The globalization of economy, with greater number of ventures, global relocations and cross-border alliances, along with the introduction of e-commerce has caused in key modifications in the field of intercultural management. Companies are increasingly appreciating the concept of management of cultural differences as it performs an important role in effective accomplishment of the tasks across borders. The businesses are required to interact with customers and personnel belonging to diverse cultural background and therefore, there is a growing demand among them for learning the management of business worldviews, diverse values, perceptions and behavior of companies, its customers and staff. Intercultural Management can be defined as interdisciplinary human resources field concerned with the facilitation of management, communication and effective interaction of customers and personnel across borders.
This report focuses on the key concepts of intercultural management, globalization and the impact of culture on business practice in Japan.
Key Concepts of Intercultural Management
Intercultural management has speedily established the concepts of mother-culture versus enterprise-culture. The element of mother -culture is specific for the country from which the company belongs while the element of enterprise culture is specific for the country where the company is opening its branch. For the purpose of avoiding possible cultural conflicts, the use of specific methods and tools is made in intercultural management for mediating between two or more cultures (Barmeyer & Franklin, 2016).
Intercultural management is the mixture of insights, knowledge and skills required for effectively dealing with the regional and national cultures and the culture differences at several levels of management within and between organizations (Chanlatr, Davel & Dupuis, 2013).
Intercultural management requires the use of cross- cultural communication as it is also routed in culture. The process of intercultural communication consists of sending and receiving of messages between individuals whose cultural background could lead them towards making interpretation of verbal and non-verbal signs in a different manner (Piller, 2011). It has gained importance due to the concept of globalization which has bought more and more cultures in contact (Samovar, Porter, McDaniel & Roy, 2014).
Geert Hofstede developed a Hofstede’s cultural dimension theory for cross-cultural communication which defined the effects of the culture within the society on the morals of its members (Shi & Wang, 2011). It also describes the way in which these morals and values are related with behavior by making the use of a structure derived from factor analysis. The dimensions of the model include power distance index (the degree to which inequality of power is accepted and expected by less powerful members of the institutions and organizations), individualism versus collectivism (the power of the bonds that individuals have with others within their community), masculinity versus feminity (role distribution between men and women), uncertainty avoidance index (the ability of people to cope with anxiety) and pragmatic versus normative also known as long term orientation (the extent to which individuals need to describe the inexplicable and is related to nationalism and religiosity).
Trompenaars and Hampden- Turner created a model after researching the values and preferences of people belonging to different cultures. This research resulted in the conclusion that people belonging to different cultures are not different from each other in random ways, instead the difference between them occur in a particular and predictable manner. It created seven cultural dimensions namely universalism versus particularism, individualism versus communitarianism, neutral versus emotional, specific versus diffuse, achievement versus ascription, sequential versus synchronous time and internal direction versus external direction.
Concept of Globalization from the perspective of Different Nations
At the economic and political level, globalization can be defines as the process of denationalization of legal systems, politics and markets. In other words, globalization can be referred to as the rise of the global economy. From the perspective of a business, the process of globalization consists of participation by the companies in the emerging global economy and their establishment in the foreign markets. Therefore, they Businesses get exposure to various opportunities due to globalization as it results in the elimination of boundaries between the countries. (Rothlauf, 2015)
However, the concept of globalization is different from the perspective of different nations as leads towards an extreme impact on the economy. Here the concept of globalization has been described from the perspective developing and developed nations. As far as developing nations such as Argentina, Brazil, Myanmar, Mexico, etc. are concerned, globalization brings both positive and negative impact in the field of economic and trade processes, health and education systems and culture effects. The economic growth of the developing countries is increased with the help of globalization along with the solving of problems related to poverty. Globalization also creates job opportunities for poor people in the developing countries due to investment by developed countries. The technological and resource flow requirements of the developing countries are also met by the developed countries by way of globalization (Roberts, Hite & Chorev, 2014).
Moreover, the life expectancy, living standards and the economic growth gets better in developing nations as a result of globalization. Various international institutions such as UNESCO, World Health Organization (WHO) and Non- government organization (NGO) are taking steps for eliminating deadly diseases and illiteracy from the world with the help of globalization. However, there are some negative effects of globalization in the field of health and education in the developing countries (Stromquist & Monkman, 2014). The spreading of new diseases is facilitated by globalization by travelers between countries. Also, diseases such as HIV/ AIDS, Bird flu, swine flu, etc. are facilitated from the developed nations to the developing nations due to the increase in trade and travel. Globalization has also resulted in the migration of skilled workers such as doctors, scientists, engineers, etc. from the developing nation to the developed nation for getting higher wages and for adopting a better lifestyle (Hamdi, 2015).
