I. OVERVIEW Modern Japan has long captured the attention of economics and researchers around the world. The island-country provides a fascinating example of immense successes against all odds, from its isolated geolocation, lack of natural resources to the total economic collapse post World War II. With a GDP that ranks third worldwide in 2014 only after the United States and China, and a population that is a fraction of the former two, Japan owns a great deal of its achievement to various homegrown aspects (World Bank, 2014). This essay analyzes keys aspects of Japan to get a broad overview of Japanese business culture, using the Hofstede's Model and key social institutions.
II. HOFSTEDE’S MODEL OF JAPANESE CULTURE:

Figure 1. Japan on the Hofstede's Model (The Hofstede Centre, 2016).
Figure 1 shows Japan's scores on six dimensions of the Hofstede's Model. Based on these scores, Japanese culture is characterised by low power distance, high masculinity, high context, medium individualism, very high uncertainty avoidance, and high long-term orientation.
1. Power Distance
Japan is ranked at an immediate score of 54 in power distance index. It shows that the extent between the powerful and the less powerful within institutions and organizations is neither very far nor showing immense inequality. Japan almost reaches the balance.
Confucianism makes a deep impact on Japanese culture. The main effect of Confucian philosophy on Japanese business is in the development of a strictly hierarchical working environment. Decision-making process is slow because all decisions have to be confirmed by each hierarchical layer and finally by the top management. A typical style of Japanese management is Ho-ren-so. Ho-ren-so stands for Hokoku (report), Renkaku (communication, touch base) and Sodan (discussion). Firstly, the supervisor gives a general instruction to the subordinate. Then, the subordinate will proceed the project in first steps, such as planning the project, outline or first draft. After that, he brings this to the supervisor, to let him know where he is going with it. The supervisor will evaluate the report and feedback to the subordinate. The subordinate continues his work, taking further steps and again contacts his supervisor for further comments. This process repeats itself over the course of the project. At each step, the supervisor is involved and regular adjustments are made. The project is considered finished only when it meets expectations of the supervisor.
On the other hand, the hierarchy in Japan is not like any other Asian cultures. Japanese stresses on harmony and unity in group so that no one is exactly the top person to make all the executive decisions. Everything needs consulting by every member, the upper willingly listens to the lowers’ idea and they discuss together to reach the final consensus. In this perspective, the superior treats the subordinate with respect and does not pull the rank card. Another example is that every pupil in school is treated equally and shows appearance in uniform irrespective of who his parents are. Even Princess Aiko has to walk to her primary school, wearing school uniform like any other pupils. It reflects a strong notion in the Japanese education system that everybody is born equal and anyone can get ahead and become any thing if she works hard enough.
2/ Masculinity
At 95, Japan is the most masculine societies in the world. There is high regard for men’s role in society. In general, Japanese masculinities are described as the salaryman who “toils long hours for Mitsubishi or Sony or some other large corporations, goes out drinking with his fellow workers or clients after work and plays golf with them on weekends, and rarely spends much time at home” (Roberson and Suzuki, 2003). Traditionally, Japanese man is expected to be strong and dominant. Home is the place for women.
Notorious Japanese workaholism is another expression of Japanese masculinity. Japanese live to work and work prevails over their lives. A Japanese employee dedicates all his time and his own interests to work, decline vacations or sick days. Work is their first priority in life. Working for long hours with a heavy workload leads Japanese to karoshi, death from overwork.
Sport competitions also reflect Japanese masculinity. At the very young age, Japanese children learn to compete in playing sports by being divided into groups. Kendo is one of tradition Japanese martial arts arose from the samurai, a warrior in feudal Japan, fighting with a bamboo sword. The most important goal of Kendo is to cultivate a strong mind and nurture tough spirit.
In addition, masculinity of Japan is also expressed through their strong desire for excellence and perfection in their material production. Monozukuri is a term referring that Japanese drive.
3/ High Context
Japan is considered a high context culture. High context culture tends to rely on implicit, non-verbal communication and indirect expression of ideas. The reason for using high context communication is face factor and harmony relationship protection.
