Cross-Cultural Management - Coursework Example

 Introduction Considering the high failure rates of international mergers and acquisitions and how cultural misunderstandings are often a significant factor in this, the essay intends to cover some of the key cultural issues that might arise and specific advice for the company’s managers who will be dealing with negotiators. The objectives of this essay are thus two-prong. The first is to present some cultural profiling between two countries, using a range of academic models which should highlight any significant differences that are likely to occur in terms of management behaviour. Secondly, aim to critically evaluate the key communication and negotiation differences that managers should be aware of when dealing with the negotiators when they arrive. Negotiation is generally considered as a means of resolving conflict. It is a process in which problems are solved between two or more parties that attempt to settle some disagreement in a manner that is agreeable to both (Fisher, Ury & Patton 1991, pp. 1-3). Although the main principles of negotiation are easily understood, it can be extremely difficult when placed into practice. Contention between what is right or wrong; opposing views when it comes to what is fair and just; forms of communication and information exchange as well as the procedures carried out for negotiations are only a handful of the challenges that negotiators often encounter (Susskind, McKearnan & Thomas-Larner 1999, pp. 2-57). Furthermore, the process of negotiation is made difficult when different parties are negotiating across conflicting cultures (Gelfand & Brett 2004, pp. 45-47). Culture is one of the most powerful factors that determine and influence people’s way of thinking as well as behaviour and communication (Salacuse 1993, pp. 199-208). Therefore, culture has a significant effect on the people’s means of negotiation. This essay specifically examines the impact of culture on the process of negotiation. First, it provides cultural profiling between India and Japan, and identifies differences between their culture and management behaviour. Important factors that are involved in cross cultural negotiation such as communication and negotiation differences are also tackled. In addition, the four dimensions of culture identified by Hofstede (1997, pp. 28-37) have been included, suggesting how culture is integrated into an individual’s values and ways of thinking. The essay also presents an overview of the process of negotiation and describes how culture makes an impact on this. Culture: An Overview The concept of culture as the primary purpose of in this essay is to identify the impact of culture on negotiations, particularly the issues that may arise between parties during the negotiation. Culture is a product of ideas, beliefs, customs and values that characterize groups and their behavior (Faure & Sjostedt 1993). In addition, culture has defined through a number of ideas: 1) culture is not a personal or individualistic trait, rather it is societal; 2) it is acquired and is not inherent; and 3) its characteristics include the entire group of social life. Four dimensions of culture have also been identified by Hofstede (1997, pp. 28-37) for the purpose of classifying people in various countries and their ways of understanding and translating their cultural environment. These are: 1) power distance, 2) individualism and collectivism, 3) masculinity-femininity, and 4) uncertainty avoidance. Power distance refers to “the extent to which the less powerful members of institutions and organisations within a country expect and accept that power is distributed unequally”. Power distance measures the relationships that exist between individuals that belong to different statuses in a cultural setting (House 2004, pp. 56-58). For example, in countries that have a high power distance index (PDI) such as the Arab countries, inequality among people is typical and is expected; bosses expect complete obedience from subordinates and subordinates expect to be told by their superiors. On the other hand, Japan, Australia and other countries that have a low PDI believe that inequality among individuals should be significantly reduced. Furthermore, those who hold higher positions in organisations and society in general expect that their subordinates should give them feedback and reactions; correspondingly, their subordinates also expect that their superiors will consult them and asked for input. The second dimension of culture is individualism which, when used as an index, refers to the degree to which the people living in a region learn to communicate and interact with each other (Hofstede 2001, p. 297). Countries where the group’s interest is more important than the individual’s interest, are referred to as collectivist societies. An opposite trait has also been identified which is individualism, referring to a society in which a person is expected to care for and look after himself and his family instead of watching over his group to obtain loyalty from fellow members. For example, in regions where the individualism index (IDV) is high, an individual grows up to look after himself. That is, identity is based on the person himself and tasks are normally viewed as more important than relationships. In contrast, those who have a low IDV and are more focused on a collectivist approach (in which a person places emphasis on looking after extended families) bases his identity on social networks, and places greater premium on relationships than on tasks. The next cultural dimension, masculinity-femininity, is based upon the most suitable roles for each gender in a particular culture. Masculinity refers to a trait where society’s gender roles are socially and clearly distinct; men are