Joint Venture Japan vs. Sweden:

Joint Venture

Japan vs. Sweden: International joint ventures

Joint ventures are often used as a means to gain entry into a foreign market. "Foreign companies form joint ventures with domestic companies already present in markets the foreign companies would like to enter. The foreign companies generally bring new technologies and business practices into the joint venture, while the domestic companies already have the relationships and requisite governmental documents within the country along with being entrenched in the domestic industry" (Joint ventures: Overview, 2010, Cornell Law). When establishing an international joint venture, such as the currently proposed enterprise between companies in Japan and Sweden, it is essential to be mindful of the differences between both entities' national business cultures as well as any regulatory obstacles that exist.

Sweden and Japan have vastly different business approaches to corporate governance. Sweden has one of the smallest 'power distances' between managers and subordinates in the world, and little consideration is given to organizational hierarchy. "Swedish management is based on the idea that the individual is both willing and able to do a good job. A Swedish manager tends to think of himself as a coach rather than a commander, and he often delegates tasks and authority to his staff. Swedish organizations, employees on all levels have the freedom to make decisions and solve unexpected problems without asking superiors for permission" (Business culture in Sweden, 2010, Business Culture).

Japan, in contrast, has one of the highest power differentials in the world between subordinates and superiors. While Sweden's business hierarchies are relatively flat, and performance rather than seniority determines work placement, Japan is the direct opposite. "In a typical Japanese office the words used to informally refer to senior and junior employees are often the same words used to describe the hierarchy of a human family" (The Japanese company in Japan's culture, 2009, Japanese business culture). Hierarchies and protocols are very important in Japan, and the need to respect hierarchical differentials cannot be underestimated.

Under the circumstances, a Japanese company should engage in a joint venture that allows for considerable control on the part of the managing, local entity in Sweden for day-to-day human resource activities. If a Japanese manager expects Swedish employees to act Japanese, and to obey organizational protocols without question, he or she is setting the agreement up for failure.

When designing an organizational structure to take advantage of international opportunities, the culture and the government structure of the nation are two essential components to consider: Sweden, for example, tends to have a very worker-friendly culture, with heavily subsidized child care, nationalized healthcare, and generous benefits such as pensions and sick leave. While Japan also manifests many of these features, it also depends on a high level of personal worker sacrifice to function. In Japan, an individual's identity is linked to his or her social role in relation to corporate employment. In Sweden, this is not the case. Sweden also has a much more gender-equitable workplace, while Japanese workplace leadership still remains heavily male-dominated.