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National University of Ireland, Dublin
Bachelor of Science (Finance & HR)
Intake 46
Group: (B)
Module: BMGT2002S: Cross Cultural Management
Submitted by:
Ng Yi Yang, Joey (14208674)
Lim Cheng Chye (14207631)
Lim Si Hui (14207630)
Ili Munirah Binte Mohd Ibrahim (14209617)
Chang Pei Hsuan (14209492)
Novel Lim Yu Ting (14209629)
Lecturer: Dr. Brona Russell
Submission Date: 03 July 2015
Word Count: 2971Words (Excluding Cover Page, References)
2
BMGT2002S: Cross Cultural Management
Group B
Done by:
Ng Yi Yang, Joey
Lim Cheng Chye
Lim Si Hui
Chang Pei Hsuan
Ili Munirah Binte Mohd Ibrahim
Novel Lim Yu Ting
3
Contents
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For years, the question to understand how Japan was able to overcome overwhelming odds to become one of the world’s largest economic powers had been a fascinating topic for the global population. Following a defeat in the Second World War that destroyed much of its economic infrastructure, the Japanese are still able to rise like a phoenix from its ashes to become a model of modernity and success. Much of the contributing success had been attributed to the Japanese cultural morals and values. Yet, a period of governance mismanagement by Ex-Prime Minster Hashimoto had resulted in a great recession in Japan in the 90s. The Japanese fairy-tale was rudely stopped overnight; measures to kick start the economy failed and the Asian Financial Crisis of 97 was a double whammy for the Japanese population. The unique social cohesion that enabled Japan to develop and progress at the start is also showing negative signs of strains; elements of individualism are developing due to changing assumptions about job and career security, a deviation from its collective society. The country’s culture of hard work, though legendary, is facing increasingly pressure from the country’s aging and declining population. This report will now present a penetrating analysis of the morals and values that help shaped the Japanese business personality, taking into account past, current and future trends.
1.1 Japan: System of Harmony?
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One of the most influential cultural aspects of the Japanese is their obsession with reference groups. In order to better understand the Japanese strong sentimental attachments with groups, there is a need to explore the Japanese traditional value of “Wa”, which is said to play an influential part on groupism. The essence of Japanese style management is based on Wa, which can be loosely translated into “peace & harmony”. With the concept of Wa being repeatedly designated throughout Japan’s history as the ideal which all Japanese should strive for, it resulted in the majority being strongly influenced by the concepts of instinctive unselfishness and harmonious behavior. Wa cultivates the following two aspects that forms the cornerstone of the Japanese cultural DNA:
1) The creation and maintenance of peaceful unity & conformity within a social group 2) A commitment to cohesive community over personal interests
Social Scientists have since characterized Wa as a set of culturally specific social norms; standards of behavior that the Japanese are expected to conform to and are strictly enforced through tenacious social pressure.
2.1.1 Japanese Wa – “Peace & Harmony”
2.1 The Japanese Traditional Core Values
Picture: Interesting Facts about “Wa”
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Another important cultural concept underpinning Japanese management is a vertical structural tendency. Human relations in Japan are based on vertical or superior-subordinate relationships; Professor Chie Nakane of the Tokyo University stated that the Japanese’s superior-subordinate vertical structure, which is established around an ego-centered ranking, as the primary basis for social order in Japan. As such, it promotes a strong emphasis on an authoritarian control and obedience culture, which gives rise to a series of highly regulated patterns of interpersonal relationships. Implications of Tate Shakai:
1) Ranking in a superior-subordinate structure 2) Tendency for the Japanese to identify & form themselves into groups on the basis of
proximity and activity
Although Wa has a significant influence on the two main characteristics of the Japanese society of harmonious groups and vertical relations, other deeply rooted cultural values also played a part in generating such specific Japanese rules of behaviour. The recognition of these desirable interrelated values will be essential in understanding why the Japanese have a strong sense of attachment to groups and are willing to accept a mutually binding vertical relationship within the group.
Table: Information on Other Japanese Values
2.1.2 Tate Shakai – The Japanese Vertical Society
2.1.3 Other Core Japanese Values
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The core values of the Japanese culture have no doubts provided far-reaching implications for the practices of management in contemporary Japan. In order to better understand the Japanese style of business management, the Hofstede’s “Five Dimensions” model will be used to highlight distinctive features in the Japanese culture. According to Jackson and Tomioka (2004), the Hofstede’s analysis is comparative; in order to better understand the Japanese management culture, it is vital to analyse it in comparison with another national culture; with reference to the report’s interviewee country of origin, a comparison will be made using the American culture. On a micro perspective level, critical incidents that the interviewee highlighted during the interview will be analysed using the model to pinpoint the differences between the two cultures.