thought of as firm, forceful and focused on the acquisition of material things, while women are expected to be gentle, reserved and concerned with the quality of life (Anastasi 1937, p. 29). For instance, countries that have a low masculinity index (MAS) place greater emphasis on people and relationships and primary values include care and preservation. On the contrary, those having a high (MAS) are more focused on money and material things, regarding material success as a dominant value in society. Finally, the fourth dimension of culture that has been recognized is uncertainty avoidance, which supposes that great uncertainty leads to intense anxiety (Ting-Toomey 1999). Each human society makes use of various means and processes to reduce anxiety, particularly in their laws, religion, and technology. Ambiguity is the primary cause of uncertainty avoidance, and cultures that scored high on the uncertainty avoidance index (UAI) and has a low tolerance for ambiguity feel that uncertainty is a threat that will continue putting them at risk when it is not fought. Moreover, the level of stress is particularly high in these countries and numerous laws and rules are implemented because they aim for security. Those with a lower UAI or a higher tolerance for ambiguity believe that uncertainty is normal and therefore maintain a low level of stress. They are also comfortable in doubtful situations, implement fewer policies, and have a strong desire for opportunities. Aside from these cultural dimensions, historical and religious factors were believed to have had an influence on culture with the growth of the “Five Dragons”, particularly in Japan (Hofstede & Bond 1988). The cultural dimensions mentioned above have been applied, however, replacing orientation with Confucian Dynamism, with which Confucian principles were used and giving rise to the Five Dragons in the international market. Confucian teachings have been discussed as an empowerment for devoting to unequal relationships as well as emphasizing the needs of a group. Generally, culture can be developed through the patterned ways that individuals in a group respond to the issues of social interaction (Trompenaars 1996). Negotiation, which is one way of making decisions when individuals are mutually dependent on each other, is one of these fundamental issues. The beliefs that these people have regarding negotiation, the goals and values that they tend to confirm and strengthen during the negotiation process, their normative behaviors, as well as the arrangement of the institutions that they try to create to direct and control negotiations all indicate the main assumptions of culture when it comes to social interactions. The solutions that are available to human beings allow us to distinguish each culture from another (Trompenaars & Hampden-Turner 1998). The problems, which are people’s relationships with time, nature and other individuals, are common and shared among people; however, the solutions to these problems are not. Rather, it will depend on the cultural background of the groups involved. Trompenaars and Hampden-Turner (1998, p. 25) further assert that there are other factors necessary in understanding individuals when dealing with cross cultural interactions. For example, universalism focuses on finding broad and extensive rules and when these rules are not appropriate, the best one should be applied. Particularism, on the other hand, gives more emphasis on personal relationships and considers every situation as unique instead of universal. Next, individualism and collectivism are also similar to that of Hofstede’s with which those from individualistic cultures are more inclined on personal responsibilities while those from collectivist cultures focus on the people as a larger collective body. Neutral and affective cultures also exist wherein members of neutral societies do not display their emotions while those from affective societies consider emotions as natural and are free to publicly display these. The specific and diffuse cultural dimensions are the level of involvement with which an individual is comfortable with particularly when dealing with other people. In the specific culture, people are very open and outgoing though they also look out for their private space. Meanwhile those from the diffuse culture may appear detached and indifferent; however, when others are allowed to become involved in their private lives, they also become very open. Overview: Negotiation Values, beliefs and attitudes are significantly determined by one’s culture; however, the degree of its impact on the process of negotiation has been difficult to estimate (Churchman 1995, pp. 1-6). Therefore, it is also worthwhile discussing the concept of negotiation. This portion of the essay describes how negotiations are used as a means of resolving conflicts by defining the process of negotiation as well as the skills that are necessary in negotiators and how culture generally affects negotiation. Negotiation is a process that requires joint decision making through which parties turn their conflicting interests into a mutually acceptable settlement. Therefore, in each party involved, cooperation is necessary to attain all desired goals; though a party is capable of preventing the other from achieving his or her objective (Spangle & Isenhart 2003, p. 8). Furthermore, when parties depend on each other, it establishes a mixed-motive relationship where they become involved to accomplish different outcomes. Generally, negotiation is categorized into three types: 1) competitive, 2) collaborative and/or 3) concession (Pruitt 2002, p.36-37). Due to the fact that a competitive style of negotiation allows maximum value and advantage at the expense of the other group, it has been referred to as the win-lose approach. The