The Significance of Training Cross-cultural Negotiations - Essay Example

Running head: CROSS-CULTURAL NEGOTIATIONS Cross-cultural Negotiations: The Significance of Training March 7, 2009 Cross-cultural Negotiations: The Significance of Training In today's world, where business has turned global, having crossed the boundaries of its home environment and by having its presence in several countries, the key negotiators of an organization taking training in cross-cultural negotiation can give the organization a definite edge on the competition. There are several factors that are exogenous to the home environment of an organization that influence its decision making and success. The global business environment can be divided into the internal and the external environment where, while the organization has some control over the internal environment, its control over the external environment is close to naught. As an organization has no control over the external environment, it becomes extremely essential for it to adapt to its external environment. Hence, the success of an organization depends very much on how well it can handle and adapt to its external environment. One of the main components of the external environment is the cultural environment, along with the social, political, economic and technological environments. The culture of a country plays a significant role in the decision-making of its people, which in turn affects their working habits and their business. Need for Cultural Adaptability According to Geert Hofstede, "culture is the collective programming of the mind which distinguishes the members of one group from another" ("Cultural environment," p. 105). Culture has an impact on every function of business, from production to designing and marketing of products to human resources management. Hence, success in international business relations almost entirely depends on the negotiators' cultural adaptability and their ability to respect other cultures. Cultural differences among different nations make negotiations highly complicated, confusing and sometimes frustrating. Overlooking religious beliefs, values, attitudes, habits, and routines, and holding cultural preconceptions, biases and prejudices can lead to blunders in cross-cultural negotiations ("Cross-cultural negotiations," 2009). Influence of Religion on International Business Religion, which forms one of the bases of culture, and its philosophies are the main factors that influence the lifestyles, values and beliefs of the people of a country. Religion affects the working habits of the people, their attitude towards work and entrepreneurship. "Religious ethics sometimes affect the cost of doing business in a country" ("An overview," 2004, p. 7). Islam, one of the largest religions in the world, believes in social justice and is strictly against making profits through exploitation. Business should not violate principles of social justice. Hence, giving and earning interest on money is against the principles of Islam. This hinders international business, and international financial firms try to solve this problem by giving and receiving profit-shares instead of interest ("An overview," 2004, p. 7). Buddhism is a religion that is presently practiced mainly in Southeast Asia, China, Korea and Japan. This is a religion that gives utmost importance to spiritual rather than materialistic achievements. Though the religion advocates an ascetic life, Buddhism encourages entrepreneurial activity ("An overview," 2004, p. 7). However, according to Hutanuwatr and Rasbash (1998), from a Buddhist perspective, the very core of globalization process is the globalization of craving, and craving is the root cause of all suffering. As craving becomes globalized, the scale of suffering around the world becomes vastly amplified. Third-world communities that had been self-sufficient until then become consumers of capital-intensive goods and services provided by the transnational corporations, which enhances the standard of living of some while "the majority fall victim to discontent, dependency, and poverty" (Hutanuwatr & Rasbash, 1998). There is increased emphasis on material goods, which deteriorates the quality of life of the people, making them spiritually void. Having an insight into these religious beliefs of the people, which have a great influence on their values and attitude towards life, work and wealth, can guide a negotiator in his or her business dealings with them. Confucianism, followed in China, Korea, Japan and Taiwan, lays great emphasis on loyalty and high moral and ethical conduct ("An overview," 2004, p. 7). Employees who follow these principles are likely to be loyal to their employers, and the management repays this loyalty by providing them life-time employment. This results in minimum friction between employees and the management. Companies also tend to show honesty in their dealings with each other, which helps long-lasting, close ties between companies. These values generally help in rendering the environment conducive to international business ("An overview," 2004, p. 7). In the present times, people from different countries are relatively well exposed to the religious beliefs and customs of each other. This has made them more tolerant and understanding in their transactions. However, sensitive issues can precipitate once in a while and hence it would be in the best interest of the organization for the negotiators to prepare