A cultural comparison of business practices in Thailand and Japan with implications for Malaysia

Abstract

This paper compares some business practices in Thailand and Japan using a cultural model. The focus is to assess the validity of using a ‘western’ model in the context of a changing south-east Asia and Japan, and the contextual global implications for change. The model considered was developed by Hofstede in his famous cultural dimensions theory. The model concentrates on five cultural dimensions across over 100 countries of the world. This paper’s aim is to identify and interpret features of the cultures of Thailand and Japan when juxtaposed with what is obtainable in the Western World and draw conclusion on its implications for Malaysia. The relevance of a western model in two very distinctive ethnic contexts was X-rayed and the most suitable for these Nations were discussed. Hofstedt’s five cultural dimensions are: power distance, individualism and collectivism, masculinity and femininity, uncertainty avoidance, and short- and long-term orientation. The two most suitable for developing Countries like Japan and Thailand are: power distance and uncertainty avoidance. After analyzing these two cultural dimensions, it is argued that a western interpretation takes insufficient account of the different ethnic and social contexts in plural and homogenous societies. The hegemonic western perspective may thus be challenged when comparing non-western cultures. Similarities and dissimilarities for the cultures of Thailand and Japan were inferred and discussed. A preliminary assessment is undertaken of the implications of the paper for globalizing the engineering profession and business in Thailand, Japan, and Malaysia.

Keywords:

• Thailand culture
• Japanese culture
• Business model
• implication for Malaysia

Public Interest Statement

The interdependency nature of globalized business world as demonstrated by cross border transactions and international business deals necessitated proper understanding of cultural affinity to avert setbacks suffered, due to little consideration for cultural differences of the countries involved. This paper aimed to compare three distinct Asian cultures of Japan, Thailand and Malaysia with the view to understand their similarities and differences based on popular Hostede cultural dimensions model. The arguments were limited to the original five dimensions with greater emphasis on power distance (PD) and uncertainty avoidance (UA). This study’s focus is to assess the chain of command from top managers to subordinate staff and properly understand the degree of avoiding ambiguous situations. In short, this paper is aimed at revealing the advantages of understanding a business partner cultural strength and weakness needed for smooth international transactions.

1. The cultural context: A personal perspective

In an attempt at exploring the labyrinth of Thai and Japanese cultures, the author leverages on his personal cross-cultural experiences of the two countries as they evolve through development stages. The approach stems from the notion that problems are better confronted when the origin and culture are understood, this vintage position foster objective and brighter perspectives for these two countries. These problems are multidimensional, ranging from political, economic, legal, and technological environments. However, the complexity and intricacies inherent in the mesh mechanisms of cross-cultural ambience of differing countries are difficult to comprehend from non-cultural perspectives. Therefore, insightful, cultural enculturation metamorphoses geometrically, influencing national personalities, careers, and businesses from a micro-point of view.

The author of this paper worked in the travel industry for sixteen years from 1988 in south-east Asia, notably in Thailand and Vietnam. Thus, the avalanche of experiences garnered about Asian cultures through decades of observations and pragmatic interest in cultural matters fostered a research of this magnitude. For nearly thirteen years, the author has been serving in the academic environment, delivering lectures in international business management, comparative management, and cross-cultural studies at the Prince of Songkla University in Thailand and Universiti Malaysia Perlis. Specifically, a subject such as cross-cultural studies brings up many fundamental and mind throbbing questions. This experience suggests that culture is significant in understanding the perspectives of differing individuals. Interestingly, the author is currently working in Malaysia and his years of experience and observation of cross-national cultures features empirically in this study. As a Japanese citizen, the author’s work experiences in Vietnam, Thailand and Malaysia made it possible to experience four different Asian cultures. This experience of cultures gained through working and theoretical experience of business practice at different locations provides an in-depth understanding of cross-cultural evaluation of business practices in south-east Asia (Nardon & Steers, 2009).

Nowadays, any business is important, because doing business can improve what people want in order to raise their standards of living. Individual life, economy, society, and the country are all good examples of what people desire to improve. These days, doing business is not as easy as it was a decade ago, because business activities are expanding internationally and the clients are more informed, exposed, network and enriched about the workings of the business environment. In particular, outsourcing is very popular with most manufacturing companies who wish to relocate the production of their products after restructuring. Again, international marketing is very attractive for any company who wish to find new customers. Today, people are living in a so-called borderless world, as a result of globalization which challenges us to think of the business environment that best suits the fast changing world to meet the ever increasing demand of clients (Ohmae, 2005). This paper is specially focused on the comparative cultures of Thailand and Japan in order to understand them from a business point of view based on theoretical and personal experiences (Kim & Leung, 2007). Furthermore, the implications will be explored for Malaysian in relation to globalizing the engineering profession and associated businesses.

