1954; Blau, 1966).
By the 1960's and 1970's, researchers recognized that bureaucracy needed to be treated as a continuum. In other words, to what degree are organizations bureaucratized? The Aston studies went so far as to distinguish three types of bureaucracies - full bureaucracy, workflow bureaucracies, and personnel bureaucracies (Pugh & Hickson, 1976; Pugh & Hinings, 1976; Pugh & Payne, 1977). Mintzberg (1983) went on to make another important distinction between machine bureaucracy and professional bureaucracy. More recently, scholars have looked at bureaucracies as learning organizations (Weick & Westly, 1996), analyzed them from the perspective of power and organizational politics (Pfeffer, 1992), and suggested how to make bureaucracies more responsive (Adler, 1999).
REASONS TO DE-BUREAUCRATIZE
Burns & Stalker (1961) observed some time ago that firms organized along bureaucratic lines and pursuing innovative business strategies usually do poorly because they are quite rigid, and respond slowly to change. On the other hand, the firms that were devoid of bureaucratic impediments, known as adhocracies (Mintzberg, 1983) or organic institutions (Burns & Stalker, 1961), frequently succeeded in their pursuit of innovative business strategies, since they were flexible, fluid and responsive.
As a result of unprecedented technological change that created the "Information Age" and the concomitant knowledge based economies, what is urgently required are nimble organizations pursuing innovative business strategies. In like manner, worldwide telecommunications has produced a global consumer whose preferences shift more frequently than ever before. This too contributes to the increasing rate of change in the marketplace. Being able to compete against the best multinationals and transnationals requires the ability to adapt quickly to dynamic, even turbulent, economic environments; something bureaucratic organizations cannot do.
While bureaucratic tendencies plague organizations in every country, industrialized societies, in response to aggressive international competition, have learned how to streamline their private sector while at the same time downsizing the regulatory arm of government. The problem, however, is more acute in developing nations because by-and-large they are still...
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