Essay: elements of a specific business culture can influence cross-border buyer-supplier relationships

1.4 – Contribution
The purpose of this study is to describe how elements of a specific business culture can influence cross-border buyer-supplier relationships and define the limitations, which should be explored in future research. Only a few prior studies have considered this role of cultural sensitivity in international exchange (Skarmeas, Katsikeas, & Schlegelmilch, 2002). Therefore, this paper contributes to existing literature by expanding on the cultural issues companies face by trading abroad.
1.5 – Research Design and Data Collection
This bachelor thesis is a literature review. The formulated problem statement and research questions are answered based on existing literature and secondary sources. By searching for, and selecting literature that has been used in this thesis, attention has been paid to the date of publishing, expertise of the researchers, context of the study, relevance, and number of citations of the article concerned. In order to find the right articles, Google Scholar is the source that has been used most frequently. Concepts that served as keywords are: “Hofstede’s typology of culture”, “culture”, “relationship”, “cultural sensitivity”, “low- and high-context cultures”, and “cross-border buyer-suppler relationships”. The selected articles matched the search criterion the best, other selected articles are suggestions of the search engine based on the article used.
1.6 – Structure of the Thesis
The structure of the thesis is based on three research questions. These questions are formed in a sequential manner in relation to the problem statement. After this first introductory chapter, each subsequent chapter addresses one research question. More specifically; chapter 2 discusses the concept of a relationship, what its main characteristics are, and the influence of culture. Chapter 3 elaborates on culture as a concept and how it is linked to a cross-border buyer-supplier relationship. In addition, Hofstede’s framework is discussed in detail. Subsequently, chapter 4 discusses the appliance of the cultural elements and Hofstede’s typology of culture to Japan and the United States. The last chapter deals with the problem statement, it states recommendations and limitations for future research. At last, this is followed by the reference list and appendices.
Chapter 2 – Cross-border Buyer-Supplier Relationship
This chapter addresses the first research question: ‘What is important in the management of a cross-border buyer-supplier relationship?’. It starts with an explanation of relationship management. Thereafter, the factors that influence the management of a cross-border buyer-supplier relationship are further discussed. Furthermore, the influence of a national culture on a relationship are taken into account together with the impact of cultural sensitivity.
2.1 – Relationship Management
One of the most important trends in the industrial organization of the past 25 years has been the growth of collaboration between independent companies (Grant & Baden-Fuller, 2004). In addition, in these days a highly competitive market place and rapid technological changes let multinational corporations choose to focus on their core competencies and source other activities from external suppliers (Grant & Baden-Fuller, 2004). External parties may play a key role for the firm’s access to specific resources unavailable to a company, which are crucial for its competitive position (Johnson & Ford, 2006). As a result, there is an increasingly stronger need for specialized supplier networks (Dyer & Singh, 1998). The fundamental aim of a relationship is to link a buyer with a supplier. Relationships can be viewed as mutual, two-way, involved exchanges between buyers and suppliers (O’Toole & Donaldson, 2002). A firm’s ability to develop and manage relationships with key suppliers, customers and other organizations is a core competence that will help a firm to achieve competitive advantages (Ritter, Wilkinson, & Johnston, 2002). Therefore, effective relationship management within a buyer-supplier relationship becomes increasingly more important.
2.2 – Foundation of a Relationship
The foundation of a successful relationship is based on three factors: trust, commitment, and cooperation. In order to establish these three factors, effective communication between partners is crucial. In a cross-border buyer-supplier relationship culture might influence these factors and the communication process (Mehta et al., 2006). Therefore, cultural sensitivity is important in the management of a cross-border buyer-supplier relationship.
2.2.1 – Trust
Trust is the willingness to rely on an exchange partner in whom one has confidence. It involves the believe of one partner in the other, with expertise, to perform a task effectively, and the believe that a partner will act in a way that is beneficial for both parties. Relational trust is developed between exchange partners through repeated interactions over time. As in this process a partner is regarded to be reliable and dependable, the other partner will generate positive expectations regarding that partner’s intentions and reduce the fear of opportunistic behaviour (Mehta et al, 2006). Usually, a relationship cannot be legally defined. Therefore, trust can operate as some type of control mechanism to facilitate the functioning of relationships (Dyer & Singh, 1998). As a result, in the situation of high levels of trust, companies do not need any safeguard mechanisms, which will lower their cost. Besides, high levels of trust will encourage information sharing between partners, and therefore reduce misunderstandings and conflicts (Liu, 2012).
