Decision-Making Process in Japanese Firms

Most Japanese companies have a decision-making system called “Ringisho”. It is a process of internal consensus for a future project. Ringisho is only issued when the person submitting it is sure of approval. It goes from the lower level up to the upper levels of management, gaining approval as it passes on to the next higher up, recording consensus through out the company. If there are X number of persons above the Ringisho issuer, all of X number of people will read and study the business proposal, and then each one gives their approval and passes it on to the next higher level. After approval has been collected from all the members of upper management and consensus is established within the company, the Ringisho is returned to the original issuer and then he or she can start taking charge of its business.


If such a business proposal is new to the issuer’s immediate boss and the other upper level personnel, no one will approve it because it is a new idea. Therefore, an employee will only issue a Ringisho if they are sure that it will meet with approval. Generally, Japanese business people are risk averse and so Japanese business people seldom take charge of new proposals if they are not 100% sure that it will be supported by their superiors.


The Japanese tend to be risk averse in business and their need for consensus tends to take time, which often frustrates Americans because it means slow reaction time in the decision-making process. Unlike American business people, who are authorized to make business decisions within their jurisdiction, Japanese business people work in groups and are not normally given the authorization to make decisions alone.


This risk averse nature comes from the Japanese fear of making mistakes. Trial and error is not allowed and so the Japanese take extra time and care to be sure of success from the start. In Japan, it is unacceptable to have any failures in ones career and so this makes Japanese business people weary of high risk, new business proposals. Therefore, getting approval from upper management takes much time and patience.


Under the circumstances, new business opportunities with Japanese firms seem to not go through. The question is, how does anyone get any business done in Japan? The same applies to Japanese and foreigners alike. Even among Japanese businesses, the same protocol applies. There is no exception. Japanese business people are not discriminating against non-Japanese business people. The main reason why American business people feel that there is a barrier built by the Japanese is because Japanese people normally find it difficult to do business with others whom haven't established good relations with yet.

For the Japanese, new business plans with new business associates is quite high risk and so establishing good relations cuts that risk down considerably. The key word when dealing with the Japanese is "patience". Establishing good relations and dealing with the risk averse, consensus-needing Japanese business world requires time and patience for success in new business proposals so be prepared to take your time, and enjoy strengthening your bonds with your Japanese counterparts because it will make your business go much more smoothly.

-Shintaro Tominaga