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Cross-Cultural Environment Negotiations: Japan and America Research Paper

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Updated: Jul 3rd, 2020

Abstract

This paper explores the cultural issues that would impede business negotiations between Japan and America. After using the Hofstede cross-cultural model to highlight cultural differences between both societies, this paper says that such differences need not create an impasse between Japanese and American businesspersons. Based on this understanding, this paper shows that understanding the need for neutrality, cultural sensitivity, and flexibility is the key to having a positive outcome in a cross-cultural business negotiation.

Introduction and Background

Globalization has created new opportunities for businesses to thrive in the international market. Giant multinational companies, such as Coca Cola, Google, Apple, Toyota, and Wal-Mart, have achieved their success by exploiting such opportunities.

Many researchers agree that globalization offers many opportunities for companies to grow (DPCD, 2014). Such opportunities include expanded markets, increased sales, controlled expenses, increased diversification, and improved competitiveness (some of these benefits intertwine) (DPCD 2014). For example, expanded markets also mean increased profit margins, and increased profits mean improved business success.

To realize the above advantages, countries need to have economic differences. This is true because countries that have the same economic potential create fewer trade opportunities. However, those that have significant economic differences create more opportunities for international companies to reap more benefits from international trade. Such opportunities exist for American and Japanese companies because both economies are important players in the international market.

Cooper (2014) says they control about one-third of the world’s domestic product. Indeed, being among the world’s strongest economic powers, both countries have the power to influence economic outcomes in other countries. This power comes from the strong trade and capital relationships that they share. These relationships have created (almost) similar social and economic dynamics in both states. For example, both countries have huge economies and high standards of living for their citizens.

However, such similarities do not spread to all aspects of social and economic governance. For example, the United States (US) economy is more than double the size of Japan’s economy (Cooper 2014). The standards of living in both countries are also uneven because Japan’s standards of living are slightly lower than America’s standards of living (this measure is even lower if we measure it using PPP per capita/GDP) (Cooper 2014). Besides their standards of living, both countries have different economic prospects.

The above economic conditions create an opportunity for US multinationals to venture into Japan. However, both countries have different social dynamics that may inhibit cross-border trade. For example, the Asian country has unique cultural dynamics that could change the outcomes of American business strategies in Asia. Therefore, American companies need to know such differences.

This is an important requirement for successful international businesses because successful global enterprises thrive on good communication and cultural awareness. To have a proper understanding of this fact, this paper explores the cultural differences between Japan and America. It does so by borrowing from Hofstede’s cultural dimensions and explaining how their cultural differences affect business negotiations and business decision-making processes.

Hofstede’s Cultural Dimensions

Hofstede developed a model for explaining cross-cultural communication by defining four cultural dimensions (power-distance, individualism, masculinity, and uncertainty avoidance). Later, he revised his model and included a fifth cultural dimension of cross-cultural communication (long-term orientation). This section of the paper explores these cultural dimensions.

Power-Distance (PDI)

The power-distance model outlines a society’s acceptance of unequal power structures. Societies that have a low power-distance relationship practice more social equality than those that have a high power-distance relationship (MTL 2014). The Hofstede Centre (2014) says Japan has a moderate power-distance relationship. It has a borderline score of 54. However, Americans still perceive this borderline score as an unattractive quality of the Asian society because slow decision-making processes still characterize it. They hold this view because America has an equal power-distance structure.

Individualism (IDI)

Individualism outlines the strengths of human relationships within a society. Countries that have strong individualistic traits usually have weak human relationships, while non-individualistic societies have strong human relationships (The Hofstede Centre 2014). Similarly, non-individualistic societies value group loyalty. The Hofstede Centre (2014) says Japan has a moderate individualism score of 42.

This means that it values collectivist decisions more than individualistic decisions. Comparatively, America is an individualistic society because they value individual decisions more than collectivist decisions. Indeed, in America’s corporate world, although managers consult extensively with their employees (more than other cultures), the CEOs mainly make fundamental decisions about a company.

Masculinity (MAS)

Masculinity outlines how societies value traditional patriarchal gender norms. Highly masculine cultures expect men to show strength and manage most aspects of political, economic, and social life (The Hofstede Centre 2014). Japan is an example of a highly masculine society. The Hofstede Centre (2014) says it has a score of 95. This makes it among the most masculine societies in the world. Comparatively, America has a low masculinity index because it promotes gender equality in the business world. Based on this understanding, MTL (2014) says businesses can have more success in Japan if they employ a male manager. Comparatively, American businesses would be more successful if they used merit, as opposed to gender considerations when selecting the management team.