2.2.2 – Commitment
Commitment in a relationship is about the expectations that partners have of each other, that both partners will jointly exploit the opportunities and solve the problems in the best interest of both parties. So, commitment refers to the engagement in the relationship based on a partner’s own self-interest stake in the relationship, i.e. the partner shows more than only a promise. In addition, commitment is about the intentions of both parties to develop and maintain a stable, long-term relationship. Thus, in the situation of high levels of commitment, partners are able to achieve individual and joint goals without raising the fear of opportunistic behaviour (Mehta et al., 2006). However, the concept of commitment is perceived differently across cultures. For example, in Japan commitment is very important, as they often forgo better deals with new partners in order to maintain long-term relations with loyal partners. Whereas the U.S. is less committed to relationships as they would easily switch to partners who offer better deals (Yamagishi & Yamagishi, 1994).
2.2.3 – Cooperation
Cooperation can be defined in multiple ways, for example as ‘joint accomplishment’, or as ‘joint striving towards individual and mutual goals’, or as ‘partners working together to achieve mutual goals’. Therefore, the general concept of cooperation is the following: cooperation requires interrelated behaviour by two or more parties, these parties perform this behaviour voluntarily. In addition, cooperation is motivated by the desire to achieve both individual and joint objectives. Cooperation is necessary in order to collectively pursue independent and mutual goals, because partners may have the skills and knowledge that the others need in order to accomplish their goals and vice versa (Mehta et al., 2006).
2.2.4 – Communication
Effective communication between partners is necessary to establish trust, commitment, and cooperation. Communication is influenced by culture and is, therefore, different across countries. Every country has its own ways of expressing oneself and its own communication patterns, that can be regarded as typical for a country (Nishimura, Nevgi & Tella, 2008). If an individual is to communicate effectively with someone from another culture, he must – if not understand the hidden codes in communication – at least have a code breaker (Mehta, 2006). Hall and Hall (1995) developed a framework for the translation of behaviour across cultures based on communication styles. He divided cultures into low and high-context cultures. This framework has been further discussed in Chapter 3.1.3. However, in a long-term relationship, once achieved a certain level of trust, firms are able to predict a partners’ behaviour and performance. Consequently, effective communication becomes less necessary as partners know what they can expect from each other and how they conduct business (Liu, 2012).
2.3 – National Culture
Culture is a broad construct on which researchers of different background developed various definitions and frameworks. Hofstede (2011) defines culture as ‘the collective programming of the mind that distinguishes the members of one group or category of people from others’. Hall and Hall (1995) state ‘culture is communication’. Ralston et al. (1993) describe culture as ‘those beliefs and values that are widely shared in a specific society at a particular point in time’. Whereas Schwartz (2006) views culture as ‘the rich complex of meanings, beliefs, practices, symbols, norms, and values prevalent among people in a society.’ Because of culture’s wide range of definitions, this thesis focuses only on the ideas of Hofstede and, Hall and Hall.
Culture is considered to influence all human activity (Pressey & Selassie, 2003). Conducting business is regarded as a human activity and is therefore influenced by culture. Nowadays, in our globalizing economy culture plays an important role, as more and more companies are collaborating across borders. It can be stated that not every country has the same culture. As a result, each party involved in a relationship has developed beliefs related to common frames of reference, norms, and symbols or other elements of their culture (MacNeil, 1980). These elements of culture determine the rules that govern how firms operate in society. Therefore, partners need to consider those cross-cultural differences in order to create the best business environment.
Cross-cultural differences may raise difficulties and challenges concerning how to communicate, interact, manage, and evaluate processes in the buyer-supplier relationships, because of the different mental maps and interpretive approaches of different nationalities (Liu, 2012). In conclusion, culture asymmetry may obstruct the development of an effective relationship. Therefore, it is crucial to understand the cultures you are conducting business with, this concept is known as cultural sensitivity. This understanding will be reflected in your success in the global market (Lohtia, Bello & Porter, 2009).
