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This study empirically examines the significance of demographic factors and organizational characteristics …

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- Blockade for Career Advancement in Japanese Organization Abroad: The Case of Malaysian Subsidiaries

The Japanese economic miracle has captured the avid interest of the non-Japanese. Initial interest in Japan’s seemingly unique style of decision-making and work organization sprang from the role of management and work in Japan’s phenomenal post-war economic growth[1-7]. In Malaysia, this interest has been highlighted by the enunciation of the Look East Policy by the former Prime Minister, Tun Dr Mahathir Mohammad, in December 1981. Foreign direct investment (FDI) of predominant investors like Japan has contributed greatly towards Malaysia’s economic development[8]. The miracle of Japan’s economic success is said to be due to its unique Human Resource Management (HRM) style. Tsuda[9] referred to the special features of Japanese management practices such as life-time employment, seniority based wage system, enterprise welfare and enterprise unions as a tightly coherent organic system, stressing that each of the special features does not exist in isolation or as separate entities. However, the transfer of Japanese style HRM in Malaysia like other developing countries is indirect[8]. This is because the overriding objectives are mostly economic.

Japanese subsidiaries in Malaysia according to Imaoka[10] emphasized in firm promotion systems, seniority-merit wage systems, human relations between workers and management, long-term oriented on-thejob training, commendation for long service and personnel welfare policies. This is to retain local workers and implement Japanese style management within the sphere of their authority. The distinctive Japanese style HRM practices in Malaysia and other developing countries in most studies[11,12] suggest high degree of control exerted by parent companies over major areas of decision making. Japanese expatriates stationed in subsidiaries control major decisions[13]. The presence of expatriates has isolated local managers from the decision making process and thus causing a ceiling impeding their promotion.

Local managers mostly occupy jobs relating to labor and personnel, while their Japanese counterparts occupy all other key positions[14]. Some lower positions are even staffed by Japanese junior managers. This strong presence of Japanese expatriates in subsidiaries in developing countries, due to the lack of trust and confidence in local managers, is also known as the ‘inferior’ local workforce factor[15]. Japanese companies are noted to be the most ethnocentric in nature when it comes to their staffing policies. This phenomenon has been observed in Japanese subsidiaries in both developed[16] and developing countries[15,17]. The high degree of centralization imposed in major decision making areas in Japanese companies through parent companies or Japanese expatriate managers are one of its characteristics.

Table 1 extracted from Raduan[8], presents the managerial structure according to the functions of local managers and Japanese managers in sixty-nine subsidiaries surveyed. The findings clearly revealed the differently designated responsibilities of local managers and Japanese managers. By looking at Table 1, it can be seen that local managers, majority of whom are male tend to take managerial responsibilities related to local issues or act as ‘backstage prompters’[18]. These issues include personnel matters (74.3%), liaisons with local people and institutes (77.5%) and public relations (74.3%). At the same time, the Japanese managers dominate important and strategic functions such as strategic planning, finance and production methods. Half of the sample indicated that Japanese managers are responsible for corporate planning (66.7%), marketing (63.7%), production planning (63.2%) and manufacturing (55.8%). Also, Japanese managers normally have exclusive access to headquarters, thus obtaining advantages in respect of influence and information. Feedback from interviews with local managers indicated that almost all key policies were formulated and serious decisions taken, even before local managers were allowed to voice their opinion. These situations made them doubt the effectiveness of their role in the company because they were excluded from the decision-making process[8]. Therefore, in his research Raduan[8], drew a few general conclusions after examining the managerial structure. Firstly, there seems to be a lack of confidence in the competence of local managers to perform strategic functions especially corporate planning, product planning and finance. Secondly, Japanese subsidiaries rely on local managers mostly for their expertise in knowledge of local culture, environment, labor law and practices. Other issues were also raised during his interviews with local managers. It was reported that the senior Japanese managers to protect Japanese expatriates especially when dealing with sensitive issues concerning local values and culture were using trusted local managers. This leaves local managers with the problem of maintaining balance between two parties in the same organization. Another important issue is related to career development of local managers within their companies. Quite a number of local managers interviewed by Raduan[8] admitted their chances of promotion to higher positions, especially in areas of corporate planning, production and quality control, have been limited by the presence of many Japanese expatriates. This phenomenon seems to be widespread among Japanese companies in developing countries, where local managers resent the ‘bamboo ceiling’[15]. The ‘bamboo ceiling’ similar to the ‘rice-paper ceiling’ prevents local managers from receiving promotion to upper level positions[13,17]. In Malaysia, Japanese expatriates are said to fill most of the senior positions and this results in limited opportunities for local managers to be promoted. So it can be said that there is an unofficial ceiling to promotion be it a bamboo ceiling or rice paper ceiling. A barrier does seem to exist. Some local managers even criticized the special treatment received by Japanese managers. This included a higher basic salary and allowances, other fringe benefits and facilities as well as access to the parent company.