The two decades spent in south-east Asia so far, suggest that the professional and academic significance of the topic is very high. The author is of the view that peoples especially those from Malaysia, Thailand, and Japan, would better understand their economic situation if they paid much more attention to analyzing their economic performances in relation to their cultural dimensions (Taras, Rowney, & Steel, 2009). On the other hand, there is need to critically review all relevant models in respect of Malaysia, Thailand, and Japan cultures, this will fast-track the full meaning of cultures in the modern context. After analyzing these cultures, the conclusion can be drawn based on assessment, discussions and understanding of the relevance and significance of cultures in the fields of economics and business. This paper aims to contribute to frontier of knowledge and academic world by understanding this comparison.

A major problem faced is that the assessment of cultures in relation to business has been based on western models. This means that the validity of the assessment may not be adequate for generalization. The context of south-east Asia and Japan is changing rapidly, to key into this revolution mean identifying and interpreting features of the cultures of Thailand and Japan in their original form. The challenge is surmountable if the proposed western model is domesticated to indicate and describe the cultures and related business practices of south-east Asia, including Japan. Two cultural dimensions of Hofstede’s model suited for these countries are discussed in the next section, this will be used first to assess the proposition.

The celebrated Hofstede cultural dimensions provide clear description of the role of culture in behavioral studies. The similarities and dissimilarities were not focused by the early researchers until criticism and shortfall of the model were critically reviewed. Table 1 gives summary of definition of each of the dimensions as originally proposed by Hofstede.

Table 1. Definition of Hofstede dimensions (in words i.e. editable format)

Power Distance	Power distance (PD) reflects the degree to which hierarchy and unequal distributions of power are accepted. A high PD score implies a prevailing acceptance of large status differences between superiors and subordinates. Managers tend to be autocratic and paternalistic while employees tend to do as they are told
Uncertainty avoidance	Uncertainty avoidance (UA) reflects the degree of comfort with ambiguous situations and the extent to which efforts have been made to minimize or avoid these situations. Managers in high UA cultures tend to depend extensively on systematic rules and regulations. Extensive efforts are made to plan for and even control the future
Masculinity	Masculinity (MAS) reflects the degree to which tough and assertive behavior is encouraged. Conversely, femininity (FEM) encourages tender and nurturing behavior. The belief in equity (rather than equality) and the importance of material success to a group both tend to be related to its MAS score
Time orientation	This dimension reflects the degree to which short-term pain is accepted in return for long-term gain. Societies with a short-term orientation (STO) will be more likely to seek out immediate gratification than those with a long term orientation (LTO) but they are less likely to plan for the future
Individualism	Individualism reflects the degree to which personal independence is valued over group membership. A society scoring high on IND values personal goals, initiative, autonomy and privacy. Conversely, collectivistic (low IND) society value group goals and objective over individual preferences. The importance of harmony and consensus tends to encourage collective responsibility and group decision-making while discouraging dissent and innovation

2. Cultural dimensions (Hofstede model)

Hofstede (1980) defined culture as “the collective programming of the mind which distinguishes the members of one human group from another.” He developed his cultural value framework with data from about 116,000 morale surveys completed by 88,000 IBM employees living in 72 countries (Taras, Kirkman, & Steel, 2010). Hofstede identifies five cultural dimensions – power distance, individualism and collectivism, masculinity and femininity, uncertainty avoidance, and short- and long-orientation (Hofstede & Hofstede, 2005). After exhaustive analysis of the model, it was observed that western-orientated interpretation may not sufficiently comprehend non-western societies. Broadly speaking, people from homogeneous societies can better understand other homogeneous societies, rather than heterogeneous societies. In the same way those from heterogeneous societies better understand similar societies. To consider this further, power distance and uncertainty avoidance were selected for consideration from the five cultural dimensions. These dimensions are deemed suitable to assess how best they are for Asian interpretation. In an attempt to fit the uncertainty avoidance dimension into the Asian culture, Hofstede introduced a fifth dimensions, long/short term orientation (Hofstede & Bond, 1988) (see Figure 1).

