Japan’s Hierarchy Paradox
Why many foreign managers get Japanese decision-making wrong
Welcome to this week’s edition of Japan Business Secrets!
I’ll be honest — it took me a little longer to get this one out. Over the weekend, I revisited The Culture Map by Erin Meyer, and it gave me a fresh lens on something every foreign manager in Japan wrestles with: decision-making.
Which brings us to today’s big topic — a problem that I call “Japan’s Hierarchy Paradox”.
If Japan is so hierarchical and everyone expects the boss to make the final call, why does it so often feel like no one’s making any move at all?
This is a contradiction that for years I couldn’t wrap my head around.
Why won’t the boss just sign off your proposal and move on? Why do Japanese organizations need to convene and deliberate for weeks to decide just about anything?
We’ll break it down and see how you can make sense of this apparent contradiction.
But before we get into the “soft stuff,” let’s start with some hard facts.
Japan is changing – often quietly – which is why I’m highlighting a few key stories here. From semiconductors to electric vehicles, big shifts are about to happen, and the smart players are paying attention.
Let’s dive in.
Last Week in Japan: What you might have missed
🔹 Mitsubishi Partners With Foxconn to Build EVs
Can Japan’s automakers catch up their lag in EVs?
Mitsubishi Motors is shifting gears: The Japanese automaker has decided to outsource EV manufacturing to Hon Hai Technology Group, better known as Foxconn. The Taiwanese electronics giant will produce Mitsubishi-branded electric vehicles in Taiwan, with initial shipments targeting Australia and New Zealand, according to a Bloomberg report.
With former Nissan executive Jun Seki now leading Foxconn’s EV strategy, the Taiwanese are aggressively looking to expand beyond iPhones. Partnering with Mitsubishi could boost its credibility in vehicle manufacturing and open doors to future deals.
For Mitsubishi, one of Japan’s smallest automakers, this deal might open new opportunities beyond its limited production capacity.
🔹 Science Park Near TSMC to Cement Japan’s Silicon Ambitions
Japan is ramping up its semiconductor capabilities — once again with Taiwanese support.
Mitsui Fudosan has partnered with two leading Taiwanese research institutes to develop a science park near TSMC’s Kumamoto fab, aiming to boost talent development and high-tech research.
Taiwan’s model – National Yang Ming Chiao Tung University (NYCU) supplying engineers and Industrial Technology Research Institute (ITRI) driving R&D – helped cement its chip dominance. Japan hopes to replicate this success, complementing TSMC’s growing presence in the south of Japan.
With its geographic closeness to Taiwan, Japan’s “Silicon Island” Kyushu is becoming a major hub in the global chip industry.
🔹 Will Japan’s exit from ultra-easy monetary policy continue?
All eyes were on Bank of Japan governor Kazuo Ueda last week.
For now, the central bank kept interest rates unchanged, citing global uncertainties, including U.S. trade policies. After hiking rates for the first time in eleven years last summer, and once again in January, the BoJ is monitoring wage growth and inflation before making its next move.
With inflation above the BoJ’s 2% target and Japan’s unions securing 5.46% pay hikes, markets anticipate another rate hike before the summer.
🔹 JXAM Surges In Biggest IPO Since 2018
Japan’s largest IPO in more than six years got off to a strong start.
JX Advanced Metals (JXAM), a spin off from energy giant Eneos, jumped 17% in the three days since its Tokyo debut after raising close to US$3 billion, despite initial concerns about weak investor demand. The semiconductor materials supplier priced its shares at the top of the marketed range, signaling that appetite for tech stocks remains strong.
JXAM’s successful listing could give Japan’s IPO market a much-needed boost after a slow start to 2025.
Beyond the Headlines: This Week’s Deep Dive
Japan’s Hierarchy Paradox:
Why the Boss Won’t Decide By Himself
Many foreign managers in Japan have experienced this moment: a crucial meeting is held, key executives are present, and a decision is on the table — yet, no one seems willing to make the final call.
The expectation, shaped by the visible hierarchy in Japanese organizations, is that authority flows from the top. But in reality, decisions are rarely made by individual executives.
Hierarchy dictates who gets consulted, not who decides.
In the West, we expect leaders to make bold, clear decisions as a sign of strong leadership. In Japan, however, it's understood that the process requires a strong group consensus first.
Authority on Paper vs. Decision Paralysis
Titles on business cards, seating positions, who greets whom first. In Japan, it seems like it’s all about rank and rituals.
Yes, hierarchies and respect for authority are paramount, something Dutch social psychologist Geert Hofstede calls high “Power Distance”. (I’ve introduced you to Hofstede’s 6 dimensions of national culture before).
But as you might remember, Japan also ranks high on “Uncertainty Avoidance”, meaning decisions are carefully scrutinized to minimize risk. These two traits create a paradox:
Clear hierarchies, but slow, collective decision-making.
