DECISION - MAKING IN ORGANIZATIONS: A

COMPARISON OF THE JAPANESE AND CHINESE MODELS

Kazuo John Fukuda

The concept of culture is hard to define. It has been defined in so many

different ways that no concensus has emerged. Culture may be defined as
the man-made part of the human environment including both physical
objects (for example, roads, buildings, tools) and subjective responses to what
is man-made (for example, myths, roles, values, attitudes).1 Although
culture is primarily born out of the satisfaction of biological needs by means
of the commodity and instruments, its very nature makes man into some-
thing essentially different from other animals; man is also dependent on
organized activities and cooperation to satisfy his psychological needs.
In searching for a tighter conception of culture, Keesing proposes that
culture is not all of what an individual knows, thinks and feels about his
world; that it is his theory of the code being followed, the game being
played, in the society into which he was born; that it is the theory to which
a native actor refers.2 He thus treats culture as the percejved rules of the
game, but interacting with game itself — the rules of the game change over
time in accordance with the pattern of play and its results. The perceived
rules of the game (that is, culture) vary from one society to another; and
the way in which the game is played may therefore vary likewise. Quite
naturally, then, one issue which has been receiving a great deal of attention
in comparative management research is the question of universality or
uniqueness of management across cultures.

Universality versus Uniqueness

The argument persists between (1) those who believe that efficient
and effective management is based largely on universal principles, practices
and knowhow and (2) those who advocate that management as a philosophy
and/or process is essentially or substantially culture-bound. Harbison and
Myers, for example, maintain that there is a general logic of management
which has applicability to both developed and developing countries in the
modem world.3 Included as a universal feature of the logic is world-wide
industrialization, which occurs through the diffusion of technology,
particularly knowledge technology, from the developed countries. In the
same vein, Koontz and O'Donnell take the postion that management
fundamentals such as concepts, theory, and principles have universal applica-

Kazuo John Fukuda is Lecturer in Management Studies at the University

of Hong Kong.

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tions in every kind of enterprise and at every level of enterprise.4
On the other hand, many cross-cultural researchers have challenged
the contention of the universalists. Oberg, from his overseas experience
and empirical research in Brazil and the United States, concluded that:
"Cultural differences from one country to another are more
significant than many writers (on management theory) now appear
to recognize . . . If management principles are to be truly universal
. . . they must face up to the challenge of other cultures and other
business climates . . . The universalist claim is hardly warranted
by either evidence or intuition at this stage in the development
of management theory."5
He argues that the applicability of management principles may be
limited to a particular culture and that it may be fruitless to search for a
common set of principles, absolutes, or determinate solutions. In a more
recent article, Bedeian stated that:
"It is a well-established fact that different cultures possess
different organizational norms and behaviour standards and that
they recognize these as legitimate forms of influence."6
Negandhi and Estafen have pointed out that management process is
dependent on not only the external environmental factors, such as culture,
but also management philosophy.7 They argue that management philosophy,
defined as the expressed or implied attitudes on relationships of a firm with
some of its external and internal agents, has considerable impact on manage-
ment process; that such attitudes may or may not be influenced by culture
and other environmental factors. A group of psychologists carried out a
study to measure the relative influence of national culture on attitudes
and belief about management.8 Their study indicated that if all differences
arising from national origin were eliminated, the differences in managers'
attitudes would be reduced by 25 to 30 percent. While culture alone cannot
be used to explain everything, it would seem that culture has a significant
influence on managers' attitudes and behaviour in different countries.

Culture and Decision-Making Process

Decision-making is considered as synonymous with managing by many
writers, who believe that decision-making and process leading to it account
for most of what managers do. Simon once stated that:
"I shall find it convenient to take mild liberties with English
language by using 'decision-making' as though it were synonymous
with 'managing'."9
It may therefore be useful to examine cultural influence on manage-
ment by focusing our attention on variations in decision-making process
between different cultures.

