Is Japan’s Attitude to Risk Holding It Back?

Matthew MacLachlan

29 Aug 2014

Japan is a country where innovation and tradition co-exist in harmony. Despite being famous for having a high level of uncertainty avoidance, Japan is known worldwide for its technological breakthroughs. Why does this contradiction occur?Uncertainty Avoidance and Japan

According to Hofstede’s study, Japan is a country with a high UAI (Uncertainty Avoidance Index). This means that it is a country which tends to avoid uncertainty and ambiguity, reflected in the creation of a society which maximises risk avoidance through the creation of rules and regulations. This also implies that people, in order to perform, need to get security in exchange.

High risk avoidance can also be reflected in a less open attitude towards what is different and foreign. This conservatism is maintained also in other characteristics of Japanese society, e.g. its strict hierarchical structure. Risk avoidance, usually considered a negative feature for countries wanting to grow economically, has proven to be a good strategy for those seeking economic success. As Arvin Maskin in Bloomberg magazine suggests, creating a culture of risk avoidance is fundamental “against the backdrop of crises such as the current peanut-product recall, melamine in milk and pet food, e-coli in spinach, and lead in toys”. Therefore, the success of Japan in the global scene can also be attributed to its risk avoidance attitude.

World Leader in Environmental Technologies

Japan is also a world leader in innovation as forward thinking as environmental technology and energy conservation. Japan is also where lean production, also called the Toyota Production System, was invented, giving a hard time to the American car industry.

However, Japan’s innovative attitude has to face with its rigid social structure and closure to change. The decline in Japan’s once leading electronics companies such as SONY and PANASONIC has been attributed by some to be due to their inability to innovate and take risks.

What does the future hold for Japan and its once powerful electronics industry?



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