Table: Summary on Critical Incidents Encountered with Japs Counterparts
3.1 Cultural Collision!
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A fundamental reason for the cultural collusion encountered by the American interviewee will be the apparent mismatch in dynamics between the two different cultures with reference to Hofstede’s collectivism & individualism dichotomy. According to the Hofstede’s model, Japanese managers will be twice more likely to express collectivist values than their American counterparts. Dahl (2002) stated: “Collectivist societies place greater attention towards personal relationships and group harmony. They are also more concerned with collective goals and the group unity as a whole; in comparison, Individualist cultures emphasize individual goals, initiative and achievement; variety to conformity in work is preferred and strong emotional connections with the organization are non-existent.” With the above analysis, it reinforced the experience that our interviewee had encountered: Japanese members of the business unit are committed towards the maintenance of a harmonious appearance of a cohesive unit. The American culture however encourages the behaviour of speaking out individually, for example, critiquing and evaluating the points bought forth by other colleagues; which our interviewee did but was “silently” opposed by his Japanese counterparts. Rather than speaking out openly, the Japanese instead saves its critical questions for private discussion or in follow-up negotiation sessions where such questions are put forth, carefully phased. One of the cultural value that the Japanese embraced is “face”; by speaking out as what Andrew did, it amounts to a loss of face, which negatively impact the relations between Andrew and his Japanese counterparts. On the other hand, Andrew was left frustrated due to the slow pace of negotiations; the Japanese, supporting the notion of Collectivism, are much more willing to present a solid front of unity; this acts as a form of resistance to move negotiation away in a direction or pace that they are uncomfortable with.
Hofstede (2001) stated: “Uncertainty Avoidance is the extent to which people feel threatened by ambiguous situations and have created beliefs & institutions to avoid these.” He further emphasized that countries with high uncertainty avoidance tend to have a high need for security; they also tend to place higher emphasis on “tried & tested” expertise, unlikely to take on high risks, and are averse to ambiguity. Based on Hofstede’s analysis, Japanese managers are likely to be twice as averse to uncertainty as compared to their American counterparts. As seen, this is also another source of frustration for Andrew. Having an education from the University of Cornell, Andrew favors taking risks; he is more willing to apply new ways and novel approaches towards problem solving; which collides with the Japanese style and opposed by his superiors. As such, this also explains why during business negotiations, Andrew encountered more periodic periods of silence whenever he prompt issues with his Japanese counterparts; the Japanese are more unwilling to speak out directly. To the Japanese, vocal communications are more prone to ambiguity than written communications; by speaking out, it might translate to a commitment that they might regret at a later stage. Furthermore, the Japanese will not prefer an action that might cause the counterparty to suffer a loss of face; such risks are prevalent in a counter argument that the American culture endorses.
3.1.1 Collectivism vs Individualism
3.1.2 Uncertainty Avoidance
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Power Distance is defined by Hofstede (2001) as “the extent to which less powerful members of the organizations accept that power is distributed unequally.” People in countries that are found to have a high scoring in this dimension tend to follow orders as a matter of procedure; they normally blindly obey the orders of their superiors. Based on Hofstede’s analysis, Japanese employees are more concerned for hierarchy and authority as compared to the American culture. With reference to Hofstede’s individualism dimension, in an American context, the overall decision maker tend to declare his leadership presence by ensuring their own face time through helming the negotiations with all parties involved. The proposition of Japanese senior leadership is much different; they do not like to “stand out” from the group, instead they prefer to facilitate leadership and decision making “behind the scenes”. This goes in line with Japanese cultural values, but collides with Andrew’s cultural upbringing.
Hofstede (2001) defined this dimension as being concerned with the time frame in which the individual operates. As seen from the interview, Andrew’s source of frustration with the Japanese slow pace of negotiations shows the Japanese favouritism of a long term time orientation. Jackson and Tomioka (2004) stated that short term orientation is concerned with the present and immediate future, placing priority on obtaining immediate gratification. On the other hand, long term orientation focuses on long term gain; sustainability is the ideal. As Luthans and Doh (2012) emphasized, although it seems that this dimension may seem
to contradicts the Japanese bias over uncertainty avoidance; however, it can be said that
with influence from the “Deming Management Method”, long term orientation to the
Japanese means having confidence in its human capital to respond effectively to the future
business landscape. Ouchi (1981) suggested that the Japanese felt that the short orientation
of the American culture like Andrew’s displays a lack of trust in one’s employees which will
impact group harmony.
