Based on the experiences of leading Japanese companies, this article attempts to formulate a conceptual framework of a self-renewal process of a firm. The author conceptualizes the process as the continuous creation and dissolution of organizational order, or nonequilibrium self-organizing process. Although the process is continuous, four phases can be identified: creation of chaos; amplification of fluctuation; dynamic cooperation; and restructuring of organizational knowledge. The essence of the process is not the processing of syntactic information, but the organizational creation of meaningful, semantic information. The article negates the information-processing model of organization that emphasizes such concepts as fit, balance, and equilibrium. Instead, it advocates the self-organization paradigm that sheds light on functional aspects of chaos, fluctuation, and disequilibrium.
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