Cultural entry barriers for SMEs : An exploratory study of cultural entry barriers for foreign SMEs entering Japan 

Abstract:

Purpose: The purpose of this paper is to study the cultural barriers faced by Small and Medium Enterprises (SMEs) in entering Japanese market and to see how the successful companies have overcome the barriers.

Design/methodology/approach: An exploratory case study with qualitative research through semi-structured interviews (telephonic and Skype) with foreign SMEs in Japan. 17 interviews could be conducted in 12 companies out of 76 companies contacted. 

Theoretical framework: The theoretical framework encompasses barriers studied by Namiki (1998) for classification of the entry barriers and applied the same on SMEs. The cultural aspect has been deployed in accordance to theory of House et al. (2004), Trompenaars & Hampden-Turner (2012) and on the cultural dimensional framework of Hofstede et al. (2010). It further includes language in intercultural communication and barriers related to it. 

Findings: The study identifies that the business culture perceived by foreign SMEs in Japan is almost similar to the national culture identified by Hofstede et al. (2010), but only three out of five cultural dimensions studied and the language have emerged as barriers for the foreign SMEs to do business in Japan. It was also found that to adapt to the Japanese business culture in general, engage in business relationship and to use senior bi-lingual Japanese staff, was keys to success for the foreign SMEs.

Managerial implications: It is recommended that managers should study previous literature on cultural barriers as it most likely also applies to SMEs. It is also recommended to use Japanese bi-lingual staff and to establish relationships with Japanese companies as soon as possible.

Limitations: The study was conducted with interviews of only twelve SMEs in Japan. The study was confined to qualitative method and a quantitative study with larger number of companies could have fetched more quantifiable results.

Originality/value: This paper is one of the first to analyse the cultural barriers exclusively for the foreign SMEs in Japan with interviewing firms doing business in Japan.

Keywords: Entry barriers, cultural barriers, SMEs, Japan market.

Classification: Exploratory, qualitative study.