2.4 – Culture Sensitivity
There are several concepts that explain a country’s view with regard to other cultures, such as psychic distance, openness to other countries and cultural sensitivity. The latter one is discussed in this thesis because of its relevance to the problem statement. Cultural sensitivity is the awareness of a firm’s differences between the domestic and the foreign market business practices and its willingness to address and manage these differences (Lohtia, Bello & Porter, 2009). Hence, cultural sensitivity is essential in a cross-border buyer-supplier relationship. Cultural sensitivity is important to successfully manage cultural differences. Therefore, a firm must develop a deep understanding of the partner’s culture. Cultural sensitive partners are strongly appreciated by foreign partners. This will reduce the barrier to communication, and that will, in turn, increase the levels of trust between partners (Johnson et al., 1996).
2.5 – Conclusion
The foundation of a relationship is based upon trust, commitment, and cooperation. These three factors are facilitated by communication in order for a relationship to function successfully. Countries can be regarded as having either a low-context culture or a high-context culture, depending on their communication style. Moreover, a relationship is often affected by cultural differences. Therefore, cultural sensitivity is essential for the success of a cross-border buyer-supplier relationship.
Chapter 3 – Culture in Business
This chapter deals with the second research question: ‘What aspects of culture relate to a cross-border buyer-supplier relationship?’. National culture has been defined in the preceding chapter (Chapter 2), this chapter elaborates on the elements of culture that can affect a cross-border buyer-supplier relationship, including Hofstede’s typology of culture. Thereafter, the concept of cultural sensitivity is introduced and its influence on a cross-border buyer-supplier relationship.
3.1 – Elements of Culture
A society’s culture determines how its members communicate and interact with each other and how the international business environment of a country is structured. The following elements are fundamental for the formation of a culture. Since these elements are different across cultures, they carefully need to be taken into account when engaging in a cross-border buyer-supplier relationship. All these cultural elements result from the values and attitudes members in a society have. Values are standards accepted by all the members of a society and attitudes are the actions, feelings, and thoughts that result from those values (Hofstede, 1980).
3.1.1 – Social Structure
First of all, the social structure, which are all the social relations that affect behaviour and institutions (Granovetter, 2005). This concept is related to the institutional theory, in which institutions are defined as shared rules and typifications that identify categories of social actors and their appropriate activities or relationships. These institutions are created on the basis of a history of negotiations that lead to shared interpretations of behaviour (Barley & Tolbert, 1997).
The social structure of a culture can either be vertically structured, which indicates that the people in a country are ranked in a hierarchy. Vertical social networks are typically formal with clearly indicated boundaries. Or, it can also be horizontally structured. This underlines equality between group members. Horizontal social networks are characterised by informal social fields without permanent well-defined boundaries (Lomnitz, 1982).
In addition, cultures differ, for example, with regard to their social attitudes towards the importance they place on the individual relative to the group. In the U.S. individualism plays a central role, whereas in Japan serving the group is much more valued. Social structure also affects economic outcomes. People tend to rely rather on people they know than on people they do not know. Therefore, in a relationship in which people know each other, the flow and quality of information are better transferred, rewarding and punishing is more effective, and people are more likely to trust each other (Granovetter, 2005).
3.1.2 – Communication
Secondly, communication, whether verbally or nonverbally, is an important skill for international managers. A culture of communication refers to expected ways of communicating and of interpreting others’ communication in a cultural group. It is important to note that participants in a communication process do not only carry cultural behaviour and concepts into it, but also use their culture to interpret and assess other people’s words and actions (Harris & McNamara, 2002).
As noted in the preceding chapter (chapter 2), Hall and Hall (1995) developed a framework of context cultures. They defined two types of context cultures: low-context cultures and high-context cultures. This concept tries to explain how cultural context influences the communication between two different cultures. Context is defined as the information that surrounds an event, it is inextricably bound up with the meaning of that event (Nishimura, Nevgi & Tella, 2008).
On the one hand, low-context cultures can be characterized by communication between parties, in which the message is explicit and detailed. So, most of the information is contained in the message itself. On the other hand, high-context cultures’ communication can be defined as less explicit and detailed information carried in the message itself. Thus, the receiver has to understand the context of the message (Mehta, 2006). It is, therefore, crucial to understand what kind of culture you are working with in order to prevent miscommunications.
