Cross cultural Negotiations

HOW BEST CAN WE NEGOTIATE ACROSS CULTURES?

Negotiating across cultures Selecting your negotiating style, tactic and strategy Term paper: Group Work Group 5 United States International University.

Cross cultural Negotiations

Abstract Negotiation is basic human activity. Its process we undertake in everyday activities to manage our relationships both business and personal. The latter type of negotiations is what we are interested in this paper. Business negotiations are increasingly recognized as a full part of the managerial process, highly relevant to the implementation of business strategies. Since international business is all around us and many thousands of companies are already involved, being able to negotiate effectively with foreigners has become a critical skill.

This paper first discusses the fundamentals, what is culture, negotiation, intercultural discussions and then goes on to discuss different negotiating styles, tactics and strategies and draw a conclusion as to which best suits international and cross cultural negotiations.1

Cross cultural Negotiations

INTRODUCTION Over the years culture has had different definition from different authors. Each of the authors has brought out different characteristics of culture that wholesomely make up a comprehensive definition. Below are some of the definitions of culture: Its a technical term used by anthropologists to refer to a system for creating, sending, storing, and processing information developed by human beings, which differentiates them from other life forms (Hall 1990). Its "to human collectivity while personality is to the individual" (Hofstede 1984, p.21). It consists of ideals, values, and assumptions about life that are widely shared among people and that guide specific behaviors. (Brislin 1993)

Negotiation on the other hand is a much abused word. Its not another term for bargaining or selling. Both the relevant skills and the appropriate circumstances are quite different for these three activities. To fully understand the difference note that selling is about satisfying a specific customers specific needs, usually on a competitive basis against other supplier in exchange for money, but negotiation is concerned with resolving conflict between two or more parties, usually by the exchange of concessions (Thorn, 2004, p. 6). Bargaining is more like haggling in a typical bazaar setting (Chauri & Usunier, 2003).Thus negotiation also has different definitions with different authors;

Cross cultural Negotiations

Chauri and Usunier (2003) define negotiation as a voluntary process of give and take where both parties modify their offers and expectations in order to come closer to each other. Brett (2007) also defined negotiation as the process by which people with conflicting interests determine how they are going to allocate resources or work together in the future. She goes on to say negotiation is not only for making deals. It is and should be used to resolve disputes and reaching decisions in teams and other multiparty environments.

Negotiation is a process that involves balancing matters between two parties so that you not only get what you want, but get what you want in the best possible way. Its the art of concluding a deal, and the arrangement of all elements that deal; for instance, the terms and conditions in some business deals. Its a form of communication (Forsyth, 2002, p.p 6, 7).

Harris and Moran (2000) state that, negotiation is the process in which two or more entries come together to discuss common and conflicting interests to reach an agreement of mutual benefit. In international business negotiations then, the difference in the negotiation from culture to culture include language , cultural conditioning , negotiating styles , approaches to problem solving, implicit assumptions, gestures and facial expressions , and the role of ceremony and formality (p. 54).

All in all negotiation is at the heart of every transaction and for the most part it comes down to interaction between two sides with a common goal but divergent methods.

Cross cultural Negotiations

Negotiating across borders differs markedly from negotiating within the domestic market. Number of new factors has to be considered, including different languages, cultural sensitivities, legal systems, tax regimes, labor laws and different business practices. According to Brett (2007 p. 1) the negotiating environment can be further complicated by government-led bureaucracy, restrictive regulations and, in some cases, direct government interference. All of this can be set against a background of political and economic instability, with currency uctuations and uncertainty stemming from ideological differences.

The process of negotiation requires individuals and groups to adopt a position based on their interests and needs. Underlying cultural orientations and core values, which may be nonnegotiable or, at best, marginally negotiable, influence these positions (Acuff, 1997). To arrive at a mutually beneficial agreement, both sides must conduct cultural due diligence. Cultural due diligence is the process of clarifying the other sides cultural orientations and the resultant behavior before entering into the negotiation (Kennedy, 2004, p. 156).

Since we are going to discuss negotiation styles and which style suits the best. First we looked at the core factors and strategies that will affect cross cultural negotiations. Cultural factors play an important role in international business negotiations (Chauri & Usunier, 2003). We have chosen to use the following factors that are most important in this respect:

Cross cultural Negotiations

Negotiation strategies A negotiation strategy is an integrated set of behaviors chosen because they are thought to be the means of accomplishing the goal of negotiating. All the negotiators have interests, priorities and strategies. These are affected by culture. Culture is the unique character of a social group, including the values and norms shared by members of the group and the group's social, economic, political and other institutions. Cultural values direct the attention of the negotiator to the issues that are more important and influence the negotiators' interests and priorities. Cultural norms define the behaviors that are appropriate and inappropriate in negotiation and influence the negotiators' strategies.

