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Pyramids, Machines, Markets, and Families: Organizing Across Nations 311

with the ruler as the country’s father and with whatever structure there is
based on personal relationships.
Paradoxically, in the other China (which expelled the Kuomintang),
the People’s Republic, the 1966–76 Cultural Revolution experiment can
also be interpreted as an attempt to maintain the authority of the ruler (in
this case Chairman Mao Zedong, 1893–1976) while rejecting the authority
of the rules, which were felt to suffocate the modernization of the minds.
The Cultural Revolution is now publicly recognized as a disaster. What
passed for modernization may in fact have been a revival of centuries-old
unconscious fears.
In the previous paragraphs the models of organization in different
cultures have been related to the theories of the founding fathers (including
one founding mother) of organization theory. The different models can also
be recognized in more recent theories.
In the United States in the 1970s and ’80s, it became fashionable to
look at organizations from the point of view of transaction costs. Econo-
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mist Oliver Williamson opposed hierarchies to markets. The reasoning is
that human social life consists of economic transactions between individu-
als. These individuals will form hierarchical organizations when the cost
of the economic transactions (such as getting information or fi nding out
whom to trust) is lower in a hierarchy than if all transactions took place on
a free market. What is interesting about this theory from a cultural point
of view is that the “market” is the point of departure or base model, and the
organization is explained from market failure. A culture that produces such
a theory is likely to prefer organizations that internally resemble markets
to organizations that internally resemble more structured models, such as
pyramids. The ideal principle of control in organizations in the “market”
philosophy is competition between individuals.

Williamson’s colleague William Ouchi, an American of Japanese
descent, has suggested two alternatives to markets: “bureaucracies” and
“clans”; they come close to what earlier in this chapter we called the
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“machine” model and the “family” model, respectively. If we take Wil-
liamson’s and Ouchi’s ideas together, we find all four organizational

models described. The market, however, takes a special position as the
theory’s starting point, and this can be explained by the nationality of the
authors.
In the work of both German and French organization theorists, mar-
kets play a modest role. German books tend to focus on formal systems—on
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the running of the machine. The ideal principle of control in organiza-