Challenges Facing Globally-Minded Leaders in a Japanese-European Joint Venture Company

This present study examines a Japanese-European 50% joint venture company operating in a northern European country. It seeks to identify the particular difficulties facing Japanese expatriates by means of a focus group based on particular research questions. All comments made by the focus group were transcribed and analysed using the Modified Grounded Theory Approach (Kinoshita 2003).

Although the company chosen for the study is a 50% joint venture between a Japanese and a European manufacturer, in terms of corporate structure, the selected company is a subsidiary of the European parent company. The resulting joint venture company (which will be called Company A) is involved in all of the parent company’s functions including product design, product development, procurement, sales, and after-care. The main reason the Japanese company invested in and established Company A was to bring its own technology, expertise, and way of doing business into Company A. The Japanese parent company will hereafter be called Company J and the European parent company will be called Company E.

Since Company A operates in Europe, there are only 18 Japanese expatriates in a total of 900 employees, accounting for only 2% of the workforce. With regard to their system of reporting to the Japanese headquarters (Company J), there are two types of monthly reports: an official monthly report in English, which is reported to both companies (Company E and Company J), and an informal report communicated in Japanese to the Headquarters of Company J.

In northern Europe, there exists a recognized set of values regarding interpersonal interaction that is widely shared and is sometimes called The Law of Jante. That ‘law’ may be characterized as “a pattern of group behaviour towards individuals within Scandinavian communities that negatively portrays and criticizes individual success and achievement as unworthy and inappropriate.” The behavioral tendency consists of ten rules, including “You’re not to think you are anything special” or “You’re not to think you are more important than we are.” In this sense, the country can be regarded as sharing some common values with (the relatively high degree of) Japanese collectivism (Hofstede 1991). In fact, participants in the study discussed below talked about such similarities in values as well as the cultural differences (both will be examined in detail in the following section).

In order to identify the skill set needed for globally-minded Japanese leaders, the following four research questions were formed for the present study.

Research Question 1: Are there difficulties in communication between Japanese expatriates and local staff members? If so, what kind of difficulties?

Research Question 2: Are there cultural differences and similarities between Japanese expatriates and local staff members which potentially influence their business?

Research Question 3: What are the abilities and skills needed for globally-minded leaders?

Research Question 4: What should Japanese university education provide in order to foster the development of such globally- minded leaders?

Four participants were involved in the study: a financial controller, a business development manager, and two engineers. All were Japanese male expatriates in their forties and fifties. In addition, a Japanese associate professor working for a local university, who introduced the participants to the researcher, joined the focus group. However, his comments were rather occasional and excluded from the following analysis.

Research by means of a focus group has been regarded as a representative method for qualitative analysis in business research. The basic conditions, advantages, and disadvantages of a focus group are summarized in Morgan (1997) and Eriksson & Kovalainen (2008). In general terms, a focus group provides better insights when conducted with a group that is relatively homogeneous in terms of age, gender, or nationality, because each participant’s opinion can be more easily shared and developed among the group. From a practical point of view, the ideal number of participants is typically described as being somewhere between four and nine. If the group exceeds ten participants, there are likely to be some participants who do not find it easy to contribute.

As regards to advantages, a focus group is typically regarded as being effective for collecting a comparatively large amount of information in a limited time frame, because topics presented by a participant are likely to be developed through interaction. In such circumstances, expanded or further developed comments by other participants can provide unexpected and interesting insights. On the other hand, disadvantages associated with the method include the possibility that a few participants dominate the floor, and consequently some participants may not speak up sufficiently.

In this study, the participants in the focus group have similar backgrounds in that they received a high level of education in Japan, did not have extensive overseas experiences before joining this particular company, and have all worked in the same European company. Therefore, the focus group was chosen as a suitable means for data collection.