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 It is generally said that Oriental culture supports norms of collectivism
and Western culture supports norms of independence, self-reliance and
individual responsibility. As a result, it is frequently implied that, the process
of decision-making in the Orient is collective; by contrast, collective
decision-making is rare in the West, and responsibility is much more clearly
assigned to the individual. Collective decision-making makes it easier for
the decision-maker to avoid sole responsibility for his mistakes, but he may
be inadequately rewarded for his efforts. Individual decision-making, on
the other hand, involves both risks and rewards for the decision-maker;
if he makes mistakes, he alone will be responsible for the consequences,
but he can also expect rewards for good decisions.
Numerous comparative management studies to date have, in fact,
pointed out sharp contrasts between Oriental and Western managements.
However, quite often the Orientals are simply lumped together largely due
to a lack of firm understanding of Oriental management (except for the
Japanese). Those people stemming from the neo-Confucian realm such
as the Japanese and the Chinese are assumed to share common cultural
traditions that make them similar in orientation and action. Would it, then,
be appropriate to say that the decision-making process of Chinese manage-
ment is the same as that of Japanese management?
In spite of common cultural traditions, a mutual heritage, racial
similarities or geographical proximity, there seem to exist striking differences
in leadership patterns between the Japanese and the Chinese, which may
have direct implications for variations in the decision-making process.

Emotional Ties versus Rational Commitment

A vertical structural tendency in various Japanese organizations is one
of the characteristics of Japanese culture.10 In order to gain a proper
perspective for examining such a tendency in the context of Japanese
cultural traditions, we need to understand the ideology inherited from the
Tokugawa era which immediately preceded the modernization of Japan
(that is, a period from the beginning of the 17th century to the Meiji
Restoration of 1868). The rulers of the era found an effective ideology in
Confucianism, which concerned itself mainly with the correct observance
of social relationships within a hierarchically oriented society. We con-
sequently find in Tokugawa Japan a very rigid and vertically structured
society with strong emphasis on authoritarian control on the one hand
and obedience on the other hand, giving rise to a series of highly regulated
patterns of interpersonal relationships.
The essence of the vertical relationship in the Japanese society may
be expressed in the concept of "ie". The "ie" refers to a traditional house-

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hold of related members and often an artificial or simulated kinship group
of unrelated individuals (for example, a business organization). On the
surface, the authority may appear to be heavily concentrated in the head
of an "ie". But, being anxious to maintain "wa" (group harmony), he
usually consults with the key members of the "ie" in making important
decisions. The adoption of such a leadership style is essential because
conflicts among the members of a collectivity are more disruptive to the
smooth attainment of collective goals in a collectively-oriented society than
in an individualistic society. In Japan, therefore, the creation of informal,
affective interpersonal relationships between leaders and subordinates is
encouraged; leaders not only admit dependence on their subordinates
but use this situation to strengthen their relations with subordinates; leaders
act as coordinators to achieve group goals through maintaining harmony
among group members. It is a common practice in Japan that leaders take
out their subordinates rather regularly for after-work drinking sessions,
during which a wide range of personal problems not necessarily related
to work are aired and resolutions sought.
There seems to exist a universal trait in the behaviour of the Chinese,
which is quite different from that of the Japanese. The Chinese are some-
times described as a nation of individualists. They are family-oriented (like
the Japanese), but they are not social-minded (unlike the Japanese); the
family mind is only a form of magnified selfishness, and team work is
almost unknown. Their nation is like "a tray of loose sands", each grain
being not an individual but a family. On the other hand, the Japanese
nation is welded together like a piece of granite.11 Several recent studies
have suggested that Chinese and Japanese organizations can be differentiated
largely on the basis of variations in the interpersonal relationships between
leaders and subordinates.
The Chinese pattern of leadership normally emphasizes rational
commitment to leaders, rather than emotional ties as in Japan. This emphasis
on rational commitment stems largely from the concern over the role of
emotions in many areas of behaviour. For example, any attempts at creating
a more informal affective atmosphere on the part of subordinates are inter-
preted by Chinese leaders as efforts to undercut the leaders' prerogatives;
leaders attempt to maintain considerable distance in their relations with
subordinates by suppressing these inclinations on the part of subordinates.
Chinese leaders neither admit their dependence on subordinates nor do they
lead through maintaining group harmony; instead, they attempt to achieve
goals through fostering competition among subordinates. Chinese leaders
often play down or even deny the contributions of subordinates and play
off various subgroups within an organization through "divide-and-rule"
tactics, which are rarely employed by Japanese leaders.12 Unlike their

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Japanese counterparts, they seldom go out with subordinates for casual
drinks or meals. Though they are more inclined to get together during the
off-hours with those of similar ranks, they talk almost invariably about
work and very little about personal matters even on such occasions.
Such differences in leadership patterns as described above may well
lead to variations in decision-making process between Japanese and
Chinese organizations.