Research hypothesis: Japanese subsidiaries have a unique quality of high degree of centralization and this poses challenges to local managers when operating in a foreign country like Malaysia. One of the prevailing challenges includes perceived barriers, which are apparent or seemingly real obstacles and obstructions in the path to achieve goals and career advancement. In this research, the perceived barriers identified are: access to power and decision-making authority, stereotyping and discrimination, opportunities for promotion, benefits, wages and compensation system, performance appraisal and feedback. These barriers were chosen for this study because they seem to have the most impact on career advancement opportunities of local managers. Previous studies[8,10,19] have shown that these perceived barriers for local managers working in Japanese multinational corporations (MNCs) do indeed exist. Therefore, this study looks into the impact of demographic and organizational factors on the perceived barriers affecting local managers’ career advancement opportunities into higher management positions in Japanese firms.

Demographic factors such as age, gender, marital status, academic background and race play a role in career advancement of local managers. It is a wellknown fact that the Japanese like to hire young and fresh graduates who they can mould[20]. Also male managers would be preferred compared to female managers. In Japanese firm although education is of importance, past research suggested seniority would earn preference in promotion and career advancement[21]. The preference of the race of the local manager is a factor that has not been looked into. The findings of the study may offer new insight if there is any racial preference in working with local managers be it Malay, Chinese or Indian. Thus, the first hypothesis to be tested is: There is no significant relationship between demographic factors and perceived barriers to career advancement.

Characteristics of the organization consist of size, numbers of years in operation, type of ownership and type of industry are also of fundamental importance to this research. All these variables have, to a certain extent, determined the career advancement of local managers in Malaysia. Consequently, it is hypothesized that: There is no significant relationship between characteristics of organization and perceived barriers to career advancement.

Perceived barriers such as stereotypes and discrimination adversely impact on local managers’ career progress. Since local managers are perceived as ineffective leaders, they are not assigned line positions, where managers make significant decisions, have access to information and interact with top-level executives who may have an impact on their careers[22]. If local managers are not considered to be decision makers and leaders but are perceived merely as support personnel, they would be denied critical information, because this would not be seen as relevant to them. These opportunities to learn, grow and develop on the job and gain visibility in the system, help managers to advance to top-level positions[8]. However, because local managers in staff positions do not gain these experiences or have the visibility to be identified as key people in the organization with the potential to be successful top managers, their advancement to top-level positions is rare and usually overlooked. Thus, the act of stereotyping and discrimination hinder the progress of local managers to the top.

Opportunities for promotion in terms of benefits and compensation system, performance appraisal and feedback are also denied because of this discrimination. Local managers are excluded from the networks where Japanese managers informally interact with one another, including golf courses, private Japanese managers clubs and so on[19,23]. Local managers are also barred from gaining access to key information and resources vital for their advancement. Local managers are generally unaware of the most recent development since they are not a part of the informal group that interacts and exchanges information away from the workplace. This definitely is a handicap and chances of advancement are severely restricted. Hence, the discussion above leads to the construction of the following hypothesis: There is no significant relationship between the extent of stereotyping and discrimination in the organizations and the number of local managers in higher management positions in Japanese subsidiaries.

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