Ethical Standards for Behaviour in International and Cross- Cultural Negotiations - Term Paper Example

Ethical Standards for Behavior in International and Cross- Cultural Negotiations Globalization of production processes and markets has resulted to an ever-increasing number of ethical issues that business people and marketers have to deal with in cross-cultural settings. Therefore, global managers and entrepreneurs face a major challenge in understanding the relationship between negotiation ethics and culture. Today, many multi-national organizations prioritize the task of understanding ethical and cultural orientations of their international business partners in order to operate successfully in the international market (Lewicki, Barry, and Saunders, 2010:170). International and cross-cultural negations are often complex. The main challenge is to understand the various influences of the different factors that propagate cultural behavior, as well as updating this understanding based on changes in circumstances. Several theoretical approaches seek to establish an ethical standard of behavior in cross-cultural and international negotiations, including Lewicki’s and Robinson’s five dimensions of questionable negotiation tactics and Hofstede’s cultural framework. Hosfede defines culture as a collective programmed mindset that distinguishes members of a particular category or group from another (Kirkman, Lowe, and Gibson, 2006:303). Another concise definition is that culture is a shared set of beliefs, values, and enduring meanings that characterize ethnic, nation, and other groups, as well as orienting their behavior. Elements of culture include norms, values, behavior, and attitudes. Norms are the rules and regulations followed in specific scenarios based on values. Values are the prioritized beliefs and issues, arranged from high to low. Behaviors are the words and actions, while attitudes are the feelings regarding the actions. On the other hand, ethics is a standard through which business actions are judged as wrong or right. These standards vary from one culture to the other, thus an action regarded as moral in one culture may be immoral in another culture. Therefore, culture is the standard that determines whether individuals’ behaviors are moral or immoral in a given societal setting. It is vital for companies, especially those in the multi-national business, to study negotiation ethics from different cultures to avoid potentially unethical tactics of negotiation and capitalize on positive values (Christie, Kwon, Stoeberl, and Baumhart, 2003:271). The growth of opportunities in global business and international trade engages global executives in negotiations with other executives from other diverse cultures. The process of these negotiations faces opportunistic temptations and ethical dilemmas. In a normal tactical process where two parties seek an agreement, each party will try to maximize their result, thus the temptation to use deceptive tactics. Negotiation is the systematic interaction of two or more parties with the aim of reaching a mutual agreement that will provide guidelines, terms, and condition of future behavior. Negotiation brings together different parties seeking to achieve mutually benefits while at the same time meeting odd individual goals of the other parties (Christie, Kwon, Stoeberl, and Baumhart, 2003:269). Therefore, negotiation involves serial exchange of communication and information between parties in an attempt to persuade or influence a counterpart. International and cross-cultural negotiations face ethical dilemmas, as each party tries to maximize their outcome and the eminent temptation of applying dishonest or deceptive tactics. Negotiation behaviors may be ethical or unethical. Ethical negotiation tactics include exaggerated demands, hiding the negotiation timeline, or hiding the bottom-line. Unethical tactics include false promises and misrepresentation. The negotiator may also attack the opponent’s network to lure members of that team to join them. A negotiator may also use inappropriate information gathering tactics like bribing to obtain sensitive information concerning the opponent. Several studies examine the relationship between ethics and negotiation. Robinson and Lewicki argue that numerous behaviors that vary as far as perceived appropriateness and ethnicity are concerned (Guasco and Robinson, 2007:136). The basic level consists of traditional competitive bargaining, which consists of generally acceptable tactics like appearing to be in a hurry or exaggerating demands. Additionally, there are other questionable tactics like gathering inappropriate information, making false promises, attacking the opponent’s network, and misrepresenting information. Donahau, Robinson, and lewicki further investigated the perceptions of business executives on unethical negotiation tactics, reporting that the executives generally accept the traditional competitive bargaining tactics, while they reject other potentially illegal and serious tactics (Guasco and Robinson, 2007:138). Volkema, Ford, and Elahee and Brooks made similar observations in their separate studies and research. According to business theories, individuals tend to apply varying moral philosophies when faced with morally questionable situations. Fraedrich, Ferell, and Gresham argue that these moral philosophies provide a platform of judging the act, the consequences of the act, and the intentions of the actor (Silkenat, Aresty and Klosek, 