Uncertainty Avoidance Index (UAI)

The uncertainty avoidance index refers to a society’s risk threshold. In other words, societies show different levels of anxiety, depending on their risk levels. Countries that have a high UAI index tend to show risk aversion and prefer to follow the rules, as opposed to intuition (The Hofstede Centre 2014). Japan has a high uncertainty avoidance index because The Hofstede Centre (2014) says it has a score of 92 on the UAI scale. Comparatively, American society has a high uncertainty avoidance index because Americans prefer to take risks, as opposed to failing to do so because there is no precedence.

Long-term Orientation (LTO)

Long-term orientation is the fifth aspect of Hofstede’s cross-cultural model. It explores how countries value long-term human values, as opposed to short-term traditions. American society does not have high regard for long-standing traditions and values.

Instead, they have a democratic and free-willed society, which allows people to pursue their novel ideas, so long as they include other people in their practices. Japan has a high LTO than America does. Concisely, Japanese society respects its cultural norms and traditions in business, politics, and family spheres. Overall, LTO, UAI, MAS, IDI, and PDI outline the five principles of Hofstede’s cross-cultural model. The figure below shows Japan’s scores in this model

Japan’s Hofstede scores
Figure One: Japan’s Hofstede scores (Source: Weaver 2011)

Besides the above model, scholars have also evaluated the Japanese and American societies based on their pragmatism and indulgence.

Pragmatism

The Hofstede Centre (2014) defines pragmatism as “how people in the past, as well as today, relate to the fact that so much that happens around us cannot be explained” (p. 5). Japan is a pragmatic society because experts say its score is 89 (The Hofstede Centre 2014). This society does not emphasize knowing the truth because the Japanese strive to live a virtuous life (they believe their life is only a short segment in a long history of humankind). Comparatively, America is a pragmatic society because its people prefer to use deductive reasoning as opposed to blind judgments. This philosophical thought has dominated the American business world since the 1890s (The Hofstede Centre, s2014).

Indulgence

Indulgence relates to people’s socialization. Based on this understanding, The Hofstede Centre (2014) defines indulgence as “the extent to which people try to control their desires and impulses” (p. 6). Japan is a restrained society. Experts say it has a score of 42 (on the indulgence scale) (The Hofstede Centre 2014). Such societies often exhibit strong signs of cynicism and pessimism in business dealings. Comparatively, the American society is relatively indulgent. Stated differently, it does not demonstrate the same restraint as the Japanese people do.

Manifestations of Culture

Symbols

Japanese people have unique communication symbols that outline how they communicate. American businesspeople need to learn these symbols because they can influence their success in Japan. First, it is important to understand that the Japanese people do not like to use the number four (Williams 2014). To them, this number symbolizes death. The Japanese also do not like saying “no,” even when they want to give a negative response (Williams 2014). Therefore, they may say “yes,” even when they mean to say no. It is important for American businesspeople to understand these symbols during negotiations.

Rituals

Ritualistic practices in the Japanese business environment aim to motivate employees. For example, Rocha (2014) says that Japan has a “cultish” business practice where employees often chant company slogans before starting the business. Japanese businesses support this practice because it motivates employees and reminds them of the company’s goals. Another common ritual in Japan is venerating the business card. Japanese people refer to this practice as meishi kokan (Rocha 2014).

In America, businesspeople exchange business cards, casually, and put it in their pockets. However, the Japanese consider a business card exchange as a ceremonial one. Their culture also expects that a person should receive the business card with both hands and place it in a cardholder, or on a table. Putting the business card in the pocket is disrespectful because it shows that the recipient does not value the business meeting (Rocha 2014). Americans need to understand this fact because it would improve their initial contact with the Japanese people.

Heroes

Unlike the US, the Japanese business culture supports traditional power structures in an organization. This fact explains why many Japanese businesses consider elderly people as “heroes.” To affirm this fact, Rocha (2014) says, “the Japanese business culture appreciates its elders for the wisdom and experience they bring to the company. Age equals rank in Japan, so the older the person, the more important he is” (p. 1). Based on this assessment, American companies should understand that, in Japan, elderly people have more business influence than young people do.

Values

Although this paper shows many differences between American and Japanese cultures, some of their values are similar. For example, both cultures subscribe to the infamous philosophy of “working hard and playing hard.” Therefore, Americans should learn that Japanese people do not think that work is everything. Indeed, as Rocha (2014) purports, the Japanese people understand that leisure is equally as important as work.

Practices

JETRO (1999) says that Japanese people sometimes prefer to use non-verbal communication when they want to express their thoughts. Since the Japanese are polite people, they would prefer using implicit communication styles, as opposed to explicit communication styles. Often, they believe that using verbal communication may be harsh to the people involved. Therefore, non-verbal communication is appropriate because it is a subtle way of expressing their feelings. Based on this analysis, it is important for American businesses to watch out for subtle communication practices by the Japanese because although they may disagree with an issue, they would not openly show their discontent.

