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Negotiations and cross cultural considerations Paper

Negotiations “Negotiation” steams from the Roman word negotiari meaning “to carry on business”. It was true for ancient Romans as it is for businesspersons of today that negotiations and business involves hard work. (Hendon, Hendon & Herbig 1996) Negotiations are a frequent part of international business. Parties involved in a negotiation face different problems in reaching a successful outcome. When parties have different cultural backgrounds the faced problems becomes even more complex. Negotiation is a process to manage relationships.

It is a basic human activity that xists between husband and wife, children and parents, employers and employees, buyers and sellers and between business associates. In business relationships the stakes are often high and therefore it is necessary to plan an prepare the negotiation more carefully. (Ghauri 2003) When business parties negotiate the purpose is to influence the process so they can get a better deal rather than to accept or reject what the other party is offering. Negotiations are treated as an important part of developing business in any market.

The estimated time spent in negotiations is 50 er cent of the total working time. (Fraser & Zarkanda-Fraser 2002) Business negotiations differ from other negotiations. In business negotiations it is considered the most challenging communication tasks (Woo & Prud’homme 1999) and are more and more considered a crucial part of the managerial process, which is highly relevant to the implementation of business strategy (Ghauri 2003) Successful negotiations require understanding of each partys culture and may also require adaptation of the negotiating strategy so it is consistent with the other partys culture.

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Hollensen 2001) Negotiations is important, especially in business to business markets where companies build long term relationships. Establish, maintain and foster relationships are of prime importance for the market transaction to take place (Ghauri 2003). Due to globalization, many companies have also set up overseas branches and many managers are facing greater problems in negotiating with local sales office often manned with local managers. It is therefore, interesting to investigate how culture interfere the negotiation behaviour of parties coming from different countries and cultures.

Cross-cultural Considerations The different social behaviour patterns international negotiators encounter have been broadly and loosely defined as cultural differences. Furthermore, there is limited research on the relationship of culture to negotiation, most probably because 0T tne Innerent OITTlcultles In tne metnoaology 0T stuaylng tnese proDlems. I nere are, however, four approaches taken by negotiation literature implying a connection between culture and behaviour : culture as a learned behaviour, culture as shared value, culture as dialectic, and culture-in-context.

Robert 1991) Each approach is conceptually different, and this implies that it is important to understand these differences during the conduct of negotiation of international partnerships. Learned behaviours focuses on negotiating etiquette, that is the use of proper social customs, such as whether or not negotiations are conducted over dinner or not. Most books on “how to negotiate abroad” are written based on this approach to international negotiations. Researchers following this approach observe that certain types of behavior are common to certain cultures, and attempt to catalog those behaviors.

Some of the earliest investigations into cultural differences take this form. However, this approach has difficulty accounting for individual variations in negotiation styles. (Robert 1991) Culture as a shared value focuses on the negotiation process. For this approach “the assumption, simply put, is that thinking precedes doing, and that one’s thinking patterns derive from one’s cultural context. ” Researchers try to discover the basic values and attitudes of a particular culture, and then to deduce patterns of negotiation behavior from those basic beliefs.

The shared value approach typically ssumes homogeneity in the culture’s dominant or commonly-held cluster of values. This approach can potentially lead to failed negotiations if the negotiators themselves do not follow the rules of perception in the eyes of their counterparts on the other side of the bargaining table. Whereas the learned behavior approach merely describes differing behaviors, this approach attempts to explain those behaviors. However, this approach also has difficulty in accounting for individual variations in negotiation styles. Robert 1991) A third approach understands cultures as shaped by the dialectic tension between aired, opposing values. Cultures can be seen for example as shaped by the tension between the values of collectivism and individualism, or pragmatism and idealism, or spirituality and materialism. This approach has the advantage of being dynamic where the previous approaches were static. It can explain changes in a culture over time as shifts in the balance between opposing values. And it can explain individual variations in negotiating style as different personal interpretations of the same basic tensions.

Robert (1991) argues that while this approach is more interesting to the cademic, it is less helpful to the negotiation practitioner, since it gives less definite answers to what to expect in a given circumstance. The culture-in-context model is a complex quintessential integration of the current understanding of human behaviour by “systems theorists”, such as Max Weber (1947), that human behaviour is not dictated by single cause explanations. Therefore, according to this model, the international negotiator needs to understand that even within such homogeneous cultures as the Japanese, complex human behaviour snou a De expected.

Negotlatlng Denavlor wlll vary aepen01ng upon a w10e range 0T factors, such as the participant’s age, religion, class, or character, relations of authority, institutional setting, the opponent’s behavior, and even the presence or absence of an audience (Robert 1991) Academic analysts currently favor this approach. Its complexity gives more nuanced explanations. However this same complexity makes it even less useful as a predictive tool, and so as a useful guide for negotiation practitioners. The perceptions that different cultures have concerning trust are an important issue n the conduct of any negotiation.

No contract can be drawn that covers every conceivable situation. Parties to any venture, whether international or domestic, must have a level of trust in each other. Humans by their very nature are opportunistic, and to the extent that parties cannot trust each other dictate the level of contractual constraints to prevent opportunistic behaviour. Trust in international negotiations manifests itself in the transaction cost theory, which suggests that some cultures are more trustworthy and less opportunistic than others. Obviously, strategic alliances egotiated between cultures with differing levels of transaction costs carry increased risk.

Cultural diversity is not a simple or trivial issue. Understanding cultural differences is critical in the negotiation and operation of any international strategic alliance. Approaches which rely on simplified notions of culture and rational choice theory are attractive in part because they offer determinate accounts of negotiation behavior and relatively simple predictive models. Robert (1991) cautions however that this appeal should not prevent us from undertaking studies which rely on rather ore sophisticated notions of culture.

Such approaches are messier but are potentially more accurate and ultimately more rewarding. Erikson, E. H. (1950). Childhood and Society. New York:Norton. Ghauri, Pervez N, (2003), International business Negotiations- 2nd edition, Oxford, UK:Elsevter, pp 3-22. Hollensen, Svend (2001), Global marketing – A market-responsive approach- 2nd edition, Harlow, England: Pearson Education Limited. Hendon, Donald W; Hendon, Rebecca Angeles and Herbig, Paul (1996), Cross-cultural Business Negotiations, Quorum Books, Westport, USA

Fraser, Campbell and Zarkanda-Fraser, Anna, (2002), An exploratory investigation into cultural awareness and approach to negotiation of Greek, Russian and British Managers, European business review, vol 14, no. 2 , pp. 111-127 Woo, Hong Seng and Prud’homme, Celine (1999), Cultural characteristics prevalent in the Chinese negotiation process, European business review, vol. 99, no. 5, pp 313-322 Rooert JanoslK 1), RetnlnKlng tne culture-Negotlatlon LlnK In Negotlatlon I neory and Practice, eds. J. , Cambridge, pp. 235-246 Weber Max. (1947), The Theory of Social and Economic Organization. New York: Free Press.

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