2009:50). The moral philosophies may be teleological or deontological in nature. Deontological moral philosophies focus on specific behaviors or actions of individuals, while the teleological philosophies capitalize on the consequences of the behaviors or actions. Individuals who apply the deontological philosophy when faced with moral dilemmas often consider the inherent wrongness or rightness of the available alternatives that they perceive as possible course of actions against some predetermined deontological rules or norms reflecting an individual’s behavior or value. Those who tend to subscribe to teleological philosophies evaluate actions based on their perceived consequences of those actions on the relative likelihood of the occurrence of such consequences and the impact to various stakeholders. Hofstede’s framework highlights four dimension of culture that influence an individual’s attitude towards questionable business practices and business ethics (Kirkman, Lowe, and Gibson, 2006:290). These dimensions are individualism/collectivism, feminity/masculinity, uncertainty avoidance, and power distance. Hofstede argues that societies where individuals have loose ties exhibit individualism. Each person is expected to look after themselves and their families. Individualism thrives on personal pleasure, independence, time, and individual expression (Al-Khatib, Stanton, and Rawwas, 2005:236). In such a setting, personal interests and goals precede those of the group or society, thus the need for high value individual rights and personal achievement. On the other hand, societies where individuals, after birth, are integrated into cohesive and strong in-groups that continues to protect these individuals throughout their life in exchange for unquestioning loyalty. Collectivism has a tight social framework that distinguishes people between out-groups and in-groups. The identity of a collectivist is the social system, not the self. The individuals view themselves as part of a tribe, culture, nation, or extended family. Despite the group providing security, loyalty, and protection to its members, it takes invades their private lives. Collectivism or individualism of people affects their moral reasoning. The moral implications of this particular dimension are that individualist society members often question the moral standards of the society. According to various social studies, individualists do not emphasize on the adherence to formal moral rules (Bell, 2007:47). These studies further report that individualism has a positive relationship with the tendency of people to break laws. Additionally, the studies report that collectivists are more ethical than individualists are, and that individualists focus on achievement of personal goals and self-interests. This means that there exists a negative relationship between the five questionable negotiation tactics and collectivism, and the reverse is true for individualism. In general, individualism (collectivism) is a positive (negative) determinant of the five questionable negotiation tactics. The dimension of femininity and masculinity reflect gender dominance in society. Masculinity is said to be the preference to assertiveness, achievement, material success, and heroism. Masculine individuals display characteristics of aggression, competition, assertion, and ambitious, and tend to focus on material success. Feminists, on the other hand, are humble, nurturing, modest, and value the quality of life. Feminists are less concerned with personal recognition are relatively focus on people. Their achievements determinants are in terms of quality of life and close human relationships (Weiss, 2009:460). Masculinity ethical implications surround the relationship between ethically acceptable behaviors and aggression. Here, the main problem is that masculine people may tolerate aggressive and questionable behaviors as compared to feminists. Competitiveness and greed, which characterize masculinity, are among the most cited reason for unethical behaviors. According to research by Modic, personal desire, financial gain, and ambition contribute heavily to unethical behaviors. Additionally, feminists focus on ethical issues and tend to tolerate less financial-driven, aggressive behavior. Therefore, there is a negative (positive) relationship between femininity (masculinity) and the five questionable negotiation tactics. Hofstede argues that power distance represents the extent of acceptability of unequal distribution of power in a society by the lower members of organizations and institutions (Kirkman, Lowe, and Gibson, 2006:317). The main concern of this dimension is how individuals interpret and deal with the problem of unequal power distribution among their members of society. The main implication here is that subordinates may act unethically under pressure from their superiors. Research indicates that countries with small power distance are likely to record many cases of questionable business practice as compared to large power distance countries. This means that individuals high on the power distance scale are more opportunistic than their counterparts in the lower scales are. Consequently, this implies that power distance has a positive relationship with the questionable negotiations tactics. Hofstede then defines uncertainty avoidance as the level upon which unknown or uncertain situations threaten members of a particular culture (Kirkman, Lowe, and Gibson, 2006:293). Uncertainty avoidance the extent of threats of