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Enlightenments from Immunity on Organizational Theories
Yihua Wang
School of Economics and Management
Tsinghua University, Beijing, China, 10084
[email protected]
Debin Du
School of Economics and Management
Tsinghua University, Beijing, China, 10084
[email protected]
Zhenning Yang
School of Economics and Management
Tsinghua University, Beijing, China, 10084
[email protected]
Jianbo Zhao
School of Economics and Management
Tsinghua University, Beijing, China, 10084
[email protected]
Wenwen Liu
School of Economics and Management
Tsinghua University, Beijing, China, 10084
[email protected]
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Abstract
The paper argues that the current organizational adaptation theories are not
sufficient in explaining the recent sub-loan crisis in which the famous Lehman
Brothers with hundreds of years’ history crushed overnight. We analyze the
viewpoints and focuses of the mainstream adaptation theories and put forward that the
immunity perspective contributes to organizational research. Based on the preliminary
constructs, we stress several crucial characteristics: necessity, moderation, limitation,
lethality and dualism.
1. Introduction
The core issues in strategic management are connected with how organizations
adapt to the increasingly turbulent and complex environmental changes and acquire
the competency while avoiding failure and maintaining sustainable development
(Ansoff,1965；Hofer and Schendel,1978). There are several fundamental theories and
perspectives which can solve these questions. Brown and Eisenhardt (1998) argue that
effective organizational change perception and high response speed are essential to
organization in hyper-competition. In the same line, organizational learning provides
the organizations with the right understanding and evaluating of environment (Foil
and Lyles, 1985; Huber, 1991; March and Levitt, 1999). Furthermore, the
resource-based view stresses that valuable, scarce, and imitable resources secure the
organizational change and development (Wernerfelt, 1984; Barney, 1991; Amit and
Schomaker, 1994). Moreover, operational risk management, crisis management and
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strategic warning systems have become the prevailing practices in organizational
adaptation.
However, the mainstream seems hard to explain the brutal facts: Why was the
well-known investment firm Lehman Brothers extremely vulnerable to the global
spread of the sub-loan crisis in the United States and crashed and ended in bankruptcy
overnight? Didn’t it have the innovation and change capability? Didn’t it get the
learning capability? Didn’t it obsess sufficient resources, core competency and
dynamic capability? Didn’t it run the risk control system? The answer seems to be
not.
It is well known that the corporate finance should keep the balance among profit,
safety and liquidity. Financial enterprises are aimed at provide security and add value
for other organizations. However, some financial institutions have deviated from the
mission, in violation of the principle of itself, create for-profit and highly risky
derivative products under the name of innovation while transferring the risks and
keeping the profit by taking the advantage of their economic potential, brand
reputation and the asymmetry of financial knowledge. The crazy pursuit of profits and
a chain of risk shifting which accumulated from small to large, from quantitative to
qualitative, from partial to overwhelm, finally has caused the most major liquidity
crisis and especially credit crisis, inside and outside the financial system since 1982.
The impact and consequences are still indefinite.
It is no doubt that the roots of the crisis are the greedy motive for profit, the
notion of escaping risks by chance, the actions of shifting risks by deception and the
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intentions to benefit oneself at the expense of others. At present, the United States and
the Governments’ financial intervention, joint efforts to thrive the markets and
attempts to revive confidence are forms of temporary solutions which can not tackle
problems at their sources. What strategists concerned about are:

Why were Lehman Brothers and IMF not aware of the “deadly virus”? Why
did they pay attention to the spread of “disease”? Why did they expect the
“death”?

Why were the relevant organizations stuck in the “risk transferring” and
completely blind to clear the “virus” and unable to cure the “disease”?

Are they prepared to sweep away their greedy desires, ideas of trusting to
luck and deceptive conducts? Is there any mechanism which can crucially
clear the deadly “virus”?
We argue that, immunology may help us understand these phenomena and
provide a new perspective to solve these questions.
2. Inspirations from Biological Immunity
In 2003, the death of one loved who suffered from leukemia (MR2) left us great
pains and guided us to biological immunity by accident. The complex essence and
philosophy deeply attracted us. From then, we have begun our journey of exploration
on organizational immunity.
Human being is the most complex natural perfect system. Immunity is a
physiological defense system which after thousands of years of evolution, it can
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discern “self” and “non-self”, exclude bacteria, viruses and diseases, maintain internal
stability, and promote body health and longevity. However, immunity is a
double-edged sword, its own diseases and disorders are hazardous to human health
(Zhang, 2003).
