A Comparison of Business Systems Between Japan and China - Essay Example

? A comparison of business systems between Japan and China BY YOU YOUR SCHOOL INFO HERE HERE A comparison between business systems in Japan and China Introduction Business systems and management in Japan differs significantly from business in China. Japanese management focuses on participative leadership, a phenomenon in this country that is driven by historical and socio-cultural developments within the nation. Chinese business systems, unlike Japan, structure their management and leadership with much higher disparity between managers and employees, illustrating significant differences between that of Japanese business ideology. There are many other fundamental variances between the two nations in terms of how business is managed and operated. At the same time, research has identified many similarities between the two cultures and ideology of business systems operations that are driven by cultural characteristics in both countries. This paper explores these similarities and differences between the two nations, focusing on cultural dynamics that drive business philosophy and the varying approaches to how business systems operate in both Japan and China. Cultural and managerial differences in business The contemporary Japanese business systems were highly influenced by American values, developed through cooperative efforts between the United States and Japan post-World War II. Hence, many managerial-related principles and ideologies are akin to those found in Western cultures. However, before delving into the managerial philosophies in Japan, it is important to understand the historical and cultural aspects that make business systems unique in this country. The Japanese culture maintains a very powerful respect for tradition, borne of Confucian-era teachings regarding the ideology of maintaining very high esteem for power holders in the business hierarchy and for the aged.1 These teachings, passed down over centuries, have created a very collectivist culture, or one in which personal identity is based on social aspects and where loyalties belong to the in-group.2 According to respected cultural theorist, Geert Hofstede, Japanese managers and employees are greatly concerned about losing face, where personal reputation matters significantly.3 The aforementioned aspects of Japanese culture substantially impact how business operations and managerial philosophy is developed. Being a collectivist culture means that managers and employees in Japan tend to work cooperatively, with very minimal power distance tolerated. A recent empirical study of the Japanese business environment indicated that participative leadership is the most accepted form of management whereby decision-making generally occurs from the bottom-up rather than utilising strict hierarchies of executive control.4 It is through consultation between different ranking employees and managers that a negotiation-based management style thrives and prospers. It is a more balanced system within the business dynamic whereby the attitudes and opinions of workers are highly respected and considered when making important corporate decisions. China, on the other hand, maintains very high levels of power distance between different ranking members of the organisation. Geert Hofstede recognises that Chinese culture scores very highly on power distance scales, meaning that there is a culturally-driven tolerance for power disparities that makes most business systems vertical rather than horizontal when it comes to decision-making. This is a stark contrast between the Japanese business environment. Unequal power means that employees in the organisational hierarchy are not consulted for their opinions and problem-solving ability, whereby employees are routinely sanctioned and the general belief is that employees should not maintain aspirations for improving their rank and status within the organisational dynamic.5 These disparate relationships between managers and employees are highly polarized, meaning significant division, and there are generally no defences for employees in the event that managerial leadership abuses their authority. Despite the aforesaid differences in business systems in both nations, there is a similarity. Chinese business systems are also highly collectivist, even though there is a significant disparity between power holders. Chinese workers maintain very little loyalty and commitment to their organisation, but maintain very high allegiance to other employees in the organisation so long as they are within the same organisational rank and status. Whereas in Japan workers have this commitment and loyalty to their managers and leaders, Chinese employees find collective bonds with similar ranked in-groups. This would tend to suggest that Chinese business systems do not have well-developed human resource philosophies and ideologies, essentially treating workers as commodities rather than valuable resources to enhance business practice. Yet another similarity in business systems between China and Japan is the high score of cultural masculinity that drives decision-making within the organisation. Masculinity, according to cultural theory, involves being competitively driven, where success and achievement is considered to be a powerful motivation in organisational behaviour. In fact, many Chinese employees (despite having low commitment to the organisation) will actually sacrifice their personal leisure and recreational time in order to succeed at their job tasks. This behaviour is certainly not driven by allegiance to the organisation and its leadership, but to respecting cultural traditions associated with a more masculine philosophy. In