Figure 1. Cultural dimensions (Hofstede model).

3. Power distance value dimension

Before explaining the power distance dimension, it is important to evaluate how Hofstede (2006) defined and measured power distance. They used factor analysis to classify survey questions into groups in different countries. They used the outcomes to establish how people thought about the way power and inequality was distributed in a country. As a result, a power distance index (PDI) for the country was calculated. The PDI scores indicate a range from about 0 for a small-power-distance country to about 100 for a large-power-distance country. Consequently, the power distance index measures the degree of inequality in a society or country.

“Power distance can therefore be defined as the extent to which the less powerful members of institutions and organizations within a country expect and accept that power is distributed unequally. Institutions are the basic elements of society, such as the family, the school, and the community; organizations are the places where people work (Hofstede, 2006). Alternatively, it is the extent to which subordinates are not expected to express disagreement with their supervisors and supervisors are not expected to consult with their subordinates in the decision-making process” (Taras et al., 2010).

It must be noted that, inequalities in power are common in the workplace, because most employees face them in “boss”-subordinate relationships (Lee, Pillutla, & Law, 2000).

4. Uncertainty avoidance value dimension

This value dimension, uncertainty avoidance, refers to the extent to which people in a society feel threatened by ambiguous situations. The uncertainty avoidance index (UAI) scores that have emerged from the research indicate the range from around 0 for the country with the weakest uncertainty avoidance to around 100 for the strongest (Hofstede, 2006). Therefore, in the workplace managers and employees become aware of uncertainty avoidance over a range from the weakest to the strongest. Where this dimension is strong ambiguous situations do not threaten people and vice versa. In the next section, Thai culture relating to power distance and uncertainty avoidance will be introduced.

Uncertainty avoidance is defined as “the extent to which a society feels threatened by uncertain and ambiguous situations and tries to avoid these situations by providing greater career stability, establishing more formal rules, not tolerating deviant ideas and behaviors, and believing in absolute truths and the attainment of expertise” (Hofstede, 1980). Uncertainty avoidance should not be confused with risk avoidance, as “it does not describe one’s willingness to take or avoid risk, but rather is associated with preferences for clear rules and guidance” (Hofstede, 2001).

5. Concise criticism associated with Hofstede’s cultural dimensions

Hofstede’s work has been criticized for inappropriate sampling in a way that “all participants in the survey were highly educated, white collar professionals employed by a multinational company, IBM; therefore, they are not representative of their societies and may hold values different from those of the wider population” (Maude, 2011). Moreover, according to Rosenhauer (2007), the framework of Hofstede’s Cultural Dimensions is based only on five dimensions and more important dimensions have been neglected. However, it is important to note that the validity of this argument is compromised by the fact that Rosenhauer (2007) fails to name any specific dimensions that Hofstede needed to address.

Johann (2008) argue that Hofstede’s Cultural Dimensions fail to take into account gender differences and occupational differences between individuals.

The peculiarities of these two countries will be focused based on the prepositions and personal experience of the author.

6. Dimensions in Thai culture

6.1. Power distance

Thai people are found to rank high in the dimension recognized as Power Distance. According to Hofstede’s research, Thailand ranked above the middle (34–36th) among 74 countries and regions (Hofstede, 2006). The peculiarity of Thai culture in respect to power distance is captured below:

6.1.1. SAKDI NA (field power)

In the fifteenth century, King Borommatrailokanat undertook a ranking, based on numbers, of all citizens within the kingdom. The name sakdi na or “field power” attributed to the king’s subjects in this ranking had been based on the amount of land owned. Sakdi na was removed completely four hundred years later, but most Thais still believe that people should have a place rank in a hierarchy even up to now (Holmes & Tangtongtavy, 1996). Therefore, Thailand is a very hierarchical society.

6.2. Uncertainty avoidance

According to Hofstede survey, Thailand ranked below the middle (44th) among 74 countries and regions in the cultural dimension of uncertainty avoidance (Hofstede, 2006). The peculiarity of Thai culture in respect of uncertainty avoidance is captured below:

6.2.1. Maipenrai (That’s all right)

The word maipenrai is very popular and pervasive in Thai society and is used among Thai people and used towards foreigners also. For example, when Thai people encounter adversity, such as mistakes made by others, failure, and even misfortune, they tend not to worry too much. That is the reason why they prefer not to fear or think about the future. It cannot be said that Thai people lack of sense or awareness. They are merely reluctant to fear unpredictable situations, because they would prefer to relax in a loosely ordered society.

