Why do Japanese firms not utilize worldwide common performance appraisal
systems and not supervise senior-level managers regardless of their nationalities?
Our research found three reasons for this. First, as Bae, Chen, and Lawler (1998)
found, Japanese firms are very sensitive to local contexts and respect management
decision by each subsidiary. The Japanese subsidiaries manage on a policy of
“when in Rome do as the Romans do”. The Japanese firms do not intend to change
those management systems. Japanese management might be characterized by
being pragmatic and inductive, in contrast to American management that is
strategic and deductive. Second, Japanese human resources general managers of
the subsidiaries do not want that headquarters human resources
departments/business units of Japanese firms control in detail the subsidiaries, like
American firms. Finally, according to some human resources managers of the
Japanese firms, headquarters human resources departments do not maintain many
human resources managers who execute international human resources
management. Part of the reason stems from the fact that Japanese headquarters
have been rationalized and shrunk in size.