According to Hofstede (2001), Masculinity is defined as “a situation in which the dominant values are success, money and material factors.” This trait emphasizes assertive and competitive attitudes. Femininity however is defined by Hofstede (2001) as “a situation in which values are caring for others and the quality of life.” Based on Hofstede analysis, the Japanese culture is ranked top (score of 95) in terms of attachment towards Masculinity values; which might in fact be contradicting as Japanese culture valued human relations to a huge extent. This contradiction can explained: in combination with Japanese emphasis on a collective society and positive human relations, the Japanese do not present competitive & individual behaviours that we tend to associate with a Masculine society. With high Masculinity, this might explain Andrew’s dissatisfaction; the Japanese counterparts are not willing to speak out openly as they feared making mistakes, which might give a impression that they are incompetent, which will conflict with a Masculinity culture.
3.1.4 Time Orientation
3.1.5 Masculinity vs Femininity
3.1.3 Power Distance
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54
46
95
92
88
0 20 40 60 80 100
Power Distance
Individualism
Masculinity
Uncertainty Avoidance
Long Term Orientation
Japan's Ranking on Hofstede Model
40
91
62
46
26
0 20 40 60 80 100
Power Distance
Individualism
Masculinity
Uncertainty Avoidance
Long Term Orientation
America's Ranking on Hofstede Model
3.1.6 Graphical Presentation on Hofstede’s Model for Both Countries
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Summary of Interview:
Overall Organizational Culture: Harmonious & Collectivist
Strong Emphasis on Teamwork
Paternalistic Leadership with Elements of Theory Z Managerial Style
Group Based Reward System
Decisions were made through Group Discussion and Consensus
Ringi decision making
Strong influence of the Deming Management Method on Performance Appraisal
Low key, long term approach towards Performance Appraisal
Haire et al. (1966) stated that Japan is reputed for its paternalistic approach to leadership, which is highly consistent from the interview with Andrew. With a culture promoting high safety & security needs, alongside the various core cultural values mentioned earlier, the leadership style that is highly visible in Japan is in line with a paternalistic approach. Luthans and Doh (2012) describe it as to be one which uses work centered behavior coupled with a protective employee-centered concern.
Table: Qualities of an Effective Leader in Japan
4.1 Further Analysis on Interview
4.1.1 Paternalistic Leadership
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In such a leadership culture, employees are expected to work hard; in return, they are promised employment along with superior welfare benefits; this is highly relevant in Japan. Firstly, the Japanese practiced “shu-shin-koyo” or “lifelong employment” in their renowned family patterned company system. Secondly, Japanese workers are willing to put in long hours for their “kaisha” or “company” in return for such a benefit given. In actual fact, Jackson and Tomioka (2004) stated that in Japan, the company’s concern over the life of all employees actually extends far beyond the workplace itself. With efforts made by the Japanese managements to safeguard their employee’s welfare both within and outside the workplace, the end result is a strong sense of attachment to the company held by their employees. Summarizing, the total loyalty and effort given by the Japanese employees is reciprocated by the common Japanese company culture of providing total concern for its employees, which is seen from the interview. The creation of informal and emotive interpersonal relations between the manager and his subordinates is very much encouraged in Japan, which is the direct opposite of an American approach towards its leadership style. The role of a Japanese leader is one of a facilitator with a main responsibility of nurturing group harmony; which is different from an American context whereby the leader is the decision maker. Performance Appraisal (PA) is a challenging task in Japan due to collectivist cultural values; there is an unavoidable emphasis on harmonious group relations, activity and overall results instead of individual track records. The challenge is to implement a reasonable objective appraisal system that fulfills cultural norms while fitting the corporate climate in Japan. To scrutinize one’s performance against another, this will result in a “winner” and a “loser” on the rating scale; ultimately, this will mean a painful loss of face, which is taboo to the Japanese culture. Furthermore, in American culture whereby it is a norm to analyze the negative behavior found during appraisal, it is a burdensome assignment for Japanese supervisors. From Andrew’s interview, his organization also failed in the implementation of a 365 Degree