Effective Management of Cross Cultural Negotiations 교차문화 협상의 효과적 운영론

 

Effective Management of Cross Cultural Negotiations

 - by Juliana Jiyoon Lee

 

I: Introduction:

             Culture plays a significant role in negotiation process and results. However, culture in a national context alone is not sufficient in understanding the intricate nature of cross-cultural or international negotiations. The interplay between national culture and other factors such as organizational culture and individual personalities of involved negotiator contributes to the outcomes of a negotiation. This paper aims to interpret cross cultural negotiations from the aspects of national culture, organizational culture and individual personalities and suggest skills required of negotiators to achieve successful outcomes from international negotiations.

 

II: How Cultural Differences Affect International Negotiations

             Understanding the potential of culture in the process and outcome of a negotiation should be the very first step to any international negotiation. Cultural differences affect the perceptions and behaviors of different parties especially during the negotiation preparation phase. Suppose a company considering international joint ventures (IJV) needs to find international companies to negotiate with. If the managers are fully aware of the importance of culture in an international negotiation, they would select the target company with much more care and effort. Generally, a negotiation with a company with a similar cultural background is more accessible, requiring less time for creating rapport and minimizing misunderstandings. A negotiation with a company with a different cultural background, on the other hand, requires managers of more preparation time and hesitance to make a first move. Therefore, in any international negotiations, cultural differences and their possible impact on the framework of the negotiation should be carefully studied and planned before commencing the actual negotiation.

 

III. The relative importance of national culture, organizational culture, and individual personalities

             The outcome of a negotiation results from a complex interplay between national culture, organizational culture, and individual personalities of people involved in the negotiation. At the macro-level, negotiators should understand the cross-contextual meaning of national culture and how it might affect the negotiation. The national culture is often difficult to access because (a) not all international or local companies show distinctive national characteristics when they negotiate; and (b) globalization has created so-called “international business manners and etiquettes” that all companies and involved negotiators customarily follow regardless of their nationality. At the micro-level, organizational culture shapes the flow of a negotiation. Compared to the national culture, the organizational culture is predictable since it is rather fixed reflecting the market position, philosophy, and work ethic of the company (Weiss and Stripp, 1998). Understanding the organizational culture of negotiating companies help individual negotiators to find common ground and predict possible conflicts and alternatives through the negotiation. Lastly, at the microscopic-level, negotiators’ characteristics and individual personalities affect the international negotiation. The negotiation types and the characteristics of negotiators can be predicted and researched in advance from past negotiation records and patterns of involved parties. What matters here is that this tri-pillar interplay between national, organizational culture and individual characteristics is attributed to the complex nature of a case-by-case international negotiation.

 

IV. Required skills of negotiators or managers of an international negotiation

             Managers and negotiators of an international negotiation do not need to be “born negotiators” or play hardball for successful outcomes. They need to be aware of not only the obvious aspects of culture, but also underlying attitudes and values of an international negotiation (Mead and Andrews, 2009, p. 134-37) Firstly, they need to have cultural awareness. The dichotomized cultural analysis of Hofstede’s dimension (Mead and Andrews, 2009, p. 132) including collective and individualist culture, power distance, and uncertainty avoidance would be of help. Secondly, managers and negotiators must have (preferably advanced) language skills of the country of a negotiation partner which help them create rapport and understand cultural nuances easily. However, in order to remain professional and minimize misunderstandings on the negotiation table, the presence of professionally trained interpreters or translators is a must (Hurn, 2007).  Thirdly, managers and negotiators must have the ability to interpret the body language, non-verbal communication and paralanguage. They should also be able to use correct non-verbal ｅxpressions that translate appropriate meanings into different cultural contexts. Lastly, managers and negotiators should know when to negotiate, who to negotiate with, where to negotiate and who has the power to make decisions during the preparatory phase of an international negotiation.

 

V. Positive and negative outcomes of international negotiations & case studies

             The awareness of cultural differences help negotiators develop tolerance toward disputes which may lead to both positive and negative outcomes. In most Anglo-Saxon countries of low-context cultures, the technicality of a negotiation is emphasized more than cultural tolerance in disputes. For example, negotiators would pay more attention to read between lines, seal the deal with the presence of the third party like a legal specialist, a corporate lawyer or a certified guarantor. All documents would be considered legally effective. The positive outcomes of this would be guaranteed accuracy and further dispute prevention while maintaining professional attitudes. However, in a culture that requires a more personal-level negotiation, the emphasis on technicality during a dispute can incur distrust, each party acting based solely on self-interest. The “art of negotiation” coming from cultural diversity would be ignored by business practicality.

The failed joint venture between GM and Daewoo back in 1992 exemplifies the lack of cultural tolerance which built up distrust in their business relations. GM took very practical business gestures acting on their interest in the joint venture. Daewoo and GM had not agreed on some fundamentals including management style and marketing approach (Kim, 2006, p. 114). Daewoo, a Korean conglomerate of that time, was offended by GM and it resolved this issue by buying GM's half of the venture while continuing to supply the Lemans to GM (Kim, 2006, p. 114). Dow Chemical's venture in Korea is another classic example of a negotiation failure due to cultural differences and poor communications. They withdrew from the joint venture not wanting to lose face further. Understanding cultural differences is important, but most importantly the success of an international negotiation depends on finding a suitable company for an alliance partner that have similar corporate cultures.

 

VI. Conclusion

In sum, effective communication, cultural awareness, rapport creation should be established before negotiators rush to sign a contract. It is imperative to fully discuss the goals and expectations of each negotiating partner. Companies should not jump into alliances or partnerships based solely on the past negotiation patterns, friendship of CEOs, and personal anticipations. Negotiators should remember that having differences in personal, social, organizational, and cultural attitudes would hamper negotiations and alliances. Therefore, thorough research on finding a suitable company for an international alliance should antecede any other negotiation efforts.

 

 

References:

 

Hurn, B.J. (2007) ‘The influence of culture on international business negotiations’, Industrial and Commercial Training, 39 (7), pp. 354–360, Emerald [Online]. DOI: 10.1108/00197850710829058 (Accessed: 16 July 2010).
http://dx.doi.org.ezproxy.liv.ac.uk/10.1108/00197850710829058

 

Kim, Eun Yong (1996) A cross-cultural reference of business practices in a new Korea. Quorum Books.

 

Mead, R. & Andrews, T.G. (2009) International management. 4th ed. Chichester, England: John Wiley & Sons.

 

Weiss, S.E. and Stripp, W. (1998) ‘Negotiating with Foreign Businesspersons: An Introduction for Americans with Propositions on Six Cultures’, in S. Niemeier, C.P. Campbell and R. Dirven (eds) The Cultural Context in Business Communication, pp. 51-118. Amsterdam: John Benjamins.