The focus group interview was conducted in November, 2015 and lasted 2 hours 27 minutes, with an intermission. As is often the case in a focus group, the author assumed the role of facilitator and asked questions based on the research questions explained above, that is, questions related to communicative problems, cultural differences and similarities that influence their business, the skill set needed for globally-minded leaders, and educational suggestions for Japanese universities. The participants were encouraged to talk freely about the topic, and the session was conducted in Japanese in order to ensure more active discussion.

All comments made during the session were transcribed and analyzed using the Modified Grounded Theory Approach (MGTA), an approach for qualitative analysis developed by Kinoshita (2003), based on the Grounded Theory Approach (GTA) pioneered by Glaser and Strauss (1967). All of the basic notions involved in the modified version are shared with GTA, including the following points.

The major difference between the original and modified versions lies in the introduction of worksheets. M-GTA introduced worksheets for clearer and simpler analysis, instead of fragmenting the data as conducted in the GTA. Each worksheet deals with a particular concept, consisting of (1) the name of the concept, (2) the definition of that concept, (3) variations related to it (as expressed in actual comments), and (4) theoretical memos. First of all, the concept should be named carefully in order to provide a general idea of the concept at first glance. Then, the definition of the concept (2 above) should be carefully constructed so that the analysis related to it will not be blurred. Then, the actual comments expressed in the focus group should be sorted as they are linked to each worksheet, which represents one concept. Lastly, points noted should be written in the column of the theoretical memo (4 above) for further reference.

In the first stage, Open Coding, basic concepts are formed based on actual comments. In other words, in this stage, all comments are sorted into groups, each of which forms one ‘worksheet,’ that is, one concept. While sorting the data the researcher reaches a point of saturation or point of not being able to sort any further; this points is called “theoretical saturation” and signals the end of the analysis. Kinoshita (2003) suggests that the number of resulting concepts is likely to be about ten. In this study, the following nine concepts were formed; they are summarized in Table 1 for ease of identification, with further details presented later.

Actual comments (variations) for each concepts are presented in Table 2, although only two or three are given by way of illustration because of space limitations. The comments were translated by the author from Japanese into English. For comments that may be somewhat difficult to understand without the relevant context, the author has added brackets. ‘Here’ in the comments refers to the situation in the given country.

In the next stage of the research process, the Selective Coding stage, the concepts formulated during the open coding stage are categorized into larger, consolidated groups, connecting closely related concepts together. In this study, the author categorized them into three larger groups: language and power (language level), cultural awareness (cultural level), and business and economic factors (economic level). Each group can be seen as consisting of two axes: factors influencing business and challenges related to more successful communication (Figure 1).

Figure 1. Categorization of the nine concepts.

Download Original Figure

Figure 1 indicates the problems globally-minded Japanese leaders need to consider simultaneously at three levels: language, culture, and economy. In general terms, problems at the economic level are beyond the ability to change for any individual or corporation, though some countermeasures could be taken at the national level. On the other hand, problems at the language and cultural levels could be resolved to some extent through individual efforts.

In this study, both linguistic and cultural problems were confirmed by the focus group, as presented in the previous section. Here, an important topic mentioned by all the participants will be highlighted: that is, language and power.

The point was made on more than one occasion that the ability to speak up in a meeting significantly shapes the power relationships in play, because in this European country, many agenda items are immediately decided during the meeting, unlike in Japan, where decision-making requires a great deal of time, as it often includes Ringi (a typical Japanese procedure in which a written document is circulated among managers to receive approval from each manager). Therefore, the ability to speak up in a meeting can directly influence decision-making, and it consequently contributes to determining one’s relative positioning— rather than formal position—in an organization.

This finding supports a finding of the study by Tanaka (2008), and it is likely that this tendency can be observed clearly in Company A because it operates in Europe as a joint venture. In this case, neither the mother tongue of Company E’s employees nor Company J’s is English. They all have equal standing in being non-native speakers and employees of the same joint venture company, but with varying degrees of English ability, such that the varying English ability might directly influence one’s possible turn-taking. In further research, it would be interesting to compare the results of the present study with the different cases of different organizations or different locations, for example, the case of a Japanese subsidiary operating overseas, in which Japanese expatriates would be typically likely to exercise more power (e.g., Fujio, 2016).

