A Cultural Decide: Differences in decision making between Japan and the United States
Globalization created an expanded sphere of commerce in which success is influenced by how business leaders think and act. A leader’s global perspective establishes its foundation from cultural values in relation to achievement, affiliation, power and information. Is that any different for credit union leaders around the world? In a global setting, leaders utilize specific assumptions or inputs through the decision-making process to reach viable solutions. Regardless of the specific leadership style, decisions are still based on inputs that are culturally derived, data driven, and resource dependent (Ballantyne, 2011).
A country’s orientation influences the level of thinking in which decisions are made. The deep roots of the culture’s norms, traditions, rituals and stories imprint specific generational preferences that impact organizational values and the decision-making process of leaders and followers. While some decision-making processes include collaboration, others rely on an authoritarian approach. For American businesses, Park and Datnow (2009) suggested the concept of distributed leadership occurred for organizations when decision making was handled at the level closest to operations. Through this process an open atmosphere for the exchange of ideas and an aura of experimentation flourished when the leader tapped into organizational intelligence, utilized the dynamics of top-down, bottom up and lateral positioning of power, and recognized cultural norms, traditions and preferences within the team. Rowe and Boulgarides (1983) declared the decision-making process dependent on context, perception, cues, nuances, decision-maker values, and cultural distinction. This definition expanded to a wider audience of business leaders from all over the world. In other words, leaders in different countries approached the process of making decisions by allowing the culture to decide.
To further the discovery of decision making between business leaders of different countries, Japan and the United States are compared to four decision-making models: a) rational, b) emotional, c) political/coalitional, and d) garbage can. A quick review of the Japanese and United States cultures and their respective behaviors provide the backdrop for understanding decision making in these two dissimilar countries. From this insight, credit union professionals can draw inference and conclusion to better understand even how cultural tensions, traditions, norms, and rituals might affect decision making from one area of a state to another. Bringing this information down to a micro level is achieved by first understanding it from a macro perspective.
Overview of Japanese Culture
Although the feudal period in Japan’s history is long gone, the impact of the country’s way of life at that time contributes to how Japanese workers think and act today and it gives insight to the way business leaders make decisions in that country. For instance, from 1185 to 1868, a large Japanese population lived in rice farming villages. Through economies of scale, this activity, when done together, bonded entire communities. Villages pooled labor and worked the fields as a group. This collective activity, working as one, created an imprint on the outcome of decisions that both past and current Japanese leaders make (Kopp, 2012). In these communities, it was common for the senior-most members of the village to render decisions.
These cultural preferences for collective behavior and respect for elders affects how Japanese business leaders approached decisions from the mindset of affiliation and personal power, respectively. These leaders tended to favor outcomes that preserved established relationships or ones that would grow new ones. However, the need for affiliation limits management’s ability to respond competitively through a change in social structure of a business network (Martinsons & Davidson, 2007). The impact of the feudal system and its specific cultural nuances created an imprint on Japanese business leaders even though the system has been absent from influence for almost 150-years.
Overview of the United States Culture
Traditionally, American business leaders decision-making style reflected a strong need for individual achievement and recognition. Decision makers such as Henry Ford, Jack Welch, Lee Iacocca, Bill Gates, and Donald Trump are representative of this individualistic tendency responding to personal challenges or creating solutions that recognized them for their individual efforts. Henry Ford revolutionized the automotive industry and offered the American public the option to have any color car as long as it was black. Jack Welch, in his early years at General Electric, espoused a management philosophy of worker differentiation based on merit. Employees were categorized as the top 20%, middle 70%, and bottom 10% (Welch & Welch, 2005). Both Ford and Welch’s examples characterized an individualistic approach to decision making and reinforced a set of leadership values based on personal achievement and recognition.
American leaders analyzed situations or conceptualized solutions, which encouraged a structured and formalized decision-making process (Martinsons & Davidson, (2007). According to Hofstede (1984) individualist cultures, like the United States, tended to focus actions and solutions based on personal interests and were less likely to make decisions based on group norms. House, Hanges, Javidan, Dorfman, and Gupta (2004) categorized the United States as having a high performance orientation driving competitiveness, and results-oriented decisions. The low in-group collectivism rating for the United States affected decision-making resulting in less attachment to family or similar groups than in other countries.
Decision-Making Models
Today’s business leaders face complex issues influenced to a large degree by cultural preferences, social behaviors, differential power of participants, and group affiliations. To limit the scope of this report, only four decision-making models were selected to compare and contrast its strengths and weaknesses within two dissimilar cultures, Japan and the United States.
Rational
With this model there is only one paramount goal and that members of the organization, individually and collectively strive to achieve that goal. The premise works assuming that all decision makers: a) have unlimited information, b) posses cognitive ability to use it efficiently, c) know all opportunities and consequences, and d) believe the optimal course of action can be revealed logically, and this choice over time will be more profitable than any other choice or course of action (Beach & Connolly, 2005).
