Business Cultures of Japan and The Philippines - Research Paper Example

COMPARATIVE REPORT OF BUSINESS CULTURES BETWEEN TWO COUNTRIES JAPAN AND THE PHILIPPINES Culture is defined as shared beliefs, values and norms. Culture orders our perceptions and provides prescriptions about what to do when things happen , how to behave under certain circumstances, and what to value. Culture is reinforced by the stories we tell, by myths, symbols, rituals, and heroes. As we share a larger culture, we convey similar meanings to events, for example, how markets ought to work, how management ought to behave, and what products are valued. This is not to say that culture can be disjoint with reality, rather culture, our shared understanding of things, in a sense, creates “reality”-- by providing an interpretation of what we see or experience. The business culture therefore is shaped by the culture of the society where it exists. The importance of recognizing business culture in setting overseas operations is crucial in determining the success of the operations whether it maybe for profitability or enhanced productivity through efficient administration. Business culture is a manifestation of current practices of business in certain geographical location, let’s say the Philippines. The business culture reflects how companies or organizations conduct its business, the extent of autonomy and freedom being practiced in making decisions, development of new ideas, flow of power and information, and dedication of the employee towards achieving the organizational goal. Every business culture is framed in the country’s own culture. Culture is inherent in a society, and that culture affects and influences the way that particular society conducts its business( Henry 1999 ). Having this view, it is therefore important to identify the existing business culture in the Philippines that will contribute to a greater understanding of what type of management should be implemented once the operations start. However, it is pertinent that certain theories about culture must be understood first which will enhance our understanding of business culture. HOFSTEDE’S DIMENSIONS OF CULTURE Due to the advent of globalization, companies have sought overseas operations to expand their market as well as gain from trade agreements. More so, the availability of cheap labor has attracted multinationals to invest in Southeast Asia ( Philippines, Thailand, Indonesia), especially in China. However, issues in organizational behavior always resurface as western methods of management are fitted into Asian culture. This is exactly what this report intends to avoid, conflicts in organizational management due to different cultural orientations. In order to prevent this misunderstanding, it would be best to identify critical issues in business culture. An important model in understanding business culture was developed by Geert Hofstede. He firmly believed that a misunderstanding of business culture can have tragic consequences for companies. Hofstede’s statement is clear about this : Culture is more often a source of conflict than of synergy. Cultural differences are a nuisance at best and often a disaster." Hofstede’s Model is composed of 5 Cultural Dimensions that can assist in differentiating cultures. POWER DISTANCE INDEX The first dimension that Hostede pointed out is the Power Distance Index (PDI) . Hostede defined this as to the extent to which the less powerful members of organizations and institutions (like the family) accept and expect that power is distributed unequally. This represents inequality (more versus less), but defined from below, not from above. It suggests that a societys level of inequality is endorsed by the followers as much as by the leaders. Power and inequality, of course, are extremely fundamental facts of any society and anybody with some international experience will be aware that all societies are unequal, but some are more unequal than others. In Japan, the PDI is roughly 50 % , while in the Philippines, PDI is 90%. This big difference in PDI can translate to many differences in the common business practices. This pose as a challenger to a manager since he has to adjust his leadership style when he is conducting business in any of the countries. Since the Philippines registered a high power distance, it meant that : 1. Person in authority such as public officials and high-ranking company officials openly express their authority with emphasis. 2. The relationship between a subordinate and his superior is transactional. The subordinate respects his superiors due to inherent authority. Although a subordinate may try to develop a close relationship with the boss, this is usually frowned upon by the other subordinates. 3. The decisions are to be made by higher authorities, thus , subordinates are only given menial work. They need clearance from superiors to make decisions. This makes the organizational set-up bureaucratic since hierarchy is observed. The implication of this in the Philippine operations is that managers in the Philippines must emphasize the importance of deadlines, be explicit in their orders, and be more authoritative. The leader is accountable and responsible for the mistake of his subordinates. Contrastingly, the Japanese management does not expect much deference and can handle informal protocol. The Japanese also practice making-decisions as a group and prefer not to be direct in confrontations. In a way, Filipinos can adjust to this system of the Japanese since like other Asians, they are also group oriented. INDIVIDUALISM Most Asians are known to be collectivist, that is, they are more inclined to act and think as a group. Unlike individualist societies like western societies, Asians have cohesive bonds with their nuclear families as well as extended ones. Thus, it is natural then that