second style of negotiation, which is the collaborative style, incorporates the value of solving problems, bargaining and establishing merit between all parties. Moreover, it makes an attempt in reaching an agreement by means of creating options which can be favorable in achieving and making the most of the objectives of all parties involved, therefore making way for a “win-win” situation. Finally, in the concession style of negotiation, one party lowers their position in order for the other party to gain an advantage over them, thus being referred to as the “lose-win” approach (Pruitt 2002, p. 36-37). As identified and studied by Weiss (1985), the role of the individual in the process of negotiation differs. Firstly, their goals and objectives may take an individualistic (persona) or a collective (community) approach. Decision making may also differ in two cultures where one is authoritative with the person in charge making all decisions while the other one takes on a consensual approach with which everyone that is involved creates the decision together. Orientation towards time may also differ with some cultures being monochromic and likes to accomplish things one at a time while valuing orderliness and the appropriate time for everything. On the other hand, people from polychromic cultures are more inclined to finish several things at the same time. Furthermore, the risk taking propensity of cultures may go from high to low, with which cultures of high propensity are open to uncertain situations and are not fearful of the circumstances when they take action; however, those of low propensity are not comfortable when they are faced with vague and unclear situations, and look towards more policies to ensure stability. A number of factors may also affect the trust and confidence at cross cultural countries place on each other, depending on the reputation that one holds, how the others may perceive them, as well as through the experiences they share and the interaction that exists among them. How they value etiquette is also an important factor to consider as it can range from formal to informal and this code of behavior, from greetings and respectful language to forms of payments and working ethics, may influence the expectations of social behavior in one country and may be considered very important. Negotiations are carried out in different styles as the process reflects different parties struggling for conflicting interests and objectives (Lin & Miller 2003). The primary aim of negotiations is to achieve a decision or outcome that is agreed upon and considered acceptable by both parties and for this reason, the most useful and effective form of negotiation falls under the problem-solving approach in which collaboration is integrated. In order to deliberate on the decision or outcome of a negotiation, the value that is achieved can be described as “created value” or “claimed value” (Dasgupta 2005). Normally, organizations of different cultures use communication to share meaning and transmit messages through the words that they use, the material resources that they provide or the behaviors that they display. In the study of Edward Hall (1976) on communication, it has been identified that low-context and high-context communication exist in different cultures (Hall 1976). Low-context cultures normally send their messages in a more direct way particularly through detailed information, verbal or written style. The main emphasis is merely on settling the business or negotiation plans, as well as on performance, competence and tasks. On the other hand, in a high context culture, there is less formal communication and one party expects the other to fully understand what it is that has been communicated. Long-term relationships are also established while activities and decisions revolve around personal relationships rather on responsibilities. Upon entering high contexts, challenges may come about especially if one is an outsider and they do not carry the information internally. This way, they will not be able to establish close relationships. On the contrary, an outsider may find it somewhat easy to enter low contexts because the much information is provided in the environment that one has to become involved with, relationships are established fairly as soon as one enters, and that it is more important to accomplish tasks rather than to grope for a relationship. Essential components of negotiation will significantly influence one’s ability to negotiate and such components ascertain the impact of culture on the negotiation process (Ghauri & Usunier 2003, p. 97). Two countries, India and Japan, are compared and contrasted in terms of their culture and how these affect their management behaviour. Indian Culture and Its Effect on Management Before it can be determined as to how India and Japan can share their similarities or have cultural crashes with their differences, it is very important that Indian culture is first examined. Majority of India takes on an Indian business culture that is very diverse; therefore, in dealing with this culture, it is important to be aware of the diversity across sectors, regions and communities. Many Indian businesses are either owned by families or different community members and although many such businesses are relatively modern when it comes to their operations and performance and follows international norms and standards, they have peculiar, specific community cultures (Bullis 1998, p. 61). There are also significant differences between private and public sector companies. Those that are owned by the government are arranged in a formally ranked order and rules are rigidly applied in their system; on the other hand, their counterparts in the private sector are more flexible, democratic and