Over the years, I’ve seen many foreign clients come to Japan with this attitude:
Let’s go directly to the top, have a couple of good meetings with the CEO, and sign the deal.
The challenge for Western managers is that, while Japan may look highly hierarchical and ritualistic on the surface, its decision-making process is actually deeply consensual.
In fact, Japan has one of the most consensus-driven approaches to decision-making in the world.
This isn’t just my personal observation; it’s backed by academic research. Erin Meyer, an INSEAD professor, maps this dynamic out in her book The Culture Map.
The “Culture Map” to Japanese Decision-Making
Meyer’s research places Japan among the most hierarchical societies, alongside South Korea and China.
Contrast this to Denmark or the Netherlands, where flat structures dominate. The U.S. and Germany fall somewhere in the middle, while France and Italy are among the societies with the most distinct executive authority in Europe.
Yet, despite strong hierarchies, Japan leans heavily toward consensual decision-making.
When mapping out how managers lead across cultures (top-down vs. consensual) and how they make decisions (egalitarian vs. hierarchical) in four dimensions, you immediately see Japan on the opposite end to Anglo-Saxon countries — and very different to North-Western Europe.
Or contrast this to China and France, two societies with distinct elites that have a preference for top-down decisions.
Japan is clearly off the charts.
What does this mean in practical terms?
Leaders in the U.S. or Canada can make a call first and adjust later. In Japan, decisions happen only after complete group alignment is reached.
Nemawashi – the informal process of securing buy-in before an official meeting –ensures that by the time a decision is made, objections have already been resolved.
Ringi-sei, the formalized system of bottom-up approval, follows the same logic: decisions must be thoroughly reviewed and agreed upon before action is taken. It ensures stability, prevents risky moves, and keeps responsibility distributed.
This minimizes disruption but requires patience from those used to faster-moving environments.
Cracks in the System: From Startups to Sony
Not all Japanese companies adhere strictly to traditional consensus-driven decision-making.
Startups and owner-led businesses operate differently. Entrepreneurs often make quick, decisive calls without the layers of approval found in established corporations.
But while these agile decision-making practices are expected in young companies, even some of Japan’s corporate giants are beginning to embrace change.
Sony’s turnaround under Kazuo Hirai involved streamlining its decision-making process to be more responsive to global markets.
Hitachi, now a leader in AI and energy solutions, restructured its management approach to foster faster, more strategic decision-making.
Or take Resonac (formerly Showa Denko): Here, former investment banker Hidehito Takahashi has adapted the leadership structure to allow for more agile corporate governance.
While the ringi system remains a key aspect of Japanese corporate culture, some organizations are modifying their approach to balance efficiency with alignment.
How Foreign Managers Can Play the Game
For foreign executives, success in Japan often depends on adapting to this decision-making framework.
Expect that many decisions will not take place in the meeting itself, but your counterparts will need to deliberate with other stakeholders involved.
Recognize that indecisiveness, or silence, in a meeting might indicate that not all required information have been gathered.
Rather than pushing for immediate resolutions, ask what further concerns they might still have — and offer to provide more information.
Middle managers play an essential role in shaping outcomes, so gaining their trust and support is often more effective than appealing directly to senior leadership.
Engage in nemawashi — building relationships, aligning with various stakeholders, and understanding the informal networks that shape decisions.
A “Slow Yes” is What You are After
Japan’s Hierarchy Paradox – where respect for authority coexists with slow, consensus-driven decision-making – is a fact of life anyone doing business in Japan cannot ignore. It’s an intentional system built for stability and careful decision-making.
While it can be frustrating for Western managers accustomed to more direct leadership styles, the system is designed for long-term stability. It ensures Japanese organizations avoid quick and dirty decisions.
For those who learn to navigate it, the rewards are well worth the patience.
Talk soon.
Pascal
Thank you for this easy-to-digest summary of how many Japanese companies make decisions.
First, I am glad that you addressed the apparent anomaly of how decisions can be made in a top-down format at startups or other entrepreneurial-led businesses. My first job at a Japanese company was at such a firm, which had recently been acquired by the famously hierarchical Mitsubishi Corporation. The original founder was still the CEO and liked to fly by the seat of his pants, making almost all the important decisions. As you can imagine, the tension between these two management styles was palpable at times.
Recently, my colleagues in India and I pitched a fairly large project to a medium-sized Japanese firm. After waiting several months following a visit by two mid-level managers who continue to act as our primary access points to this prospect, we were recently told that they failed to gain consensus among top management to move forward. Although we offered to answer any remaining questions, meet with the executives at their headquarters, and make the proposal more cost-competitive, our contacts essentially asked us to "stand down" and continue to wait. Do you have any suggestions for how we should proceed?