Business Ethics in Japan

Business Ethics in Japan
Courtesy of the ACCJ Journal, © Custom Media, January 2020, Tokyo, Japan

Business Ethics in Japan

Langley Esquire President & CEO Timothy Langley was quoted in the January 2020 issue of the American Chamber of Commerce in Japan’s monthly journal for a piece on business ethics. Timothy emphasizes the need for creating frameworks that serve society as a whole, by achieving healthy cooperation between government, business, and the rest of society. This is a theme that is a guiding principle at Langley Esquire, and we are honored to be featured in such a prestigious publication.

Read the ACCJ Journal article here or the full interview below:

Japan is truly unique. While it is common for professionals in Japan to struggle to convey the depth of this concept to their uninitiated overseas counterparts, it really is true: Japan is just so very different on so many levels, ethics being a prime one. In Japanese society, as in the corporate culture here, ethics is calibrated and evaluated differently; toss in the foreign element and it is no wonder there is confusion and perplexity… and tons of mistakes.

The need for this article highlights the complexity of doing it “the Japanese way.” Management from headquarters overseas may emphasize hitting certain metrics, numbers, KPIs, etc.…without taking this critical component into account.

Foreign companies in Japan are in a particularly vulnerable position of striking that fine balance between Western ideals and Japanese standards for business ethics. The underlying theme is the constant tension between expediency vs. “doing the right thing.” Executives running a foreign company in Japan must be wary of unforeseen exposure or brand erosion which will inevitably result from neglecting proper business ethics. 

The comments provided here are based off close to 40 years of professional experience in Japan. As a foreigner doing business at a significant enough level to have danced this fine dance, I now guide organizations away from these type of challenges in my public affairs consulting practice.

Ethics in Leadership

Reputation is critical to doing business in Japan. Credibility is founded on personal relationships, and these relationships are founded in ethics. Everything revolves around personal relationships here: it is PEOPLE who are the essential ingredient, the constant element in establishing who you do business with. You build trust with the community and your consumers by demonstrating integrity and ethical leadership.

One example that springs to mind is what happened to Carlos Ghosn. In Japanese companies, it is rare that an external executive is picked to run operations as was done at Nissan. However, with foreign companies it is more prevalent. New untested executives easily suffer ethical lapses when prioritizing profit over ethics. While attempting to distinguish themselves, their over eagerness can of course be detrimental to the organization and brand, and in extreme cases result in bankruptcy and the company’s exit!

Business Ethics Tech Japan

Influence of Technology

Regulation only begrudgingly follows the rapid advancement of technology; it is important for business ethics to be a guiding principle to safeguard the interests of the public and other stakeholders involved. Emerging technologies invite new opportunities and threats as they naturally challenge the status-quo. The opportunities lie in creating frameworks that serve society as a whole, so win-win scenarios can be achieved, and bad actors prevented from exploiting vulnerabilities. This can only be realized through healthy cooperation between government, business, and the rest of society.

Industry Differences

Different industries face different challenges in business ethics. Those who operate at the cutting-edge of technology face the very real dilemma of either exploiting the lack of oversight or acting as ethical leaders. On the other hand, there are business ethics that span across industries. When it comes to a company’s treatment of its employees for example, issues like workplace harassment should not be tolerated.

Marketing & Communications

Current trends highlight the need to demonstrate ethical leadership in a company’s marcom strategy. Globally, companies are under scrutiny for unethical practices through the internet and social media. In order to mitigate this risk, it is important for a company’s marketing efforts to far outweigh any disclosure by whistleblowers. The real challenge can be discerning when companies are truly ethical, or just presenting themselves to be through CSR. While business ethics and CSR are inherently connected, there are some companies that simply leverage their resources to offset negative PR. In order to truly build goodwill with the public, companies need to embrace opportunities to create shared value with the communities in which they operate. This must be communicated as part of your brand to build trust with business partners, government bodies, and other external stakeholders.

Renewable Energy Public Policy Japan

Impact on Investment

The rapid growth of ESG investments similarly suggests the growing need for business ethics. As some investors choose to consider the long-term impact of their investments, the perception and consideration of a company’s business ethics is essential. Investors will likely continue to be compelled to consider ethics when making financing decisions. For leaders to improve their image, it is critical to fine-tune external communications and find the appropriate vehicle for approach to various stakeholders. This is the essence to any advocacy campaign, such as the ACCJ, or even my own company, engages in.

Langley Esquire provides a full range of public affairs services, to help companies in Japan make an impact in pushing Japan forward. We provide you the tools and intelligence you need to make informed decisions based off public policy, stakeholder engagement, and government relations.

If you are advocating for a positive cause that can use our support, contact us to learn how we can help.