Emotional
According to Beach and Connelly (2005) the emotional decision-making process is driven by the spectrum of feelings associated with the situation. The premise of this model includes: a) mood, b) regrets and disappointments in shaping choice, c) sunk costs, d) endowment of the status quo, e) overconfidence, and f) feelings of risk.
Political/Coalitional
The three elements of this model include: a) formation of groups, b) power relations, and c) socializing and garnering support (Mummalaneni, 1984). Rubin and Brown (1975) suggested that members lacking confidence or limited resources band with others to form coalitions impacting decision making. These various interest groups, subunits, and subcultures form the model’s pluralistic view. It is the interdependence of these departments or subcultures that created the potential for coalitions to form (Pfieffer, 1981). Understanding organizational politics begins through the analysis of power relations (Bacharach & Lawler, 1980). As business leaders jockey to leverage power relations, socialization begins the process of influencing other’s opinions and values with the intent to garner support in the decision-making process.
Garbage Can
This term originally proposed by Cohen, March, and Olgen (1972) describes organizations as anarchies with unclear and inconsistent goals. Organizations characterized by this model use outdated technologies not suited for the task, nor understood by organizational members, and business decisions are made by leaders who are inconsistent participants. Beach and Connelly (2005) built this model’s premise to include: a) organizations are collection of problems, solutions, participants and opportunities all of which must be linked to problems and solutions, b) elements are theoretically mixed in a garbage can causing solutions to appear prior to problems, and c) combination of elements are seen as intrinsically unpredictable.
Decision-making in Japan
As a collectivist society, Japanese business leaders approach decision making from a semi-rational and full-emotional perspective. Business leaders work collectively achieving a common goal that utilizes a formalized and structured approach. This aspect alone precludes leaders from giving the garbage can model any consideration or attention. One might conclude that this rigid process and absence of the garbage can model may limit the decision-making process, instead of encouraging flexibility and spontaneity. On the contrary, Japanese management reaches a conclusion of viable solutions and options through a high propensity for building relationships. Their sensitivity toward group overshadows any thought, which might consider offering a compromise during a single meeting. This contextual understanding of how these global leaders think, rules out the option for a true classical negotiation process. Consequently, due to the cultural preference of this society, Japan employs a collaborative approach to decision making with the end result of management thinking and acting as one.
Japanese leaders vet solutions to problems collaboratively over several meetings. When these leaders re-convene, it is not to negotiate or brainstorm new ideas. It is to formalize decisions already made (Lewis, 2010). Although this deliberate process appears quite lengthy, once a decision is reached, the other party is expected to implement the solution as quickly as possible. The country’s previous 700-year rice farming activity combined with a cultural preference to exhibit an intense desire to satisfy group norms, and gain group consensus explains the process for how and why Japanese leaders reach conclusions using some form of the emotional decision-making model.
Decision making in the United States
American business leaders primarily approach decision making through the construct of the rational decision-making approach. Because of the strong cultural preference toward individualism, there exists a substantive amount of reputation risk at stake for the decisions these leaders make. Leaders making decisions to benefit organizational profitability provide for recognition and acceptance through shareholder appeal. Hofstede’s (1984) work connected the understanding of this approach with the cultural values of American leadership.
The weakness of the rational approach is the exclusion of information that might be obtained using a collaborative or consultative leadership style approach. Again, pointing back to the premise of this model, it operates under the assumption the leader has unlimited information, possesses the cognitive ability to make rational and logical choices, and knows all the possible solutions from which to choose. This is a key weakness for this model in the United States because it limits creative thinking and lacks a robust and varied array of options and solutions for decision making.
From the American perspective of the political/coalitional model, there exists a push-pull effect as it relates to the decision-making process. Pascale (1978) contended that American leaders were conscious of authority and would demarcate zones of authority just to maintain independence. To accomplish these zones of authority, the formation of coalitions provided needed protection from factions that might disrupt independence. An example of the dichotomy existing within this model comes to life through the historical account of conflicts between labor unions and management in the United States. Through the phenomenon of cultural preference, management represented an individualistic stance and labor unions were formed from a collectivistic ideal to benefit a group of workers. The opposite result of decision making occurred when business leadership styles focused entirely on an authoritarian perspective. One might assume that this attention to control would produce positive results. However, it is chaotic logic or garbage can thinking that becomes visible when these authoritarian leaders make decisions through a myopic lens.
Conclusion
The quantitative and empirical studies characterized Japanese and American business leaders as representatives of two dissimilar cultures with respect to their approach of decision making (Pascale, 1978). While the Japanese emphasized interdependence, American leaders tended to be more myopic and individualistic. Japanese management approached a connection with the emotional model through their strong consultative approach working harmoniously with groups. American leadership as Pascale (1978) pointed out would circumvent authority to maintain independence. It is plausible to argue that American leaders have used the political/coalitional model for the purposes of manipulation and control. This may be contrary to how one might perceive Japanese leaders to think and act. Regardless of the similarities and differences of each country’s influence on its leaders, one tenet remained. When all was said and done, leaders made decisions influenced by cultural preferences. In other words, they let the culture decide.
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