Bridging the Differences on Cross - border Deals in Japan
Cultural Acceptance
Much is said about culture in any cross-border deal. This is often emphasized in the Japanese context, given the much-touted uniqueness of the culture. To some extent, the combination of culture and language does contribute to the difficulties
encountered in effecting cultural integration or change. However, the differences, especially in the last 15-20 years, have become less apparent and often manifest themselves more subtly. These differences are often less noticeable at the time of agreement and negotiation and only truly manifest themselves during integration. Having a strategic approach to influencing both corporate culture (what a company stands for, how work is conducted and attributes that define the organization) and national culture to define the overall culture of the newly integrated entity becomes a critical element for ensuring deal success.In the context of Japan, for many non-Japanese acquirers, distinguishing between what aspects of the culture stem from the national culture and what are corporate culture attributes is often challenging. Well aware of the fact that we are grossly oversimplifying matters, traditional Japanese businesses have tended towards a directive approach to decision-making more rooted in hierarchy, where information sharing tends to be more one-sided, and open discussions in the Western sense are less common.
Understanding the difference between what attributes are changeable from a company-culture perspective and which are areas where allowances need to be made for national culture is a critical first step. National culture requires culture sensitization on the parts of both the buyer and the seller, as actions and messages can very easily be misunderstood. As for corporate culture, a more direct and proactive intervention is required – a clear articulation of the desired "to-be" culture is crucial. Clearly understanding the gaps between the existing and desired culture by both parties and an acceptance that the culture change process, like most other aspects associated with the transaction in Japan, is an extended process (quick turnarounds in a one to two-year period are rare – a four to five-year timeframe is likely to be more realistic) is paramount for the medium to long-term success of such undertakings in Japan.
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