The first idea of globalization in the business world brought to light by Levitt in the year 1983. In a research report done by Culbro & Herbig (1998), they describe globalization as a phenomenon where there is advancing technology that makes people to do a lot of travelling. It is through this increased travelling that people meet different cultures, which tend to affect them in various ways. On the other hand, Hofstede (2005) says that there are factors such as the existing environment, history, geography, language and experience that make people to have significant differences. In the contemporary business world, the concept of culture has become very important because of its influence on the outcomes of business negotiations. It is a subject that is now tackled by various researchers within corporations.
Since human beings are naturally conditioned to think and perform activities in a particular manner, it is always challenging for them to understand each other. This situation has been of great challenge to companies with operations all over the world hence with managers who have to meet various workers across the world. The lack of understanding among the business parties may also be regarded as one result of the cultural difference among people in the world. This lack of understanding is what leads to high transaction costs for businesses that have international operations.
Managers have to recognize the fact that it is not only one factor, which causes failures in the business negotiations across cultures. However, it has been established that business negotiations that involve people from different culture origins normally fail as a result of this difference. According to Martin et al. (1999), international business negotiations normally crumble as a result of the various cultural dimensions like business etiquette, the proficiency in language, politics and history. Martin et al. (1999) argues that the existing lack of understanding in among different cultures causes impediments within the communication process during negotiations making them to fail. It has to be understood that one major cultural dimension that leads to problems in the communication process is the issue of language barrier (Wang, 2005). When managers of companies meet workers from different countries speaking a totally different language, there is bound to be a problem in the communication process because there will not be any understanding (Zhu, 1994). This is one way in which negotiations fail to be effective. It is, therefore, quite important that business managers find the right skills that can enable them overcome these cultural differences and make business negotiations successful.
The purpose of this paper is to give cross-culture negotiation guidelines to managers of a company located in the United States and seeking to meet workers from different places of the world for negotiations. Therefore, the paper is written from the perspective of managers of one company situated in the U.S, looking forward to meet workers from different parts of the world. Therefore, the types of managers in this context are international ones. It is based on cross-culture issues like:
- Creation and claiming of value
- The efficient trade-offs
- The manner of tackling uncertainty
- Tackling information asymmetries
- Verbal as well as non-verbal communication
- The cultural priorities
The Problem of Globalization
The current economy of the world has been significantly affected by globalization. Globalization has brought about the need for cross-cultural business negotiations, particularly by managers of corporations. It is important to note the fact these cross-cultural negotiations call for intensive competencies that are both technical and social in nature (Assante & Yin, 2007). The international managers have to be competent in associating with people from different backgrounds as well as cultures.
Currently, there are a lot of business negotiations taking place between people from the Western nations and the big emerging market countries. However, a lot of these business negotiations have got the challenge of cultural difference among those communicating hence they eventually fail to be productive. Managers of companies need to understand the fact that the existing literature provides good guidelines on how to be an effective business negotiator at the international status (Bovee & Thill, 2010). The same literature also normally presents information regarding the foreign cultures in the entire world and the various negotiation techniques in order to overcome these cultural differences. Scholars have been able to point out that the first skill in the current global business negotiation processes is the knowledge of diverse cultures that exist across the world.
Research has been able to establish the fact that cultural intelligence has a great bearing on the outcome of international business negotiations. Cultural intelligence and politics are integrated in the cross-cultural environments. In this context, cultural intelligence refers to the capability of associating with different people in multi-cultural settings (Brett, 2001). When managers are going out to meet workers from various parts of the world for business negotiations on matters of labor, it is important that they first have a high sense of cultural intelligence. Without this skill these managers cannot have successful negotiations with workers.
Globalization has been good in terms increasing business activities. However, it has increased the cost of doing business since people have to go to classes in order to learn new cultures as well as languages for them to conduct successful business negotiations (Budhwar, 2001). Moreover, some managers are forced to hire translators and this makes the whole process of communication to be quite expensive.
There is rich literature on the various aspects of cross-cultural negotiations. The common denominator in all these research reports is that the contemporary global business is very much inter-dependent as well as inter-connected. Another common position taken in virtually all the studies is that corporate leaders have to expose their managers at the international playing ground so that they learn about the existing cross-cultural aspects like business etiquette, for them to gain more effective skills that would enable them have good interaction and be productive negotiators with people of different backgrounds (Cardon & Scott, 2003). For the business managers to excel in negotiations involving people with different cultures, they have to train the required skills of understanding cross-cultural etiquette. The exposure that corporate leaders give their managers is what can make them to take advantage of the global business opportunities, which are present in the current culturally-diverse international marketplace.
