Expatriate Management: U.S. to Japan Using Hofstede's Framework

Introduction

Japanese corporations and Japanese culture in general have become increasingly Westernized over the past several decades. However, this does not mean that all differences between Japan and the United States have been eradicated. There is still a great deal that the American expatriate needs to know about doing business in Japan before embarking on such a venture.

With so many cultural differences, adjustment on the part of the expatriate can be challenging. These stressors can be reduced, however, if the expatriate feels confident that he or she is well versed in the workings of the foreign culture. According to Peltokorpi (2008), "expatriate language proficiency, type, and the personality traits of emotional stability and cultural empathy have a positive influence on both non-work- and work-related adjustment" (p. 1588). Human resource managers are in a unique position to help the expatriation and repatriation process go as smoothly as possible.

Hofstede's Cultural Classification Theory

One helpful tool that has often been used by human resource managers to identify differences and bridge the gap between foreign countries attempting to do business with one another is Geert Hofstede's Cultural Classification Theory. This paper uses Hofstede's theory to analyze the opportunities and risks of an expatriate of a U.S. corporation conducting business in Japan.

Successfully conducting business in Japan requires HR personnel to conduct a great deal of research into the nature of the business culture, the ethical standards of the country, and the rules of business etiquette—all of which tend to differ significantly from those Western managers are used to. This is where Hofstede's Cultural Classification Theory can be particularly helpful.

Power Distance and Hierarchical Structures

According to Hofstede, there are five different cultural dimensions that help determine how a certain culture conducts business, negotiates, and deals with conflict. These dimensions are power distance, individualism versus collectivism, masculinity versus femininity, uncertainty avoidance, and long-term versus short-term orientation.

Power distance refers to the accepted level of inequality among the people of a community or nation. There are certain characteristics associated with high power distance and others associated with low power distance. For example, according to Goodwin (1999), "People in high power distance cultures experience greater uncertainty and anxiety when communicating with people higher in status than do members of low power distance cultures" (p. 26). Furthermore, in high power-distance cultures, "subordinates and managers perceive themselves as unequal, and subordinates depend more on the management and are expected to 'do as they are told.' Interpersonal contact between levels of the hierarchy is initiated by superiors" (Goodwin, p. 142).

Goodwin adds that numerous factors can be influenced by high power distance versus low power distance negotiating styles. For example, low power distance groups are egalitarian in nature and are therefore more likely to perceive injustice. High power distance groups, which are hierarchical in nature, are more likely to legitimize inequality.

Individualism, Collectivism, and Market Research

According to Hofstede's Power Distance Index, Japan has a higher power distance than the United States, with the former scoring 54 and the latter scoring 40. Therefore, American business leaders need to be formally trained to recognize important cultural differences such as the fact that in Japan, employees are more subordinate to managers than they are in the United States, and that there may be a level of anxiety during communications because of the differences in power distance.

Individualism versus Collectivism is described by Hofstede as the extent to which individuals feel part of a group and, as such, how reliant they are on others for support. One of the most notable problems of style discordance occurs during negotiations between individualist and collectivist cultures. Hofstede explains that in individualist cultures, connections between individuals are tenuous and self-interest eclipses group interest. Individualist cultures promote the designation of goals geared toward bettering the position of oneself or one's family. When these goals conflict with those of their in-groups, individuals will choose their personal goals. Ties do exist between these autonomous members; however, the ties are loosely bound, easily broken, and easily transferred to others.

Collectivist cultures, according to Hofstede, are the opposite of individualist cultures in that the focus is on the group instead of the individual. In these cultures, the good of the group comes before the good of the individual. Ties between members are strong, and there is a collective sense of group pride and responsibility. This can account, for example, for different approaches in market research between the U.S. and Japan—a topic that comprises a significant part of the expatriate training process.

