Cultural Factors Anticipated in Contract Negotiation between American and Arab Managers - Case Study Example

Cultural factors anticipated in contract negotiation between American and Arab Managers Name: Lecturer: Course: Date: Introduction A negotiation consists of activities involved in communicating, consulting, discussing, or exchanging of ideas in order to arrive at a consensus. Scholars have differed on the link between manager’s behaviour during negotiation and their cultural shock (Muecke et al. 2010). Some scholars like Chang (2006) argued that negotiation is a common behaviour, despite the negotiator’s cultural background and that the behaviour displayed by managers during negotiation depends on a certain pre-set framework. Conversely, other scholars are of the opinion that managers from different countries have different negotiation styles depending on their cultures (Millington & Schultz 2009). This paper believes in the second argument, and further argues that the relationship between the behaviours displayed by managers and their cultures is not absolute (Jankiram & Rao 2007). During the recent decades, technological and knowledge proliferation has led to increased information flow between different cultures resulting in intensified globalisation. Intercultural communication to establish trade between different countries is also a significant outcome of globalisation (Singh 2009; Muhammad et al. 2011). Since the negotiation methods or styles differ with culture, it is expected that the way in which a manager in the United States would negotiate with a manager in the United Arab Emirates vary (Downey et al. 2006) This essay argues that Arab manager will negotiate differently from the American managers due to various factors language, time values, communication/body languages, negotiations process and self-identity. To show how culture influences negotiations, and how different cultural factors influence their decision-making styles, this paper examines the various cultural issues anticipation when American managers negotiate with the Arab managers. Theoretical review The Hofstede's framework of cultural dimensions is proposed for this study, as it is widely used in management studies and applicable to unlimited national cultures (Hofstede 2011). The framework proposes five dimensions that can be used to discuss and analyse the cultural issues expected when American managers negotiate with the Arab managers. The five dimensions include individualism–collectivism, uncertainty avoidance, power distance, masculinity–femininity, and lastly, long-term orientation (Soares et al. 2007). Individualism–collectivism defines the relationships people keep in their culture. In individualistic cultures, people tend to give preference to their individual needs while in collectivistic cultures people give preference to group belonging. Uncertainty avoidance describes the degree to which individuals tend to be threatened by ambiguous and uncertainty and seek to avoid these circumstances (Hofstede 2011). Power distance describes the effects of power inequality, as well as how individuals recognise authority in the society. Next, Masculinity–femininity refers to the dominant values based on gender. In the masculine countries, preference is given to success and achievement, while in feminine countries preference is given to caring for others (Soares et al. 2007). Time value The meaning attached to the time, as Chang (2006) explains, varies depending on cultures. The American managers attach much significance to time, as well as what they will keep to schedule during negotiation. However, they should not expect the Arab managers to do the same, as they attach less significance to time and value building relationships, and may often delay the schedule during a negotiation unless they have built relationships with their American counterparts. According to Amanda et al. (2005), the American’s sensitivity to time is firmly “monochron,” which means that they perceive it as money and will ensure that the meetings are exactingly planned, and state when it should start and end. On the other hand, the Arabs are polychronic cultures. According to Al-Soufi (2003), monochronic cultures separate activities in specific chronological schedules, where they undertake tasks at a time. Hence, the American managers are likely to keep the negotiations to schedule. On the other hand, in the polychronic societies, such as in the United Arab Emirates, the managers tend to multitask or do different things at the same time. Hence, while negotiating, they are likely to engage in another phone call without fear that the negotiation will go beyond the time. Again, during negotiation, the Americans discuss one point at a time. On the other hand, the Arabs discuss everything simultaneously. According to Huang (2010), the manner in which negotiators perceive time is patterned culturally. Hence, there is a broad divergence in the perception of people regarding time depending on their countries of origin. To this end, Huang (2010) noted that the Americans perceive time as being unilinear, and, therefore, schedule all their negotiations. On the other hand, the Arabs places a high value on establishing rapport before getting to business, and may never stick to the time schedule unless they have established a rapport. They view time much more flexible. In respect to Hofstede’s five-dimensional framework, the collectivism/individualism applies suitably (Hofstede 2011). Amanda et al. (2005) showed how collectivism/individualism influences how the Arabs and the Americans plan their negotiation. In his view, while the negotiators from the collectivist culture (Arabs) spend much time making plans for the long-term goals, those from individualistic cultures (the Americans) spend much of their time