Cultural and Structural Impediments Affecting Localization of Management in Japanese Overseas Subsidiaries

Abstract

Perhaps the greatest challenge that Japanese companies face in their expansion abroad is how to deal with the cross-cultural environment of the foreign subsidiary. As the number of Japanese foreign subsidiaries increase, it is becoming increasingly important for Japanese organizations to effectively utilize the talents of non-Japanese employees. This paper uses original data to demonstrate that Japanese organizations experience great difficulties in integrating host country nationals (HCN) into the management process of their foreign subsidiaries. Quantitative and qualitative data was gathered from Japanese subsidiaries in Australia, Malaysia, Singapore and Thailand. A model, developed from statistical analysis of the quantitative data gathered, illustrates that difficulties experienced in communication and dealing with cultural differences lead to international human resource policies that impede the integration of HCN managers. This paper discusses the particular attitudes and cultural traits of Japanese individuals, organizations and society that appear to be inhibiting effective cross-cultural human resource management. The consequences of the lack of HCN integration are examined and remedies are suggested.