Foreign Ownership: Japanese in U.S. Overcome Barriers

By Levy, Matthew D.; Teramura, Soji | Management Review, December 1992 | Go to article overview

Foreign Ownership: Japanese in U.S. Overcome Barriers


Levy, Matthew D., Teramura, Soji, Management Review


Globally oriented corporate investment and operations are reshaping general management in fundamental ways. This trend only will increase in the coming decade. Nevertheless, many companies are hampered by obsolete approaches to transnational management, and successful global management practices are still in their infancy.

The purpose of our study was to draw from the experiences of 50 non-U.S.-owned companies so that the lessons they learned could be extrapolated and then shared, helping other companies avoid the all-too-frequent repetition of costly mistakes.

Delving into the operations of these 50 companies yielded valuable insights about their corporate practices, problems and solutions. As we anticipated, certain common themes and problem areas emerged with varying degrees of intensity and frequency. The lessons learned should be of interest to all businesses, particularly those operating internationally.

We identified a number of representative problems--covering all aspects of business-- which manifested themselves with remarkable consistency among the subjects of our study. Addressing these difficulties is critical, we believe, and will contribute to both the improvement of business efficiency and the enhancement of U.S.-Japan relations.

* Language barriers and cultural differences. These were the two problems most frequently cited by Japanese companies in describing their U.S. operations. One American executive reported that the chairman of his parent company, a man with some working knowledge of English, whom he had known for 15 years, "still brings along a translator when we go out to dinner," for example.

American executives tend to see language barriers between U.S. companies and their Japanese parents as a source of greater difficulty than do Japanese executives, and younger Japanese managers with better English skills see language barriers as less of a problem than do their older colleagues with less English training. The problem is more pronounced for companies whose Japanese parent is comparatively small, but a longer history of operations in the United States does not change the incidence of the problem, nor does the size of the U.S. operation.

Frequently, language barriers mask cultural differences, as the following comment by an American executive suggests: "Sometimes we all think we have understood each other on important points, and down the line [we] find out that was not the cases' Within U.S. operations, the large majority of Japanese executives and about half of American executives find miscommunication to be a significant obstacle to successful operations.

More than half of American executives-- and almost that many Japanese executives-- find cultural differences in the U.S. workplace to be a problem. The majority of American executives report that cultural differences between the U.S. company and its parent are troublesome. In most cases, our client assignments have demonstrated that the smaller Japanese parent companies, which tend to be less experienced in international management, have the most difficulty managing cultural differences between the Japanese parent and the U.S. subsidiary.

Language barriers present less of a problem to European companies than to Japanese, and European-owned companies tend to encounter less difficulty with cultural differences in the U.S. workplace. Difficulty in dealings between the U.S. company and its non-U.S. parent, however, is reported with similar frequency by European and Japanese companies.

* Difficulties attracting and retaining employees. Although cited as the third most common problem facing Japanese companies in their U.S. operations when this study was first undertaken in 1990, the current recessionary climate has no doubt diminished the difficulty of hiring and keeping desirable employees. Still, this area deserves special attention if foreign firms are to enjoy long-term success. …

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