making plans for the short-term goals. Al-Soufi (2003) also examined the negotiation process between individuals from the collectivist and individualist cultures and revealed that those from the individualistic cultures tended to make extreme offers while negotiating a contract compared to those from the collectivist cultures. This, according to Al-Soufi (2003) has far-reaching effects on the negotiators’ accountability of the process or negotiation. Self-identity and group identity While the American managers are likely to be self-referential, as they tend to place emphasis to self-identity, they should not expect the Arab managers to do the same. The Arab managers attach greater significant to group identity. This is since while all cultures tend to make a distinction between out-groups and in-groups, they show different levels of dedication to their in-group. Fan (2008) explains that the concept of self-identity is more liable to certain aspects that are autonomous to the in-group membership. At this level, Hofstede’s five-dimensional framework, the collectivism/individualism applies suitably. Hence, a negotiator who comes from the individualist cultures is likely to say, “I’m intelligent,” or use the “I” persona during the negotiation process. On the other hand, a negotiator from the collectivist culture is not likely to use the “I” persona, as self-identity is mutually dependent on the group membership. In which case, an American manager is likely to say, “I’m a member of the union.” Direct and indirect confrontation In respect to the strategy applied during the negotiation process, some scholars have showed that the motivational behaviours or confrontational behaviours originate from this cultural value (Amanda et al. 2005). In respect to Hofstede’s five-dimensional framework, the collectivism/individualism applies in this area. According to Al-Soufi (2003), negotiators are motivated by cultural values for collectivism versus individualism, which is reflective of the societal objectives for orientation. In which case, while the individualist cultures tend to place emphasis on self-interests, the collectivist cultures do not, as they place emphasis on collective interests (Hofstede 2011). At this level, the unwillingness to confront directly while negotiating is a consequence of emphasizing on commonality or shared values within the collectivist cultures (Gupta 2000). Therefore, Arab managers are likely to consider a direct “No” to show a lack of respect or rudeness. They prefer an indirect approach, as they are capable of preserving relationships. Therefore, an Arab manager is likely to use an indirect method, rather than a directly confrontational method. In comparing the Arab and American cultures, most researchers have examined them through the key domains of East versus West cultural comparison (Menger 1999). Still, some focus-oriented researchers have concentrated on the sub-domains Arab versus Western cultural studies. In Al-Soufi’s (2003) review of the American and Saudi Arabian negotiations during the1973 oil embargo, showed that the Arabs tended to be assertive while expressing their feelings, and use the extreme ends of everything as opposed to the Western managers who tended to remain less assertive in showing their emotions. When it comes to showing some aspects of hospitality during negotiation, Al-Soufi (2003) comments that interdependence is stressed in Arab cultures. As a result, social behaviours are critical. To this end, the Arabs tend to show ‘dhiyafa’ or Bedouin hospitality where people are highly dependent on each other for emotional or physical protection. Language The Arabs managers tend to consider the order they present a discussion, where they delay the main point until the background of the negotiation is sufficiently explored. Based on Hall’s theory of cultural perceptions of space, different ways in which different cultures perceive reality influence the tendencies for miscommunications, despite the fact that humans tend to have particular patterns of culture in common (Vass et al. 2011). There is a significant difference in the way the American, and Arab negotiators communicate. Due to this, since language is the primary mediator of negotiations, it serves as the medium through which the manager’s thoughts and propositions are taken (Burke 2007). In which case, language appears to have a significant impact on the manner in which the managers conceptualise realities during the negotiation process. Language is, therefore, particularly crucial as no negotiations can be carried out without verbal communication. To this end, language exemplifies the way the American negotiators would talk, think or communicate, and perceive a contract. There is a significant divergence between the way in which the Americans and Arabs communicate, as well as how language shapes the way they negotiate. Between the Arab and American businessmen, language barriers are doubled, since most of the business meetings are undertaken using English. The Americans, as Amanda et al. (2005) notes, use the hypothesis that a discourse strategy used in starting a negotiation implies the main point. Conversely, the Arabs give emphasis to the order of presenting a discussion, where the emphasis on the main point is delayed until the background of the negotiation is sufficiently explored. Therefore, the Arab managers use the discourse in a totally contradictory way to that of the Americans (Amanda et al. 2005). In fact, the Arab managers begin by introducing the problem, providing an explanation of the underlying reasons for the problem, providing any associated details before eventually mentioning the main point. The American managers would mention the main point at the beginning of the discussion. When it comes to the language signs, it is important to