unrestricted. Additionally, there are regional differences when it comes to Indian business etiquette as southern Indian companies are viewed to be more conservative and traditionalist compared to those from the west or northern part of India, who are more aggressive and individualistic in terms of behaviour. Indian culture places great emphasis on nationalism and focuses on passionate devotion to their country and its interests above all others (Chatterjee & Nankervis 2007, pp. 108-114). Because heritage and cultural tradition has become a strong driver of influence, strong cultural frames including close family bonds and conformity to traditions have affected the managerial approach and state of mind of majority of Indian businesses. In the country’s business environment, joint ventures as well as collaborations with foreign countries are not new as well-known companies from Europe, America and Asia have been negotiating and establishing business relations with India for more than a few decades now. Therefore, if one is representing a distinguished international company, you will find that Indians are very open and comfortable in negotiations, and it is not necessary for an intermediary to establish their proof of ability and trustworthiness. The administrative system as well as the laws implemented in India is somewhat complex and difficult to manage (Singh 1998, p. 214). The process of creating and passing laws are also considerably different across the country and it is therefore recommended to have a coordinator who can help in dealing with such details and issues. Moreover, when it comes to societal values, though there have been gradual changes, the practice of religious rituals as well as respect for age and loyalty to family remain to be observed by many Indians, even in work settings. Executives who belong to the female population are somewhat a new occurrence in the business environment of India. People are normally respectful towards women who are working in businesses, though they may not be comfortable when working with females for business deals. Moreover, cultural heritage remains strong as the concept of “Nishkama karma” or being loyal and devoted to work without considering results has been supported by majority of Indian business leaders. Indian culture and values have been strongly integrated and a number of cultural components have been influencing the Indian work settings for years now such as high paternalism, greater focus on stability and security, strong masculine values, acknowledgment and recognition, spirituality, as well as highly emotional behavioural norms (Pande 1990, p. 3). Japanese Culture and Its Effects on Management Aside from India, it is also necessary that the culture of Japan is recognized to determine any similarities or differences between the two countries in order to make the preparations for a successful negotiation. As known by many, Japan gained tremendous success after the second World War and because of such, researchers have paid great attention to understanding how their success came about by means of various models and theories. To summarize the theories on the main factors that have driven Japan to achieve constant growth and development, a framework provided by McKinsey & Company to develop their own model of seven management variables has been used which include seven S’s- strategy, structure, system, staff, skills, style, and super ordinate goals (Pascale & Athos 1981). There may be numerous reasons behind Japan’s growth and success but these are mostly rooted in their culture. They also identified the factors that contribute toward Japan’s effective management practices including collective responsibility, commitment to lifetime employment, and long-run planning horizon (Bernard & Miller 1984). Japanese management practices are generally influenced by culture, including a collective mentality, determination and diligence especially in times of difficulty as well as greater emphasis on social reciprocity that has become the primary principle when establishing relationships. Social reciprocity is also exemplified in the fact that Japanese employees are expected to stay for a long time in their organisations and expect lifelong job security in return. Moreover, the belief of Japanese people in ‘wa’, which refers to harmony, is often used to help organisations in making decisions. Key Differences Cultural Negotiations between India and Japan In relation to the dimensions of culture, similarities and differences have been identified between India and Japan, as illustrated: In the first category, the Power Development Index (PDI), India acquired a higher score compared to Japan which goes to show that inequality among Indian individuals are expected and that bosses expect complete obedience from their subordinates. On the other hand, Japan scored a lower figure than India. Next, the Individualism Index (IDV) scores showed a similarity between the two countries as they acquired almost the same scores. These are not extremely high scores which show a balance between an individualist and a collectivist approach. The next scores on cultural dimension of masculinity-femininity (MAS) show that Japan acquired a higher figure than India, which goes to show that the Japanese individuals are more focused on achieving money and material success in general. Similarly Japan scored higher in the uncertainty avoidance index (UAI) than India which means that the Japanese would want to be sure and certain in everything that they do, as their level of stress is increased when there is vagueness and uncertainty when dealing with things. Finally, Japan still scored higher than India when it comes to Long Term Orientation; therefore Japanese people focus more on thrift and perseverance as well as persistent actions