The immune system is characterized by a collaboration of various organs, cells,
molecules, body fluids with clear division. In addition, immunity is considered as a
complex network system able to response to harmful “non-selves” automatically and
capable of self-organize. The central immune organs including the bone marrow,
thymus, and so on, are the places where immune cells (e.g. macrophages,
lymphocytes, natural killer cells, the antigen-presenting cells) took place, differentiate,
grow and mature. Furthermore, the central immune organs have the essential effect on
the development of peripheral immune organs. Peripheral immune organs including
the spleen, lymph nodes and the mucous membrane are the places for settlement and
operation of mature immune cells (T cells and B cells).
Factors to damage heath can be classified into three categories: external harmful
“non-selves” and internal harmful “non-selves” and “own” aging factors. The immune
system is assumed to carry out three major functions: supervision and defense of the
external harmful “non-selves” (in medicine, called immune surveillance), supervision
and defense of the internal harmful “non-selves” (in medicine, called immune
defense), identification and clear of “own” aging factors (in medicine, called immune
homeostasis).
There are two types of immune system response: non-specific immunity (such as
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skin, mucous membrane, phagocytes, macrophages, etc.), which is formed in the
long-term evolution of mankind. Furthermore, individuals are born with the
non-specific immunity. It plays an important role in a wide range which is called the
first line of defense to any harmful factors. Specific immunity is acquired by the
individual after birth and is the second line of defense to specific hazards. Only when
the immune system accesses to the specific harmful “non-selves”, will the specific
immune cells (such as B cells and T cells) start to work.
It is clear that the differences caused by the genetic immunity and exercise of
specific immunity will make the individuals different in immune capacity. Some
people’s immune system is able to recognize and resist the SARS virus while other
human immune system may not identify or resist the same virus.
The dual response mechanisms of the immune system are described as:
The first is the mechanism of immune discernment - memory. Immune system
can not only discern and exclude harmful factors, but also memorize the process of
discernment. If the body was once again under similar antigen stimulation, the
immune system will produce more responsive and more effective antibodies in a short
period of time than the last time
The second is the mechanism of stimulation – inhibition. The feedback
mechanism of the immune system can keep pace with the implementation of two
different tasks: When the external antigens entering the body, message was passed by
the presenting cells to the T cells (TH), the latter secrete Interleukin (IL+), and
activate the immune response, while stimulating the reproductive cloning of a large
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number of B cells to promote immune response. And when the number of B cells
achieves a certain degree, the suppression of T cells (TS) will secrete a different kind
of interleukin (IL-) in a large number, and inhabit the immune response to stabilize.
As a result, the immune feedback mechanism will not only promote the rapid
response to hazards while maintaining the relative stability of the immune system.
The third is mechanism of diversification and clone-select. In the immune system,
the categories of antibodies are much more than those of antigens. Inheritance and
gene mutation make immune cells so diversified that whatever kind of antigens comes
into the body, it can select corresponding immune cells, active them, clone them and
finally exclude antigens.
The fourth is the mechanism of network regulation - self-maintenance. Based on
the assumption of the biological immunity network, the immune cells in the immune
are isolated and they form a dynamic balancing network through mutual stimulation
and inhibition. When the antigens invade, immune system reach to a new immune
balance through regulation. When there is no antigen invasion, the immune system
can maintain an appropriate number of antibodies necessary to maintain immune
balance through promotion inhibition. The immune cells and molecules is distributed
self-organizing systems with no central control, they do not need outside management
and maintenance and repair themselves through the replacement of damaged cells to
eliminate the antigens.
Based on the above mechanisms (Figure. 1), in order to safeguard the health of
the body, when responding to the same or similar antigens properly, the immune
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response time is cut down and the immune effect is increased. However, any incorrect
immune responding mechanism such as identification errors, memory loss, excessive
stimulation, invalid inhibition, lack of diversity, wrong selections, ineffective
maintenance will result in improper immune responses and lead to lead to various
diseases (for example, inflammation, cancer, lupus, rheumatoid arthritis, etc).
First response
Second response
Effectiveness
Mutation
Feedback
Discern
Defer
Dissident
Mutation Selection
Feedback
Elimination
Discern
Memory
Selection
Elimination
Memory
Defer
Dissident
Time
Figure1. Mechanism of immune system
What’s notable is, some of the immune system’s own diseases are deadly. AIDS
is one of these. When the AIDS virus enter the body, they “assimilate” the immune
cells making the immune system to “tolerant” and “accepted” them as their own, then
the immune system allow the viruses to reproduce, finally it leads to the death.
Leukemia is another instance. The pathological changes of spinal cord in central
immune system result in a large number of fast breeding white blood cells, which lack
of the ability to recognize and resist the harmful factors. They not only crowd out the
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space for normal ones and damage them, but also cause the collapse of the whole
immune system leading to infection, hemorrhage, complications and death.