Consequently, cultural sensitivity competence is especially important in order to prevent misunderstandings which could result in accelerating conflict between partners and thus minimizing flows of information and learning (Lyles & Salk, 1996). However, the concept of conflict itself can also be experienced differently in cultures. For instance, in the American culture it can be viewed as an inevitable part of a relationship, which will eventually result in a better strategic decision, however, in the Japanese cultures an intense conflict or discussion are regarded as a loss of face (Parkhe, 1991).
Additionally, as mentioned before, in the communication process people do not only communicate by words, but also by body language (LaFrance & Mayo, 1978). Non-verbal communication includes facial expressions, hand gestures, intonation, eye contact, body positioning, and body posture. Members of a society quickly understand nonverbal forms of communication common to their society, whereas outsiders may find the nonverbal communication difficult to comprehend. The use of the head nod is a good example to illustrate how it varies across cultures. When listening to an American presentation a Japanese head nod only means continued attention whereas an American head nod means assent. So, disagreement at the end of the presentation would come as a surprise to an American businessman as he assumed that the Japanese businessman agreed throughout the whole presentation (LaFrance & Mayo, 1978).
3.1.3 – Language
A third element that needs to be considered is language. Worldwide it has been estimated that there are up to 7,000 different languages spoken. However, 90% of these languages are spoken by less than 100,000 people (BBC, 2016). As there are so many different languages and international business people must be able to communicate, English has emerged as a lingua franca. A lingua franca refers to the communication in English between people with different first languages (Seidlhofer, 2005).
Language also organizes the way people within a culture think about the world. This cultural accommodation proposes that individuals will respond in a manner that favours or accommodates the culture associated with the language of presentation. So, when bilingual people use their second language, they may develop a mind-set influenced by the values associated with the culture of that second language. Therefore, English as a lingua franca accommodates the mind-set of non-English companies to the English culture (Ralston et al., 1995).
This has been shown by a study of Harzing (2005). He found in his research that a language of a questionnaire influences the responses across countries. If the questionnaire was distributed in one common language (English), the responses were more homogenized than when the questionnaire was distributed in a country’s native language. Hence, in the English version the differences between the countries became less clear. As a result, management might incorrectly conclude that differences between countries are rather small or non-significant. And therefore, may mistakenly think that concepts developed in one part of the world, will also be effective across borders (Harzing, 2005).
Another study has shown that 57% of the interviewees stated that language acts as a barrier to communication (Marschan-Piekkari, Welch & Welch, 1999). People might develop a sense of frustration when they have no choice than to write and speak in a foreign language. Moreover, people who do not possess the language spoken within a company might feel excluded from the group in day-to-day conversations. In addition, language can increase the time needed for a specific task as individuals might need extra time to translate and rewrite text (Park, Dai Hwang & Harrison, 1996). However, an individual in the possession of relevant language skills often resulted in more power as he can gain access to sensitive information (Marschan-Piekkari, Welch & Welch, 1999).
Furthermore, language provides an important indication of the cultural values within a society. Some languages have informal and formal forms of the word ‘you,’ the use of which depends on the relationship between the speaker and the person addressed. This needs especially to be taken into account when dealing with businesspeople from countries in which this is applicable (Yum, 1988).
3.2 – Hofstede’s Four Dimensions
Next to these cultural elements, Geert Hofstede developed four dimensions by which a culture of a country can be categorized. These dimensions further clarify the characteristics of a country’s culture. Hofstede, a Dutch researcher, is the most influential researcher in the area of cultural differences and similarities. He performed a study on 116,000 people working for IBM in a lot of different countries and thus with many different cultures. Hofstede wanted to develop a commonly acceptable, well-defined, and empirically based terminology to describe cultures (Hofstede, 1983).
3.2.1 – Individualism versus Collectivism
The fundamental issue involved in this dimension is the relation between an individual and his or her fellow individuals. This dimension can be distinguished in Individualism and Collectivism. Individualism is when someone only is concerned about his or her own self-interest and about the interest of his or her immediate family. Collectivism is when the interest of the group takes precedence. This can be for example their extended family or their village. This means that everybody within the group is supposed to look after the opinions and the beliefs of their in-group.