How Culture affects Negotiation Strategies When people negotiate, their behaviors are strategic and their strategies may be culturally biased. Not only are there differences in strategic behavior between cultures, but also within cultures and overlap between the cultures. With the result, some members of a culture may negotiate less like their own cultural prototype and more like the prototype of another culture.

Negotiation Strategies are linked with culture because cultures evolve norms to facilitate social interaction. Norms are functional because they reduce the number of choices a person has to make, about how to behave and how others in the culture will behave. Culture may also affect the strategies that the negotiators bring to the table for example, the way they go about

Cross cultural Negotiations

negotiating, whether they confront directly or indirectly, their motivations, and the way they use the information and influence. * Confrontation * Motivation * Influence * Information

Types of Negotiations Strategies Communication Strategies Communication is both a symptom and a cause of organization performance problems. Over the years, we've heard hundreds of managers use communication as a vague catchall for every type of organization and team problem imaginable. Generally, the root cause of many "communication problems" was deeper than that.

Poorly designed organizations, ineffective processes, bureaucratic systems, unaligned rewards, unclear customer/partner focus, fuzzy visions, values, and purpose, unskilled team leaders and members, cluttered goals and priorities, low trust levels, and weak measurements and feedback loops all cause communication problems. Whenever a manager contacts us to solve a "communication problem," we always know we have some digging to do.

Cross cultural Negotiations

Communication strategies, systems, and practices do play a central role in high-performance. Information, understanding, and knowledge are the lifeblood of the organizational body. A thoughtful and comprehensive communication strategy is a vital component to any successful change and improvement. The education and communication strategy sets the tone and direction of improvement efforts.

Education and communication strategies influence the energy levels for change and improvement. Strong communications keep everyone focused on goals and priorities while providing feedback on progress and the course corrections needed. Effective communication strategies, systems, and practices have a huge and direct effect on organization learning and innovation. Effective communication strategies, systems, and practices:

Deliver clear and consistent messages to all parts of the organization Are simple, direct, and fast with a minimal number of filters and interpreters Inspire and energize Are user-friendly, human, and personal Move information, experiences, learning, ideas, direction, and feedback equally well in all directions up, down, and across the organization

Provide multiple channels Are only possible in an atmosphere of trust and openness

Cross cultural Negotiations

Despite all their talk about communications, many managers don't appreciate the highly strategic role communication plays in their improvement efforts. Consequently, they don't spend enough time thinking through what they want to say and the best ways to say it. But the amount and type of communicating we do speak volumes about how much we trust people and whether we see people as partners or "subordinates" who "work for me." Our communication strategies, systems, and practices set the dimensions of the environment we are putting people in.

The literature on cross-cultural communication suggests that different cultures may have different information-sharing strategies in negotiation. An Good Example Brett et al. (1998) found that U.S. and Japanese negotiators had similar norms for information sharing in negotiation, but subsequent research found that U.S. negotiators embraced direct informationsharing strategies while Japanese negotiators used indirect information-sharing strategies (Adair, Okumura, and Brett 2001). Other accounts of U.S. and Japanese negotiation styles also report different communication styles; for example, Japanese negotiators are less likely to say no and more likely to remain silent than U.S. negotiators (Graham and Sano 1989; March 1990). The various norms and strategies for information sharing seen in the U.S. and Japan suggest that culture may account for different communication strategies in the six cultures under investigation.

Power Strategies Power in negotiation is the basis of one partys ability to gain advantage over the other party through positional, distributive, or inuence tactics. Egalitarianism versus hierarchy is a cultural

Cross cultural Negotiations

value with implications for the use of power strategies in negotiation. Hierarchical cultural values stress the importance of status and power whereas egalitarian cultural values stress sameness, equal opportunity, and achievement. Brett et al. (1998) found that hierarchical cultures in comparison to egalitarian cultures were more likely to espouse norms for distributive tactics. Distributive tactics (i.e. making threats or using arguments) are power strategies that are focused on individual, not joint, gains. Distributive tactics are normative in hierarchical cultures because negotiators use positional and persuasive arguments to make status and power differences clear.

When a clear negotiation strategy has been chosen a style is need to close the deal, a negotiator will chose a style depending on what the negotiator

Negotiation styles. Before buyers and sellers can engage in business, they need to negotiate terms of agreement or contracts. Each partys individual culture will determine its way of thinking, values, norms

and behaviors (Simintiras & Thomas, 1998; Hung, 1998; Woo & Pruhomme, 1999; Chang, 2003). Gulbro & Herbig (1994) indicated that different cultures can generate distinct

negotiation styles. These different styles in business negotiation are the product of differences in communication, protocols, persuasion strategies, and personal characteristics, including accommodation, determination, flexibility, and adaptation (Hung, 1998). Those specializing in

Cross cultural Negotiations

negotiation need to understand the negotiation styles of other people who live in different countries by studying their cultural beliefs and norms (Chang, 2003).

