What is Z Theory?
Z Theory is a management theory in Western behavioral science that differs from Theory X and Theory Y. It was proposed by William Ouchi, a Japanese-American, in his 1981 book Theory Z: How American Business Can Meet the Japanese Challenge.

Ouchi selected several typical companies from Japan and the United States (these companies had subsidiaries or factories in both their home country and the other country) for research. He found that Japanese companies generally had higher productivity than American companies, and American companies operating in Japan performed poorly when managed in the American style. Based on this observation, Ouchi suggested that American companies should integrate Japanese management practices with their own national characteristics to develop a unique management approach.

Thus, he termed this management approach "Type Z management" and summarized it theoretically as "Z Theory." The book gained widespread attention immediately after its publication and became one of the most renowned works on management studies in the early 1980s (Theory Z, along with In Search of Excellence, The Art of Japanese Management, and Corporate Cultures, was referred to as the American management "quartet." One of the authors of The Art of Japanese Management, Richard Pascale, had collaborated with Ouchi in studying Japanese management).

The main elements of Z Theory include:
(1) Long-term employment policies for employees;
(2) Bottom-up decision-making, encouraging employee participation in management;
(3) Individual responsibility and creative management;
(4) Managers should care comprehensively for employees and build harmonious relationships;
(5) Comprehensive knowledge and technical training for employees;
(6) Long-term and holistic evaluation of employees, with a steady promotion system;
(7) Formal measurement methods and informal control mechanisms.
These practices help establish trusting interpersonal relationships within the company and align the goals and interests of managers and employees.