uncertain or unknown situation towards the people from a certain group as well as the extent of avoidance of these situations through believing in absolute truths, , adopting strict rules, establishing non-tolerance policies for deviant behaviors and ideas. High uncertainty avoidance in individuals makes them intolerant to deviation from the norms, increase their concern over security in life, and increase their urge for written rules and consensus. Low uncertainty avoidance, on the contrary, rely less on consensus and written rules, concern less with security, and are likely to tolerate risks. Additionally, individuals with high uncertainty avoidance are more intolerant to deviations, are likely to take risks, and are loyal to their cultures, while low uncertainty avoidance societies have few rules, accept different beliefs, and tolerate alternative options. This therefore means that individuals with high uncertainty avoidance are relatively more idealistic as compared with low uncertainty avoidance. This means therefore that there is a negative relationship between uncertainty avoidance and the questionable negotiation tactics. Various factors have been cited as the predictors of ethical behavior. They include ethical orientation, personality variables, economic factors, and opportunism (Volkema, 2004:73). Assuming that negotiating parties have conflicting interests, studies indicate that most negotiators will attempt to gain advantage through unethical and opportunistic behaviors. However, multi-national organizations can prevent questionable negotiation tactics using selection programs and screening services that take different forms that will enable them to select partners who are not inherently cooperative and opportunistically inclined. These selection programs should identify the best criteria for screening partners and future selection. A viable criterion is the individual’s past behavior and reputation in similar undertakings and relationship. This will provide an organization with a basis for judging the motivation, ability, and willingness of the potential exchange partner to behave and act ethically. However, the organizations need to have information on the current and past behaviors of the potential exchange partner. Ex ante verification may also reduce cases of opportunistic tendencies. This involves verifying promises and claims before the initial commitments that are dependent on the promises or claims. The questionable tactic has a long-term ramification, thus an organization may hire a reputable local agent to assist in the verification process (Trevino and Nelson, 2011:405). However, the international organization needs to employ these services at the early age to avoid the questionable tactic of using a third party. In some parts of the world, the most efficient and effective negotiation rely on trust-based exchanges. This is due to the increasing number of regions in the world that are embracing emphasis on trust as the foundation of building relationships. Another important point is to understand the ethical mindset and culture of the negotiator. This will provide an essential decision-making tool for organizations that operate in the global market. For instance, most developing countries executives emphasize on trust as the foundation of all organizational, social, and transactional relations, and this has an impact on the preference of foreign direct investment and the firm-level perception of costs of transaction (Bell, 2007:43). Lastly, other situational factors, like favorable negotiation conditions, ethicality of the previous business agreement, and the possibility of long-term business relations, may change the perception of the negotiator on the appropriateness of opportunistic negotiation and their probable use. Bibliography Al-Khatib, J., Stanton, A. and Rawwas, M.Y.A., "Ethical Segmentation of Consumers in Developing Countries: A Comparative Analysis", International Marketing Review, 25(2), 2005, 225-246 Bell, V., 2007. Culture and Performance: The Challenge of Ethics, Politics, and Feminist Theory. New York: Berg. Christie, P. Maria Joseph, Kwon, Ik-Whan G., Stoeberl, Philip A. and Baumhart, Raymond, "A Cross-Cultural Comparison of Ethical Attitudes of Business Managers: India, Korea and the United States", Journal of Business Ethics, 46, 2003, 263-287. Guasco, M., and Robinson, P., 2007. Principles of Negotiation: Strategies, Tactics, and Techniques to reach agreements. New York: Entrepreneur Media Inc. Kirkman, Bradley L., Lowe, Kevin B. and Gibson, Cristina B., "A Quarter Century of Culture's Consequences: A Review of Empirical Research Incorporating Hofstede's Cultural Values Framework", Journal of International Business Studies, 37(3), 2006, 285-320. Lewicki, R., Barry, B., and Saunders, D., 2010. Essentials of Negotiation. New York: McGraw-Hill/Irwin. Silkenat, J., Aresty, J., and Klosek, J., 2009. The ABA Guide to International Business Negotiations: A Comparison of Cross-Cultural Issues and Successful Approaches. New York: ABA Publishing City. Trevino, L., and Nelson, K., 2011. Managing Business Ethics: Straight Talk About How To Do It Right. New Jersey: John Wiley and Sons Inc. Volkema, R.J., "Demographic, Cultural, and Economic Predictors of Perceived Ethicality of Negotiation Behavior: A Nine-Country Analysis", Journal of Business Research, 57(1), 2004, 69-78. Weiss, J., 2009. Business Ethics: A Stakeholder and Issues Management Approach. 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