Feedback system; Peer rating is widely accepted in the American culture. However, in Japan the notion of rating follow colleagues while disclosing the results to the higher authority is totally unaccepted; they view it as a disruptive action to group relations. Jackson and Tomioka (2004) disclosed that until recently, PA is completely reliant on the factor of “nenko” or “years of service” as the basis for promotion and salary decisions; it must not be forgotten that the Japanese culture place an emphasis on seniority based pay/promotion. However, with years of low growth, merit rating has assumed an important role in PA; there’s a need to be accountable to shareholders. As the interview disclosed, Andrew’s organization appraise their employees twice a year; this is consistent with what Haire et al. (1966) stated: Japanese companies rate their employees performance more frequently than American organizations as bonus payments are of a higher frequency in Japan; they are normally awarded in summer and winter. In American context, PA is conducted once a year; the interview disclosed that it is a time consuming and distracting procedure; quality of work may suffer as employees place their attention towards impressing their superiors instead. To Andrew, he observed that the same level of uneasiness is not applicable to the Japanese culture; of which is attributed group trust, harmony that is emphasized. Supporting evidence from Ouchi (1981) stated, in Japan,
4.1.2 Performance Appraisal in Japan
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post appraisal interviews are also rarely conducted. Instead, Superiors tend to carry out talks that are informal when discussing PA results with subordinates. In line with Japanese values, such talks are normally supportive and are not directly related to salary or promotion arrangements. On the ground, a single appraisal is rarely used as the basis for immediate action; corporate decisions are taken based on a collection of results; the Japanese are known for not making hasty decisions. During the interview, the term “Deming Management Method” is also disclosed. According to Ouchi (1981), it is conceptualized by Dr W. Edwards Deming, who was partially responsible for the Japanese economy recovery. He preached that PA is negative; with a scope on short term results, it’s deemed to be a management tool of “fear” that destroys teamwork, cultivate a suspicious environment in the workplace in his own words. Many Japanese companies are heavily influenced by the ideologies of Dr Deming, and thus the explanation for the Japanese approach of a low key and long term view towards PA. Noe et al. (2014) defined the term “Psychological Contract” as a description of what an employee expects to contribute in an employment relationship and what the employer will provide the employee in exchange for those contributions. From the interview, it can be inferred that the “Psychological Contract” is highly visible in Japanese business management. Due to Paternalistic Leadership being favored by the Japanese, the relationship between a Japanese employer and employee tend to be one that is highly fraternal. Lacking tangible form, the “Psychological Contract” is fulfilled through human relations; Jackson and Tomioka (2004) stated that Japanese organizations tend to emphasize the management of interpersonal relations while focusing on elements such as teamwork, flexibility and generalist knowledge instead of stressing the achievement of specified tasks; it resulted in employees becoming emotionally bounded to the organization which is amplified due to the vertical society of Japan. In return for loyalty, life-time employment and seniority based pay/promotion are offered; two factors of which are the main pillars of business organizations in Japan. The interviewee mentioned that the first step in Japanese Decision Making comprises of informal talks to gather support and feedback for the potential change. Hayashi (1989) defined this process as “Nemawashi”. It is known as the informal discussion that precedes formal decision making in Japanese organizations. Loosely translated in English, it means “going around the roots”; “Nemawashi” helps to smoothen out the decision making process in Japan. Without establishing people relations, it is almost impossible to gain acceptance for a proposed decision; securing amicable relations with key office holders is the only way to make one’s voice effective in a Japanese context. As Andrew experienced, there are rarely open disputes during meetings; critique is also often presented in a moderated format by respectfully presenting views of an alternative position. Hayashi (1989) pointed out that discussion also tends to move at a snail pace, “much like snappers clearing a minefield” in his own words as participants progress and talk conservatively so as not to present an image of demolishing points that others brought forward.
