They came, they saw, they adapted: How Swedish firms adapt when managing cross-cultural business relations with Japanese customers

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They came, they saw, they adapted

How Swedish firms adapt when managing cross- cultural business relations with Japanese customers

Bachelor Thesis

Author: Daniel Ingvarsson &

Jonathan Gustafsson

Supervisor: Selcen Özturkcan

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Abstract

Culture is a strong part of people’s lives. When you are working with people and building relationships with them, it helps to have some perspective and understanding of their cultures. In the Japan business culture, there are several things that differentiate them from Swedish their way of conducting business.

The purpose of this thesis is to explore how Swedish firms adapt in order to manage business relationships with Japanese customers. By investigating this, important components of cross-cultural differences have been identified and a deeper understanding of the cultural obstacles of doing business between two cultures that has great differences in their business cultures. A qualitative research method, with an abductive approach, has been conducted to this thesis to provide a deeper understanding of the topic. The literature review starts with presenting the concept of cultural differences between Sweden and Japan, then continuous with cultural adaptions and business relationship management. A theoretical framework is presented to illustrate the relationship between these concepts. The analysis discusses and compares the theoretical concepts with the empirical findings in order to understand the relation to each other. In the final chapter, a conclusion is made where the authors present answers to the research question, theoretical- and policy implication, limitations and suggestions for further research. The findings of this thesis have narrowed down the research gap regarding how Swedish firms manage business relationships with Japanese customers. We suggest that, in order to succeed on the Japanese market as a Swedish firm, one must adapt towards their cultural values and be open-minded regarding their business management when establishing a new relationship with a Japanese customer.

Key words

Sweden; Japan; managing business relations; cross-cultural; adaptations

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Acknowledgements

We would like to express our sincere gratitude to everyone who in some way have helped us in writing this thesis. We would first like to thank our interviewees; P-A Järneström at Trelleborg Sealing Solutions, Olle Moberg at Norden Machinery, Thomas Östergren at Atlas Copco, Carl Norsten at Business Sweden and Robert Bickö at Yaskawa. We are very grateful for your time and for your valuable insights and without your help we would not be able to conduct this thesis.

We would further like to show our gratitude to our supervisor Selcen Özturkcan who have contributed with her knowledge and guidance during the process of this study. We would also like to take the opportunity to thank our examiner Susanne Sandberg who have given us valuable feedback during the process of writing the thesis.

Kalmar, 29^th May 2019.

Jonathan Gustafsson Daniel Ingvarsson

__________________ _________________

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1. Introduction

In the introduction chapter, the thesis describe and clarify the chosen area of research. Firstly, the background will be presented to the research problem and follow up with the problem discussion. Finally, the thesis will conclude the problem statement and research question(s), and explain the purpose of the thesis.

1.1 Background

In order to make a competitive advantage, many companies strive to enter new global markets (Ristovska and Ristovska, 2014). It is stated that factors such as limited resource and competitive pressure force the decisions makers to act in each company (Ristovska and Ristovska, 2014). These actions result in international business, meaning that two or more nations have business activities with each other. Cross-border actions include transactions of services, goods and resources, which could be labour or financing, and results in that economies in the world connects with each other more and the borders between them shrink (ibid).

According to Hill (2014), the barriers between nations such as distance, language, culture and government regulations are declining and the differences are not as severe anymore making it easier for companies to do international business. Lincoln and McCallum (2018) argue that the barriers that exist decline over time, which is the reason why firms easier can enter a foreign market. This process is often referred to globalisation, meaning that the distance is shrinking due to new technologies and transportation solutions, the material culture starts to look the same and that national economies are merging into an integrated economic system (Hill, 2014). Hill (2014) describes that the globalization process creates great opportunities for business since firms can reach a larger target group by selling in various countries and reduce cost by producing abroad where the labour costs are cheaper.

Hollensen (2017) states that with globalization, every player and competitor have an equally large opportunity and that companies will compete around the world for the customers, resources and talents. Products and services will move between numbers of countries and locations leading to the preparedness of the internationalisation for firms to be important (Hollensen, 2017).

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Business relationships are quite simply the basis of business, and without them, no company can operate. Business relationships enable a company to make profitable sales and to buy the products and services they need. However, business relationships are also the source of many problems that managers face (Ford, Gadde, Håkansson and Snehota 2011). Business relationships take a long time to establish and they require consistent investment and maintenance (ibid). Barron (2008) states that maintaining a relationship requires a deeper understanding of each businesses and explain that this takes a long time to establish. For a firm, relationships can differ from being simple to being complex (Ford et al, 2011). The complexity of customer relationships means that it is important for the supplier to develop and organise the offering, its fulfilment and the relationship as a whole (ibid).

The cultural environment of global management incorporates much of the macro environment in which organizations operates (Steers, Nardon and Sánchez-Runde, 2016). However, the fundamental aspect of culture is that it is something all humans learn in one way or another. It is not something that people acquire, it is somewhat a code of attitudes, norms and values, a way of thinking that is learnt within a social environment (Browaeys, M. 2015).

Although culture is reflected on individuals and their behaviour, it is a way of thinking shared by individuals in a particular society that makes the culture what it is. With the advent of globalisation, the notion of culture has taken on a broader meaning and has come to be an important element of organisations (ibid). When cross-cultural matters are in focus, the terms cultural and nation should be notable. This distinction can affect the way organisations operate at the macro level and micro level. At the macro level, the nation in terms of its laws and economic institutions must be taken into account. At the micro level, the organisation is influenced by cultural elements relating to employee relationships and behaviour among the employees (ibid).