Japan ( 46 ) and Philipppines ( 40 ) have low points for individualism. In fact, this is the lowest score of Japan among Hofstede’s Dimension. One important trait of collectivism is recognizing loyalty which is present in both cultures, especially in family ties. This is demonstrated by the practice of nepotism in the Philippines where business owners or employees have relatives working in the same office. It was asserted by ( Halig 2001 ) that “roles, status, and privileges and obligations are clearly defined to protect the family. In the Philippines, this is translated by “pakikisama” meaning, getting along well with others. This attitude can be seen after a day’s work where co-workers would often wait for one another when going home. However, this can also work against an employee when one has to conform to wrong practice done by some members of the group. If he/she does not conform to such practice, he will be accused of “walang pakikisama” ( no goodwill ) thereby, becoming ostracized by the group . A major factor in Japan’s collectivism is its homogeneity as a nation since 95% of people in Japan are Japanese. Studies also indicate that Buddhism also influences collectivism in a culture. Therefore, collectivism is highly practiced in Japan since the Japanese identify themselves by the group which they belong to whether it is accompany, club, organization, or a family (Strategic Direction 1997). A manifestation of collectivism in Japanese business culture is demonstrated during meetings. One etiquette that foreigners must understand is that it is inappropriate to show too much appreciation to an individual especially in front of a group since that act diminishes the value of teamwork. Japanese culture has high regard for collective effort and credits success to the team, not the individual. In this dimension, Japan and the Philippines would not have much problems in adjustment. In company events and activities, it is probable that both Filipinos and Japanese would form a bond that can enhance harmonious working relationships between the two cultures. This translates to less conflicts and more efficient operations for the management. Lastly, both cultures recognize the importance of lasting business relationships. Thus, transacting in both cultures may mean that they can become your business partners for life. MASCULINITY Masculinity as described by Hofstede is the distribution of roles between genders that is a basic issue for any society to which a range of solutions are found. Hofstede’s studies in IBM demonstrated that women’s values vary less than men’s values and that every country has its own value system of masculinity or femininity. Masculinity is not all about gender, rather, it is the characteristics of masculine values like assertiveness, control, assertiveness, and success. Its opposite are the feminine “values” such as support, nurture, and build relationships according to Hofstede. Awareness of the basic precepts on this dimension will help us understand how business is conducted in the two countries. In Japan’s case, its highest score on the Dimension is that of masculinity ( 95 ) making it the world’s most masculine society. On the other hand, Philippines registered only a score of 60 points. Thus, success in Japan is highly-recognized since it is an indicator of one’s being. The Japanese are highly-competitive and they derive satisfaction from material success and accomplishments. This is also the same reason why Japanese businessmen commit suicide when they fail in their transactions since they only identify their self-worth on their achievements or failure. However, achieving this success also means sacrifice. The Japanese place business on top of family which makes them excessive workaholics. They are relentless when challenged to accomplish a difficult goal, in fact, they thrive on adversity. On the other hand, Philippine’s lower score on masculinity reflects that business is conducted through constant negotiations. The rule of the day is achieving compromise or a “win-win” situation that is also espoused by the West. This lower masculinity score in the Philippines reflect that Filipinos are willing to break rules as long as there are negotiations or considerations. In fact, it is a norm for Filipinos to break deadlines or ask for considerations even after negotiation has been done. This is best exemplified by the volatility of the regulatory environment in the Philippines ( White 1999 ). The implication of this to the Philippine’s operations is that Filipinos must adjust to the Japanese way of handling business. Due to their high masculinity, the Japanese would be expecting everyone to comply strictly to the rules, policies, and procedure that they would implement. The management of the Philippine operations must brief the Japanese about the masculinity index of the Philippines so certain adjustments maybe made in the leadership style. UNCERTAINTY AVOIDANCE INDEX According to Hofstede, Uncertainty Avoidance Index is the degree to which a society can tolerate uncertainty and ambiguity. It is often associated with the search for Truth. Japan has a high UAI index ( 78 ) which could be generally interpreted as a society that does not feel comfortable with new situations. In fact, Japan’s UAI index ranks second to masculinity in the Dimensions. Hostede argued that these type of societies curb “these new situations is by the imposition of strict rules laws and rules and through establishing safety and security measures” ( geerfhostede.com ). More often than not, the strict impositions of laws and rules end up as a fetish. This UAI is also reflected in the religious beliefs of the Japanese in the essence of Buddhism where there is only one absolute Truth. UAI plays an important role in analyzing how cultures handle conflict in the organization. For the