4.1.4 Japanese Decision Making
4.1.3 “Psychological Contract” of the Japanese
Culture
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Consensus style decision making is much appreciated in Japan, due to the collectivist nature of the society. Ouchi (1981) stated that Japanese organizations employ a great deal of effort in ensuring a group consensus on decisions; there is a strong preference over group decisions, instead of individual ones. The process of consultation and sharing of information is consistent with the value of reference groups in Japan; it is ideal to let members feel that they played a significant role while sharing collective responsibility for decisions taken. According to Jackson and Tomioka (2004), the “Ringi-sho” system is also heavily utilized in Japanese business culture. The “Ringi-sho” system is defined by Ouchi (1981) as the act of obtaining approval on a proposed decision through vertical circulation of documents to the people concerned. Essentially, this means the proposal for change is circulated from lower level of hierarchy all the way up to top management; when approved at one level, a seal is affixed to the document. When there is opposition at any level, the proposer must thereby convince the dissenters. It will receive formal authorization when it reaches the top management; thus the “Ringi-sho” system is known as a “consensual understanding” process of decision making, it is highly merited for increasing group participation in Japan. According to Robbins (2012), there are two by-products of group decision making that have the potential to negatively impact a group’s ability to appraise alternatives objectively to obtain high quality solutions. One of which, coined the “Groupthink” is present in our interviewee analysis of the Japanese business culture. Groupthink is defined as situations in which group pressures for conformity deter the group from critically appraising unpopular, minority views. This is relevant in the Japanese context. With “Ninjo” and “Amae” based interpersonal relationships, it resulted in a high degree of emotional attachment that led the Japanese business unit to enter a seemingly irrational decision, which was experienced by Andrew. Furthermore, with a preference to conserve group harmony, the Japanese tend to avoid pinpointing the outcomes of a particular decision to an individual. It is noted that the individualist American culture have long held a view that managerial decision making process should be an informed & rational process in which the supervisor selects a evaluation criteria and utilize it to determine a practical solution to a problem on hand. However, from a Japanese perspective, decision making is dependent on cultural norms, values and behavioural patterns of the reference group; this tends to result the process to be irrational and emotional. Furthermore, the Japanese are known to be obsessed about not losing “face”; as seen from the interview, the Japanese counterparts that Andrew met rationalized his resistance to the decisions made despite strong contradicting evidence; they reinforced their decisions to protect themselves from a potential loss of self-esteem. With elements such as emotional, irrational decisions along with a need to protect their pride, this often leads to groupthink scenarios that Andrew experienced.
4.1.5 Occurrence of Groupthink in Japanese Context
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Schein (1987) defined Organizational Culture (OC) as a company’s underlying assumptions, shared values and norms that determine its corporate behavior. Deal and Kennedy (1988) stated that OC and National Culture (NC) are important factors in determining work attitude and behavior. In reality, the ideals of NC and OC may be in conflict; there is a notion put forth that a strong NC might in fact dominate OC instead. There is a level of interest in this notion, as the relative strength of NC or OC will be crucial in determining Organizational Behavior (OB); the winning element will play an influential role in determining a company’s OB. The question thereby is: is NC able to overcome OC when the two elements are up against each other? In a Japanese context, our interviewee had explained via his own experience, NC still is the dominating factor over OC; this might be biased to a certain extent as the company he is working for has Japanese roots to begin with. However, Jackson and Tomioka (2004) argued that OC is almost created in the context of NC; they suggested that OC is usually expressed in management practices, but essentially such practices are often either reinforced or resisted by the values of NC. Berry et al. (1992) supported the stance by Jackson and Tomioka (2004); they contended that there is minimal evidence to imply major differences in values between employees of different organizations within a more or less culturally homogenous country. Mead (1994) reinforced this notion by indicating: Adding on, Ouchi (1981) stated that in a Japanese context, OC is highly unlikely to alter NC when both elements come into conflict as the first is usually overridden by NC. It is also believed that when values and beliefs of NC are threatened by OC, dysfunctional work behavior will result. Hofstede (1985) maintained that NC should be understood as the strongest force shaping corporate culture. In conclusion, it is important to understand how NC shapes OC; and how to create a synergy between both factors so that conflicts will not occur.
5.1 Conflicts between OC and NC
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Traditional Values:
Collective Recognition for Exceptional Service to Organization
Harmonious Relations between Subordinates and Superiors
Co-operation with Groups
Life Long Employment
Seniority Based Advancement
Reward System Stressing Years of Accumulated Service
Long Working Hours
Emerging Values:
Earnings
Quality of Life
Personal and Professional Challenges
Individual Recognition and Satisfaction for Outstanding Performance
As per the interview, Andrew stated that due to years of stagnant growth, the business practices such as lifelong employment are feeling the strain; with low growth, many lower levels are inflated with employees; there is lesser chance of promotion for everyone. As a result of bearing this scenario, individual incomes are getting lesser; elements of dissatisfaction with the traditional cultural values in Japanese management culture are surfacing. Jackson and Tomioka (2004) stated that there is an increase of Japanese middle management who seeks out challenges in job responsibilities. This observation suggested that as job security and seniority promotion opportunities decreases, the Japanese are becoming less risk averse and are willing to forego lifelong employment in search of challenges; applying the Maslow Hierarchy of Needs, this translated that more Japanese are seeking opportunities to fulfill their needs of “Esteem” or “Self-Actualization”. Individualism elements are also surfacing, with an increasing percentage of Japanese focusing on individual compensation benefits; many had become enchanted with the traditional reward and promotion structure. In summary, with prolonged low growth, it had resulted in a change of traditional cultural values in Japan, to a certain extent.
6.1 Changing Values of the Japanese
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