while Indians gain satisfaction in quick results and believe that money that is earned should already be spent. As identified by the graph, there are more differences between the Japanese and Indian culture than similarities and it will be a challenge to address each and every component. For example, when communicating, Indians call for a more formal structure and means of agreement compared to the Japanese as seen in the PDI. Furthermore, when doing business, the Japanese are more assertive and task-oriented compared to the Indians who may be more nurturing and relationally oriented. The Japanese are also more persuasive regardless of any difficult situation and they want to have certainty in all things; the Indians, though, are comfortable in doubtful situations and are more likely to focus on opportunities that can bring significant potential. Finally, with term oriented culture as Japan, it is necessary that lengthy meetings or discussions are carried out to ensure the long pursuit of goals. The Indians, on the other hand, are contented when they achieve short-term goals. When it comes to the Confucian dynamism, reports have shown that Japan acquired a very high score which points out to a historical reason as to why some of the Japanese perform certain actions when they are conducting their business. They maintain a strict hierarchy as well as a collectivist approach in their boardrooms and workplaces. The fact that it has been realized as to how the teachings of Confucius still continues to influence modern Japanese behavior implies that there can be more religious and historical reasons behind the business cultures of not just Japan but other countries as well. Therefore, when preparing cross-cultural negotiations with other countries, one should focus on learning about the background in which their own and the other one’s culture has been established. This way, they can find detect differences that will require adjustments as well as similarities that will aid them in developing strong and effective business relations. Dimensions of culture that are combined with negotiation elements as well as the effect of culture on negotiation styles demonstrate that culture does have an influence on the process of negotiation. Understanding the effects of culture can significantly improve and facilitate this process (Elashmawi & Harris 1993, pp. 6-7). Two important elements must be kept in mind. First is the definition of negotiation with which it is necessary to understand that the main purpose of negotiations is to resolve conflict and that all parties come up with a mutual and agreeable decision. Second, each party that is involved in the negotiation must have their own independent interests and bring skills and capabilities that are necessary in addressing their issues. It is, therefore, extremely important that a relevant component in developing a cross-cultural strategy for negotiation is utilized, and that is preparation. Firstly, aside from analysing the present issues that have encouraged parties to negotiate, it is strongly suggested to study and learn as much as possible about the other’s culture and history (Mead 2005, pp. 19-20). It is also as important that the negotiator is fully aware and has completely understood his own cultural tendencies and behaviours. These are all exemplified in the graph that was used in relation to the concept of cultural dimensions. This is relevant in identifying any possible similarities or differences in terms of culture that are evident during the process of negotiation. Eventually, when a relationship is established with the other negotiators involved, it will allow all parties to look for a common foundation in which to develop a relationship, a technique to bridge all gaps. When the negotiators are capable of gathering information regarding the cultural conditions as well as preparing the environment and establishing relationships, it will have a significant impact on achieving the objectives that the parties intend to address. For example, by fully understanding how a certain culture moves are directed towards its interests is useful information to gain. However, the most challenging cross cultural issue when it comes to negotiating is that of values (Soderberg & Holden 2002), and to create a cultural bridge can be done when one party demonstrates interest as well as establishes respect for the other’s culture. Conclusion and Recommendations The process of negotiation is important in conflict resolution when all parties involved share a commitment in order to reach a desired outcome that can satisfy the needs and interests of everyone involved. To consider culture in negotiating is also relevant as each negotiator holds certain cultural behaviours that may be different from the others, including their way of thinking, feeling, behaving, and most especially their values. When the implications of culture are understood, it is more likely that any negotiator can prepare and come up with the most favorable solution for all parties involved. References Anastasi, A 1937, Differential psychology: individual and group differences in behavior, London, p. 29. Bernard, K & Miller, T 1984, The Japanese management theory jungle, The Academy of Management Review, vol. 9, no. 2, pp. 342-353. Bullis, D 1998, Doing business in today’s India, Quorum Books, Westport, p. 61. Chatterjee, S & Nankervis, A 2007, Asian management in transition: emerging themes, Palgrave, Ontario, pp. 108-114. Churchman, D 1995, Negotiation: Process, tactics, theory, University Press of America, Lanham, pp. 1-6. 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Trompenaars, F, & Hampden-Turner, C 1998, Riding the waves of culture: Understanding cultural diversity in global business, McGraw-Hill, New York, p. 25. Read More