1.1.1 Sweden’s business culture

According to Birkinshaw (2002), the Swedish style of management is unthreatening and has its emphasis on empowering and coaching. Empowering is about delegating responsibility to people who work for you, sharing information and appreciating their initiative. Coaching is about making the employees feel part of the team, encouraging them to co-operate and taking interest in their individual performance. Grenness (2003) claim that Scandinavian managers value cooperation, collaboration as well as power

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sharing. Birkinshaw (2002) do, however, argues that the trouble with these elements of the management philosophy is that they are overworked. The reality is that most managers neither empower nor coach their employees.

Some think they do and others adopt a different style. Swedes favour a model that gives them a lot of freedom to do their work uninterrupted by their boss.

For the boss, it requires complete trust in his or her employees that they have the skills they need to have for their job and a belief they act in the interest of the company when they face difficult decisions (Birkinshaw, J. 2002).

1.1.2 Japan’s business culture

Concerning the Japanese business environment, firms in Japan often describe themselves and their place in a network of relationships rather than individuals.

So, the Japanese firm defines its role through its relationship with other firms rather than being a detached organisation (Lasserre, P. 2006). Larger firms are often connected with affiliated companies where they form a business network, this type of system are known as Keiretsu system, whereby companies maintain long business ties with each other (ibid). There are mainly six different large Keiretsu systems which together represent the core of the Japanese business environment. However, most announcements on Japanese management tend to blame this system as an entry barrier to the Japanese market that provides Japanese firms with an unfair competitive advantage (ibid).

Unlike the West, business in Asian countries is as much to do with the relationship between the parties concerned as the actual transaction itself. This requires paying great attention to building trust and establishing respect (Browaeys, M. 2015). Harmony between the parties of any formal meeting is required to ensure that nobody is offended. If harmony is maintained, confidence and trust will build and then form an eventual agreement (ibid).

Harmony is also something that can be applied to the culture of Japanese society. Although it is important to try to find a solution when a problem occur it is important that this do not disturb the peace and harmony (World Business Culture, 2017). This is the reason why individuals in Japan do not tell their opinion since it can disturb the harmony, or as it is called in Japan, wa (ibid).

The concept of wa, is a principle of Japanese thoughts and is reflected in the collaborative behaviour and consensus-building within an organisation. The idea is also reflected in the relationship between the organisation and its

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employees. In return for an employee’s loyalty and commitment to an organization, the employer will provide job security (ibid).

Japan’s economy is third largest in the world and Sweden’s second largest export market in Asia. Japan continues to be of interest to the Swedish industry as a step towards a broader strategy (Business-sweden. 2019). There are 1500 Swedish companies which are trading with Japan today, where 150 of the companies are established in the Japanese market. After some years of economic stagnation, Japanese companies expose a positive attitude towards the domestic market. Japan has a broad manufacturing industry and some big investments have been taking place to further increase international competitiveness (ibid)

1.2 Problem discussion

The growing global marketplace is creating massive opportunities for organisations in the fact of having global operations with a business located in various countries. However, more and more business find themselves confronting new obstacles that are threatening global success (Elashmawi, F.

1998). Problems that occur during intercultural business lies in the misunderstanding of basic cultural guidelines in each of the countries. One must be willing to make the effort to understand and work within these presented guidelines (ibid). Elashmawi (1998) further explains that each culture has its own unique way of handling business as well as social interactions, and the visitor to particular cultures must recognise the differences.

Cross-cultural literacy is a phenomenon described by Hill (2014) which means that a company needs an understanding of how cultural differences across the world will affect their way of doing business. Even though that we nowadays have global communication, rapid transportations solutions and global brands, the deep of cultural differences remain under the surface (Hill, 2014).

Hollensen (2017) argues that the main barrier is the lack of market information and which is influencing the managers perceived psychic distance (Johanson

& Vahlne, 2009) towards the market. To reduce the barrier, managers will have to increase their foreign market knowledge and build trustworthy relationships with foreign partners. Hill (2014) argues that it is important for businesses to gain an understanding of the foreign market including the culture that prevails, and to be able to succeed, the firm must adapt to the culture that exists in the market.

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In Japan, it differs a lot when making a deal compared to Western countries (Maguire, 2001). Maguire (2001) explains that the Japanese have three important concepts when making negotiations which are (1) the concept of face, (2) connections and personal relationships and (3) the priority over the group over the individual. Compared to western culture, where cold calling is a way of making new partners and customers, the Japanese want to build long- lasting relationships instead (ibid). The relationship building starts at the beginning of the meeting where the Japanese prefer to discuss a non-task related subject which is seen as unprofessional in North Europe (Maguire, 2001). Japanese business people prefer face to face conversation and during the establishment one should always send the most senior executive possible in order to avoid insulting the Japanese (Asialink Business, n.d.). The contracts differ as well and according to Maguire (2001), the Japanese want short and general contracts with a focus on the beginning and hope of the new venture compared with the western world which wants to know how to resolve a dispute in the event of a conflict.

There is a growing sense of importance that we need to gain an understanding of people from different cultural backgrounds. From interpersonal misunderstandings to intercultural conflicts, frictions exist between cultures.

According to Ting-Toomey (1999), there are rapid changes in the global economy and the world are becoming a small intersecting community. We find ourselves in increased contact with people that are culturally different, working side by side with us. In order to achieve effective intercultural communication, we have to learn to manage differences flexibly and mindfully (ibid).

In a study made in Uppsala regarding Swedish industrial firms in international competition, the result is that Swedish firms have severe problems regarding the establishment, development and maintenance of lasting business relationships (Forsgren and Johanson, 2014). The authors state that relationships are developed and maintained through everyday interactions and that with these interactions one can learn what the other party needs and what resources they possess. Forsgren and Johanson (2014) further argue that by investing time and resources the firm learns the other party needs, their resources and their strategy and the relationship becomes stronger as a result of both parties have a trust for each other. In order to establish a relationship with a supplier or customer, the firm might have to make adaptations in the products or in the process and routines (ibid). Forsgren and Johanson (2014)

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further state that the adaptations made are made gradually as a consequence of two firms learning from each other's way of performing activities. Roden and Lawson (2014) mentions that the extent to which buyers and suppliers make adaptations for each other is acknowledged as a defining component of these more collaborative and integrated relationships. More recent studies have explored how closer, more integrated supplier relationships with a long-term focus can leverage competitive advantage (Roden and Lawson, 2014).