3.2.2 – Large or Small Power Distance
This dimension is about the extent to which less powerful members of institutions and organizations within a country expect and accept that they are less powerful (Hofstede, 2005). It refers to the beliefs people in a culture hold about the appropriateness of power and authority differences in hierarchies such as business organizations. It depends on the society in which degree people are unequal to each other, as no society has ever reached complete equality. Large Power Distance means that people in a culture tend to accept the power of their superiors. On the contrary, Small Power Distance means that people see themselves more as equals, so tend to question mandates of superiors.
3.2.3 – Strong or Weak Uncertainty Avoidance
Central is the extent to which the members of a culture feel threatened by ambiguous or unknown situations (Hofstede, 2005). People have to live with uncertainty because the future is unknown and always will be. Weak Uncertainty Avoidance is a state of mind when you accept the things the way they are and try to make the best of it. They are relatively secure about their situation.
On the other hand, in a society with Strong Uncertainty Avoidance, people dislike ambiguity and therefore try to avoid it whenever possible. They live with anxiety, nervousness, and are emotional and aggressive. In these societies, institutions are established to create security and avoid risk.
3.2.4 – Masculinity versus Femininity
This dimension refers to the distribution of values and emotional roles between the sexes. Masculine societies value assertiveness and competition. Thus, there is a maximum emotional and social role differentiation between the genders, work is more important than family, and they have an admiration for the strong. On the contrary, in feminine societies people place a higher value on being modest and caring, have sympathy for the weak, and search for a balance between work and family. There is only a minimum emotional and social role differentiation between the sexes (Hofstede, 2011).
3.3 – Conclusion
For a cross-border buyer-supplier relationship to work effectively and efficiently, it is important to take into account the cultural differences between the home and the foreign country. Elements that serve as a foundation for a culture are: the social structure of a country, the communication style, and the language spoken. These elements all result from the values and attitudes members of a society have.
Additionally, a country’s culture can be further examined by Hofstede’s theory, which explains a country’s culture by four different dimensions: Individualism versus Collectivism, Power Distance, Uncertainty Avoidance, and Masculinity versus Femininity.
Chapter 4 – Comparison Between Japan and the U.S.
This chapter addresses the third research question ‘What are the actual cultural differences between Japan and the United States linked to their cross-border buyer-supplier relationship?’. First, a short introduction of Japan and the United States is given. Subsequently, the cultural elements of each country are discussed. Thereafter, the culture’s of Japan and the U.S. are further examined by Hofstede’s cultural dimensions.
4.1 – Japan
Japan is a country on its own as it is a compact insular country with clearly defined and virtually unchallenged boundaries. This resulted in the fact that Japan sustained in isolation until the end of the nineteenth century. This strongly contributed to the ‘national self-consciousness’ of the Japanese inhabitants (Caudill, 1973). Throughout history, Japan has been an ethnically and religiously homogeneous society with a feudal past of strong internal and nationalistic loyalty (Ralston et al., 1997). According to Nishimura, Nevgi and Tella (2008) Japan has the following cultural features: a lot of power of traditions, high commitment to complete action chains, reactive, listening culture, data-orientation, high-situational relevance, punctual, hierarchical, high respect for elders and collectivistic.
4.2 – United States
The United States is a very large country with multiple states. It is not realistic to say that every state is the same, but it is possible to have some general idea about the business culture in the U.S. It is commonly known that the U.S. is very individualistic and a Western culture with a capitalistic business environment that evolved out of the English legal and political systems. Moreover, the U.S. represent the height of technological development (Ralston et al., 1993).
Figure 1 shows the contrasting cultural concepts of Japan and the U.S (Hodgson et al., 2008).
Figure 1. Contrasting cultural concepts between the U.S. and Japan. Source: Hodgson, J. D., Sano, Y., & Graham, J. L. (2008).
4.3 – Elements of Culture
This section discusses the elements of the Japanese and the American culture that influence their cross-border buyer-supplier relationship.
4.3.1 – Social Structure
The first element is the social structure. The Japanese social structure is more vertically oriented. Social relationships in Japan are mainly based on ranking. This corresponds to the findings of Nishimura, Nevgi & Tella (2008), who state that Japan has a lot of power traditions, is hierarchical, and have high respect for elders. For Japanese individuals, it is most advantageous to remain in one group in which he started his career and move up step by step in the course of time. It is difficult to enter another group with already established vertical links between individuals because the individual must start again at the bottom (Nakane, 1970).