Japan has become Westernized in numerous ways in the last few decades. Its fashion, food, and even music have been influenced significantly by the United States and Europe. Japanese corporations, however, have tended to stick with their tried and true formulas—formulas which are obviously working, as Japan is home to some of the largest corporations in the world. Western companies have, in fact, learned a great deal from the Japanese regarding inventory management, organizational structure, and work ethic. However, one area that the Japanese seem reluctant to embrace, despite its potential benefits, is market research. According to Freedland (2003), "Japan and Japanese companies are deeply committed to marketing, and spend millions using it to gain an edge on the competition. When it comes to market research, however, much of the country is left in the dark ages" (para. 3).

In the United States, the significance of market research to a company's bottom line is well and widely accepted. Thus, it is difficult for many U.S. marketers to understand why any company would not invest in market research to determine the likelihood that their product will succeed. It is also critical to find out what the market is ready for, what it desires and does not desire, and how easily it can be influenced. All of these factors can be determined through market research; however, in Japan, it is still not a common practice. This may be a result of the collectivist culture in Japan, in which outside support, even in the form of market research, is looked down upon.

The purpose of some of the training will therefore be to help expatriates understand these types of differences while simultaneously helping them approach the subject of change without apprehension. For example, rather than simply telling Japanese company leaders that they should engage in market research, expatriates should conduct research of their own to find out what barriers are preventing them from making market research a significant part of their marketing strategies. Many American business people are apprehensive about approaching subjects regarding change because the Japanese are known to be committed to their traditional methods. However, when addressed properly, changes such as increased market research can be facilitated. This requires proper training in how to best approach these situations.

Masculinity, Femininity, and Competitive Strategy

According to Hofstede's Individualism Index, the United States (with a score of 91) is extremely individualistic. There is a general belief in this country that individuals can achieve just about anything they put their mind to if they work hard for it. Japan, on the other hand, ranks extremely low in terms of individualism, scoring only 46. Therefore, it is not surprising that, as Hofstede points out, some of the greatest conflicts occur between these two very different types of cultures.

Masculinity versus Femininity is not, as it might initially appear, about the way men and women treat each other or are perceived in a particular culture. Hofstede uses these terms to describe the qualities generally associated with males (for example, dominance, power, control) versus the qualities generally associated with females (for example, compassion, nurturing, and justice). Therefore, according to Hofstede, a country that rates high on the masculinity scale is one that values dominance more than equality, while a country that rates low on the masculinity scale is likely to advocate human rights as opposed to subjugation.

The United States and Japan score very differently on Hofstede's Masculinity Index, with the U.S. ranking 62 and Japan scoring 95—the highest out of all countries on the list. Therefore, this is one dimension likely to cause a significant amount of conflict between companies from the different nations doing business with one another. This is particularly true considering that competition in the Japanese market is considered to be some of the fiercest in the world. Therefore, expatriate training at PCN will include a significant focus on how to gain a competitive advantage by being responsive to local needs and requirements when engaging in activities such as product and service adaptation, pricing, distribution, advertising and sales promotion, and after-sales service. The expatriates will learn that being more flexible and willing to adapt to local markets is a key factor in succeeding in business in Japan.

Uncertainty Avoidance and Business Protocol

According to Hofstede's model, Uncertainty Avoidance refers to how comfortable the people of a certain culture are with structure as opposed to flexibility. Notable disparities in negotiating styles between nations scoring high and low on the uncertainty avoidance index have been known to cause significant conflict. This conflict is most likely to occur when people who prefer structured activities—because they entail less risk—encounter people from a culture with a more spontaneous style. Those with a structured mindset are likely to regard a lack of structure as a form of disrespect, as if the culture does not care about risk because the deal or negotiation is not important to them. According to Goodwin, "Uncertainty avoidance concerns planning and stability as a way of dealing with life's uncertainties: those high on uncertainty avoidance have a strong desire for consensus, and deviant behavior is unacceptable. Because high uncertainty avoidance cultures provide rules for dealing with other group members, individuals in high uncertainty avoidance cultures do not judge inter-group interactions to be as difficult as those in low uncertainty avoidance cultures" (p. 27).

