Is saving face worth it? Why old cultural practices hinder engagement in Japanese boardrooms

Deep Dive into Japanese equities

Investors often feel communication with Japanese companies can be difficult due to cultural and language differences, often highlighting the following as hindering effective engagement: complicated corporate governance systems; a mystified corporate culture that includes a strong emphasis on hierarchy, politeness and manners; and a dislike of giving and receiving honest feedback due to an emphasis on "saving face".

Academic research supports these perceptions of Japan's unique culture. Professor Erin Meyer, of France's INSEAD, wrote The Culture Map, in which she uses eight scales (communicating, evaluating, persuading, leading, deciding, trusting, disagreeing, and scheduling) for expressing the cultural conventions of each country. Examining the two scales of leading and deciding, it is clear Japan represents a major outlier versus the more typical relationship where hierarchical styles tend to correlate with top-down styles. A combination of consensual decision-making and a hierarchical leaders...