Contact

Research Insight

In Japan, Business Must Step Up to the Plate

In Japan, Business Must Step Up to the Plate

by

Published

My parents married in 1956. It was an era when even at the young age of 22 they could take out a housing loan and build a house. I remember finding a copy of the loan contract in a drawer one day. It was a loan for $2400 at 1 percent interest. They paid for the land in cash.

I think I was about 12. I can’t remember how the conversation came about, but my mother told me how as a young couple they were so full of hope. They had married young, opposed by both their parents for being too young. But they married, and together they built a house.

But they were frightened. My mum told me that one night in October 1957 they stood on the porch of their newly completed house. They embraced each other as they looked up to the night sky and watched the Soviet Sputnik satellite cross the night skies. At that instant, my parents kissed each other and vowed that they could never bring children into a world that would be dominated by communism.

In one way or another, every generation faces the fears of that generation. I am as scared about the world today as my parents were on that night in 1957.

War, communism, nuclear war, global warming, Trump. Each generation has its fears. However, connectivity seems to have, in some way, made the fears of this generation more severe.

Fear features heavily in the results of the 2017 Edelman Trust Barometer. Fears around the impact of globalization, fears about the pace of innovation. And fears over immigration and eroding social values. These fears, amplified and intensified by the echo chamber of social media, are taking us past the erosion of trust to a situation where erosion of belief in the system is leading to populism and heightened nationalism.

In last year’s Trust Barometer, we highlighted the low level of trust combined with relatively high social cohesion by saying: “We might be cynical but at least we are all cynical together.”

How has trust in Japan changed over the past year? Is the fear we see in many parts of the world also applicable to Japan?

First, despite the already low levels, trust in all four institutions declined in 2017. The greatest fall was in trust in media, which fell six points, from 38 to 32. Less than one-third of Japanese now trust the media. Trust in the media ranks sixth from the bottom globally, with trust lower only in Turkey, Ireland, Poland, Russia and Australia.

The fall in trust in institutions however, is eclipsed by the low credibility of leaders of those institutions. Only 13 percent of Japanese trust government officials, and, perhaps more remarkably, only 18 percent see CEOs as being credible — the lowest level of any country. This compares to 37 percent for CEOs globally and 29 percent for government officials.

Just over two in five Japanese believe the system is failing them. While this is lower than the global average of 53 percent, 45 percent said they were uncertain. This is significantly higher than the global average of 32 percent, indicating potential for disbelief in the system increasing in the coming years.

Last year we pointed out that the trust gap between the mass population and informed public in Japan was only 3 percentage points, much lower than the global average. However, we also showed that the gap was significantly wider between those in the top- and bottom-income quartiles. Part of this was the result of the further decline in trust in institutions among the mass population (from 38 percent to 34 percent), and part of it was a jump in trust from among the informed public (41 percent to 49 percent). The gap is more due to a jump in trust among the informed public than a fall in trust by the mass population.

As a cultural trait, Japanese tend to self-appraise in the context of their environment. It is more relative than absolute. One explanation for this may be that the Japanese informed public is looking at issues such as Brexit and Donald Trump and judging that Japan is not so badly off after all. However, even among the top income group, 35 percent of respondents said they do not believe the system is working.

Fear exists in Japan too. Between 40 and 50 percent of respondents replied that they were concerned about issues such as globalization, the pace of innovation, immigration and eroding social issues, and between 10 and 20 percent said they were fearful over these issues. These figures are lower than the global averages of around 50 to 70 percent concern and 20 to 40 percent fearful, but remain quite significant for a normally patient and resilient nation.

I see this year’s data as a warning.

Last year we pointed out how business had the opportunity to take a leadership position and work for societal benefit and change. Except for some isolated cases, business appears to have failed to rise to the occasion.

In Japan, CEOs are trusted by less than 20 percent of people. Sixty-three percent of people find individuals to be more believable than institutions. Sixty-eight percent see leaked information as being more credible than company press statements. And 73 percent would rather listen to a reformer than a preserver of status quo. Unless business works to regain trust, reform for reform’s sake may become the agenda.

In addition, 41 percent of Japanese respondents think the pace of change in business and industry is too fast. It is imperative that businesses clearly articulate the rationale for change to both their external and internal stakeholders.

Yet there remains a huge opportunity here for business in Japan. In fact, 51 percent agree that companies should take specific actions that both increase profits and improve the economic and social conditions in the community where it operates.

Employees rank as more credible than CEOs in communicating information a range of topics from financial and operating performance to innovation efforts. As a first step in taking a leadership position, companies in Japan must not assume the loyalty and trust of their employees. They must earn it by keeping them informed, engaged and involved.

Trust in the system in Japan is on shaky ground. It is up to companies to do more to help allay the fears and shift the credibility needle.

Ross Rowbury is president, Edelman Japan.

Contact us

Contact us

Edelman is interested in hearing from you. Please select your primary interest.