Previous researchers have studied that there is a great difference between Sweden and Japan in the spirit of business. As mentioned above, there is research regarding the subject that Swedish firms have problems in develop and maintaining relationships in an international arena leading to adaptations to be made for the firm. However, these adaptations are not clearly specified leading to wondering of how Swedish firms adapt their business in Japan and what cultural differences the firms may face when starting a new relationship with new customers.

Hollensen (2017) and Elashmawi (1998) discuss the obstacles when making cross-cultural business and that firms must adapt and make an effort to understand each other in order to succeed. Taking that into consideration, while comparing the different business cultures between Sweden and Japan, there is no doubt that researchers want to underline the differences. In a study by Forsgren and Johanson (2014), it is mentioned that adaptations are made in order to establish, maintain and develop a business relationship. It is stated that Swedish firms have a problem with the relationship development and maintenance with international partners leading this study to have a focus for understanding how they overcome and adapt to this problem. Since none of the researchers describes specifically how Swedish firms overcome these obstacles and adapt to the cultural differences, the paper will have an aim for that.

According to Stiles (2009), the large network system in Japan, keiretsu, is central to trust, authority relations, management and network across firms on the Japanese market. There have been several researchers who have studied this system (Stiles, 2009) However, the importance of this system for foreign firms have not been presented and what the obstacles are that may occur for them due to keiretsu (ibid). These networks are reinforced by ownership structures characterised by cross-holdings, with financial institutions the largest shareholders in Japanese listed companies (Stiles, 2009). This structure of major companies in Japan is saturated in tradition and relationships,

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therefore, it can be a disadvantage for a foreign company to be an outsider to this network. Information sharing within the keiretsu could be an argument for the disadvantage of being an outsider. Information is shared among customers, employees and suppliers and this leads to quicker investment decisions and all actors can easier know the purposes and goals of those investments (Twomey, 2018). Johanson and Vahlne (2009) state that outsidership is the root of uncertainty. Therefore, insidership in relevant networks is necessary for having a successful business in a foreign market. If a firm does not have a position in a relevant network, you are often described as an “outsider”. Outsidership makes it impossible to develop a good business (Johanson and Vahlne, 2009).

However, it might happen that a partner inside the relevant network requests a service from you, which could create an initial insider opportunity and the commitment-building with a new customer may then begin.

1.3 Research questions

The following research questions will be analysed:

o What are the main cultural differences Swedish companies face when managing business relations in Japan?

o How do Swedish companies adapt when managing business relationships in Japan?

1.4 Purpose/Aim

The purpose of this thesis is to analyse cultural differences in relationship management that may occur for Swedish firms operating in the Japanese market. We are going to investigate what kind of cultural difficulties Swedish firms could face and try to understand how they could avoid them or adapt in order to manage a relationship with Japanese customers successfully.

1.5 Delimitations

The main focus of this study is culture differences and adaptations in managing business relationship with Japanese customers. Therefore, no other business activities that firms may conduct in Japan will be analysed in this thesis. The study is from a Swedish B2B firms point of view that operates towards Japan.

Therefore, Swedish firms that operates B2C in Japan will not be a part of this thesis. The paper will receive data from interviewing chosen participants and from secondary data sources. The limitations in literature are focusing on

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cultural differences, adaptations towards culture and managing business relationships.

1.6 Thesis outline

Introduction

• In this following chapter, the theoretical framework is presented. In order for us to answer our problem questions, the concept of Hofstede’s cultural dimensions is presented, followed by the concept of cultural dimensions in relationships with people. Lastly, adaptations towards cross-cultural and the concept of managing business relationships is outlined.

Literature review

• In the following chapter, the chosen research approach and research method for the study is. Furthermore, the research strategy will be discussed and argued why a case-study is the best choice in order to answer our research questions.

Additionally, the data collection process will be presented which will distinguish primary and secondary data. Lastly, the research quality design is presented and discussed.

Methodology

• In the methodology chapter, we will present the chosen research approach and research method for our study.

Furthermore, the research strategy will be discussed and argued why a case-study is the best choice in order to answer our research questions. Additionally, the data collection process will be presented which will distinguish primary and secondary data. Lastly, the research quality design is presented and discussed.

Empirical findings

• In the following chapter the study will present the empirical findings from the companies interviewed. The chapter will present the empirical framework and is divided between the five interviewees; P-A Järneström (Trelleborg Sealing Solutions), Olle Moberg (Norden Machinery), Thomas Östergren (Atlas Copco), Carl Norsten (Business Sweden), and Robert Bickö (Yaskawa).

Analysis

• The analysis chapter will highlight three voices, the theoretical part, empirical one and our voices as well. The chapter will connect the empirical findings with the theoretical framework in order to draw a conclusion in the following chapter. The chapter will have three subheadings where the three phenomenon described in the operationalisation will have one each.

Conclusion

• In the final chapter of the thesis, a conclusion of the thesis will take place where we give answers to our research questions. Further in the chapter, we will present theoretical- and policy implications, limitations of the study and suggestions for future research.

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2. Literature review

In this following chapter, the theoretical framework is presented. In order for us to answer our problem questions, the concept of Hofstede’s cultural dimensions is presented, followed by the concept of cultural dimensions in relationships with people. Lastly, adaptations towards cross-cultural and the concept of managing business relationships is outlined.