Japan, this shared trait of masculinity is also found in the organisation, enhanced by commitment to the collective and participative management culture found within the organisational dynamic. Japanese employees and managers are trained to be assertive and there is a consistent philosophy that one should be driven to join a winning team and sustain these victories. Japanese workers and managers are coerced to work long hours and, unlike China, are promoted to make rapid advancements up the proverbial corporate ladder. Therefore, it should be recognised that the main difference between Japan and China, though both masculine driven, is that Japan prides itself in maintaining a very liberal and Westernised human resources system that feeds the culturally-driven competitive nature of employees. Furthermore, in Japanese business systems, employees and managers maintain a very powerful long-term orientation that is also driven by historical and socio-cultural evolutions in the nation. A high score on Hofstede’s long-term orientation scale indicates that Japan consistently seeks virtue in their business practices and pride themselves in perseverance. Japanese workers believe that their life spans are short and therefore they should be determined and resolute to achieve long-term benefits for the business. This is quite different from the Western model of business practice which seeks risk-taking and achievement of short-term profitability gains as part of strategic thinking. In Japan, there is a much higher investment in such areas as research and development, managerial driven pursuit for longer term return on capital investment, and seeking opportunities to service the needs of business stakeholders rather than the pursuit of instant profitability through high risk decision-making. Chinese business systems and their internal organisational philosophies are quite similar to that of Japan as it pertains to long-term orientation. Chinese managers are often thrifty regarding expenditures of valuable resources and seek opportunities to better exploit gains with these resources over the long-run. Investment decisions, at the executive level, often involve such ventures as real estate which generally maintain a better physical capital position for the firm instead of making short-term risk-oriented decisions. Much of what drives long-term orientation within the Chinese business dynamic is driven by the development of business groups in the nation. A business group is defined as “groups of legally independent firms, which operate in many different markets, bound together by enduring formal and informal connections”.6 Between the late 1970s and 1990s, the Chinese government went through a series of reforms in an effort to ensure that the country could be, from a business perspective, highly competitive against other developed nations globally. Countries such as the United Kingdom and the United States began finding opportunities for export and foreign direct investment which provided better production capacity and distribution opportunities. During the 1970s and 1990s, the country maintained a very weak government and economic system and it was extremely difficult for small companies to procure loans and other capital needed to expand their operations. Therefore, business groups were developed, structured much like the Western conglomerate, with many subsidiaries of a parent company in an effort to pool available resources. Business groups were able to create alternative channels of funding, which rapidly improved their capital position, giving them competitive advantages and producing more output for China. As a result, Chinese businesses began to develop their long-term orientation in order to secure longevity of these powerful business entities and guarantee competitive achievements over a longer period of time. Japan shares some dimensions similar to that of Chinese business groups in the form of keiretsus, which are groups of various business enterprises that have a connectivity through management and financial controls. However, the keiretsu concept was developed as a means of insulating various business entities in the event of a financial or performance-related loss, thus illustrating similar characteristics of long-term orientation to that of Chinese business systems. What makes China so different from the Japanese keiretsu structure of bounded and inter-connected businesses is that government steps in to support the actions of Chinese business systems which give them much more clout and financial capital availability over the long-run. Therefore, it should be recognised that Chinese business systems have strong reliance on government intervention and encouragement to sustain these groups’ longevity in various markets. This is the only example in which power distance is shed in China in order to support business growth and development, lending even further support for China’s cultural characteristics toward collectivism; at least at the higher levels of authority between business management and government. What is unusual, and also representing stark differences between Chinese business systems and Japanese systems, is that Chinese employees and managers are highly tolerant of ambiguity in decision-making. This is a cultural dynamic of Chinese society known as maintaining lenience toward uncertainty. Managers and employees are very adaptable and flexible as it pertains to ambiguity, which could be a result of the high volume of family-owned, small enterprises in the country. This characteristic of low uncertainty avoidance could also be explained away by the high levels of power distance that exist within the organisational dynamic whereby lower-level employees