The present research suggests that communication problems are not limited to internal communication in English, however. One of the participants in the focus group commented that sometimes the local language is used in meetings because all the other participants in his department are local people. A similar finding can be found in Harzing and Feely (2008), where it is described in the following way:

The complex conventions governing interaction outlined here imply another obstacle facing Japanese expatriates, that is, possessing a good command of the local language in order to understand the local employees.

In addition, some participants in the focus group reported that staff at the Japanese Headquarters do not necessarily understand what has been going on in the local office or local culture, including how the decision-making takes place (Table 2). As a result, reporting the current situation to headquarters can become another significant issue for Japanese staff working overseas. The difficulty appears to be a long-standing and possibly deep-seated challenge, since a very similar problem was reported by Yoshihara as far back as 1996, yet remains a major challenge for the future in Japanese corporations.

All participants mentioned cultural differences in the way of decision-making and in working style (Table 2). They observed that each employee has greater decision-making authority and the budget to implement decisions in Company A, as compared to Company J. Although such an arrangement speeds up business, it causes another problem that each employee tends to work on his/her own job but is less likely to grasp the overall, bigger picture, including the progress being made by other individuals. As shown in Table 2, since the Japanese Headquarters wishes to understand everything happening in the local office, such information and reporting gaps sometimes trouble Japanese expatriates, who are not necessarily informed of other employees’ progress.

With regard to cultural factors, comments by all participants were made not only about differences but also about cultural similarities. Such comments reflect the tendency described above as the Law of Jante. This might imply that in an intercultural business arena, we may pay more attention to cultural similarities, which establish rapport with the interlocutor, rather than being attentive to cultural differences, which focus on differences or discrepancies between parties.

The last two research questions are discussed together because the answers to overlap on many points: What are the abilities and skills needed for globally-minded leaders and what should Japanese university education provide in order to foster the development of such globally-minded leaders. Among the concepts listed in Table 1, both “Education to encourage speaking up” and “Training to enhance intercultural competence” are concerned with these questions. In particular, specific comments such as “In order to foster globally-minded leaders, speaking English and how to express one’s opinions should be taught at an early stage” and “Both Japan and this country are homogeneous societies and cannot accept diversity” indicate that informants in the focus group have paid particular attention to intercultural communicative competence or intercultural competency (e.g. Byram 1997, Spencer-Oatey & Stadler 2009).

Among various models of intercultural competency, that of Spencer-Oatey and Stadler (2009) will be especially helpful for those working in an international arena, in that they include a relational aspect (rapport building) as well as a strategic aspect (communication management) in their model (which consists of “knowledge”, “communication”, “relationships” and “personal qualities and dispositions”). Communication management in this model includes not only language adjustment attuned to the interlocutor’s language ability but also the choice of communication mode (such as e-mail or face-to-face communication) and the establishment of a suitable communication network (including the appropriate choice of the person to speak to).

In the present study, the importance of communication management is reaffirmed in the context of difficulties in speaking up or taking turns smoothly and in a timely manner in meetings. This indicates that the relatively lower language ability of Japanese businesspeople and their hesitation to take turns are likely to make them less strategic speakers in English communication, an observation that supports Fujio’s proposal (2012) that English education in Japan should incorporate practical work on how to manage conversation, including turn-taking, rather than just focusing on language accuracy.

In these and other ways, the results of this study confirm that the challenges facing globally-minded Japanese leaders will need to be resolved at all three of the levels distinguished in this and earlier related studies: individual, corporate, and national (cf. Adachi 2000, Norisada 2005). In this study in particular, comments concerned with the world standard or reduced presence of Japan in the global business environment suggest that we should be more strategic in seeking to regain power in the world economy in ways likely to influence the success of individual Japanese managers working overseas.