Cross Cultural Negotiation

The impact of international business in domestic markets compels us to ask a question: "How can we survive in this global playing field, and what can we do to run our businesses more effectively?" Nowadays, businesses of all sizes search for suppliers and customers on a global level. International competition, foreign clients and suppliers may become a danger, but they may also create huge opportunities to develop our business. The increasingly global business environment requires managers to approach the negotiation process from the global business person's point of view. This approach includes aspects which are usually unimportant in domestic negotiations. Some of the components of a cross cultural negotiation process are more complex and difficult, but will increase our success in avoiding barriers and failures in the international business arena.

When doing business internationally, we need to consider (Salacuse, 1991):

1. The negotiating environment
2. Cultural and sub-cultural differences
3. Ideological differences
4. Foreign bureaucracy
5. Foreign laws and governments
6. Financial insecurity due to international monetary factors
7. Political instability and economic changes

If we consider the fact that negotiating with our fellow citizen is not an easy task due to many individual differences, it would be reasonable to suggest that negotiating with foreigners may be even more difficult. The way we perceive and create our own reality may be completely different to our counterpart's way of thinking, behaving and feeling. Unfortunately, knowledge of any foreign language is not enough to face and solve the problem. Language is a cluster of codes used in communication which, if not shared effectively, can act as a barrier to establish credibility and trust. We need more effective tools, and the most important is knowledge of all factors that can influence the proceedings. Nations tend to have a national character that influences the type of goals and process the society pursues in negotiations. This is why specifying and understanding cultural differences is vital in order to perform successfully in inter-cultural communication (Schuster-Copeland 1996, 33). As we better understand that our partners may see things differently, we will be less likely to make negative assumptions and more likely to make progress when negotiating.

Factors influencing cross-cultural negotiations

Negotiating Goal and Basic Concept: How is the negotiation being seen? Is mutual satisfaction the real purpose of the meeting? Do we have to compete? Do they want to win? Different cultures stress different aspects of negotiation. The goal of business negotiation may be a substantive outcome (Americans) or a long-lasting relationship (Japanese).

Protocol: There are as many kinds of business etiquette as there are nations in the world. Protocol factors that should be considered are dress codes, number of negotiators, entertainment, degree of formality, gift giving, meeting and greeting, etc.

Communications: Verbal and non-verbal communication is a key factor of persuasion. The way we express our needs and feelings using body language and tone of voice can determine the way the other side perceives us, and in fact positively or negatively contributes to our credibility.Another aspect of communication relevant to negotiation is the direct or indirect approach to exchanging information. Is the meaning of what is said exactly in the words themselves? Does "...it's impossible" really mean impossible or just difficult to realise? Always use questions to identify the other side's needs, otherwise assumptions may result in you never finding common interests.

Risk-Taking Propensity - Uncertainty Avoidance: There is always risk involved in negotiations. The final outcome is unknown when the negotiations commence. The most common dilemma is related to personal relations between counterparts: Should we trust them? Will they trust us? Certain cultures are more risk averse than others, e.g. Japan (Hofstede 1980). It means that less innovative and creative alternatives are available to pursue during the negotiation, unless there is a strong trust-based relationship between the counterparts.

View of Time: In some cultures time is money and something to be used wisely. Punctuality and agenda may be an important aspect of negotiation. In countries such as China or Japan, being late would be taken as an insult. Consider investing more time in the negotiating process in Japan. The main goal when negotiating with an oriental counterpart is to establish a firm relationship, which takes time. Another dimension of time relevant to negotiation is the focus on past, present or future. Sometimes the past or the distant future may be seen as part of the present, especially in Latin American countries .

Decision-Making System: The way members of the other negotiating team reach a decision may give us a hint: who we shall focus on providing our presentation. When negotiating with a team, it's crucial to identify who is the leader and who has the authority to make a decision.

Form of Agreement: In most cultures,only written agreements stamp a deal. It seems to be the best way to secure our interests in case of any unexpected circumstances. The 'deal' may be the contract itself or the relationship between the parties, like in China, where a contract is likely to be in the form of general principles. In this case, if any unexpected circumstances arise, parties prefer to focus on the relationship than the contract to solve the problem.

Power Distance: This refers to the acceptance of authority differences between people. Cultures with low power distance postulate equality among people, and focus more on earned status than ascribed status. Negotiators from countries like Britain, Germany and Austria tend to be comfortable with shared authority and democratic structures. When we face a high power distance culture, be prepared for hierarchical structures and clear authority figures.

Personal Style: Our individual attitude towards the other side and biases which we sometimes establish all determine our assumptions that may lead the negotiation process towards win-win or win-lose solutions. Do we feel more comfortable using a formal or informal approach to communication? In some cultures, like America, an informal style may help to create friendly relationships and accelerate the problem solving solution. In China, by comparison, an informal approach is proper only when the relationship is firm and sealed with trust.

Coping with Culture

Negotiating in the international environment is a huge challenge for any negotiator. How do we cope with the cultural differences? What approach is more efficient and proper when dealing with Japanese, Americans or Germans? There are some very helpful guidelines we can apply (Salacuse, 1991):

1. Learn the other side's culture

   It is very important to know the commonest basic components of our counterparty's culture. It's a sign of respect and a way to build trust and credibility as well as advantage that can help us to choose the right strategies and tactics during the negotiation. Of course, it's impossible to learn another culture in detail when we learn at short notice that a foreign delegation is visiting in two weeks' time. The best we can do is to try to identify principal influences that the foreign culture may have on making the deal.

2. Don't stereotype

   Making assumptions can create distrust and barriers that expose both your and the other side's needs, positions and goals. The way we view other people tends to be reserved and cautious. We usually expect people to take advantage of a situation, and during the negotiations the other side probably thinks the same way, especially when there is a lack of trust between counterparts. In stead of generalising, we should make an effort to treat everyone as individuals. Find the other side's values and beliefs independently of values and beliefs characteristic of the culture or group being represented by your counterpart.

3. Find ways to bridge the culture gap

   Apart from adopting the other side's culture to adjust to the situation and environment, we can also try to persuade the other side to use elements of our own culture. In some situations it is also possible to use a combination of both cultures, for example, regarding joint venture businesses. Another possible solution is to adopt a third culture, which can be a strong base for personal relationships. When there is a difficulty in finding common ground, focusing on common professional cultures may be the initiation of business relations.