We are aware of the critics regarding Hofstede's framework, it has been criticised for being outdated, having too few dimensions and that it is one company approach (Jones, 2007). We do however consider Hofstede's framework to be in line with our work since several of studies in the same area have cited his work. Additionally, we believe that the dimensions presented in Hofstede's framework could contribute to a better understanding of the chosen concepts of this thesis.

2.1 Hofstede

Hofstede, Hofstede and Minkov (2010) have a framework which can compare different nations with each other, regarding the culture, with different elements and as can be seen below in Figure 1, a comparison between Sweden and Japan.

The elements are to compare the norms (unwritten rules) that exist within a group with another group of people. Each dimension or element has two extreme opposites (1-100) and the result will be somewhere in between, either in the middle or more to one of the extremes (Hofstede et al, 2010).

2.1.1 Power distance

The power distance is a dimension which is an indicator that handles the fact that people are unequal (Hofstede et al, 2010). Hofstede et al (2010) further describes that the power distance is to compare the distance between the managers and the employees and if employees are afraid to disagree with their manager. The dimension was an instrument which answered the questions of how the work environment was, whether it was auctoric or paternalistic, and how the employees wanted to have the environment. The dimension can be defined as to which extent less powerful people in a country can accept and expect that the power is divided unequal (ibid).

When comparing Sweden with Japan, the differences is not so great were Sweden’s score is 31 and Japan’s score is 54 (Hofstede Insights, n.d.). In Japan,

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the score is in the middle and is a result of the slow decision making that is in the country making them to be seen as a hierarchical society. At Hofstede Insights (n.d.) they further describe that people in Japan are born equal to the same conditions to succeed. Sweden, on the other hand, has a low score meaning the employees work independently with managers that trust the employees and has a coaching leadership (ibid). Swedes do not like being controlled and the relationship with the manager is informal and on first name basis (Hofstede Insights, n.d.).

2.1.2 Individualism versus Collectivism

The second dimensions two extreme poles are individualism and collectivism and describe whether people should look after themselves compared being integrated into strong groups which will protect each other through a lifetime (Hofstede et al, 2010). On the individualistic side parents will be proud of their children getting a job at an early age in order to gain pocket money which themselves will be responsible for. Hofstede (2010) explains that on the other side of the dimension, the collectivist pole, the resources are shared and if one member has a great paid job he will share his income with the family in order to help them.

In the comparison between Japan and Sweden the scores are 46 and 71 meaning Sweden are more individualistic (Hofstede Insights, n.d.). Japan’s score is in the middle and the nation has characteristics both from the collectivism and individualism (ibid). Japan is a collectivistic society in the sense that they put the harmony above the individual opinions and employees have a strong sense and shame of losing face. Hofstede Insights (n.d.) do however explain that Japan has individualistic characteristics in the sense that the family ties are not so strong. Japan is therefore seen as a collectivistic for Western nations while other Asian nations consider Japan as an individualist. Sweden, on the other hand, are more individualistic with a score of 71 meaning that Swedes are assumed to take care of themselves (ibid).

2.1.3 Masculinity versus Femininity

Thirdly the model has a dimension which has two extremes which are masculinity and femininity (Hofstede, 2010). The element is strongly attached with different work goals that both sides have (ibid) where masculine people value earnings, recognition and want challenging work to do while feminine people value a good relationship with the manager, great cooperation with co-

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workers and where the work environment is safe (ibid). Hofstede Insights (n.d.) further describes that the issue in this dimension is what motivates people and whether they want to be the best (masculine) or enjoy what you are doing.

There is a great difference between Japan and Sweden regarding this dimension where Japan is more masculine (95) and Sweden more Feminine (5) (Hofstede Insights, n.d.). The score indicates that the Japanese society is driven by competition, achievement and a strive to be the best in a field. Hofstede Insights (n.d.) further explains that in the business world in Japan the employees are most motivated when fighting against competitors which is a sign of masculinity. In Japan, there is a strive for perfection as well, within production as an example, where the products will have to be perfect which is an indicator of masculinity as well (ibid). Sweden, on the other hand, is feminine society meaning they value caring for each other and the quality of life and an effective manager in this society support his employees (Hofstede Insights, n.d.). Conflicts within this view are resolved by negotiation and discussion until the problem is resolved which can take time. There is a word describing what is expected by the employees where they should not do too much nor too little which is “lagom” (Hofstede Insights, n.d.).

2.1.4 Uncertainty avoidance

The fourth dimension of the framework is whether a nation has a weak or a strong uncertainty avoidance (Hofstede et al, 2010) and regards how the society deals with that the future is unpredictable and if we should try to control it (high) or just let it happen (weak) (Hofstede Insights, n.d.). In the measurement of the dimension job stress, company rules and whether people could see themselves working at the same place was the pillars responsible for a high or low score (Hofstede et al, 2010).

Japan received a high score of 92 and Sweden a relatively low score of 29 which imply that Sweden is more relaxed while the environment in Japan is more stressful and more prepared for uncertainty (Hofstede Insights, n.d.). One could explain that in Japan everything is prepared to the greatest extent possible through life with ceremonies and rituals (ibid). Hofstede Insights (n.d.) further explain that how to dress and how to behave at social events such as weddings and funerals are written in detail in the etiquette books. The managers in Japan always wants detailed facts and figures of a subject before making a decision in order to prevent uncertainty (ibid). In a society with low

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uncertainty avoidance, such in Sweden, no more rules should be applied and schedules are flexible (Hofstede Insights, n.d.)

2.1.5 Long term versus short term orientation

The fifth and second last dimension is whether a nation is long or short term oriented which implies that either one is oriented towards rewards in the future particular in perseverance and thrift or one is oriented in the past and present meaning one have respect for traditions and social obligations (Hofstede et al, 2010). According to Hofstede Insights (n.d.), this dimension regards how different societies maintain a link to their past while dealing with challenges in the present and in the future. When the score is high, they encourage saving and efforts in modern education in order to be prepared for the future (ibid).