7. Dimensions in Japanese culture

7.1. Power distance

With respect to power distance, Japan is found to rank in the middle (49–50th) among 74 countries and regions (Kirkman, Chen, Farh, Chen & Lowe, 2009). This result did not only surprise the author but also in total variance from what is obtainable in Japan. For this reason, the western model has to be assessed in terms of its validity in non-western contexts and its application should be done with caution (Lee et al., 2000). Given the Japanese context, the validity of a western model will be discussed in the next section according to the Hofstede model. The peculiarity of Japanese culture in respect to power distance is captured below:

7.1.1. Wa (peace and harmony)

Wa is very important to Japanese people in a typical Japanese society; without the principle of wa, they cannot live life as a Japanese. It is not an exaggeration to say that wa is the embodiment of Japanese culture. In particular, for Japanese people the foundations of working relationships are based on the principle of wa (Deresky, 2008). Whilst it is true that the principle of wa or peace and harmony is significant in Japanese culture, it does not necessarily follow that Japan is in the middle range in terms of the power distance cultural dimension.

7.2. Uncertainty avoidance

The ranking for Japan in terms of uncertainty avoidance is high (11–13) according to Hofstede’s survey (Hofstede, 2006). Japanese people do not like taking-risks and show little aggressiveness in such matters. They dislike facing and being surprised by ambiguous situations. In business, Japanese employees prefer the safety of lifetime employment because of their concern for security and career stability over a lifetime (Kim & Leung, 2007). The peculiarity of Japanese culture in respect of uncertainty avoidance is captured below:

7.2.1. Shinyo (mutual confidence or trust)

The spirit of shinyo (mutual confidence or trust) is also very important in Japanese society. As a result, if a Japanese person lost shinyo in a Japanese company, he or she cannot work there. It may even lead to hara-kiri (or seppuku as Japanese say). This is ritual suicide that may be the result of loss of confidence or trust. Japan is a high-trust society and this form the pillar of business relationship for them. When the Japanese keiretsu (conglomerate) system was created, it was based heavily on trust and its success was ascribed to mutual confidence.

8. Assessment of Hofstede’s model

The author has long felt doubtful about the validity of the western cultural model and considers that there is need to assess it to find out if it is generally applicable or not. As Dr. Geert Hofstede is from the Netherlands this means that he belongs to a low-context culture. However, Thailand and Japan are high-context cultures. For a range of reasons, it is difficult to understand high-context cultures from the standpoint of low-context cultures. Before exploring these reasons, high-and low-context cultures have to be clearly defined.

In general terms, feelings and thoughts are not explicitly expressed in high-context cultures, and feelings and thoughts are expressed in words (Deresky, 2008). This means that high-context cultures are implicit cultures and low-context cultures are explicit cultures. In the contexts of the two types of culture, low-context cultures may be easily understood from the way words are used about them. But in the case of high-context cultures, they are not easily understood through the use of words because meanings are implicit. Thus a business manager from a high context culture may not understand the reasons why those in a high context culture act in a certain way (Taras et al., 2009). A non-Thai business executive might demand explanations about working performances in a firm. The Thais involved would see such explanations as unnecessary; the outcomes of such a demand could seriously damage working relationships. Showing sensitivity to such matters may not be a priority to a non-Thai.

In the Japanese context and language the words “anmoku no ryokai” mean a tacit understanding or an unspoken agreement. Trust is a critical feature in business in such a context (Fukuyama, 2002). Thus if Japanese individuals understand each other, they do not have to talk in front of other people when they make a decision. In short, the meanings are implicit in the context. Western firms often stress their commitment to frank and open exchanges of ideas. Operating in this way would set a western business executive at a disadvantage in Japan. His or her Japanese counterparts would resent it if the national cultural practices are not respected. Such practices are rarely written down: it is expected that those who do business in Japan will be aware of them.

Another example is the matter of relationships, classification and ranking. Japanese people prefer there to be classification in families, schools, organizations, and any place or organization to which they belong. They feel they need to know their place, otherwise they feel uncomfortable as they do not know where they belong. In other words, Japanese people are looking for relationships in society, such as parent-child, teacher-student, “boss”-subordinate, and junior-senior. This is because this helps them understand their role and position in society. These cases demonstrate the implications of power distance differences in a society; therefore patience in understanding them is very important in Japanese society.