note that language is culture-related, where bowing is perceived as a sign of respect in America while in Islamic cultures is viewed as taboo. In respect to Hofstede’s five-dimensional framework, the dimension of power distance applies in this area. According to Al-Soufi (2003), there is a link between language and power distance. In his view, countries with high power distance cultures, such as the Egypt, Qatar, and Saudi Arabia, tend to use polite language whether they have high positions in the society or not (Aldulaimi & Sailan 2012). In addition, they are less likely to restrain from talking, despite being more likely to remain formal during the negotiation. In addition, they tend to constrain power in the hands of specific individuals (Elliot et al. 2001). Conversely, low distance cultures like the United States tend to divide power equally, as well as be informal in the way they speak or dress (Amanda et al. 2005). They also use language to stress informality. For instance, apart from using informal language, the American managers will tend to show up in meetings while donned in casual clothing. They are also likely to address their counterparts using the first names, which Amanda et al. (2005) comments may make the Arab managers uncomfortable, as they tend to value formality. Indeed, Chang (2006) argues that in Arab countries like Iraq or Egypt, the managers are highly formal, particularly when it comes to addressing people of higher status. Negotiation styles and negotiation process The Arab managers are likely to take the time to agree to a contract. Again, they are less likely to be competitive or assertive. In respect to Hofstede’s five-dimensional frameworks, the dimension of power distance applies (Hofstede 2011). As Amanda et al. (2005) show, ‘power distance’ has a major effect on negotiating styles between the Arab and American managers. The Arab manager may take time, like weeks to decide, as they are likely to keep consulting with their seniors each time they are making a proposal or consenting to one. In a study by Al-Soufi (2003), the researcher used Hofstede’s dimensions to study power distance between American managers in the United States and Saudi managers and found that those in Saudi Arabia scored higher on “power distance.” Again, Hofstede’s Masculinity versus femininity also applies. According to Hofstede (1991), masculinity is concerned with societies where social gender roles tend to be unmistakably distinctive. For instance, in masculine countries, preference is given to success and achievement; while, in feminine countries, preference is given to caring for others. When it comes to the American and Arab cultures, these two cultures stand at the opposite sides of each other, where the American cultures have a relative degree of masculinity, compared to the Arab cultures, which has relative femininity. The key features that distinguish between the two cultures are: the masculine cultures tend to have competitive work environments, while, the feminine cultures are less competitive. On the other hand, the masculine cultures, usually, tend to be high-context cultures, compared to the feminine cultures that tend to be low-context cultures (Huang 2010). Unlike the American manager who is likely to be highly competitive and selfish, as well as aggressive when making demands, the Arabs managers are less assertive and will rarely come out as being competitive contestants while negotiating. Communication and body language Arab managers do not expect detailed background information on the people they negotiate with. They also prefer using body language. Theoretically, Hall’s concept of high-context versus low-context applies. The theory divided cultures based on the manner of communicating, where in high-context cultures, information tends to be implicit while, in low-context cultures, information tends to be explicit. According to Singh (2009), the communication styles related to context can be analysed based on the concept of specific cultures versus diffuse cultures. Within the context of a high context cultures, like in the Gulf countries, the people tend to be homogenous, as they have shared experiences and cultures. Al-Soufi (2003) also comments that high context cultures tend to give great importance to their traditions. Because of this, Arab managers do not look forward to, nor expect much in detail background information on the people they negotiate with. Al-Soufi (2003) adds that in high context cultures, such as in the United Arab Emirates, the negotiators will provide key information using gestures. In fact, Al-Soufi (2003) comments by saying that the Arabs say, “when you read something, don’t look for meaning in the words they read, as the meaning is between the lines rather than the words. Again, high context cultures are likely to be highly conscious of their environment. For instance, the Arabic negotiators give great importance to where they would be positioned at the negotiating table, in addition to the number of chairs that would be provided to them, relative to that provided by the other party. Soares et al. (2007) reinforces this argument when he comments that people of collectivist cultures are likely to be concerned with the general emotions that should prevail during the interaction compared to the significance of certain words used during the negotiation. Indeed, it is because of the significance of nonverbal communication in high context cultures, such as in the Arab countries that the Arabic language is highly ambiguous. For instance, the Arab managers are not likely to use a direct “no,” despite using certain ambiguous words implying “no,” and instead leave their counterparts to establish the meaning. Again, within the high context cultures, information is inherent in the surrounding, which makes