themselves for cross-cultural negotiations. "Values are basic convictions that people hold regarding what is right and wrong, good and bad, important and unimportant" ("An overview," 2004, p. 8). Values play a significant role in shaping the attitudes of the people, which in turn have an impact on their business relationships. Different countries have different social customs and manners. A deep insight into the negotiation styles is essential to make successful negotiations and to maintain good business relations. For example, Russians and East Europeans make several demands during negotiations, not revealing what concessions they are willing to make. However, they yield to several of the demands as the negotiation progresses. However, North Americans make clear their concessions at the outset of the negotiation process, expecting the other party to do the same and quickly conclude the meeting ("An overview," 2004, p. 8). Understanding the habits pertaining to different cultures can help ease the cross-cultural encounter to a large extent. It is an utmost necessity to have an idea what would be the most appropriate attire for a meeting. While Europeans accept perfumes, other cultures are not usually as accepting. North Americans consider smiling a sign of trustworthiness. Europeans believe in controlled smiling. However, Asians usually smile to conceal negative emotions. While eye-to-eye contact is a sign of trustworthiness and assurance for Europeans and North Americans, Asians perceive lowering of eyes as a sign of respect. All cultures prefer sitting face to face for negotiation except the Chinese who prefer sitting side by side with the opposite parties for negotiation. Cultures with mixed ethnic groups are more tolerant with regard to punctuality and they enjoy sharing the negotiation space. They enjoy emotional involvement and consider personal relationships fundamental ("Cross-cultural negotiations," 2009). On the contrary, cultures that are devoid of mixed ethnic groups are less tolerant about delays and disorganization. They prefer large, simply decorated places for negotiation where each party respects the personal space of the other. They do not enjoy mixing personal and business relationships ("Cross-cultural negotiations," 2009). Indices of Universal Categories of Culture Hofstede has classified culture along four dimensions, namely power distance, masculinity vs. femininity, uncertainty avoidance and individualism vs. collectivism ("Cultural environment," p. 106). These dimensions are also known as indices of universal categories of culture and they deal with social stratification, social role of sexes, need for structure and relationships respectively (Shemwell, n.d., p. 74). Power distance refers to the social attitude towards physical and intellectual inequalities. Societies with high power distance cultures are those that have wide differences in terms of income and power among its population. Examples are Mexico, West Africa and some Arab countries. Societies having low power distance cultures are Great Britain, Germany and the U.S. ("Cultural environment," p. 106). Masculinity vs. femininity relates to the relationship between gender and work roles. According to this model, assertiveness and competitiveness are considered male values, and solidarity and quality of life are considered feminine values. In masculine cultures, the roles of men and women are differentiated sharply whereas in feminine cultures they are less so ("Cultural environment," p. 106). In Japan, which has a highly masculine culture, women are regarded as helpers of men. Women are not considered to be capable of doing work that is of a demanding nature and, in spite of the Equal Opportunity law that was passed in 1936, most of the Japanese firms employ women in routine office assistance work ("Cultural environment," p. 106). In contrast, The Netherlands has a feminine culture where people give a great deal of importance to quality of life and the employees are allowed flexible work options. Uncertainty avoidance refers to the degree to which ambiguity and uncertainty is tolerated by a society. Societies with high uncertainty avoidance prefer not taking risks. Here employees receive high job security and retirement benefits, and they are made to work under close supervision with clear job instructions, strictly adhering to rules and regulations. Japan is an example for this type of culture. Japanese prefer to give close attention to minute details and discuss them at length, which can be quite frustrating to their Western counterparts who generally prefer speedy decision-making ("Cultural environment," p. 107). Low degrees of uncertainty avoidance are found in countries like the U. S. where people believe in quick decision-making, are not hesitant to take risks and show low emotional resistance. Individualism vs. collectivism refers to values given to individual interests and collective interests in societies. In individualistic societies, individual interests are given importance while in collective societies, group interests supersede individual interests ("Cultural environment," p. 107). Japan has a collective society where group achievements and efforts are highly valued whereas the U.S. has an individualistic society where individual interests, achievements and efforts are given more importance. Arab countries are found to have high power distance and uncertainty avoidance indices while Asian countries