When the score is low on the other hand the people want to maintain traditions and rituals and the people see societal changes with suspicion.

Japan’s score on this dimension is 88 and Sweden’s score is 53 which imply that the Japanese society is more long term oriented. According to Hofstede Insights (n.d.) Japanese people see their life as a short moment in the long history of mankind. The Japanese, therefore, do the best they can do during the time they can (ibid). In the corporate world of Japan, the expenditure on R&D is high even in a difficult time (ibid). In Sweden on the other hand, Hofstede Insights (n.d.) imply that Sweden is intermediate in this dimension. This could imply that Sweden might hold on to certain traditions and rituals while they are future-oriented as well with great expenditure on R&D. When comparing how much in % of the GDP which is spent on R&D one can see that in 2016 Japan had 3.15% and Sweden 3.25% (Data.worldbank.org, n.d.). Hofstede Insights (n.d.) argues that in Japan, they serve in the durability of the company and to serve the stakeholders for generations instead of making money every quarter.

2.1.6 Indulgence versus restraint

The final dimension that Hofstede et al. (2010) present is whether a nation is indulgence or restraint. The difference refers to if people spend their money and act as they please with fun-related activities (indulgence) or if people are restraint with their money and the expenditure on fun activities are seen as wrong (restraint) (ibid). It is further differentiated with a description that an indulgence society is related to having fun and enjoying the fun while a restraint society sees such enjoyment needs to be regulated by strict norms

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(ibid). Hofstede insights (n.d.) further describe the dimension to which extent people follow their instinct and impulses or if they control it.

In the final comparison between Japan and Sweden the score is 42 in Japan and 78 in Sweden (Hofstede Insights, n.d.). When having a low score in this dimension it means that societies feel restrained by strict norms and societies might be cynicism and pessimism (ibid). Sweden has a high score of 78 meaning that Swedes do not have a restraint when spending money and enjoy living life with a positive attitude (ibid). Hofstede Insights (n.d.) finally describe that in Sweden it is more important with free time and that they act as they may want without strict social norms.

Figure 1. Country comparison - Hofstede’s cultural dimensions. (Hofstede Insights n.d.). Blue - Japan, Pink – Sweden.

When using Trompenaars dimensions, we believe that the cultural differences will receive a wider explanation and difference later in the analysis.

Trompenaars dimension will, therefore, be a great complement for Hofstede's framework. There are similarities in Hofstede and Trompenaars work (UKEssays. 2018) which will result in a more trustworthy result.

2.2 Relationships with people

Every culture distinguishes itself from others by specific solutions it chooses to certain problems that reveal themselves as dilemmas. According to Trompenaar (2012), it is beneficial to investigate these problems under three ways: those that arise from our relationships with other people, the passage of time and those that relate to the environment. From the solutions that different cultures have chosen to these specific problems, seven central dimensions are identified (Trompenaar, 2012). However, five of these is connected to the first

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category, relationships with people which the theoretical framework will be focusing on.

There are five categories covering the ways in which human beings deal with each other (Trompenaar, 2012). They greatly influence people’s way of doing business and managing as well as their responses in the face of moral dilemmas. They are presented as follow:

2.2.1 Universalism versus particularism

This first dimension defines how we judge people’s behaviour. Universalist, or rule-based behaviour, tend to be abstract and imply equality in the sense that all persons falling under the rule should be treated the same. It tends to resist exceptions that weaken that specific rule, there is a fear existing that once you start to make exceptions for illegal conduct, the system will collapse.

According to Trompenaar (2012), particularist judgements focus on the exceptional nature of present circumstances. This person is not “a citizen” but is a person of unique importance to you, which need to be protected no matter what the rules say. (Trompenaar, 2012).

2.2.2 Individualism versus communitarianism

The second dimension discusses the conflict between what each of us wants as an individual and the interests of the group to which we belong. Trompenaar (2012) explains that international management is seriously affected by individualist versus communitarian preferences within different countries.

Decision making, negotiations and motivation are the most crucial areas.

Communitarian cultures prefer plural representation. Rarely does a single Japanese go to an important negotiation. Communitarian decision making typically takes much longer and involves sustained efforts to win over everyone to achieve consensus. Voting down the dissenters, as often happens in English-speaking Western democracies, is not acceptable. (Trompenaar, 2012).

2.2.3 Neutral versus affective

In relationships with people, reason and emotion both play a role. Which of these dominates will depend on whether we are affective, meaning that we show our emotions which we probably get an emotional response in return, or emotionally neutral in our approach (Trompenaar, 2012). The researcher further explains that people in cultures that are affectively neutral do not

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telegraph their feelings but instead keep them carefully controlled. In cultures with high affectivity, people show their feelings plainly by laughing, smiling, grimacing and attempt to find immediate outlets for their feelings. Trompenaar (2012) point out that neutral cultures not necessarily are cold or unfeeling, however, the amount of emotion people show is often the result of the convention. In a culture where emotions are controlled, joy or grief will still signal loudly, however, in a culture where feelings are amplified they will have to be signalled more loudly in order to register at all.

2.2.4 Specific versus diffuse

In the fourth dimension, Trompenaar (2012) explains that the degree of how we engage others in specific areas of life and single levels of personality versus diffusely in multiple areas of lives are closely related to how we show our emotions which were explained in the previous dimension. In diffuse cultures, everything is connected to everything. A business partner may wish to know where you went to school, what you think of life, politics, music and so on.

This may be seen as a waste of time for some people, however, this kind of act reveal character and form friendships. This attitude can change depending on which country your partner is coming from. In other words, specificity and diffuseness are about strategies for getting to know other people in order to have a successful business with each other. (Trompenaar, 2012).