Factors Affecting Negotiations

Power Distance and Negotiation

This paper has already explored power-distance relationships in Hofstede’s cross-cultural model. These relationships are important in negotiation processes because they affect the decision-making process. Japan has a borderline power-distance relationship. This means that it is not fully hierarchical because some Japanese people believe inequality (as Americans do). This borderline power-distance relationship affects the negotiation process by slowing it down. In other words, Americans have to consult many hierarchical levels during negotiations.

The Impact of the Uncertainty on Negotiation

Japan has among the highest uncertainty avoidance scores in Hofstede’s cross-cultural model. The Hofstede Centre (2014) says it has a score of 92. This high uncertainty avoidance score affects the negotiation process by making it rigid. Therefore, the Japanese are not always ready to compromise, regardless of how small an issue may be.

Time Orientation and Negotiation

Since the Japanese culture has a high uncertainty avoidance score, most of the decisions that Japanese businesspeople take require a lot of time because they do not like surprises. This orientation affects the decision-making process because it makes it long and slow.

Negotiations and Diffuse Cultures

Diffuse cultures usually allow a person’s personality to permeate through other aspects of a business. For example, a person’s reputation may affect his personal and private lives. Japan has a diffuse culture. Its people use it in business negotiations. For example, they would use it when they want to oppose something without offending anyone. They do so because they do not easily trust outsiders. Therefore, issues like price and quality are not likely to persuade Japanese businesspeople (in a negotiation process) (Vance 2013, p. 58).

Languages and Negotiation

Negotiation is an art that requires the meticulous use of effective language skills. Japan and America have several language differences that may impede this process. Since language evolves, the Japanese culture has borrowed some words from other cultures that have different meanings from conventional English understanding. Understanding these words would help negotiators to avoid misunderstandings.

Negotiations and Culture

Cultural differences would affect the negotiation process by affecting people’s attitudes, personal styles, communication styles, sensitivity to time, and emotional well-being (among other factors). Vance (2013) says that the American and Japanese business cultures do not have many things in common (that would support negotiation processes).

In fact, the Japanese culture prevents them from giving hints to foreign businesses that whatever they are doing is wrong, or unacceptable. Based on this assertion, Vance (2013) cautions American businesses to observe strict rules when negotiating with Japanese businesses. However, the same principle is inapplicable when negotiating with American businesses because they are not particularly attentive to such rules.

Negotiation Process

Every negotiation process requires a thoughtful understanding of the strategies that would create successful outcomes. Such processes mainly involve four main steps – preparation, discussions, propositions, and bargaining. The diagram below outlines these steps

The Negotiation Process
Figure 2: The Negotiation Process (Source: STC 2014)

Although the above model defines the general understanding of the negotiation process, it is important to understand that in Japan, negotiators can realize very little progress during the initial stages of negotiations. This is because Japanese society is bureaucratic and although its people require approval at different levels of negotiations, “stalling” is a common practice by Japanese businesses. Comparatively, Americans are more hands-on and prefer to complete different stages of the negotiation process, fast.

Negotiation Strategy

The Americans and Japanese have different negotiation strategies. Based on the “individualistic” nature of the American society, US negotiators often practice competitive negotiation styles (JETRO 1999). Comparatively, the Japanese prefer to use power (subtly) during negotiations. This attribute makes them less competitive, but assertive.

Negotiation Outcome

Japanese and Americans have different negotiation outcomes because both sets of negotiators have different goals. The Japanese do not like to voice their personal goals. However, the Americans do. In fact, they would prefer that the negotiation outcomes show their personal goals, as opposed to group goals (as the Japanese do) (JETRO 1999).

Conflict Resolution

Americans prefer to focus on conflict issues as opposed to agreeable issues. Similarly, they prefer to focus on commonalities as opposed to divisions. This inclination stems from their politeness and preference to “save face” (JETRO 1999).

Factors Affecting Cross-Cultural Communication and Decision-Making

This section of the report explores different issues that affect cross-cultural communication and decision-making between Japan and the US.

Languages and Cross-Cultural Communications

One aspect of cross-cultural communication is language. It influences how well people understand one another, or not. For example the American business language often demands that the negotiators go “straight to the point,” while the Japanese business language prefers businesspeople to show politeness, and friendliness first, before they start any business dealings. Such dynamics are important considerations of the negotiation process (Drew & Herbig 1998).