Culture simply refers to the beliefs, norms, implied rules, values and traditions of a given group of people (Northouse, 2007). Northouse (2007) says that culture involves the common qualities of lifestyle that make a given group of people to be distinct from others. According to Hofstede (2005), there are five dimensions of culture; power distance, collectivism against individualism, masculinity and femininity as well as uncertainty avoidance and the long-term orientation.
Hofstede (2005) describes the power distance as the situation within the society where people are given different levels of significance and status. Collectivism vs. individualism is about the priority accorded to a given group versus the individual rights as well as freedoms. Explaining further, people are normally bound by strong personal and protective connections within the collectivist cultures whereas for the individualistic ones persons are required to take care of themselves and contribute to a common objective with very minimal mutual pressure. Hofstede (2005) notes that there are varying definitions of the roles of men and women within the society as well as their expected behavior. This is the masculinity and femininity cultural dimension. In a society, men and women tend to be accorded different functions by the culture of that particular group of people. Moreover, the manner in which they are expected to behave is always different. Moreover, there is also the cultural dimension of uncertainty avoidance, as suggested by Hofstede (2005), which refers to a case where there is strong uncertainty hence the society perceives circumstances that are not known as threatening. For places where the uncertainty avoidance is weak, individuals have a small feeling of threat from the unknown circumstances.
It is vital to note the fact that human values are always acting as a guiding framework, which indicates to people that which is expected of them. Values within a society can be of strong or weak meaning to the people. Moreover, they can also be shared by many members of the community or just few people. The same values that exist in a given culture have the ability of creating impediments within the communication process of people or make it easier. Managers of companies have to understand the fact that it is not the values themselves that are of significance, but the extent to which they are spread within the society. When they are spread widely, they create a sense of unity and guidance among people. These values are also transferred mutually between people interacting. This may lead to a whole new form of value after the merger. Hofstede (2005) says that culture is made up of a lot of varied human constructions that enable them to cope up with life. People also at times develop stereotype images of particular groups of individuals in order to find ways of understanding and dealing with them (Hofstede, 2005).
What is very important for the global managers when going for international business negotiations is to have strong cultural intelligence. A high cultural intelligence is the strong capability of a person to effectively deal with circumstances that are made up of people with diverse cultural backgrounds (Carte & Fox, 2008). Cultural intelligence entails continuous exposure to new cultures hence development of one’s cultural understanding. This helps boost the state of preparedness of a person, which enables them to deal with cross-cultural situations in an appropriate manner by creating a shared bridge-building culture.
Managers from a company, going to meet workers from various places of the world, should have high cultural intelligence. It is what will enable them to understand the cultures of these workers in advance and give them wisdom on how to deal with them during the business negotiations. If the cultural difference is in terms of some business practice beliefs, the managers will be able to be creative enough and come up with a shared bridge-building culture during the communication process that will make the negotiations successful (Chaney & Martin, 2011). It is very difficult to deal with situations that involve cultural diversity without the intelligence on various cultures in the world.
Cultural intelligence, an important concept for any global manager, has various dimensions. The first dimension is the inert-cultural engagement, which is normally concerned with the driving forces of a particular circumstance. These forces include emotions and attitudes towards existing cultural differences. The second dimension is about inter-cultural communication, which demands that a manger develops a good understanding of the communication process (Chaney & Martin, 2006). Finally, there is the dimension of cultural understanding, which is the cognitive part of the whole process of cross-cultural interaction. This part involves proper understanding of one’s culture and that of other people participating in a business negotiation.
Dimensions of Cultural Intelligence
Source: Plum (2008).
Facets of Cultural Intelligence
Source: Earley (2002).
Communication in Negotiations
Communication is an important part of any international business negotiation process, which involves people from diverse cultural backgrounds. During the communication process, it is important that managers pay attention to both the intended and silent signals that are given to other party in the negotiation process. For the managers to effective communicators during their business meetings with the workers hailing from different places of the world, they have to master the art of both verbal and non-verbal communications (Connerley & Pedersen, 2005). This knowledge puts them in the best chance of achieving their objectives when starting a business negotiation.
It is vital to note the fact that negotiator communication competency is very significant for the purpose of understanding the role played by communication in the international business negotiations. Speece et al. (2004) mentions that communication skills are part of the very essential ingredients necessary for a successful global business negotiation. At this point, it is very important to understand the manner in which communication works within various cultures. It is after the proper understanding of the manner in which communication operates in various cultures, that managers can have successful international business negotiations.