are found to be high on collectivism and power distance scales. According to a 1980 data, the power distance indices of Hong Kong, Japan, Philippines, Singapore and Taiwan are found to be 68, 54, 94, 74 and 58; the uncertainty avoidance indices are found to be 29, 92, 44, 8 and 69; the individualism indices are 25, 46, 32, 20 and 17; and the masculinity indices are found to be 57, 95, 64, 48 and 45 respectively (as cited in Shemwell, n.d., p. 75). In addition to the above four dimensions, Hofstede has proposed a fifth dimension, which is long-term orientation. This refers to the degree to which a society holds on to traditional values. Countries that have high long-term orientation have high value and respect for long-term commitments and traditions. This supports "a strong work ethic where long-term rewards are expected as a result of today's hard work" ("Cultural environment," p. 107). Asian countries have high ranking on the long-term orientation scale. Change can occur more rapidly in countries that rank low on the long-term orientation scale, as traditions and commitments do not come in the way of change in such societies. Influence of Culture on Communication Language, naturally, plays the most important role in communication. It would be most essential to speak in a common language like English, which is the most commonly used language the world over. If that is not possible, it would be advisable to get the services of a translator or an interpreter. However, a translator/interpreter may "interfere with conversation's natural flow and uncontrollable and unpredictable confusions may arise" ("Cross-cultural negotiations," 2009). It is essential that the negotiator speak clearly and simply and that he or she synchronize to make sure that the communication has been clear and complete. Other skills that are most helpful for completing a negotiation efficiently and successfully are concentrating on the participant's physical reactions to the conversation, listening carefully and confirming from time to time that one understands the conversation, asking for a feedback, taking notes and clearing all doubts that may arise during the negotiation ("Cross-cultural negotiations," 2009). While negotiating, slang should be avoided as such words may have different meanings in different countries. Hence, use of such words could lead to embarrassing situations. The same words could have a different meaning in different countries. For example, 'corruption' in the United States means 'morally wrong' while the same word for the Koreans means 'being socially unfortunate' ("How 1: Verbal," 1996, p.43). Like languages, signs also have different meanings in different countries. The 'OK' symbol symbolizes worthlessness in France and money in Japan ("Cultural environment," p. 109). Similarly, it is also of utmost importance to know the norms and etiquette of a country before doing business with it. Negotiators from Diverse Cultures Understanding the culture, etiquette and habits of international clients has grown so much in importance that companies are now training their employees in dealing with international clients. Lack of knowledge of their culture can cause embarrassing situations and lead to cultural blunders and sometimes even serious mistakes that may offend them, resulting in failure of negotiations and huge losses. Different countries have different etiquette, habits and culture. An example is Japan. While negotiating with the Japanese, it is essential that business cards, which are called "meishi" in Japanese, are exchanged first. After receiving a business card, it should not be transferred straight to the pocket or wallet. The cards are received with both hands and examined carefully before beginning discussion. The cards should be printed both in the native language of the executive and in Japanese. While giving the card, the side printed in the executive's native language should be facing up. The customary greeting used to be the bow, but with time Japanese have begun to use the handshake for greeting people. A greeting with a bow should be reciprocated with a bow as low as the one received. How low a person bows determines the status of the relationship between the parties. The card should be given after the bow. While introducing a person, it is important to use the last name plus the word "san" ("Cultural environment," p. 109). Indonesian negotiators are very personal in their interactions and they try to get to know one personally in the beginning stages of business relationships. Trust building is a slow process that involves socializing and using trial-and-error gut feelings. They value smooth social relationships based on warmth and goodwill ("Country study: Indonesia," 1996, p.136). Indonesians are very cautious while dealing with foreigners due to their unhappy experiences under Dutch colonization. This requires that their needs are focused and emphasized during negotiations so that they do not feel intimidated. They are a hierarchical society, so being aware about the government policies can help in winning them over. Getting the help of a local representative as an intermediary is essential in business dealings with Indonesia ("Country study: Indonesia," 1996, p.138). In negotiating with Korea, one must have a thorough understanding of their negotiation style. It is important that one conducts thorough research on all relevant aspects of the deal as Koreans will use all their