2.2.5 Achievement versus ascription

Certain members gain a higher status in society than others. Trompenaar (2012) explains that while some societies accord status to people on the basis of their achievements, others ascribe it to them by advantage of age, experience, education, gender, social connections and so on. While achieved status refers to doing, ascribe status refers to being. While there are ascriptions that are not logically connected with business effectiveness, such as gender and skin colour, some ascriptions mentioned earlier do make good sense in predicting business performance. Education and professional qualification, moreover, are related to an individual’s earlier schooling and thus not unconnected with achievement. A culture may ascribe a higher status to its employees with a better education in the belief that intellectual success will generate corporate success. (Trompenaar, 2012).

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2.3 Adaptation towards cross-culture

In Journal of International Business Studies, a study by Chanthika Pornpitakp (1999) is presented. The study is about how the effects of cultural adaptation on business relationships for Americans is when selling to Japanese and Thai.

Pornpitakpan (1999) describe that the object with the study is whether cultural adaptations are beneficial in intercultural negotiations in the context of selling.

The study did an experimental design where 145 Thai and 101 Japanese professionals were investigated in order to gain knowledge if adaptation to their culture was beneficial for Americans (Pornpitakpan, 1999). Pornpitakpan (1999) highlight that there is a positive effect regarding the cultural adaptations even while Brown and Masao (1960) state that Japanese business people tend to make a clear separation between outsiders and insiders in the country. The result stated that Thai and Japanese tended to favour the Americans that adapted more to their culture (Pornpitakpan, 1999).

In a journal from the International Marketing Review, the authors Johnson and Arunthanes (1995) studies product adaptations. According to Johnson and Arunthanes (1995), cultural value differences in different evaluation of the attributes and appeals of a product. Therefore, differences between domestic and export market cultures significantly influence the adaptations of products.

Due to that consumers rely more on their personal values and experiences in purchasing, these influences are greater for consumer products rather than industrial products (Johnson and Arunthanes, 1995). Also, the differences in the level of product desires or liking between two markets can be a crucial role.

If the export market and domestic customers differ in their preferences and taste of a product, product adaptations bridge those differences (Johnson and Arunthanes, 1995). The Japanese desire beautiful packing which has led the export business to offer modified cartons and beautiful packaging for this specific market. By adapt your business for a certain culture and meet their desires, one could argue that it gives the firm advantage on the chosen export market. According to Johnson and Arunthanes (1995), earlier research showed that products adapted for the Japanese market had higher market shares than products that were not.

Additionally, according to Roden and Lawson (2014), in a buyer-supplier relationship, organisations should do something unique to develop a competitive advantage. Adaptations have the potential to transform an economic exchange into a socially embedded relationship reducing risks.

Relationship-specific adaptations are characteristic of a process whereby

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buyers and suppliers connect with one another in effort to make their relationship more enduring and productive (Roden and Lawson, 2014).

2.4 Managing relationships

Relationships are a company’s most important asset due to the fact that without them it cannot gain access to the resources of others and acquire supplies needed to solve problems. A company’s relationships are the assets that bind together all of its other assets and convert them into something of economic value for itself and others (Ford et al, 2011). One of the most important aspects of relationships as assets is that they have to be built up over time through a process of incremental investment. According to Ford et al. (2011), they generally develop through four characteristics; The pre-relationship stage, exploratory stage, developing stage and the stable stage.

The pre-relationship stage is classified as the pre-existing situation that every relationship arises from. There is likely to be some inertia in this situation for both the customer and the supplier. Searching for new suppliers or customers and later on evaluating them takes a great deal of time and effort. This stage is mainly research for a customer or a supplier to create a relationship with one another and see if the counterparts match their set requirements for doing business with each other (Ford et al. 2011). It can further be related to what is mentioned in the problem discussion where the thesis argues that when being in the establishing phase of a relationship in Japan, one should always send the most senior executive possible (Asialink Business, n.d.).

Ford et al. (2011) further explain that the exploratory stage is the part when the customer and the supplier engage in discussion or negotiation about a possible purchase of a one-off business service, such as consultancy or sample deliveries. However, the counterparts will still have a little work experience together. There will be a lack of routine procedures and both parties are likely to have to invest great management thought and time to the relationship for it to be further developed.

The developing stage is when the business between the two companies are growing in volume or changing in character in a positive way. The deliveries of purchased services or products are building up as well. This stage is associated with growing actor bonds and the uncertainties between the counterparts are reduced by the relationship development and adaptations are made for further extension investments. Dowell, Heffernan and Morrison

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(2013) mentions that the level of trust at this phase of the relationship is arguably vital as it establishes the foundation for the rest of the relationship.

Ford et al. (2011) mention that it could either be formal adaptations, where the counterparts are showing commitment through social events or informal adaptations, which is a major indicator of commitment towards the relationship. However, these adaptations can be costly and are therefore vital to ensure the successful and profitable development of the relationship (Ford et al. 2011).

For the last category, the stable stage is discussed. This stage occurs when stability in investments, commitment to the relationship and learning of each other is reached. This stability could occur when delivery of an offer has become routine, or after several purchases. Having good stability between the counterparts can lead to the establishment of standard operating procedures, trust, and a decrease in uncertainties which moreover will decrease their costs of handling the relationship. (Ford et al. 2011)

Winer (2001) states that managers today can build better relationships with customers than before due to the World Wide Web. With the web, foreign firms can respond to electronic mails and to the requests that the customers have directly (ibid). This further leads to that companies can easier nurture and maintain a long-term relationship with their customer abroad (Winer, 2001).