Face is a very significant factor in social interactions with Japanese. Japanese is sensitive to having face in all aspects of social and business life. Losing face means losing all. They also stress on keeping harmony in group. As a result, they are likely to avoid explicit opinions or personal feelings in order to prevent others from losing face or thinking badly of one. They will use a high context reply to express their idea, like “beating around the bush.” They never say “no” directly. Instead of that, they will use an incomplete sentence with an open-ended for the listener to understand their implication. For example, when someone wanst to refuse an invitation to a party, he says: “Chotto...” with a soft voice. There are also listed as four possible types of Japanese refusal (Raohaburanakitto, 1995).
In a business context, the indirect and non-verbal negotiation style is quite typical for a Japanese businessman. They are unwilling to say “no,” in particular they say “yes” but it means “no.” For example, when you tell Japanese like: “I want you to lend me a hundred of dollars,” they will say “yes” but not actually offering you money. Japanese’s “yes” just means “I’m listening to you.” If Japanese do not want to enter a deal with you, they never give a negative reply. Instead, you cannot contact them thereafter. He or she will be always sick, on vacation or on business (Lewis, 1996). Japanese says “hear one, understand ten.” The other tactful way to say “no” and end the conversation without a negative response is: “I will consider it.”
4/ Uncertainty Avoidance:

This concept expresses the level of uneasiness of the people when facing uncertainty and ambiguity, or the approaches a society use when dealing with changes and unknown risks. Japan's scores of 92 means the nation is one of the highest Uncertainty Avoidance countries in the world, which makes sense considering Japanese society relies heavily on rules, laws and regulations. Such strict adherence can be explained by the poor natural resources and natural calamities that surround the country. More often than most countries, Japan has a history of suffering through major natural disasters like earthquakes and tsumamis. To counter the stress of constant destruction, Japan prepares itself well in anticipation for these disasters. Infrastructure and buildings are built with advanced earthquake-resistance and anti-shock technology. Japanese people are taught with everyday order in case a disaster hits at any moment. For example, Japanese queue for everything and are in good manner when interacting in public place. Japanese people also take their traditions very seriously and always perform them on appropriate occasions. This well-prepared and ordered culture is a result from Shinto thinking, which stresses Purity.
When a country is driven by purity and spends a lot of time on preparing for the future, there is no room for chance and risks. Thus, high uncertainty avoidance exists in not just Japanese national culture but also its business practices. Japanese culture simple does not see change as a favorable concept.
Yet with a population that is rapidly aging (World Bank, 2016), employee availability becomes more limited and businesses will have to move manufacturers and companies to overseas. The more international employees a Japanese company has, the harder it is for the Japanese management team to maintain the order and rules-adherence its culture is so famous for. The inevitable result will be a decrease in the number of employees that are loyal to the companym, effectively changing the Uncertainty Avoidance nature of Japanese business culture, regardless of their liking.
5/ Long-term orientation:

This dimension is expressed by how much a culture values patience in relation to time itself (Table 5).
Japan has high score for long-term orientation. Japanese people know that they only occupy small parts of their organization. Similar to other Asian cultures, Japanese employees are expected to stay with one company for their entire working careers. Japanese companies invest an enormous amount in their employees’ training and development. New employees are tried and trained in six to twelve months in each of departments or divisions so that within a few years they would have adequate experience. In Japanese organizations, supervisors and employees have a largely egalitarian relationship where consensus on both parts is required for making decisions. Rather than being a source of authority, top management is seen as a facilitator/consensus builder and has the responsibility of maintaining harmony so that employees can work together. Top management takes control from middle management, who base policies on the information forwarded by subordinates.