Furthermore, many benefits and detriments are also brought about by globalization in the developing countries. In many developing countries, globalization has resulted into entire change of culture. Many cultures and customs are vanished such as clothes and traditions along with some expressions and languages have been transformed. Drug abuse and violence have increased in the developing countries under the influence of globalization. However, globalization brings more benefits to a developing country than detriments.
As far as developed nations such as Australia, France, Germany, etc. are concerned, globalization compels the businesses for the adoption of various strategies on the basis of new ideological trends that assist in the balancing of interests and rights of both community and individuals as a whole. This change brought by globalization in the strategies of businesses is the reason which enables them to compete with the businesses across the globe and also indicates a drastic change for the labor, management and business leaders by justifiably accepting the contribution of government and workers in the implementation and development of company strategies and policies. These developed nations are also able to reduce their risk with the help of diversification by the involvement of the company with international financial institutions and associating with multinational and local businesses.
For developed nations, globalization brings reorganization at the sub- national, national and international levels. In other words, globalization brings the reorganization of international trade, production and integration of financial markets. This in turn has a significant impact on the capitalist economic and social relations at the global level by way of microeconomic and multilateralism phenomena such as competitiveness of business. The labor process, class structure, organization and structure of capital and technology application are affected due to the complete transformation of production system due to globalization (Hirst, Thompson & Bromley, 2015).
However, globalization also has some harmful effects on the less developed nations. The benefits of globalization are outweighed by the costs associated with it in the short run. Less wealthy countries usually do not derive highly – accentuated beneficial effect from globalization in comparison with the countries with greater wealth as measured by the per capita GDP. With the increase in the opportunities for international trade due to free trade, the risk of failure is also increased for smaller companies which are incapable of competing globally. Moreover, the labor and production costs are also increased including the increase in wages for more skilled workers which leads towards the requirement of outsourcing of jobs from countries with higher wages.
Impact of Culture on Business Practice in Japan
Japan has a market-oriented and highly developed economy. After World War II, Japan became the fastest growing country in Southeast Asia. In the year 2016, Japan stood on third position in terms of highest GDP in the world with GDP at USD 4.94 trillion. The imports and exports of Japan amounted to USD 583 billion and USD 605 billion resulting in a positive trade balance. Moreover, Japan stands on fourth position in terms of largest export economies of the world (World Bank, 2017).
However, the globalization of Japan has allowed the entry of various businesses in the country. However, the business practice in Japan suffers from the impact of Japanese culture (Lockwood, 2015). The cultural differences often result in differences in the attitudes towards conflicts, communication styles, decision making style and approaches to knowing. However, the expectations, beliefs, values and attitudes formed as a result of their culture are not easy to be identified by the businesses (Furusawa & Brewster, 2015).
However, Japan is considered among the poor countries therefore, there are various businesses that provide expensive products and services are out of reach of most of the people. There are also various ethnic and social groups residing in Japan
Business ventures in Japan can be successful only when the business is able to effectively communication with Japanese people. However, most of the time there are chances that the actual meaning of the message is lost in translation. Therefore, success in Japan can be achieved with the help of understanding the importance of subtle non- verbal communication between cultures. The cultural differences can be approached with openness, sensitivity and curiosity.
Cross cultural communication includes various barriers in the form of stereotyping, discrimination, ethnocentrism, cultural imposition, cultural blindness and tone difference which impact business practice in Japan. For entering into the market of Japan, various modes include exporting, licensing, turnkey projects, franchising, wholly owned subsidiary, joint ventures, etc.
The culture of Japan is fascinating and multifaceted which also follows various traditions on one hand and fashions and technological developments on another. This means that they prefer new, fashionable and innovative products over the routine products. Therefore, this culture provides various opportunities to the businesses as the people are willing to adapt new products and technologies.
Japan also follows a mix of religions i.e. Buddhism and Shintoism. Various religious ceremonies are conducted in a year which increases the sales of the businesses engaged in such businesses. Moreover, the other businesses grab these opportunities by providing various offers to the customers in the form of discounts, cashbacks, and buy one get one free, etc. The sales of almost every business are at peak in Japan at the time of these religious ceremonies and other festivals during the year.