it needless to put everything in words (Amanda et al. 2005). On the other hand, in low context cultures, such as in the United States, people are less homogenous and for this reason, are likely to classify interpersonal contacts. Such lack of homogeneity of common experience implies that every time they negotiate with others, they require in-depth background information (Chang 2006). When it comes to the low context cultures, communication is rooted in an overt verbal message that contains the entire information. At the same time, minimal information is entrenched in the context or the environment. For this reason, the American managers are more likely to depend on the spoken words during negotiation, other than non-verbal communications. As Al-Soufi (2003) comments, the Americans believes it is significant to ‘speak up’ and are likely to admire Arab managers who have a good command of vocabulary. They also prefer negotiators who express themselves directly. Conclusion Arab manager will negotiate differently from the American managers due to various factors language, time values, communication/body languages, negotiations process and self-identity. The American managers attach much significance to time, as well as what they will keep scheduling during a negotiation. However, they should not expect the Arab managers to do the same, as they attach less significance to time and value in building relationships. They may often tend to delay the schedule during a negotiation unless they have built relationships with their American counterparts. While the American managers are likely to be self-referential, as they tend to place emphasis to self-identity, they should not expect the Arab managers to do the same while negotiating. Again, Arab managers are likely to consider a direct “No” to show a lack of respect or rudeness. They prefer an indirect approach, as they are capable of preserving relationships. Between the Arab and American businessmen, language barriers are doubled since most of the business meetings are undertaken using English. Again, the Arab managers begin by introducing the problem, providing an explanation of the underlying reasons for the problem, providing any associated details before eventually mentioning the main point. The Arab managers are likely to take the time to agree to a contract. Again, they are less likely to be competitive or assertive. Lastly, the Arab managers do not expect detailed background information on the people they negotiate with. They also prefer using body language. References Aldulaimi, A & Sailan, S 2012, "The National Values Impact on Organizational Change in Public Organizations in Qatar," International Journal of Business and Management vol 7 no 1, pp.182-191 Al-Soufi, A 2003, Cultural Differences Between Arabs and Danes The Intracultural Diversity’s Effect on Intercultural negotiations, viewed 9 Aug 2015, < http://pure.au.dk/portal/files/1841/000140603-140603.pdf> Amanda, H, Christopher, H, Maria, P & Syed, R 2005, Cross-Cultural Communication and Negotiation, viewed 9 Aug 2015, Burke, S 2007, “Changing Practices, Changing Paradigms: Working Effectively with Indigenous Clients,” Australian Psychological Society Chang, L 2006, "Differences in Business Negotiations between Different Cultures," The Journal of Human Resource and Adult Learning vol 1, pp.135-140 Downey, G., Lucena, J., Moskal, J., Moskal, B., Lehr, J., Nichols-Belo, A. (2006). The Globally Competent Engineer: Working Effectively with People Who Define Problems Differently. Journal of Engineering Education, pp.1-16 Elliot, A, Chirkou, V, Kim, Y, & Sheldon, K 2001, “A cross-cultural analysis of avoidance) personal goals,” Psychological Science, vol 12 no 6, pp505-510 Fan, B 2008, “Ethnical match effect of Chinese counselor in working with Indigenous Australians in Australia,” Counselling, Psychotherapy, and Health, vol 4 no 1, pp91-98 Gupta, A 2000, “Multiculturalism Conflict Management,” Delhi Business Review vol 1 no 2, pp.1-4 Hofstede, G 2011, “ Dimensionalizing Cultures: The Hofstede Model in Context,” Online Readings in Psychology and Culture, vol 2 no 1, pp.1-26 Huang, L 2010, "Cross-cultural Communication in Business Negotiations," International Journal of Economics and Finance Vol. 2, No. 2, pp,196-199 Jankiram, B & Rao, V 2007, Management and Behavioural Processes, Excel Books India, New Delhi Menger, R 1999, “Japanese and American negotiators: Overcoming cultural barriers to understanding, “Academy of Management Executive, vol 13 no 4, pp.100-102 Millington, M & Schultz, J 2009, "The Challenge of Organizational Culture in Quality Assurance," Journal of Rehabilitation Administration, vol 33 no 2, pp.121-10 Muecke, A, Lenthall, S, Lindeman, M 2010, “Culture shock and healthcare workers in remote Indigenous communities of Australia: what do we know and how can we measure it?” Rural and Remote Health vol 11, pp.1607-1609 Muhammad, A, Muhammad, T & Ehtesham, U 2011, "Relationship between Organizational Culture and Performance Management Practices: A Case of University in Pakistan," Journal of Competitiveness vol 1 iss 4, pp.78-86 Neuliep, J,, Chaudoir, M & McCroskey, J 2001, “A Cross-Cultural Comparison of Ethnocentrism among Japanese and United States College Students,” Communication and Research Reports 18(2), 137-147 Singh, D 2009, “Managing Cross-cultural Diversity: Issues and Challenges in Global Organizations,” Journal of Mechanical and Civil Engineering, pp.43-50 Soares, A, Farhangmehr, M & Shoham, A 2007, “Hofstede's dimensions of culture in international marketing studies,” Journal of Business Research vol 60, pp.277–284 Vass, A, Mitchell, A & Dhurrkay, Y, 2011, “Health literacy and Australian Indigenous peoples: an analysis of the role of language and worldview,” Health Promotion Journal of Australia, vol 22 no 1, 33-38 Read More