Rationale in National Negotiation Styles

Different principles guide different business practices in many societies. For example, Americans often prefer to rely on facts to make their business decisions. However, besides facts, social principles and values also persuade the Japanese to make business decisions. These attributes affect their negotiation styles (Drew & Herbig 1998).

Differences in Decision-Making

Different cultures have unique attitudes that affect their decision-making processes. Negotiators should be wary of the impulses that inform such processes. In Japan, and many non-western countries, the decision-making process is a collective duty. Americans always have a problem with this model because they perceive the lack of flexibility in Japan’s decision-making structure as stubbornness (Drew & Herbig 1998).

Comparatively, the Japanese perceive the western decision-making process as “alien” and inapplicable to the Asian context. Therefore, it is important for Americans to understand that the Japanese always approach negotiations with preconceived minds. Therefore, it is difficult to change their minds, regardless of the magnitude of issues discussed.

Personal Relationships

In many cultures, personal relationships underlie successful business relationships. Japan is similar to several Latin American countries, which value personal relationships more than they do companies. The main question that most Japanese businesspeople ask when they take part in a business deal is if they can get along with their business partners. Comparatively, American businesspersons often ask questions concerning how much money they would make from such deals, as opposed to whom they are working with (Drew & Herbig 1998).

Status and Protocol

America is an egalitarian society. This attribute may present unique challenges in the negotiation process because many American businesspersons show friendly behavior as a transition to the business discussion. While Americans pride themselves in promoting equality, such virtues may clash with status-oriented societies such as Japan.

For example, Americans consider calling someone by their first name as a sign of friendliness, but the same in not true for the Japanese culture because the Japanese see it as a sign of disrespect (Drew & Herbig 1998). Based on these differences, it is important for American businesspersons to adapt to the Japanese status and protocol structure if they want to succeed in business.

Social Aspects of Negotiations

Entertainment has different values for different societies. This is particularly true for the negotiation process. In Japan, businesspersons often incur high entertainment costs because they perceive leisure as a precursor to business negotiations. Comparatively, Americans prefer to conduct their businesses in public places, such as restaurants. Since the Japanese like to save face, they base their decisions to suit non-embarrassing contexts. Americans may do the same, but they base their decisions on a cost-benefit analysis (Drew & Herbig 1998).

Interpreters, Translators and Bicultural Brokers

Since Japan is a not an English-speaking country. In fact, Drew & Herbig (1998) say only about 5% of the population speak English. Based on such statistics, it is prudent for Americans to use interpreters and translators during business negotiations.

Management Implications

Since Japan and America have different negotiation styles, American managers should understand that not all business partners think as they do. Based on this understanding, it is advisable for negotiators to show neutrality and sensitivity to the cultural norms of the Japanese people (Drew & Herbig 1998).

Conclusion

America and Japan have unique cultural differences that affect their business strategies. According to Hofstede’s cross-cultural model, this paper shows that Japan is a masculine society, while America is an individualistic society. Both attributes explain why American businesspeople have little regard for tradition, while Japanese businesspeople prefer to use subtle negotiation styles.

These differences could bring verbal and nonverbal conflicts between American and Japanese negotiators, but it is still possible for them to agree on many issues. The key to this positive outcome lies in understanding people’s different thoughts. Similarly, Americans should strive to show neutrality when negotiating with the Japanese. Lastly, they should show sensitivity to the cultural norms of the Japanese people. These factors could significantly affect the outcome of the negotiation process because they could influence the success, or failure, of business relationships.

As Drew & Herbig (1998) say, failing to consider the above cross-cultural differences contributes to several collapsed business dealings between Japanese and American businesspersons. Nonetheless, the findings of this paper do not surprise me because many Asian countries share (almost) similar cultural dynamics as the Japanese do. Furthermore, I expected the Japanese and American cultural practices to reflect the East-West cultural divide. Therefore, based on the findings of this paper, I recommend that American businesspersons should adapt to Japanese cultural thinking, if they want to succeed in the Asian economy.

References

Cooper, W 2014, U.S.-Japan Economic Relations: Significance, Prospects, and Policy Options, Congressional Research Service, Washington.

DPCD 2014, Chapter 221: Why Do Companies Expand Internationally, Web.

Drew, M & Herbig, P 1998, ‘Negotiating successfully in cross-cultural situations’, Academy of Marketing Studies Journal, vol. 2, no. 2, pp. 1-10.

JETRO 1999, , Web.

MTL 2014, , Web.

Rocha, R 2014, , Web.

STC 2014, , Web.

The Hofstede Centre 2014, What about Japan, Web.

Vance, C 2013, Managing a Global Workforce, M.E. Sharpe, New York.

Weaver, B 2011, , Web.

Williams, D 2014, , Web.

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