Japan is also referred to as foodie’s paradise where people of every race are passionate and enthusiastic for food. Therefore, businesses engaged in food business make a lot of profit during entire year. The poverty in Japan makes the less expensive food businesses more popular than the expensive food outlets. The expensive food outlets are mostly preferred by rich people.
The application of Hofstede’s cultural dimensions model in case of Japan provides the following result in the form of scores:
Power Distance- 54
Uncertainty Avoidance- 92
Long term Orientation- 88
Indulgence- 42 (Hofstede Insights, 2017)
The applicability of Trompenaars’ cultural dimensions on Japan provides that Japan falls under particularism. Japanese believe in building mutually beneficial relationships and pay more attention on the groups. It is believed in Japan that a group is more important than individual. The mentality of the group also enforces conformity to social rules. The culture of Japan is neutral where people do not believe in showing their emotions in public and tend to hide them. Japan also follows a diffuse approach in making discussion regarding history, background surrounding the problem and speaking. Japanese people value a people for who they are. This means that title, power and position plays an important role in these culture and falls under ascription. People in japan also like multitasking and view commitments and plans with flexibility and therefore falls under synchronic time. It is also believed that the environment or nature control the people of Japan and falls under the category of outer direction. Therefore, the businesses are required to study and understand the culture of Japan before interpreting their needs and wants in order to be successful in effectively meeting such needs.
The businesses that undertake their operations in Japan suffer from the impact of the regional and national cultures and cultural differences at various levels of management within and between organizations. Therefore, the combination of a variety of skills, knowledge and insights are required by businesses for understanding their culture and preparing relevant plans for effective establishment of business sin Japan. Also, it suffers from various barriers in communication as the communication takes the form of cross cultural communication (Robinson-Easley, 2014).
The ethnocentrism of Japan provides that there is superiority complex in Japanese people. The business practice in Japan gets impacted by such superiority complex as this effects how Japanese people view competition among the business firms. It leads them to select the products and services of the business which has above average reputation in the market (Erickson, 2012). The superiority complex in Japanese is considered to be very strong but not stronger than that of most other nationalities. Businesses entering in Japan are likely to face a culture shock due to the unfamiliar environment leading to disorientation (Gunn, 2017). However, after facing the frustration phase most of the businesses have been able to adjust and accept their culture and have managed accordingly. This is due to the fact that the attitude of youngsters is constantly changing (Sugimoto & Swain, 2016). The transformation of business culture of Japan is due to a probable source of dynamism in economy of Japan.
Businesses in Japan also face ethical issues related to environmental regulations, human rights, employment practices, corruption and various moral obligations (Trevino & Nelson, 2016). For example, Apple Inc. has established minimal acceptable working standards and audit foreign subsidiaries on regular basis. While operating in Japan, businesses should not follow the standards and regulations of their home country but should abide by the regulations of the host country in order to avoid getting into trouble. Moreover, Japan has low levels of corruption and has imposed anti- corruption legislation which should be taken into consideration by the businesses before thinking of gaining economic advantage by making payments to government officials. Therefore, the businesses in Japan consider the scenario before making any decision regarding the ethical issues (Moran, Abramson & Moran, 2014).
For example, Toyota Motor Corporation is a multinational automotive manufacturer of Japan. Its net revenue for the year 2017 amounted to ¥27,597 billion in Japan (Toyota, 2017). Therefore, the approach adopted by Toyota is a matter of consideration for achieving success in the business practice in Japan. Toyota has been patriotic in serving the country with the industry achievements. It has also been innovative and creative along with being collectivist and grateful. Therefore, it has been able to achieve success firstly in Japan and then in the whole world. The price of the cars is not too high in order to make it affordable for the people residing in Japan. Toyota always the cultural factors into consideration while launching new cars into the market.
This report provides that intercultural management plays a significant role in undertaking business in diverse countries as the businesses face various challenges due difference in cultures. With the emergence of the concept of globalization, intercultural communication has gained importance as it brings more and more cultures together. This report also focuses on the concept of globalization from the perspective of developing and developed nations with both positive and negative impacts on the economies. The cultural dimension models by Hofstede and Trompenaars and Hampden-Turner provided the effects of culture on the morals of the members of the society along with the values and preferences of people belonging to different cultures and their implications in Japan. Therefore, it can be concluded that the business practices in Japan gets affected by its culture as the demands and wants are generated accordingly.
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