Beside, Japan has a very high HDI (The Human Development Index). This index also reflects the long-term orientation in the country's culture. Nowadays, Japan is facing a lot of difficult society factors that may cause its orientation to become more short-term. One major factor is the aging of society. Japan’s working-age population has been in decline for almost 15 years. The effects of an aging society will therefore be felt greater in Japan than in most countries. Fewer working individuals will have to take care of an increasing number of elderly citizens. It is likely that retirement benefits will decrease. Younger workers may begin to focus on life in the short-term as the long-term becomes much less attractive. Like the uncertainty avoidance dimension, the long-term orientation of Japanese bussiness culture may too change in order to adapt with the changing society.
6/ Indulgence:

Japan has a low score of indulgence, which shows a culture of Restraint. Societies with low scores in this dimension have a tendency to cynicism and pessimism (Table 6). In contrast to indulgent societies, restrained societies do not put much emphasis on leisure time and control the gratification of their desires. People with this orientation have the perception that their actions are restrained by social norms and feel that indulging themselves is somewhat wrong.
The Japanese are known to be famous savers in money, material and natural resources. In comparison to other Asian countries, Japanese people usually do not give in temptation, have stricter moral disciplines and stricter sexual mores. They have high control when drinking with colleagues and long-time partners. Overall, Japanese people are generally stoic and exert self-control.
7/ Individualism:
Japan has low score for individualism, indicating a collective society. In collective society, group is more important than any individual that makes up the group.

A main point in Japanese collectivism is close relationships between everybody (Table 3). They are very group-minded, sociable, care enormously about what others think about them, and often do things only because other people do it too. In companies, they tend to seek everyone's opinion before making a decision to maintain harmony. Group harmony is an essential element to gain social acceptance. Japanese business people are oriented to the group they belong to, and this attitude of being concerned about the group’s interests still dominates interactions in schools and workplaces in Japan. Even when a Japanese business individual disagrees with the group’s direction, she is still willing to maintain a positive attitude to support the group in public.
Traditionally, Japanese families accommodate two or three generations in one single home. In modern Japan it is still common for grand-parents, parents and children to live in the same house. But with young generations rising, such collectivism will change. Modern youths do not keep habitual contact with their relatives like they used to. Like uncertainty avoidance and long-term orientation, Japanese score for individualsim would certainly be a higher in the future.
III. KEY SOCIAL INSTITUTIONS
Hofstede's model focuses on the influence of the national culture of Japan. However, national culture is not the only factor that shapes Japanese business practices and cultures. Key social insititutions also have major implications. This part of the essay looks at five key social insistutions in Japan: Economic system, level of industrialization, religion, education and social inequality, to further expand the analytical look at Japanese business culture.
1/ Economic System:
Dominant market type and market transitions are two important criteria when assessing the economic system of a country. The concept of market transition does not apply to Japan in this case, as the country did not make a transition from socialism to a market-based economy. Dominant Market Type:
The dominant market type can be socialist (command economy), capitalist (market economy) or a combination of both socialist and capitalist (mixed economy). These concepts are based on the degree of involvement from the government in the operation of the free market of that country. As the governmental involvement increases, the market type moves from being capitalist to socialist. The index of economic freedom is used to determine which market type the country is.
As of April 2016, Japan scores 73.1 for this index, earning the ranking as the twenty second most economically free country (Heritage.org, 2016). The score places Japan in the Mostly Free category, along with other powerful economic centers like Germany, the Republic of Korea and the United States. Such relatively high score indicates that the Japanese government does not extend substantial interference with the free market of the country, or in another way, the dominant market type of Japan is capitalist. The capitalist economic system can help explain the domination of successful large enterprises in the country. The system is profits-driven, and focuses on private owners as opposed to state-owned status.
2/ Religion:
Japan has a complex religious system. Native customes co-exist with different religious styles. Japanese people spend the new year holiday at Shinto shrines, visit Buddhist temples in the spring, and hold parties and giving gifts to each other on the occasion of Christmas in the way of God. However, only one faith truly dominates Japan. The only indigenous and oldest faith of Japan, Shinto was with the Japanese people since the country started, shaping values of the Japanese society, and until this date still exerts substantial influences on the national culture and its contemporary identity. Unlike Buddhism, Shinto was not imported from another foreign culture. The incredible relevancy of Shinto' presence can still be seen through the countless shrines that dot the country, through annual festivals, harvest rites etc.