According to Hall (1976) that communication is differently implied in contexts within the low and high context categories. Managers must understand that in the high-context cultures, the background information is always implicit with much of the message being communicated carried in the way words relate to the implicit information. For one to get the message being communicated in these high-context cultures, they must make inferences based on the existing contextual and social cues. People within the high-context cultures normally use non-verbal language such as voice, posture, gesture, facial expressions and the instances of silence in their communication (Cook & Cook, 2004). For the case of the low-context cultures, the background information has to be explicitly expressed since a lot of the message is carried by the words themselves. People within the low-context culture depend on the formal communication that focuses on verbal expressions. They also stress on win-win solutions.
It is also vital to understand the fact that cross-cultural communication is quite complex considering the difference in languages spoken by those communicating. Moreover, in cross-cultural communication, there are also non-verbal barriers since signals may carry varied meanings in various cultures (Dresky, 2006). However, through cultural intelligence, managers are able to understand these differences and deal with them appropriately during the communication process.
Cross-Cultural Negotiation Competency
The Cultural Variables
There are various forms in which culture of people differs across the world. Managers of the company have to understand the different ways in which their culture differs from that of the workers they will be meeting across the world for business talks.
Greetings form the very first expressions that people give when they meet before the negotiations start. The kinds of greetings that the managers give just at the start of the negotiations have a lot of significance and influence on the entire process. Different cultures attach various meanings to greetings. The manner in which a given understands some form of greeting may not be the same way another one takes it.
By giving an appropriate greeting, the manager sends a perception to the others that they are serious about establishing a serious working relationship with their counterparts in the negotiations (Harper, 1997). Moreover, the kind of greeting that a manager gives others in a business meeting affects the judgment of their counterparts as well as the decisions they make during the negotiations.
It is vital to note the fact that different cultures have varying forms of greeting in business meetings. For instance, the Chinese normally greet each other using personal questions, as a way of showing their considerations and care for other people (Harris & Moran, 2000). For the people from the Western countries such as the United Kingdom, they value privacy and personal liberties hence do not ask for the affairs of other people in greetings because they consider it disrespectful.
Styles of Business Negotiation
There are also differences in the manner in which people from different cultures carry out business negotiations. This is a very important issue that international managers must understand. For instance, the Japanese normally value rites since their nation has a culture that is greatly influenced by the traditional Chinese one, particularly the Confucian ideas. When the Japanese are in business negotiations, they are normally quite categorical about an equal or close to equal membership of the other negotiating team (Movius, Matsuura, Yan & Kim, 2006). If this is not granted, they feel disgruntled and not given a fair chance to negotiate effectively. Moreover, it is vital to understand the fact that the Japanese have a deep-rooted prejudice against women hence decisions made by women in business negotiations are not regarded as significant. It is worthwhile to note when negotiating with the Japanese, it is important not to include many women in the other team because this may even annoy them.
For the case of the United States of America, there are diverse cultures in this nation with some broad integrated norms and beliefs. The Americans tend to be quite aggressive while on the negotiation table. They always aim at standing out among the crowd in their business engagements (Ting-Toomey & Kurogi, 1998). The Americans do not consider rituals, formalities and the social rules when making business negotiations. In fact, they like cracking jokes and at times may even appear disrespectful of the other group on the negotiating table. It is very vital that one understands them so that they have successful business negotiations.
For the case of the Russians, they are best at playing tricks during business negotiations. The Russians always want a win-lose solution that is in their favor. For instance, when another person proposes a price, the Russians will want to bring down this price however low it may be so that they win. They use all tricks be it dirty ones to ensure the other party gives in and grants them their wish. For effective business negotiations with them, one must understand these tricks (Yu & Cannella, 2007).
Cultural diversity has a very huge influence on the global business negotiations today. International managers have to master the art of understanding other cultures for them to effectively negotiate with people from different cultural backgrounds. Through exposure at the international business negotiation scene, managers are able to understand the way to tackle parties from various parts of the world. To effectively carry out business negotiations with workers from different places of the world, the managers from the company must:
- Prepare for the possible cultural communication barriers by researching on the background and experiences of their counterpart
- Seek advice from an adviser who hails from the culture of the counterpart
- Hire their translators for the communication during the negotiation process
- Ignore ethical stereotypes
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