January 10th, 2018
How Culture Affects International Business Negotiations
Cultural distance is an important factor to consider when engaging in international negotiations. Various cultural factors may work to make international negotiations more complex, last longer than expected or fail to reach a decision (Cohen 1997, cited in Metcalf, et al. 2007, p. 148). This paper evaluates how cultural differences affect the perceptions and behaviours of the parties involved in international negotiations.
Impact of Cultural Distance on Perceptions and Behaviours of Negotiators
Cultural differences may affect how individuals negotiating perceive and behave during the negotiation process. Individualistic cultures (e.g. the U.S) are for instance hypothesized to place more emphasis on the content of the negotiations rather than the context (Metcalf et al. 2007). Collectivistic cultures (e.g. China and Mexico), on the other hand, are oriented towards placing more emphasis on the context rather than the detailed content of the negotiations (Metcalf et al. 2007; Ma 2007). Accordingly, for collectivistic cultures, creating a relationship is thought to be an important aspect for the negotiation process to be successful, a factor that might prolong the process to the dismay of negotiators from individualistic cultures (Metcalf et al. 2007; Ma 2007).
Based on such cultural orientations the behaviours adopted during negotiations could also differ. Collectivistic cultures for instance favour harmonious coexistence of a group hence may result to avoidance behaviours when negotiating; behaviours that reflect a concern for others (Ma 2007). In individualistic societies, on the other hand, by placing more importance on individual achievement rather than group harmony may tend to be more assertive and arrive at the negotiation table with a competition frame of reference (Ma 2007). In such a way, national cultures could influence the progress of negotiations especially where they differ widely.
Empirical studies however indicate that individual differences appear even within national cultures. Metcalf et al. (2007), for instance find out that despite the Mexicans being a collectivistic culture, they are equally keen on establishing contractual agreements as they are on establishing relationships. An individualistic society like the U.S is also found to favour relationships, contrary to the hypothetical suggestion for such a society (Metcalf et al. 2007). Similarly, unlike the expectations for avoidance behaviours of the Chinese, Ma (2007) finds out that at times they prefer a strongly assertive approach that is associated with individualistic societies. Such differences evidence that factors such as individual personality could affect the way negotiations advance towards a decision. Alternatively, the observations could imply a negotiation approach brought about by the organisation culture that has been shaped by aspects such as globalization and changes in how business processes are carried out (e.g. the emphasis of creating relationships with suppliers) (Metcalf et al. 2007).
For effective negotiations, individuals involved in negotiations thus need to have skills that safeguard against the effects of cultural distance, organisational culture aspects and differences in individual personalities. Such skills include adept communication skills (e.g. listening skills), being a people-oriented person, and being sensitive to cultural differences (Hurn 2007). Sensitivity to cultural differences would for instance acquaint one with the decision-making style (e.g. who bears the authority to make decisions), importance attached to “saving face”, and business etiquette and socializing demeanour of the negotiators on the opposite end (Hurn 2007). Such skills ensure that one does not antagonize the other negotiators leading to failure of the negotiation process.
Despite the complexity created by cultural differences, such could be critical in determining tolerance levels hence success of the negotiation process. Cultures that are for instance keen on maintaining group harmony could make more compromise on aspects that threaten to disrupt the existing relationship (Ma 2007; Metcalf et al. 2007). Assertive cultures on the other hand could demonstrate tolerance by exploring further ways that help bring a solution to a dispute without any side making major concessions on the aspects they consider critical on their end (Ma 2007; Metcalf et al. 2007). This demonstrates that disputes could have positive as well as negative outcomes to the organization. By arriving at an solution satisfactory to the parties to a dispute, an organization is for instance presented with an opportunity to develop strong relationship with the negotiation partners; relationships that are vital for expanding its operations in the foreign market (Ma 2007). Disputes however could aggravate a dent on a relationship, if they result in failure of negotiations or arrive at a solution where one of the parties feels dissatisfied with the outcome – e.g. a compromise arrived out of a threat or deceit (Ma 2007).
Cultural factors affect various aspects of international negotiations. The effects of such factors on the perceptions and behaviours of the parties involved in international negotiations were discussed in this paper. Depending on the cultural background of the negotiators, the concept of negotiation (whether a win-win or a win-lose perspective is followed), the basis of trust (whether it is from the contract signed or relationship established), and the most significant task (whether the content of the negotiations are given more weight than the context or vice versa) may differ. Such differences could prolong or frustrate the course of international negotiations. Other aspects of negotiation such as individual personalities and organisation culture may also make international negotiations more complex. For successful negotiations in such contexts, managers thus need a wide range of skills including being sensitive to cultural differences and adept listening skills. When negotiations arrive at a satisfactory solution for the parties involved, it could result into stronger relationships that help the organization further its interests in the market, hence improve its competitiveness.
Hurn, BJ 2007, ‘The influence of culture on international business negotiations’, Industrial and Commercial Training, vol. 39, no. 7, pp. 354-360.
Ma, Z 2007, ‘Chinese conflict management styles and negotiation behaviours: an empirical test’, International Journal of Cross Cultural Management, vol. 7, no. 1, pp. 101-119
Metcalf, LE, Bird, A, Peterson, MF, Shankarmahesh, M & Lituchy, TR 2007, ‘Cultural influences in negotiations: a four country comparative analysis’, International Journal of Cross Cultural Management, vol. 7, no. 2, pp. 147-168.