Japanese companies tend to place a greater emphasis on hierarchy and position compared to their Western counterparts, which also impacts decision-making within the organization. Japanese firms often have extremely well-defined chains of command that correspond to an employee’s title, which is useful for maintaining order and achieving long-term goals for the organization. An employee’s position in this hierarchy often correlates with their age and experience, with those in positions of authority also holding greater responsibility for their subordinates within the organization.
However, these rigid hierarchies can stifle innovation, since lower-ranking employees will find it much harder to challenge decisions made by their superiors. In turn, Japanese companies with traditional hierarchies often struggle with change and adaptability, preferring to stick with tried and tested methods rather than flexible decision-making that may be more suited to fast-paced industries. Younger employees may also find it difficult to stay motivated at the workplace, since there are not many opportunities for promotion based on merit.
Traditional Japanese company hierarchies also have a strong influence on the decision-making process. Oftentimes, decisions are made from the bottom-up and require multiple rounds of deliberation before being approved as opposed to the generally unilateral decisions made top-down in Western companies. For example, the use of ringi, which refers to company documents circulated internally that detail a proposal, involved parties, and potential benefits, is based in part on these hierarchical relationships. The emphasis on cooperative teamwork in Japanese corporations also means that no single person is able to push through a single decision. Since many decisions involve the consensus of various teams and departments, decision-making in Japanese companies tends to take a considerable amount of time before action can be taken. This can hinder the company’s responsiveness to rapidly shifting market conditions.
Western companies, in contrast, generally have a flatter chain of command compared to Japanese ones, resulting in fewer management levels and layers between top management and lower-ranking employees. This often results in more direct communication between managers and employees, allowing information to flow freely between different levels of management in a more casual manner. As a result, Western companies tend to show greater flexibility and adaptability, responding quickly and dynamically to market shifts, emerging trends, and customer needs. However, a less formalized organization can also be the source of interpersonal conflicts and power struggles that can pose risks to the company’s development.
Western decision-making processes in the business world also reflect this flexible and flat organizational structure. Lower-ranking employees are often equally as involved in decision-making as their superiors are and are encouraged to contribute their ideas, improving innovation and flexibility within the organization. However, since those with key roles in the company are able to make unilateral decisions, this organizational structure also runs the risk of inviting bias and a lack of diverse perspectives in crucial choices.
The differences in these decision-making styles is present outside of business contexts as well, with one prominent example being COVID-19 vaccine rollout in Japan and the United States. Japan struggled with gaining regulatory approval for rolling out the COVID-19 vaccine in early 2021, with only 4% of the total population having received at least one dose of the vaccine in May 2021 compared to 43% in the United States (Kosaka et al. 2021). While the Pfizer vaccine was approved for use in February, it took several months for other vaccines to pass regulatory requirements, drawing criticism for the slow process and inefficiency. However, as soon as approval was granted, the total vaccination rate skyrocketed, with 70% of the country receiving their first dose within 5 months (Statistica 2023). In contrast, although vaccination rollout was approved quickly and began in late December of 2020 in the United States, by October 2021 only around 65% of the population had received their first dose. While the Japanese decision-making process evidently took longer for vaccinations to be approved, the rollout was more efficient and smooth than in many other countries due to these traits.
Sources
Kosaka, M. et al. (2021, June 2). “Delayed COVID-19 vaccine roll-out in Japan”. National Library of
Medicine. https://www.ncbi.nlm.nih.gov/pmc/articles/PMC8172150/
Statistica Research Department. (2023, March 1). “Coronavirus disease (COVID-19) vaccination rate in
Japan as of February 27, 2023”. Statistica.
https://www.statista.com/statistics/1239927/japan-covid-19-vaccination-rate/