Uncertainty avoidance in the United States is relatively low, ranking 46; Japan, on the other hand, ranks extremely high on the Uncertainty Avoidance Index, scoring 92. As a result, Americans doing business in Japan need to be aware that Japanese businesspeople are not as willing to take risks as "free-thinking" Americans. They are likely to follow strict rules and procedures of protocol, which expatriates need to become extremely familiar with if they are going to successfully conduct business in Japan (Evans, Pucik & Barsoux, 2002). All of these roles and protocols will therefore be included in the training program.

Long-term versus short-term orientation is the final dimension of Hofstede's model. According to cultural research sources, this dimension was added only after Hofstede determined that the other four dimensions were unable to completely explain the differences between Eastern and Western cultures. Therefore, Hofstede developed the following list of differences between the long-term and short-term orientation of cultures:

Long-term orientation: persistence; ordering relationships by status and observing this order; thrift; having a sense of shame.

Long-Term Orientation and Strategic Thinking

Short-term orientation: personal steadiness and stability; protecting your "face"; respect for tradition; reciprocation of greetings, favors, and gifts.

According to the Long-Term Orientation Index, Japan ranks relatively high, with a score of 80. The United States, by contrast, scores only 29. Clearly, Japanese businesspeople are much more likely to think in the long term than businesspeople from America, which is not surprising considering that Americans live in a culture that focuses on immediate gratification. This is a difference that could potentially cause significant conflict between American and Japanese businesspeople and thus needs to be given serious consideration when proposing business deals.

Hofstede's Cultural Dimensions model is undoubtedly helpful in identifying cultural differences. However, there are certain drawbacks to the model that need to be considered. According to ClearlyCultural.com, "Even though this model has proven to be quite often correct when applied to the general population, one must be aware that not all individuals or even regions with subcultures fit into the mould. It is to be used as a guide to understanding the difference in culture between countries, not as law set in stone."

Limitations of Hofstede's Model

As Buckley (1994) points out, American businesspeople are prone to think in terms of a "national culture"—that is, they associate a nation and its inhabitants with a single cultural stereotype. However, in reality, almost every country is comprised of a variety of different cultures and cultural norms. These subcultures may not operate in the same way that the dominant culture operates, so it is dangerous to simply place every person in Japan into one of Hofstede's categories. Making assumptions is one of the biggest mistakes a businessperson can make when dealing with a different culture.

The training programs will consist of expatriate training and repatriation training for employees and their spouses. The expatriate training will focus on the following:

Training, Preparation, and Repatriation

1) Creating a higher level of knowledge regarding the cultural differences between Japan and the United States, including all of the differences discussed above in the Hofstede analysis.

2) Providing practical information regarding daily living, including housing, monetary exchange rates, transportation, and shopping.

3) Developing an action plan specifically designed to help the expatriate adjust to the new environment in both professional and personal life.

Once the initial expatriate training is completed, the preparation stage begins. Preparation before and during the assignment relies on extensive training and research. While it is important to do research on the country in general, it is just as important to research the particular company or industry with which negotiations will occur. Also, when examining the differences between American and Japanese culture, it is essential to distinguish norms from values and attitudes. The reason this distinction is important is that norms are easier to change than values and attitudes because values and attitudes tend to be more deeply ingrained (Stahl & Caligiuri, 2005).

Repatriation is also a critical part of the international business process. According to Stroh, Black, and Gregersen (2005), "Contrary to what most managers in the home country think, repatriates have to adjust to significant changes when they return home. These changes may include new political systems, transportation systems, social groups, eating habits, and so on—in short, many of the same components of the culture that were unfamiliar when the employee first moved abroad. Of equally great importance, the employee is not the same after an international assignment of 3 to 5 years" (p. 191). PCN must therefore take into account each of these factors when assigning and calling back its expatriates in Japan.

Conclusion

There are always risks involved when doing business in a foreign country, but there are a multitude of opportunities available as well. Therefore, the potential risks should not prevent PCN from pursuing a business venture in Japan. This does not mean, however, that it is acceptable to simply "dive in" without doing one's research. Costly mistakes can be made from failing to properly explore a nation's cultural differences, and these days, costly mistakes can be fatal. Therefore, it is critical for American companies desiring to do business in Japan, or in any foreign nation, to gather the facts and use them to their advantage.