The very word “overseas” has no place in Honda’s vocabulary because the corporation sees itself as equidistant from all its key customers. i
—Kenichi Ohmae, management thinker (1943–), The Borderless World (1990)
Today, businesses of all sizes seek customers globally to create huge business development opportunities. The increasingly global business environment compels business development managers at these firms to approach negotiations in the global arena from a vantage point differently, accounting for aspects usually absent from those conducted in the domestic marketplace. Though challenging, some components of cross-cultural negotiation, if approached properly, will increase your success in avoiding pitfalls and failures that inevitably arise.
When negotiating internationally,ii we need to take into account how negotiations differ among cultures by examining the environment in which the players work and the immediate factors over which negotiators limit control. The environmental factors include the political and legal systems from which the negotiators come, international economics, foreign laws, governments and their bureaucracies, national economics, ideology, and differences in the approach the parties bring to the negotiating process. Immediate factors include the relative bargaining power that each party invests in the negotiating process; their view of time and the urgency of reaching agreement; the level of conflict, if any, between ethnicity, identities, and geography of the parties; the impact of previous negotiation between negotiators and their inclination toward taking risk; domestic and international political goals; personal goals; skills; styles; the international experience of the negotiators, their staff, and those they represent—stakeholders in the outcome.
Given what we just mentioned, you can see that any negotiator faces a huge challenge in the international environment. To be successful, negotiators must become cross-culturally literate, that is, understand how cultural differences across and within nations can affect the way they negotiate. So an understanding of culture is critical—although scholars have never been able to agree on a simple definition of culture. Here we follow Hofstede,iii Namenwirth, and Weberiv by viewing culture as a system of values and norms that are shared among a group of people and that when taken together constitute a design for living. The fundamental building blocks of culture are values (abstract ideas about what a group believes to be good, right, and desirable); and norms (the social rules and guidelines that prescribe appropriate behavior in particular situations).
Andrew Boughton advises that cultural differences cause four kinds of problems in international business negotiations that involve language, nonverbal behaviors, values and thinking, and decision-making processes.v Differences at the level of language can be substantial in international negotiations, even when English is used. Although senior foreign executives may speak and understand some English, they rely on their native language and use an interpreter to ensure they accurately communicate the message they send and receive. Even in this setting during the fast pace of discussion, there will be some miscommunication as exact translations are difficult to achieve. Complicating the matter are nonverbal behavior differences that lie beneath the surface of the discussion. But even here, nonverbal signals like behavior and attitude, if missed, are subject to misinterpretation. Lastly, differences in values, thinking, and decision-making processes are hidden even deeper and are even harder for negotiators and their teams to detect.
In approaching an international negotiation, recognize there is no one “right” approach, only effective and less effective approaches and these vary according to the contextual approaches addressed earlier. As a result, if negotiators realize their counterparts may have very different viewpoints, they will be less likely to make negative judgments and generalizations about them and more likely to arrive at a mutually acceptable outcome.
Considering all the immediate and subsurface problems inherent in cross-cultural negotiations, one has to wonder how international business agreements are ever reached, but increasingly they are, despite the prospect of pitfalls in the negotiating process. Cross-cultural literacy and sensitivity to cultural differences can improve global business negotiating outcomes that lead to highly profitable business relationships.
Develop Cultural Awareness before Negotiating
Looking at the way world politicians and business people behave, it is clear the cultures of the world increasingly interact with each other. The business world is becoming increasingly global. Although globalization opens many opportunities, it also creates many complex challenges for traveling the world as a buyer or a seller seeking business agreements and ventures in the global arena. If you’re interested in taking advantage of opportunities to accomplish a firm’s international business goals, you’ll need a deep level of knowledge in finance and currency, global strategy, and foreign legal and accounting practices, along with sharp cross-cultural negotiating skills. Don’t make the mistake of approaching foreign markets the same way you would your domestic market. What works at home will not work elsewhere.
Negotiation is the process in which two or more entities come together to discuss common and conflicting interests to reach a settlement of mutual benefit. In international business negotiations, the process differs from culture to culture in language, behavior, negotiation styles, approaches to problem solving, hidden assumptions, gestures and facial expressions, and the role of ceremony and formality.