have simply become accustomed to being overlooked in decision-making and being left out of the proverbial loop of communications occurring vertically at the highest levels of the business hierarchy. Japan, however, is remarkably different in uncertainty avoidance, being known as one of the most structured cultures where ambiguity is absolutely not tolerated in business decision-making. It has been suggested that this lack of tolerance for uncertainty and doubt could be a product of the many different natural disasters that have occurred on the island, including tsunamis and earthquakes. As a result, Japanese employees want to be ever-prepared and in a protected position, which has ramifications for decision-making within the business system. Lifestyle in Japan, at the cultural level, is very ritualistic and structured which provides the foundation for why decision-making is also insulated and well-planned. Japanese managers invest considerable capital and labour into producing recurring feasibility analyses, environmental analyses, and also carefully mapping out special projects to consider all possible scenarios and outcomes; both negative and positive. Therefore, it would be common for meetings to occur regularly in Japan between employees and managers with an expectation that members come to these conferences with a well-organised set of plans and objectives. It would likely be expected in Japan that individuals who are not contributing contingency plans would be coerced to improve their overall business performance and be chastised for ill-prepared contribution to meeting organisational goals. With Japan maintaining little tolerance for ambiguity and China being more adaptable in the face of uncertainty, it shows the radical differences between business systems in these nations. Change, therefore, would be a common business practice in the Chinese organisation whilst being difficult to realise in a Japanese business environment. This could have potential implications for being responsive to external, changing marketing conditions in Japanese business systems whilst giving Chinese firms a considerable competitive advantage in terms of flexibility. According to Michael Porter, a respected business theorist and practitioner, two of the most considerable threats to ensuring business performance and profit are competitive rivalry and market entry of new competitors. As Japanese workers are slow and resistant to change based on their cultural characteristics respecting tradition and ritual, in the event that competition finds new opportunities to differentiate their products or services, it is likely that Japanese managers would struggle with finding a new competitive advantage. The above, however, would likely not be true in China, since there is much more flexibility and adaptability in the face of changing external market conditions. Chinese consumers, culturally, are known to be hedonistic , meaning self-indulgent and ever in the pursuit of finding personal pleasure in their lifestyles.7 As a result, businesses have grown accustomed to being innovative in product and service delivery as a means of ensuring profitability through customer satisfaction. Chinese consumers drive the markets in which Chinese businesses operate and, if business systems and internal management ideology was rigid and abiding by traditional cultural dynamics, it is likely Chinese business systems would lose their significant competitive advantages. Finally, Japanese workers tend to view the future as being opportunistic whereby high performance and profitability results from a business perspective can be attained through dedication and hard work. Chinese employees and managers, in opposite accord, seek to find personal fulfilment whenever possible as a primary lifestyle and cultural goal in the pursuit of finding social acceptance with like-status peers. Therefore, there is evidence that some dimensions of long-term-focused thinking will be abandoned in Chinese culture based on hedonistic consumerism that is becoming commonplace in the nation. Even though it was previously established that Chinese employees are willing to work long hours, some of this can be explained away by the desire to maintain adequate resources for hedonistic pleasure-seeking and luxury consumption to enhance lifestyle and their perceived social position among peers. When comparing Japan and China in terms of how business leaders and employees view the future, there are significant differences that are often driven by consumer power in the external market and the nature by which consumption occurs. This drives very different business models and marketing focus in Japan versus China in terms of how the company attempts to compete in various marketplaces. Conclusion As illustrated in the research, there are many differences and similarities between Chinese and Japanese business systems and internal corporate ideologies. It cannot be said, concretely, that one business system is superior to another, only that both countries operate and manage their business structures with varying philosophies and approaches to securing the future and performance of their respective organisations. Much contemporary literature on how to successfully manage businesses, today, shows that adaptability and flexibility are necessary to find competitive success. Under this premise, it would seem that China maintains the most probability for ensuring long-term business performance than that of Japan. Even though Japan has many strengths, such as high determination in a corporate context, Chinese business systems will be most likely to endure long-term if these systems continue to utilise their current, existing business ideology. Read More