Japanese, conflict is unpredictable and may lead to chaos, thus, they tend to avoid conflict. Therefore, it is not uncommon for Japanese to submit passively even when then have the right argument. The interplay of high UAI and collectivism results to submission to one’s superiors. Contrastingly, the Philippines UAI ( 40 ) is almost half of Japan’s points. This indicates that Filipinos can tolerate unusual circumstances well translating to a more resilient character. Philippines had its share of natural disasters yearly being in the Belt of Fire, yet, Filipinos can take the occurrence of these disasters as no big deal. After a tragedy, they bond together as a people and pick up the remains to form a new creation. Having this kind of traits makes Filipinos flexible and adaptable to any working environment. No wonder, there are many Overseas Filipino Workers in any part of the world. Rules for Filipinos are just guidelines, they are not the totality. More so, the business culture is more tolerant of opinions whether from the West or the East. This makes the Filipino manager’s leadership style malleable. Also, Filipinos, especially the older ones, are bound to contemplate on important decisions. The issue now therefore is how to combine these two cultures with different UAI index seamlessly in the workplace. On the part of the Japanese, they will learn from the Philippines the value of flexibility and playing situations by the ear. Similarly, the Philippine operations will learn how to comply with strict business practice especially the enforcement of rules. In this type of situation, situational leadership must be exercised so that one could balance the chemistry between these two cultures. LONG TERM ORIENTATION Long Term orientation is the fifth dimension that was revealed in the study conducted by Hofstede in 23 countries. A questionnaire formulated by Chinese scholars was used in determining the degree of this dimension. Originally, this dimension was labeled as Confucian work dynamism. Among the values included in this dimension are thrift, persistence, sense of shame, and ordering relationships. In this dimension, we can observe that religious beliefs also play a significant role in influencing the conduct of business in a country. To understand this dimension, an orientation of Confucian values must be learned. To state, these Confucian values expects these behavior : responsible, motivated and dedicated individuals that exhibit commitment and organizational loyalty. Since religion plays an important role in Japanese society, it is no surprise then to learn that Japan has an index of 98 in this dimension because of their Confucian heritage. On the contrary, Philippines has only 19 points in this index. However, the wide difference in the index of the two cultures does not translate to the Japanese culture as better than the other. In fact, a short-term orientation has also its merits ( Hofstede 1997 ch. 7 ) : 1) personal steadiness and stability 2) protecting your face 3) respect for tradition 4) reciprocation of greetings, favors, and gifts Analyzing the values in the short-term orientation reveals that they are also part of the precepts of Confucianism. The only difference would be the orientation in terms of time. The set of values in the long term connote a concern for the future such as saving and persistence. Contrastingly, the short- term indicates that it values the past ( respecting traditions ) and the present ( protecting your face ). Therefore, those two types of orientation complement each other since it presents a balance especially when exercised in decision-making. The Japanese managers can influence the Philippine management in developing long-range plans that secure the company from external changes. Similarly, the Philippines business culture can teach the Japanese management to focus on present issues and learn from the lessons of the past. CONCLUSION The establishment of a business operation in the Philippines is feasible with regards to the business culture it exhibits. The basis of this report is Hofstede’s Cultural Dimensions as well considerations of social , religious , and economic factors in both coutries. The main headquarters in Japan can oversee the operations through a close collaboration with Filipino managers. Each dimension of Hofstede is accurately based on comparisons between the index of the Philippines and Japan. There is also an interpretation of each dimension according to the score of each country. More so, an insight in current business practices and administrative culture is reported. Although some index show a wide difference in the two countries, these difference does not pose as a threat or conflict; rather, they are complementing to each other. Therefore, we can safely conclude that having a Japanese and Philippine partnership in business will yield to positive results. References Hallig, Jason V. ( 2005 ) Communicating Holiness to the Filipinos: Challenges and Needs .The Path to A Filipino Theology of Holiness. http://www.nazarene.org /files/docs/didache _2_1_Hallig.pdf Hendry, John (1999) Cultural Theory and Contemporary Management Organization. Human Relations, 52: 557-577. Hofstede, Geert (1997 ).Culture and Organizations: Software of the Mind. New York: McGraw-Hill (ch7). Japanese Geert Hofstede. Cultural Dimensions Explained. .http://www.geert-hofstede. com/hofstede_japan.shtml Strategic Direction (1997). The Cultural Dimension of Business. (129), 27-28. Retrieved March 2009 from ABI/INFORM Global database. (Document ID: 273708641). White, George III ( 1999 ) Performance Implications and Constraints of Wholly Owned Foreign Subsidiary Relation-Based Strategies in Volatile Regulatory Environments: An Empirical Examination in the Philippines. Retrieved on March 2009 from som.umflint.edu/research/docs/20082009/200809_GW.pdf Read More