Translated as "the Way of the Gods" (Genzberger, C., 1994), Shinto worships spirits called kami, and since these spirits are infused in natural components, Shinto stresses the bond that bounds everything in peace and harmony. This element is very much alive in Japanese business environment, where maintaining harmony among business relationships is of utmost importance.
3/ Level of Industrialization:
There are three stages to describe the industrialization stage of a country. The first stage is called pre-industrial. A pre-industrial country has an economy that is predominantly agricultural with raw materials--the primary economic sector. The second stage, the industrial, moves on to goods manufacturing activity-- the secondary industry. The third and last stage is the post-industrial that emphasizes on the tertiary industries of services (banking, telecommunication, entertainment, retail sales, accounting, tourism etc.)
The Meiji period (1868- 1912) created the foundation for Japanese transition to post-industrial society (Karan, 2010). In the 1970's Japan finally entered this third stage of industrialization. Transitioning to a post-industrial society, Japan moved to emphasize information, research, service and technology (Nagahama, 1998). In 1990, 60% of Japanese workforce worked in the service sector (Ohmae, 1990). Since then the country has found tremendous success. For example, Sony Corporation is a worldwide brand of high technology products that are worth billions of sales. A typical postindustrial society also has huge levels of production, annual national income, savings, and investment. The managerial, professional and technical jobs are responsible for generating the largest proportion of Gross National Product (GNP) in Japan. In addition, Japan is the world's leading investors in other nations.
The emphasis on this tertiary sector requires employees to have an advanced education in order to develop specific skills, hence Japanese workers create one of the most skilled workforces in the world, pioneering many high technology fields like robotics and biotech.
4/ Education:
Education refers to the degree of preparation for individuals to grow in society, creating a critical path to economic development and progress. Education enables people with skills, behaviors and knowledge that motivate them to dedicate themselves to the improvements of their society. Therefore, there is a correlation between educational levels and the productivity of the workers. The more educated the workforce of a country becomes, the more skilled and productive they are, and are more likely to contribute to the production of the country's economy.
The education of Japan is of decent status. The percentage of Japanese population with at least some secondary education is at 86.4%, while the primary school dropout rate is extremely low at 0.2 % (UNDP, 2016). These high educational statistics of Japan are in accordance with the country's achievement at the post-industrial stage. As discussed in the Level of Industrialization section, Japanese workforce is highly skilled in leading many technology fields. Such achievement can only be materialized with an educated workforce.
In addition, Japanese businessmen are very concerned about status, as their business culture prefers high educational level. An employee or potential partner of elite education background or has graduated from a prestigious institution can significantly improve the determinination of her status in the office or during negotiation. People with these advantages are automatically placed in senior positions compared to those who come from a normal background.
5/ Social Inequality:
The concept of Social Inequality measures how much privileged access to resources and positions people in a country have. In a country that has high social inequality among individuals in its society, the majority of its people do not have access to important resources. On the other hand, only a selected few hold the power to control these important resources, thereby perpetuating inequality further.
This social inequality of income is measured by the GINI coefficient. Japan's GINI index in 2008 stood at 32.1 (UNDP, 2016). This score shows Japanese business culture has a relatively low inequality, which means job opportunities are available to equally available to every individuals. The equality can also suggest that the employees trust that they are not being exploited by their superiers, further maintaining the loyalty and harmony that Japanese business is famous for.
IV. Conclusion
Overall, the Hofstede's Model describes Japan as a country that house distinctive national cultures with major influences on its business practices. Japanese people, accompanied by their strong beliefs in the national culture, are unified, disciplined and highly skilled. The social key institutions help strengthening these traits. However, as Japan is facing a new crisis in its rapidly aging population and the stalling economy, it is likely that the country will soon adjust these distinctive business practices in order to continue growing its already impressive economy. Until then, the consensus remains that Japanese business culture requires thoughtful study and preparation for any non-Japanese wanting to break into this proud nation.