business contacts to gather information on their foreign counterparts (Lee, 2005, p. 1). As Koreans are not very talkative, the easiest way of understanding them would be by reading their non-verbal modes of communication. Theirs is a male-dominated, Confucian society which shows very strong gender bias. Hence, when negotiating with Koreans, it is important to have male negotiators or a male-dominant negotiating team (Lee, 2005, p. 1). An interpreter is essential, as communicating in English is generally difficult for Korean businessmen. Decisions are made by seniors or superiors. Deadlines should be flexible as Koreans take time for relationship building, and decisions have to come from the top. For Koreans, signing a contract does not close a deal. In fact, they may request changes and further concessions even after signing the contract. Bargaining is perceived as strength by Koreans. So it would be wise not to make concessions right at the outset of the negotiation process. A Korean negotiator will most likely have a 'professional' and 'personal' face. Therefore it would be most advisable to be wary about what one says during the socializing hours for that could be used against one's interest during the official negotiation process (Lee, 2005, p.4). Courtesy, tolerance, harmony and face are the key elements of Malaysian culture. Malaysians give a great deal of importance to the concept of face and considers expression of emotions as a negative display. It is a high-context culture where words have less importance, and greater attention should be given to non-verbal communication. For Malaysians, developing relationships is the primary objective of communication, and disharmony and disagreement are to be avoided. Hinduism, Buddhism and Islam are prevalent in Malaysia and people believe in fate or the will of God ("A Malaysian culture overview," 2007). While scheduling a meeting, consideration should be given to prayer times, especially for the Muslim community, and punctuality should be made flexible depending on which nationality one is dealing with. Hierarchy and job titles are important features of the Malaysian business culture. The business culture of Singapore closely resembles that of Malaysia. A Hofstede Analysis on Canada Canada ranks highest on the individualism scale according to a Hofstede analysis (Roberts & Taylor, 1998). This is indicative of an individualistic attitude and self-reliance. Canadians prefer privacy, and attempts at personal ingratiating are likely to be thwarted. The lowest ranking dimension is long-term orientation which is at 23, which is reflective of adherence to cultural traditions. Power distance index is somewhat low at 39 and ethnocentrism is high. These findings are indicative of equality among the societal levels and reinforce cooperative interaction among power levels, creating a relatively stable cultural environment (Roberts & Taylor, 1998). Punctuality is valued, eating while walking in public is resented and business discussions are not appreciated during a meal. Gift giving and extending social gestures to business associates are accepted (Roberts & Taylor, 1998). Conclusion Culture has an impact on every function of business, from production to human resources management. Hence, success in international business relations almost entirely depends on the negotiators' cultural adaptability. This renders cross-cultural negotiation training indispensable for the negotiating personnel. Training can help tailor their approach to negotiations so as to positively ensure success in closing deals. References A Malaysian culture overview (2007). Retrieved March 7, 2009, from http://www.communicaid.com/%5Ccross-cultural-training%5Cculture-for-business-and-management%5Cdoing-business-in%5CMalaysian-business-and-social-culture.php An overview of the global business environment (2004). Global business environment (pp. 3-17). Hyderabad, India: ICFAI Center for Management Research. Country study: Indonesia (1996). In Hendon, D. W., Hendon, R. A. & Herbig, P. A. (Eds.), Cross-cultural business negotiations. Retrieved from http://books.google.co.in/bookshl=en&lr=&id=9Ck905Cknm0C&oi=fnd&pg=PR9&dq=cross-cultural+negotiations&ots=Ig8srNoekG&sig=qk-eOrZNlw2pCNVCvoZuZy6FWGg#PPA136,M1 Cross-cultural negotiations (2009). Retrieved March 6, 2009, from http://www.catalao.com.pt/docs/cross_cultural_negotiations.pdf Cultural environment (2004). Global business environment (pp. 104-115). Hyderabad, India: ICFAI Center for Management Research. How 1: Verbal (1996). In Hendon, D. W., Hendon, R. A. & Herbig, P. A. (Eds.), Cross-cultural business negotiations. Retrieved from http://books.google.co.in/bookshl=en&lr=&id=9Ck905Cknm0C&oi=fnd&pg=PR9&dq=cross-cultural+negotiations&ots=Ig8srNoekG&sig=qk-eOrZNlw2pCNVCvoZuZy6FWGg#PPA43,M1 Hutanuwatr, P. & Rasbash, J. (1998). Globalization from a Buddhist perspective. Bodhi Leaves, 146. Retrieved March 5, 2009, from http://www.bps.lk/bodhi_leaves_library/bl_146.html Lee, J. C. (2005). Guidelines for effective negotiations with Korean managers: A conceptual analysis. Retrieved March 7, 2009, from http://findarticles.com/p/articles/mi_qa5440/is_200503/ai_n21370546 Roberts, K. & Taylor, S. (1998). Canada. Retrieved March 7, 2009, from http://www.cyborlink.com/besite/canada.htm Shemwell, S. M. (n.d.). Cross-culture negotiations. Retrieved March 6, 2009, from http://www.strategicdecisionsciences.com/documents/Cross_Cultural_Negotiations.pdf Read More