As a negotiator or a member of the negotiating team, you should be aware of the culture space of your counterpart. Negotiating in international markets is a skill, and it can be improved. The parties to a negotiation want to do business or they would not be talking in the first place. Success in international business results from the ability to bring two people together, but all too often, the obstacle is our perception of people from other countries. Frequently, one party negotiates with impossible expectations of the other party.
Glen Fishervi addresses five considerations for analyzing cross-international negotiations: (1) the players and the situation; (2) styles of decision making; (3) national character, (4) cross-cultural noise, and (5) interpreters and translators. Each consideration presents questions that should be answered before entering international negotiations.
The Players and the Situation – There is a cultural dimension in the way negotiators view the negotiation process that raises several issues. Form, hospitality, and protocol play important roles as they interact. The negotiator and/or his team should discover the expectations of their counterparts and work to create a negotiating environment that leads to cooperation and solving problems. If possible, negotiators should also research biographical data and analyze their counterpart’s organization or institutional role, especially the level of their authority to reach an agreement.
Styles of Decision Making – The organizational culture of a foreign corporation may require adhering to formal rules, regulations, and practices guiding its decision-making process. To influence a foreign corporation’s decision-making process, analyze its corporate culture and structure arguments to fit within established guidelines you discover, if possible. By discovering how foreign counterparts look at facts and analyze data, negotiators can substantiate positions with facts that will lead to a successful outcome.
National Character – Foreign negotiators concerned with the international image may be preoccupied with their national heritage, identity, language, and organizational role. Cultural attitudes, such as ethnocentrism—the universal tendency for people to favor their own group over others, may influence the tone of the negotiating positions they take.
Cross-Cultural Noise – Noise consists of the environmental distractions that have nothing to do with the content of the foreign negotiator’s message. Factors such as gestures, personal proximity, and office surroundings may unintentionally or intentionally (e.g., room temperature, furnishings, and location) interfere with communication. The danger of misinterpretation of messages requires awareness of various contextual factors.
Interpreters and Translators – Fisher points to limitations in translating certain ideas, concepts, meanings, and nuances. The subjective meaning may not come across through words alone. Gestures, the tone of voice, cadence, and language that lends itself to more than one meaning are all meant to send a message that is excluded in any translation. Sometimes a negotiator will try to communicate a concept or idea that does not exist in the counterpart’s culture. For example, the Anglo concept of “fair play” has no equal in any other language. How then can an American or English national expect “fair play” from a foreign counterpart?
Interpreters and translators may have difficulty transmitting the logic of key arguments, especially when it comes to abstract concepts such as planning and international strategy. The parties may conclude they reached an agreement when they actually have entirely different intentions and understandings!
Fishers’ five-part framework provides you with a launch pad for practical application. Consider its elements in preparing for your next global business negotiation.
Communicating in the Global Marketplace
To land and keep new customers and business partners in international markets, effective global marketers understand that communicating across cultural boundaries is challenging and must be done with care. They are aware that persons of dissimilar backgrounds usually need more time than those of the same culture to become familiar with each other, to speak openly, to share common ideas, and to understand one another even when they share a global business language like English.
Despite the ever-expanding evolution of modern communication technologies, doing business still requires communicating on a person-to-person basis. Should there be misunderstandings or “errors” committed, the parties involved very often are unaware of any problem. Cross-cultural missteps result when we fail to recognize persons from other cultural backgrounds have different goals, customs, thought patterns, and values from our own. Cultural differences thus become communication barriers that highlight the need for understanding the differences between one’s own culture and that of another.
Even something as “simple” as an appointment time can be misinterpreted. For example, Americans value being prompt and adhering to schedule. Other cultures look upon promptness and adhering to schedules differently. Arriving late may be the norm in another culture, and a different meaning may be assigned to arrival time depending on how late one arrives or specific circumstances surrounding the meeting.
Successful cross-cultural communicators reach people and organizations of other cultures using gestures, signs, shapes, colors, sounds, smells, pictures, and other symbols to convey their needs, values, standards, and expectations. Global marketers are aware that international communications can be extremely sensitive and require a great deal of empathy, research, and courtesy. They understand the needs and concerns of their audience using the proper tools. For the best results, they get help if they need to. Mimic their communication secrets and you will match their level of success.