If the highest mission of human is to understand and transform the world in the
creation of material and spiritual wealth at the same time in order to realize their own
values. One of our authors personally witnessed the death of a wise and famous
Chinese philosopher, after suffering from leukemia. Although he had great dream of
completing the translation of Kant's “Critique of Pure Reason” for the future
generations, he with regret forever lost the energy and motion for the final chapter
translation. We also witnessed a lovely, active smart college student, who also
suffering from leukemia, ultimately left us with heartbreaking feelings. When the
immune system encountered major problems, human intelligence, learning ability, and
creativity have been of no avail.
There are impressing inspirations from biological immunity.
First of all, the necessity of the immune system is obvious. Immunity is
necessary for life and it is an absolute must. Loss of immune functions will result in
death. Immunity safeguards other living functions. Acquired immunity can be
enhanced.
Secondly, the moderation of the immune functions is essential. Only proper level
of immune functioning can safeguard the lives and health, lower or higher will lead to
immune disease.
Thirdly, the limitation of immune functioning is fundamental. The immune
system can not rescue lives under any conditions (for example, natural death,
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drowning, suffocation, etc). Only the viable environment, can the immune system be
effective.
Fourthly, immune diseases have the lethality. The immune system is the guarder
of health, but its major diseases such as leukemia, AIDS, Spleen PM (fiber
calcification of the spleen and the function loss) inevitably lead to death.
Finally, the dualism of immune system is important. A profound philosophy is
rooted in the mechanism of immune system. The system realizes the harmony and
balance between adaption of body to environment and internal stability.
Can immunity broaden perspective and understanding of the bankruptcy of
Lehman Brothers?
Proposition1: Lehman Brothers can not fend off the systemic risks because the
impacts of risks went beyond the limit of their control capabilities and resulted in
bankruptcy.
Proposition 2: As the risk control system of Lehman Brothers ignored to keep
sight of the internal harmful “non-selves”, the company resulted in bankruptcy.
Proposition 3: Because the risk control system of Lehman Brother has been
assimilated by harmful “non-selves” by taking a laissez-faire attitude toward business
departments’ participating in shifting risks and pursuing high profits and resulted in
non-performing assets, the company resulted in bankruptcy.
3. The Possibility of Drawing Lessons from Biological Immunity
In fact, the characteristics of immunity reflect the general philosophy containing
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in all organisms. Can other organization theories gain enlightenments from immunity?
In fact, the biological perspective is not unfamiliar to management science.
Generally, management scholars have already argued that the organization is an
organism system rather than mechanical system. The concepts such as Population,
Learning, Capability, Adaptation, Intelligence, and Decision Making initially
originated from metaphors of biology. We compare corporate supply chain to human
digest system, the organizational information system to human nervous system, and
the organizational financial system to human blood circulatory system. Furthermore,
we compare organizational audit and control system to human immunity system. The
application of Anti-virus Immune System in the computer science is a great success
and has been accepted wildly.
However, could organizational theory borrow the concepts from biological
immunity? This is a problem many scholars have put forward.
Actually, there is a huge difference between organization and human body.
Firstly, the human body is a matured and integral system while organization is
loose-coupled and segmented one; Secondly, the response of human immunity is an
unconscious Physiological Process while the monitoring system in an organization is
affected inevitably by individual’s motivation, willingness, minds, and emotions.
Thirdly, human immunity occurs at the level of individual while organizational
immunity is at organization level as the concept implied, which absolutely involved in
more complicated interaction among departments, positions, processes, culture as well
as individuals in organization.
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As Hannan and Carrol (e.g. Hannan and Freeman, 1989; Carrol, 1997) borrowed
the concept form Darwin’s the theory of evolution, they set out to offer their own
ideas and developed the theory of Population, we believe the contributions of
biological immunity to the theory of organizational adaptation.
At the beginning, the similarity of research objects—both human body and
organization are evolved, complex and self-organized systems; Furthermore, the
similarity of research scopes—all have been increasingly a major concern on the
mechanism of defense subsystem, and relations to the whole system, external
environment as well as the relations between its effects and sustainable development
of the whole system. Lastly, the similarity of response modes - either biological body
or organization has the same basic essence of obtaining the advantages and avoiding
the disadvantages, and observes the mode of
“stimulation-cognition-response-memory”.
Based on the mainstream researches on organizational adaptation, we compare
them with perspective of Biological Immunity (Figure 2).