The American social structure is more horizontally oriented. People in the U.S. treat each other more like equals, whether the relationship is between parents and children or God and man. The horizontal relationships are basically give-and-take relations, in which both sides expect to satisfy each other (Huer, 2012).
4.3.2 – Communication
Communication is the second element of culture. It is related to the previously defined theory of communication (section 2.2.4) of Hall and Hall (1995). They made a distinction between low- and high-context cultures. Japan is regarded as a high-context culture (Appendix 3). This is in line with the cultural feature defined by Nishimura et al. (2008) of high-situational relevance. The United States is viewed as a low-context culture (Appendix 3) (Hall & Hall, 1995). This affects the way in how to communicate with each other.
This section looks deeper into the elements of culture that relate to a type of context culture. The U.S., a low-context culture, typically expresses clearly and directly what is meant. Hence, the U.S. is characterised by direct and linear communication, in which communication is direct, precise, dramatic, open, and based on feelings or true intentions (Nishimura, Nevgi & Tella, 2008). This can be linked to Hofstede’s dimensions of Individualism and Collectivism, as low-context cultures value Individualism over Collectivism, which is true for the U.S.
Japan, a high-context culture, culture plays a more significant role. This is because the real message is not transmitted in the message itself, but has to be determined based upon the context of the message. The receiver has to read ‘between the lines’ to understand the message. The communication style is influenced by the closeness of human relationships, the well-structured social hierarchy, and the strong behavioural norms. In the process of establishing these close relationships and on the basis of Japan’s high-context culture, Japanese businesspeople gather a lot of information about their partners to create a good relationship, which explains the cultural feature of data-orientation (Nishimura, Nevgi & Tella, 2008).
An example to illustrate their communication style is that during meetings people tend to speak one after another with hardly any interruptions. This shows that Japan is a listening culture (Nishimura, Nevgi & Tella, 2008). In addition, asking questions is regarded as impolite, whereas in the U.S. the opposite is true. Typically, communication in high-context cultures is indirect, ambiguous, harmonious, reserved and understated. There is a greater emphasis on the nonverbal aspects of communication than the verbal aspects (Nishimura, Nevgi & Tella, 2008).
An example for this linked to Japan and the U.S. is the use of the words ‘yes’ and ‘no’. In contract negotiations, Japanese businesspeople often use ‘yes’ to say that they understand it, however, their American counterparts assume by ‘yes’ that they agree with the contract. The same is with the use of the word ‘no’. Japanese businesspeople consider saying directly ‘no’ as impolite, therefore, they try to say it in an indirect way through for example saying that they need to look further into it. This can be regarded by the U.S. business culture as evasive (Cortazzi& Jin, 1997).
4.3.3 – Language
Thirdly, language plays an important role in a relationship. The first thing that needs to be taken into account is that the languages of Japan and the United States are totally different from each other. This language barrier limits the opportunities for easy communication. Also, the language of communication will probably be English since English is a lingua franca and the Japanese language is more difficult to master. This could work as a disadvantage for the Japanese businesspeople, because of the process of cultural accommodation. Consequently, they might not express themselves the same as they would in their native language (Ralston et al., 1995).
Moreover, not only the language itself but also the use of words by addressing people from different hierarchical levels is very distinctive. For example, in English the pronoun ‘you’ is used to refer to young or old people, to the president or to your neighbour. Whereas in Japan, there are different words of ‘you’ depending on the level of politeness and the relationship. Also, only a small distinction can be made in English by saying ‘Hi’ or ‘Good morning’ to someone. In Japan, there are 210 different word forms for addressing people (Yum, 1988).
4.4 – Hofstede’s Four Dimensions Applied to Japan and the US
In the preceding text, there have been already some examples on how Japanese and American cultures conduct business. This section further examines the important elements of the two business cultures by applying Hofstede’s theory.