Although, the web does not only lead to that firms easier can managing customer relationships. Winer (2001) further explains that companies can take advantage of the web with lowering costs and therefore only offer online contact which will lower the quality of service. This approach is a part of the CRM (customer relationship management) and according to Chalmeta (2006), it is in the direction of relationship marketing. When doing relation marketing the attitude against the customers differs since firms focus on marketing and customer care in order to create value for their customer (Chalmeta, 2006).

2.5 Theoretical framework

In the following section, the study will present a framework which has arisen from the literature review. A theoretical framework has been developed due to different business cultures, adaptations and relationship management has been selected as three important concepts of doing business between Swedish firms and Japanese customers.

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As can be seen in the figure below, Sweden and Japan first face the cultural differences between each other. As is presented in the literature review there is a great difference between Japan and Sweden regarding the business culture in several areas. Further, in the business process, the literature review argues that adaptations are necessary when doing cross-cultural business due to the cultural differences between to markets. Finally, we find the relationship management as an important pillar for successful cross-culture business which is the final step in the theoretical framework.

Figure 2. Theoretical framework. (Own model, 2019)

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3. Methodology

In the following chapter, the chosen research approach and research method for the study is. Furthermore, the research strategy will be discussed and argued why a case-study is the best choice in order to answer our research questions. Additionally, the data collection process will be presented which will distinguish primary and secondary data. Lastly, the research quality design is presented and discussed.

3.1 Approach

There are generally three method approaches that discuss the connection of theoretical and practical knowledge which are deduction, induction and abduction. The most common view of the relationship between theory and research is associated with a deductive approach (Bell, Bryman and Harley, 2019). For a deductive model in research, the researchers test or verify a theory by examining hypotheses or questions derived from it (Creswell and Creswell, 2018). With the objective of testing or verifying a theory rather than developing it, the researcher advances a theory, collects data to test it and reflects on its confirmation from the results (ibid). On the contrary, an inductive approach, the researcher begins by gathering information from participants and then develop this information into theories that are then compared with existing literature on the topic (ibid). For the third method, the abductive method emanates from the empirical data. However, it does not reject theoretical models. One can describe this method as a blend of the inductive and deductive method where the researcher involves theories based on the collected empirical data (Bell et al, 2019). The abductive method starts with a problem that the researchers want to explain or clarify. One tries to identify those conditions that would make the stated research question less baffling and then transform facts from theories to something obvious and natural (Bell et al, 2019).

Anna Dubois and Lars-Erik Gadde are discussing in their journal Systematic combining: an abductive approach to case research of systematic combining.

By using this method, the research goes back and forth from theoretical and empirical data and therefore helps the researcher to find other patterns to gain a better understanding of the topic (Dubois and Gadde, 2002). Theories cannot be fully understood without empirical observation. Therefore, the empirical observations for this research might result in the identification of related issues that may be further explored in interviews. As authors, this might bring a

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further need to redirect the current theoretical framework through expansion or change of the theoretical model. In order for this to be an option for the researchers, systematic combining will be used in this thesis.

Since this study will first discuss theories already existing in the subject and later collect the empirical data, the inductive approach is not suitable for this thesis. It is further stated that with an inductive approach the difficulty is that even if a great amount of empirical data is collected it will not ensure a theory- building to take place (Bell et al, 2019). Furthermore, the thesis will not present any hypothesis on already existing theories with empirical data which is presented in a deductive approach (Bell et al. 2019) and therefore the deductive approach will be rejected as well. Bell et al. (2019) describe that with a deductive approach the reliance is questioned since it is not clear which theories to be selected in the subject. The third remaining approach, abductive, will, therefore, be applied which is one of the more popular approaches when doing business research (Bell et al, 2019). The abductive approach overcomes the limitations that both a deductive and an inductive approach has which is mentioned above.

Finally, we find culture to be a difficult subject in the sense that it is very subjective and complex due to the different views on culture all over the world.

Since culture is a complicated subject, the study will use systematic combining in order to find a pattern and a better understanding of the use of theories and empirical data. For that reason, we find the abductive approach to be the best applicable one in order to answer our research question.

3.2 Research method

Research methods are plans and the procedures for research that span the steps from broad assumptions to detailed methods of data collection and analysis (Creswell and Creswell, 2018). The overall decision involves which approach should be used to study a topic. Generally, it is a qualitative method, quantitative method or a combined method of them both. Often the distinction between these two research method's is framed in terms of using words, like in qualitative, rather than numbers that are used in quantitative. Or better yet, using open-ended questions and responses or closed-ended questions and responses (Creswell and Creswell, 2018).

According to Denzin & Lincoln (2008), qualitative research involves an interpretive, naturalistic approach to the world. This means that qualitative

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researchers study things in their natural settings, attempting to make sense of the phenomena in terms of the meaning people brings to them. Furthermore, Creswell (2013) states that there are several characteristics of qualitative research. Researchers that use qualitative research method often collect data in the field at the site where participants experience the issue or problem under study and gather up information by talking directly to people. Additionally, the research process is also emergent. This means that the initial plan for research cannot be tightly prescribed, and all phases of the progress may change after that the researchers enter the field and begin to collect data (Creswell, 2013).

To be able to provide context for our chosen research, which demands a deeper understanding of our chosen topic, we have decided to use a qualitative research method. To be able to gain a deeper understanding, this can only be established by talking directly to people and allowing them to tell the stories freely by what we expect to find or what we have read in the literature (Creswell, 2013). Therefore, we have decided not to use quantitative research method. Our aim for this study is to frame a deeper understanding of how relationships are managed in a business context between Swedish firms and their Japanese customers and what adaptations are made due to the cultural differences.

3.3 Research strategy

There are several ways when conducting a research strategy and Bell et al.