To further illustrate the best possible ways of negotiations we look at a case study below: Jan graduated from a leading Polish business school. He had learned a lot about economics, finance, marketing, and strategy and his grades were excellent. Everything indicated that he was well prepared for his starting career. Very soon he found a job he was dreaming of and started applying what he had learned in real business environment. He has been advancing his career rather quickly and taking over new areas of responsibility. Recently, his boss has asked him to identify a company potentially interested in cooperation especially in the area of research and development. Since his company was operating in a niche market manufacturing very specialized products, very early Jan realized that for a potential partner he would have to look in Southeast Asia, particularly in Japan, Taiwan, and possibly in China.

Not without difficulty he came up with a short list of potential partners and scheduled the first meetings with them. Today, his secretary gave him the tickets. Next week, Jan and his boss are flying to Asia. Suddenly, he realized that all he knows about Asian culture actually comes from TV and movies. The same was true for his boss. A hundred questions went through his mind. How is he supposed to behave there? What can he say and what not? Will they understand what he has to tell them? How should Jan negotiate with these guys?

Cross cultural Negotiations

Within the last few decades the number of international negotiations has been increasing rapidly. This trend is especially evident in Poland. Intensification of trading relationships, political and economic integration with the European Union and progressing globalization have caused that international negotiations have become relatively common both in the diplomatic as well as in the business environment. Similar processes occurring worldwide were most likely also the reason for increased interest in this topic among the scholars. Amid all issues connected with the international negotiations the one that has been attracting the most attention has been the influence of culture on negotiation. (Cohen, 2004)

According to the negotiation literature, the measurement of Assertiveness and Cooperativeness requires the consideration of five distinct negotiation styles the five negotiation styles are:

1. Competing - Negotiators that exhibit this style are results-oriented, self-confident, assertive, are focused primarily on the bottom line, have a tendency to impose their views upon the other party, and in the extreme can become aggressive/psychotic and domineering. . They often use whatever power and tactics they can muster, including their personality, position, economic threats, brand strength or size or market share. This style is most suitable in the American setting since they are known to be naturally aggressive and assertive hence used when results are needed quickly. This style is high in Assertiveness and low in Cooperativeness as show in the diagram above. 2.Avoiding - Negotiators that exhibit this style are passive, prefer to avoid conflict, make attempts to withdraw from the situation or pass responsibility onto another party, and fail to

Cross cultural Negotiations

show adequate concern or make an honest attempt to get to a solution. This style is both low in Assertiveness and low in Cooperativeness. 3Collaborating - Negotiators that exhibit this style use open and honest communication, focus on finding creative solutions that mutually satisfy both parties, are open to exploring new and novel solutions, and suggest many alternatives for consideration. This style is both high in Assertiveness and high in Cooperativeness. 4.Accommodating Negotiators that exhibit this style make attempts to maintain relationships with the other party, smooth over conflicts, downplay differences, and are most concerned with satisfying the needs of the other party. This style is low in Assertiveness but high in Cooperativeness. 5.Compromising Negotiators that exhibit this style aim to find the middle ground, often split the difference between positions, frequently engage in give and take tradeoffs, and accept moderate satisfaction of both parties needs. This style is both moderate in Assertiveness and moderate in Cooperativeness. Graph displays the relationship between these five negotiating styles and the competing dimensions of Assertiveness versus Cooperativeness.

Cross cultural Negotiations

Cross cultural Negotiations

LIST OF REFERENCES Acuff, L. F., (1997). How to negotiate anything with anyone anywhere around the world (2nd ed.). New York: American management association publishers.

Brett, M. J. (ed.). (2007). Negotiating globally (2nd ed.). San Francisco: Jossey bass publishers.

Chauri, N. P., & Usunier C. J., (Eds.). (2003). International business negotiations (2nd ed.) Amsterdam: Elsevier Ltd.

Forsyth, P. (2002). Business Essentials: Successful Negotiating. Oxford: How to books ltd.

Harris, R. P., & Moran, T. R., (Ed.). (2000). Managing cultural differences (5th ed.) Houston TX: Gulf publishing company.

Thorn, G. J., (2004). How to negotiate better deals. Mumbai: Jaico publishing house. Cohen, R. 2004. Negotiating Across Cultures. Washington, DC: United States Institute of Peace Press.