Figure 2
Theoretical
Schools
Background
Objectives
Key-points
Research
Fields
Dualism
Change and
Innovation
Environmental
Change and
Organizational
Aging
Internal aging
factors
Discard the
old ways of
life in favor of
the new
Mental mode
and ability;
Sustainable
competence
Not
mentioned
Learning
Organization
Environmental
Change and
Organizational
Aging
Internal aging
factors
Put forth new
ideas weeding
through the
old
Mental mode
and ability;
Sustainable
competence
Not
mentioned
Resource and
Capability
Environmental
Change and
Scarce and
Beneficial
Self-accumula
tion, and
Resource and
capability;
Not
mentioned
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Organizational
Capability
Strategic
Management
Biological
Immunity
factors
dynamic
integration
Sustainable
competence
Environmental
Change and
Organizational
Adaptation
Internal and
External
beneficial
factors;
External
hazardous
factors and
Internal
disadvantage
factors
Business
positioning,
tactics of
competition
or
cooperation,
resource
allocation,
organizational
culture
Decision-mak
ing;
Executing
Control;
Sustainable
competence
Not
mentioned
Environmental
Change and The
Growth of
Organism
External and
internal
hazardous
factors;
Organism
aging factors
Identifying
self and
non-self,
eliminating
problem,
stabilizing
adaptation
Immunity
structure;
Mechanism;
Health;
Death
Significant
Figure 2 displays the perspectives and key points of adaptation theories
respectively. Considering organizational aging factors, the school of learning, change,
and innovation all overly more stressed that discarding the old ways of organization
and in favor of the new ignoring the external and internal hazardous factors; Though
strategic management theory has SWOT analysis, it could not identify the internal
basic reasons causing organizational disadvantages, and be short of extensive and
intensive researches on the typology and nature of external risks or problems.
Biological immunity perspective observes the mode of
“cognition-response-performance“, so it provides a new, valuable view and
contributes to the organization theory directly. Figure 3 distinguishes Biological
Immunity perspective from risk control, crisis management and strategic warning
system.
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Theoretical
Schools
Background
Key-points
Research
Fields
Dualism
External and
internal
hazardous
factors;
Organism
aging factors
Identifying self and
non-self, eliminating
problems, stabilizing
adaptation
Immunity
structure;
Mechanism;
Health;
Death
Significant
Financial risk;
Overall risk
Loss, Avoid, Transfer,
and Diversification of
risks
Financial risk
control;
overall risk
control
Not
mentioned
Crisis cognition,
defense and response
Focusing on
external crisis
control
Not
mentioned
Cognition-Transfer-De
cision-making-Prepare
dness
Focusing on
monitoring
and
management
of external
changes
Not
mentioned
Objectives
Biological
Immunity
External
change,
Organism
growth
Risk Control
Internal and
Environmental
risk
Crisis
Management
Environmental
risk
Crisis events
Environmental
risk
External
opportunity;
External
threat
Strategic
Prevention
Risk management theory has extended its research from pure financial risks to
overall risk control, and developed many research models and tools, but it still has
many shortcomings. Firstly, despite stressing on risk loss, it under-evaluated the
harmfulness of risk loss, and overlooked the fatalness potentially to organization;
Secondly, it is concerned with the avoiding, transferring, and diversification of risks,
but without cleaning of risk; Thirdly, though it tries to control risk overly, it is rather
difficult to realize because the rigorous concentration of basic functions such as
strategic planning, finance, and law. Fourthly, it lacks the concept of specific defense,
which aims at non-routine threats. Lastly, so far there is no study on the boundary and
limit of risk control, no research on moderation of the defense system.
Organizational crisis management indicates crisis events are often defined as
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low-probability, high consequence events that could threaten organizational
legitimacy, profitability, and viability (Shrivastava, 1987). The traditional crisis
management literature stresses the fundamental importance of implementing an
enterprise-wide crisis plan, but the capability of crisis management is limited due to
bounded cognition, that is, people are limited in their information-processing
capabilities during a crisis (Pearson & Clair, 1998). There are also many gaps needed
to be filled out, it lacks mature and systematic researches on internal triggering factors
in organization (Pearson and Clair, 1998; Fowler, 2007). Moreover, it focuses on
crisis management of certain projects instead of considering the necessity of crisis
management plan to an organization. At the end, it is not concerned with the
moderation and dualism of crisis management. Effective crisis management is that
individual and organizational readjustment or in part, of accelerated change in
organizational processes (Burnett, 1998). For an organization, the balance between
adaptation and stability as human body did is especially important.
Similarly, strategic prevention theory stresses on discerning external risks and
opportunities, it does not develop a theory or perspective including general and
specific defense simultaneously.
Above all, the view of biological immunity can complement and refine the
existing theories of organizational adaptation.
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