(2019) mention five of them. First of is the experimental design is related to quantitative research design (Creswell and Creswell, 2018). The second design is a cross-sectional design which is a method when one collects data from more than one case and connect with two or more variables in order to find a pattern (Bell et al. 2019). Bell et al. (2019) further mention a third research design which is a longitudinal design and is often used to map a change in business and management research. This design is associated with a quantitative research design as well (Creswell and Creswell, 2018). The fourth design is the case study design which focuses on a single case such as a single organisation or a single location (Bell et al. 2019). In a case study design the researcher first select a case followed by stating question regarding the case (Maxwell, 2013).

Lastly, Bell et al. (2019) describe the comparative design which is when the researcher compares two or more different cases while using the same method.

As an example, it could be a comparison of different management system in different nations.

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For our research, we find that the best one is to follow the case study design since we have a focus on a specific topic which in our case is a focus how Swedish firms adapt when managing business towards Japan. Since we have a specific and single location, Japan, a case study design is the most appropriate choice. One could, however, argue that a comparative design is appropriate as well since we have two different regions in comparison, Sweden and Japan.

We do, however, have the research question which has its focus on the Japanese market, a single place, and by that a case study design.

Yin and Nilsson (2006) describe that when having a case study, it enables the researcher to maintain the whole and the key factors in real events. The case study design can be sorted in four different groups depending on if the study has one single (holistic design) or multiple (embedded) units of analysis and if a single case is studied or multiple cases (Yin, 2018). This study will have an embedded view meaning a several units/companies is applied in the analysis.

The study will further have a single case study since we have the main unit which is the Japanese market. What is important when having this design on the case study is to choose the case very carefully so replication can be made (Yin and Nilsson, 2006).

3.3.1 Companies and interviewees for case study

The interviews conducted was all in Swedish with people which have some experience in the field of the Japanese business culture. Three of the interviews were through skype since they were not located in Sweden while the two others were. The shortest interview was 23.37 minutes and the longest was 49:29 minutes. The criterions for our thesis are based on three concepts. Firstly, is that the interviewee has experience about the Japanese business culture, and secondly, that they can talk from a Swedish point of view. All interviewees have knowledge and experience about the Japanese business culture and was therefore chosen. Regarding the Swedish point of view one exception was made where the company Yaskawa is a Japanese owned company with an operation unit in Sweden. We do however value Robert Bickö’s knowledge about the Japanese market and therefore the interview was conducted. In order to receive information from the Swedish point of view the interviewees all were Swedish and the interview was conducted in Swedish as well. Thirdly, all companies are working business to business.

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ID: Name: Company: Title: Execution of interview:

Length of the interview:

P-A P-A

Järneström

Trelleborg Sealing Solutions

Vice President Asia Pacific

Skype interview

27:46

O.M Olle Moberg Norden Machinery

Sales Area Manager for the Middle East and Asia

Face-to-face interview

49:29

T.Ö Thomas

Östergren

Atlas Copco Vice president Holding Japan- Korea

Skype interview

23:37

C.N Carl Norsten Business Sweden

Consultant, Japan Skype interview

32:45

R.B Robert

Bickö

Yaskawa General Manager Operation

Face-to-face interview

36:06

Figure 3. Table of the interviewees and information of the interviews. (Own model, 2019)

3.4 Data collection

Data collection is a series of interrelated activities aimed to gather good information to answer the research question and qualitative researchers engage a series of activities in the process of collecting data (Creswell, 2013). Data collection could be the most important part of the research process. Without data, there cannot be any research (Corbin and Strauss, 2015). Creswell (2013) further argues that a typical reaction of qualitative data is that the focus of collecting data is on the actual types of data and the procedures for gathering them. However, it also involves gaining permissions, conduct a good sampling strategy, storing the data and anticipate issues that may occur, only to mention a few.

3.4.1 Primary- and secondary data collection

Data collection in a qualitative research design typically involves collecting a large amount of data using techniques such as in interviews, pant observation, or focus groups (Hox and Boeije, 2005). Data that are collected for the specific

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research problem using procedures that fit the research problem best are primary data. Progressively, this collected material with other researchers is made available for reuse is then called secondary data. This kind of data may be used for reanalysis, research design and methodological advancement (ibid).

Methods that are often used to collect primary data in qualitative research is the qualitative interview. The interviewees are given the opportunity to talk about their experiences and views of the chosen topic. DiCicco-Bloom and Crabtree (2006) state that qualitative interviews have been categorised in three different ways; unstructured-, semi-structured- and structured interviews.

Unstructured interviews are characterised more as an observation of the field the researcher’s study with questions emerging over time as the interviewers learn about the setting over time. Semi-structured interviews are usually scheduled in advance at a designated time and place. The questions are generally organised around predetermined open-ended questions, with other questions emerging from the dialogue between the interviewers and the interviewee. Lastly, structured interviews more limited and controlled by the interviewers with their chosen questions (DiCicco-Bloom and Crabtree, 2006).

3.4.2 Interviews

When conducting interviews Trost (2010) argue that one can have a different degree of standardisation meaning to which extent the questions are the same to the different interviewees. When the degree of standardisation is low, one takes the questions as they fit in the conversation and potential supplementary questions are applied (ibid). While having a high degree of standardisation is the opposite where the interviewees get the exact same question, which often is used in quantitative studies (Trost, 2010). Trost (2010) further describes that one can either have a structure on the interviews or having them unstructured.

This refers to which extent the interviewee can develop their answer (unstructured) or if they are locked to certain answers (structured) (ibid). This thesis will have a low standardisation regarding the interviews in order to have a flow in the interviews and receive additional information with supplementary questions. Regarding the structure, the thesis will have unstructured interviews since it enables the interviewees to explain and elaborate their answer with a real-life example for instance.

As is described in the section above one can either have structured, unstructured or semi-structured interviews. Bryman and Bell (2017) write that when having unstructured or semi-structured, the interviewees and the

They came, they saw, they adapted: How Swedish firms adapt when managing cross-cultural business relations with Japanese customers