The "Bottom-Up" Collective Process of Decison-making

The "ringi" system of decision-making is considered as one of the most
important features of Japanese management.13 "Rin" means submitting
a proposal to one's superior and receiving his approval. "Gi" means deli-
berations and decisions. In this system, the responsibility for initiating
actions rests largely with middle and lower-level managers who prepare
and submit "ringi-sho" (proposal), while formal and ultimate authority
to execute decisions remain at the top. It is important to note that the
formal submission of "ringi-sho" is almost always preceded by what the
Japanese call "Nemawashi" — informal discussions and consultations.
"Nemawashi" is actually a horticultural term, which refers to the cutting
of roots and rotation of the trunk of a tree to free it for transplantation.
This is considered as a critical step, where the greatest care is required to
ensure a subsequent success in moving a tree from one location to another.
It is a process very similar, in spirit, to the informal talks preceding the
formal submission and circulation of a proposal. The abrupt submission
of a proposal without "nemawashi" is seen as a show of a lack of
sensitivity contrary to the Japanese spirit, which reveres the preservation
of a harmonious atmosphere within an organization.
Decisions are thus made not by one particular individual possessing
a formal authority but collectively by a group of people; responsibility
for decision-making is highly diffused; even the chief executive can absolve
himself of responsibility on the ground that he acted on the basis of
prior approvals given by his subordinates. In essence, the "ringi" system
commonly adopted in Japan may be characterized by the "bottom-up"
collective process of decision-making.

The "Top-Down" Collective Process of Decision-Making

A close look at a company operating in Hongkong has suggested that
the Chinese are quite different from the Japanese in terms of their behaviour
as observed in actual decision-making. The company selected for a case
study is a firm engaged in general construction and other associated
investments. It is owned and managed by local Chinese in Hongkong.

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Of nearly 800 building contractors registered in Hongkong, it ranks
among the top ten in terms of turnover. A total of eleven managers, four
from top management and seven from middle management, were
interviewed.
The management philosophy of the company is one that believes
in team work and collective efforts. Accordingly, like their Japanese
counterparts, the company's top managers all believe that subordinates
should be allowed to participate in decision-making. The Executive
Director, for example, normally asks his subordinates to work out several
proposals together among themselves before submitting to him one final
proposal, which is then put forward for further discussions at a meeting
chaired by himself. He states his involvement in decision-making as
follows:
"I don't, as a rule, get involved in the preparation of pro-
posals. That is done by my subordinates, but I make sure to
receive the minutes of their meetings. I also attend the meetings
personally whenever I want to give my piece of mind and clear
guidelines. Besides, I don't just look at the conclusion only.
I always check the validity of raw data and information submitted
to me together with a final proposal."
Such an extent of his personal involvement in the actual preparation
of proposals as well as his scrutinization of a final proposal would indicate
that most important decisions are made collectively but, in fact, under a
strong influence from the top management of the company, leaving only
a limited room for decision-making initiative to subordinates. This is in
direct contrast to the Japanese case, where subordinates are not only allowed
but also encouraged and willing to take their own initiative in decision-
making. On the basis of this observation, the company's decision-making
system may be characterized by what I might call the "top-down" collective
process.
One important question to be raised now is how collective its decision-
making process is. In his study of Japanese companies, Clark has noted that
perhaps the best indication of a general awareness that decisions are made
collectively is the very thorough dissemination of information that takes
place in many Japanese companies; that dozens of documents seem to be
in circulation so that company members know a great deal of what is going
on, even if it scarcely concerns them.14 Besides the circulation of formal
documents, many Japanese companies use more informal channels of
communication, such as "nemawashi" and off-hours drinking sessions, to
achieve a free flow of information.
In comparison, the Chinese company seems to rely much more heavily
on the formal channels of communication for the exchange of information.