The following results of Japan and the U.S. on the four dimensions suggest large differences between the two cultures (Appendix 1):
Japan
United States
Mean countries
Individualism
46
91
51
Power Distance
54
40
51
Uncertainty Avoidance
92
46
64
Masculinity
95
62
51
Table 1
4.4.1 – Individualism versus Collectivism
The U.S. culture is very Individualistic, whereas the Japanese culture tends to be more Collectivistic. People in the U.S. place a high importance on personal performance, everyone is only concerned about themselves and their immediate family. This is reflected in their business culture, as workers strongly believe that they should be compensated according to their individual achievements. Thus, if they believe that their compensation is too low, they will easily switch to another company where they can receive a higher compensation. This suggests that the level of job mobility in the U.S. is relatively high. Job mobility is the degree to which employees switch to other employers, or the number of job shifts within the same organization (Yu, 2010).
On the contrary, Japanese people place the interest of the collective over those of the self. Moreover, they have a strong reactive behaviour, since they do not like to take the initiative but rather follow the group’s decision (Nishimura, Nevgi & Tella, 2008). Performance is therefore related to the group instead of individual performance. Their compensation is, as a consequence, differently structured than in the U.S. Employees’ compensation in Japan is related to the group the person belongs to. So, all the workers that joined a company at the same time will receive the same compensation regardless of their individual talents, insights or efforts. Moreover, compensation solely relates to the length of service and not to the work performance, known as the construct of seniority wages (Gordon, 1981). In addition to this, workers in Japan have long-term contracts with firms, known as the lifetime employment system. This implies that the job mobility in Japan is relatively low, as this is regarded as disloyalty in their culture. Although, because of economic stress in the 1990s this norm is changing (Yu, 2010). Yu (2010) showed in his research that part-time and temporary employment have increased (Appendix 2). He also found a decrease in men’s loyalty to their firms which can serve as evidence for the change in the Japanese employment system.
4.4.2 – Power Distance
The score on this dimension reflects the smallest difference between the two countries. Japan scores a little higher on Power Distance than the U.S. This indicates that the Japanese are more power respecting than the Americans are.
This dimension corresponds to the earlier found characteristics of the social structure of the two countries; the higher Power Distance is linked to the vertical orientation of the Japanese social structure and the lower Power Distance is related to the horizontal orientation of the American social structure.
Moreover, the American business culture can be characterized as informal. It is common to address other people by their first name (Hall & Hall, 1995). Business people in Japan would interpret this as insulting, because they have a more hierarchical society, in which there is a strong distinction made between workers. Additionally, at a first meeting, Japanese business people immediately exchange business cards with each other in order to know how to address the other. So this dimension is strongly related to the cultural element of communication, as the Power Distance between workers determines the way how to communicate with each other.
4.4.3 – Uncertainty Avoidance
There is a significant difference with regard to Uncertainty Avoidance. The U.S. is more risk seeking, their idea is ‘nothing ventured, nothing gained’. Workers have a willingness to take some risk as a challenge for new opportunities (Hofstede, 1983). They regard certainty as a routine, without challenges.
Japan scores really high on this dimension. Workers in Japan strongly prefer uncertainty avoidance over uncertainty accepting. This explains their lifetime employment practices as well as their seniority-based wages. This gives employers certainty about their work environment. It is related to their cultural norm of maintaining harmony and being loyal (Sternquist, et al. 2002). In addition, in Japan, trust is regarded as a solution for uncertainty. Therefore, they choose to create long-term relationships in order to achieve the best outcome and avoid uncertainty (Runyan et al., 2009). As a consequence, Japanese firms spend a lot of time getting to know their partners in order to establish these long-term relationships (Lohtia, Bello & Porter, 2009).
4.4.4 – Masculinity
Japan scores the highest of all participating countries on this dimension and is thus very Masculine. The U.S. has a score slightly above average. In this respect, in Japan, the traditional distinctions between the genders are strongly maintained compared to the division in the U.S. This can clearly be demonstrated by statistics. In 2015 the U.S. counted 42,7 percent female managers, in Japan, this percentage was only 11,1 percent (Expert Market, 2015).
4.5 – Conclusion
Japan and the U.S. are two totally different countries. The countries have different values with regard to the cultural elements and they score differently on all the four dimensions of Hofstede. Japan is more Collectivistic, whereas the U.S. is more Individualistic. Typical features of Japan are a relatively high Power Distance, high Uncertainty Avoidance, and a very Masculine society. The U.S. scores lower on all those dimensions, namely relatively low on Power Distance, low on Uncertainty avoidance, and they are a more Feminine society.
This divergence between them needs to be taken into account while engaging in a relationship in the two countries.