Rank has always been and still is particularly important in Thailand. Furthermore, this is reflected in the positions people occupy in an organization. This is usually related to age and length of experience. Thais accept and respect this. On the other hand a western businessman assumes that people are ranked in an organization in accordance with their ability and special skills. When working in a Thai (or Japanese) context they will expect that the major criteria for appointment to middle and senior levels are demonstrated ability and capacity to perform. Different cultural perceptions about personnel such as these can have a serious adverse effect and undermine the business performances of firms.

As mentioned before, Thailand ranked below the middle (44th) among 74 countries and regions in the cultural dimension of uncertainty avoidance. In fact, from the writer’s experience of working there, Thai people are much more serious about work than Hofstede’s survey suggests. For example, the fact that taxi drivers are older now than previously means that people in Thailand are working harder than before and many more work beyond retirement age. Another example is when Thai people use the term “maiperai” (that’s all right or never mind). This suggests that they do not worry about matters but this is misleading. In fact many say it but they do care; thus it is true sometimes, but not true at others. A non-Thai would be misled if he or she always took what Thais said at face value.

Thailand and Japan are high-context cultures. Therefore, when considering the implications of this for business practice, the cultural dimension is significant. It is not easy to analyze them from the perspective of a western model. This is because such models are produced by theorists with western backgrounds who use their own cultural background in developing their models. This writer suggests that individuals from high-context cultures should undertake new surveys so that non-western perspectives can be taken into account. The examples given above show that business and organizational behavior in one type of culture is inappropriate for another. This would help to develop new and more appropriate models, if the intention is to understand implicit and non-western societies. Further research is needed from non-western perspectives in order to develop such models.

9. Conclusions: Implications for Malaysia

The application of Hofstede’s model in Asian countries such as Thailand, Japan, and Malaysia is controversial. . Inferences from this study suggest that great caution must be shown when transferring business practices across cultures. Western businesses that are incognizant and insensitive to cultural essence has continually shown low return on investment (Hofstede, 2002). According to Hofstede’s survey, Malaysia ranked the top (1st) among 74 countries and regions in the cultural dimension of uncertainty avoidance and ranked below the middle (65) among 74 countries and regions in the cultural dimension of uncertainty avoidance (Hofstede, 2006). This may be the case given the criteria used by this model, but differing cultural norms suggest the model may not have relevance for business practices. Malaysia could use the experiences gained by Japan and Thailand to scrutinize this and similar models.

This study questions the adaptability of a western model (notably Hofstede’s model) in Malaysian context and there is argument that fishing from international good practices have not reflected positively in the economy of most developing nations. The tenor and texture of the study veritably underscores the reservations about this model and necessary cautions were put in place in the course of the study. Malaysia has a different cultural context from both Thailand and Japan and is markedly different to western contexts (Ohmae, 1995). The highly respected Kenichi Ohmae has argued very strongly that Malaysia has the opportunity to become a global business player, especially with respect to exploiting Information Technology. It is not proposed here to discuss this assertion. But the preceding discussion does suggest that Malaysia has, in its cultural dimensions, high power distance and lower uncertainty avoidance. However, the significance of this theoretical dialectics could be assessed by Malaysian scholars and practitioners, and, over time, a substantive cultural model that is appropriate for Malaysia could be developed. Malaya-based cultural understanding will help globalize Malaysia’s economic enterprises, such as in engineering and business. It could also make Ohmae’s vision a reality and set up Malaysian benchmarks for the rest of the world.

Additional information

Funding

Funding. The authors received no direct funding for this research.

Notes on contributors

Yoshifumi Harada

As a Japanese citizen, the author’s work experiences in Vietnam, Thailand and Malaysia made it possible to experience four different Asian cultures. This experience of cultures gained through working and theoretical experience of business practice at different locations provides an in-depth understanding of cross-cultural evaluation of business practices in south-east Asia. For nearly thirteen years, the author has been serving in the academic environment, delivering lectures in international business management, comparative management, and cross-cultural studies at the Prince of Songkla University in Thailand and Universiti Malaysia Perlis. Specifically, a subject such as cross-cultural studies brings up many fundamental and mind throbbing questions. This experience suggests that culture is significant in understanding the perspectives of differing individuals. This paper adds to solutions on why some international businesses are short-lived. The main theme of the author’s main work is “understand people before transactions”.