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Many managers tend to keep much information to themselves, and they are
generally reluctant to reveal any matters which they consider as no direct
concern of others. As one departmental head states:
"If any big problems come up, we set up an ad-hoc commit-
tee right away to sort out the problems within the department.
Then it's up to me to decide whether or not we should refer the
matter to anyone outside the department. In most cases, we can
find a solution ourselves without bothering anybody else."
While the official minutes of meetings are circulated across departments to
inform others of what is going on in the company, most managers confess
that they really do not know how much information other managers are
actually giving out. For example, many managers including the Managing
Director were not even aware of a minor fire at one of their construction
sites until a day after the incident. There seems to be a lack of informal
channels of communication within the company, which may hinder the
thorough dissemination of information essential for truly collective decision-
making.

Conclusion
This paper has reported results of an exploratory cross-cultural study
of decision-making processes in Oriental context. On the surface, the
behaviour of the Chinese in relation to decision-making appears collective
and group-oriented much like that of the Japanese. However, a close look
at a local Chinese firm in Hongkong has suggested that there are variations
in the actual process of decision-making. Such variations may well be
explained by a different emphasis placed in the interpersonal relationships
between leaders and subordinates — the Chinese emphasis on rational
commitment versus the Japanese emphasis on emotional ties.
While the Chinese leaders may, in principle, allow active participation
in decision-making from subordinates, in reality, they tend to take a
leading role themselves, often leaving little room for decision-making
initiative to subordinates. Furthermore, due to a general lack of informal
channels of communication and thorough dissemination of information
within the organization, many decisions are not necessarily made
collectively (in the Japanese sense). Some writers have suggested a picture
of the Chinese as passive and as preferring that others make decisions for
them.ls They have noted that the Chinese prefer to be in a situation in
which the leader provides guidance and takes responsibility for determining
a proper action. By contrast, while decision-making may appear to be
highly centralized, the actual decision-making function performed by
Japanese leaders is relatively limited; and decisions are in fact made

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collectively through active participation from subordinates, who are
allowed, encouraged and willing to take their own initiative.
Considering the role of the Chinese top managers as observed in the
"top-down" decision-making process, we can perhaps say that they are
"decision-makers" (in the Western sense). That is, the Chinese top mangers
seem to behave more like their Western counterparts than like the Japanese
top managers, who are often regarded as mere "facilitators of decision-
making".

NOTES

1. H.C. Triandis and W.W. Lambert, Handbook of Cross-Cultural Psychology (Boston: Allyn
and Bacon, 1980).
2. R.M. Keesing, Cultural Anthropology: A Contemporary Perspective (New York: Holt,
Rinehart and Winston, 1976).
3. H. Harbison and Myers, Management in the Industrial World, (New York: McGraw-Hill,
1959).
4. H. Koontz and C. O'Donnell, Management: A Systems and Contingency Analysis of
Management Functions (New York: McGraw-Hill, 1976).
5. W. Oberg, "Cross-Cultural Perspective on Management Principles", Journal of the Academy
of Management, 6 (June, 1963), 129-143.
6. A. Bedeian, "A Comparison and Analysis of German and United States Managerial Attitudes
toward the Legitimacy of Organizational Influence", Journal of the Academy of Management, 18
(December, 1975), 897-904.
7. A.R. Negandhi and B.D. Estafen, "A Research Model to determine the Applicability of
American Management Knowhow in Differing Cultures and/or Environments", Journal of the
Academy of Management, 8 (December, 1965), 309-318.
8. M. Haire, E. Ghiselli and L. Porter, Managerial Thinking: An International Study (New
York: John Wiley & Sons, 1966).
9. H. Simon, The New Science of Management Decision (New York: Harper & Row, 1960).
10. C. Nakane, Japanese Society (London: Weidenfeld & Nicolson, 1970).
11. Y.T. Lin,My Country and My People (London: Heinemann, 1962).
12. R.H. Silin, Leadership and Values: The Organization of Large-scale Taiwanese Enterprises
(Cambridge: Harvard University Press, 1976).
13. M.Y. Yoshino, Japan's Managerial System (Cambridge: MIT Press, 1968).
14. R. Clark, The Japanese Company (New Haven: Yale University Press, 1979).
15. L.W. Pye, The Spirit of Chinese Politics (Cambridge: MIT Press, 1968).
R.H. Solomon, Mao's Revolution and the Chinese Political Culture, (Berkeley: University of California
Press, 1971).

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