The Impact of Cultural Differences on InternationalBusiness Negotiation1.IntroductionInternational business negotiations are far more complex than domestic ones. The difficulties are due to the big differences between the two parties in a negotiation in language, value, behavior patterns, moral standards and so on. All those factors are playing crucial roles in negotiations. The key to effective cross-cultural communication is knowledge. So we must learn and know as much knowledge as we can. Knowing these cultural differences can help us solve the problems and reduce the misunderstandings in International business negotiations. Due to these cultural differences, negotiators who come from different part of the world can form different negotiation styles. The relation between culture and negotiation styles has been the topic of much investigation and research in recent times. Being familiar with different cultural differences can help us get a close view of different negotiation styles, and all these previous efforts can make the International business negotiation smooth. The thesis will elaborate on the cultural factors and their influences on negotiation styles in different countries.2. Cultural Influences and Types2.1 Cultural InfluencesWhen two groups from the same country are doing business, it is often possible to expedite the whole negotiation procedure. Because they have the same cultural background, the mutual communications are easy to understand. This does not mean they have no obstacle during the whole negotiation procedure, but compare with people who do business from different cultures, they do not have the impact of cultural differences, so the contradictions seem to be easy solved.If two different cultures are involved, one party without a real knowledge of another culture, it may lead to misunderstandings. The international negotiators must be careful when handle these cultural differences and do not use the same way like negotiate with local businesspersons.A great number of real cases show that due to misunderstandings, manybusinesses were lost. For example, an American businessman once presented a clock to the daughter of his Chinese counterpart on the occasion of her marriage, not knowing that clocks are inappropriate gifts in China because they are associated with death. His insult led to the termination of the business relationship. It is also bad form to give the gifts of great value to the Japanese than those received.As an international business negotiator, he or she must try his best to learn and know the culture differences in order to avoid some mistakes and through the cultural exchange to establish a good cooperation relationship with his partners.2.2 Cultural TypesBeliefs and behaviors are different from different cultures, because each develops its own means of explaining and coping with life. Four cultural dimensions can help to explain the differences between cultures. Though the distinctions between them seem clear, the dimension should be regarded as a general guide. The four dimensions are gender, uncertainty avoidance, power distance and individualism.Gender cultures can be divided into masculine and feminine types. Masculine cultures typically value assertiveness, independence, task orientation and self-achievement. Masculine societies tend to have a rigid division of sex roles. The competitiveness and assertiveness embedded in masculine societies may result in individuals perceiving the negotiation situation in win-or-lose terms. In masculine cultures, the party with the most competitive behavior is likely to gain more.Feminine cultures value modesty, cooperation, nurturing and solidarity with the less fortunate. Femininity is related to empathy and social relations.Uncertainty avoidance This term refers to how uncomfortable a person feel in risky or ambiguous situations. In high uncertainty avoidance cultures, people tend to avoid tense situations. These cultures tend to observe formal bureaucratic rules, rely on rituals and standards, and trust only family and friends.In low uncertainty avoidance cultures, people are generally more comfortable with ambiguous situations and are more accepting of risk. Low risk avoiders require much less information, have fewer people involved in the decision-making, and can act quickly. Such cultures dislike hierarchy and typically find it inefficient and destructive. Deviance and new ideas are more highly tolerated. Cultures characterized by low uncertainty avoidance are likely to pursue problem-solving solutions rather than maintain the status quo.Power distance Power distance refers to the acceptance of authority differences between people—the disparity between those who hold power and those affected by power. High power-distance cultures are status conscious and respectful of age and seniority. In high power-distance cultures, outward forms of status such as protocol, formality, and hierarchy are considered important. Decisions regarding rewards and redress of grievances are usually based on personal judgments made by power holders. When someone from a high-masculinity culture attempts to work with someone from a high power-distance culture without either party recognizing the variations in their respective behaviors, clashes are likely to disrupt negotiations. In low power-distance cultures, people strive for power equalization and justice. A low power-distance cultural values competence over seniority with a resulting consultative management style. Low masculinity and low power distance may be related to the sharing of information and the offering of multiple proposals as well as more cooperative and creative behavior.Individualism In individualism cultures, people tend to put tasks before relationships and to value independence highly. People in these cultures are expected to take care of themselves and to value the needs of the individual over those of the group, community, or society. Individualistic cultures prefer liner logic and tend to value open conflict. Members from individualistic societies expect the other side’s negotiation to have the ability to make decision unilaterally.By contrast, cultures that value collectivism emphasize solidarity, loyalty, and strong interdependence among individuals. Relationships are based on mutual self-interest and are dependent on the success of the group. Collectivist cultures define themselves in terms of their membership within groups. Maintaining the integrity of groups is stressed so that cooperation, conflict avoidance, and conformity dominate the culture. Collectivist societies tend to stress abstract, general agreements over concrete, specific issues.Collectivist negotiators tend to assume that details can be worked out if the negotiators can agree on generalities. Collectivist societies show more concern for the needs of the other party and focus more on group goals than individualistic societies do. Members of collectivist societies chafe when members from individualistic societies promote their own positions and ideas during negotiations.3. The Relevant Cultural FactorsIn terms of international business negotiation, the following elements of culture are generally believed to have an important impact on international business negotiation. Knowing much relevant knowledge of different cultures can make the international business negotiation smooth.3.1 Language and CommunicationThe ways in which people communicate, including using verbal and non-verbal language, directly affects international business negotiation. When we communicate with people from other cultures, our body language sometimes helps make the communication easier and more effective, such as by shaking hands when greeting others. This has become such a universal gesture that people all over the world know that it is a signal for greeting.Sometimes, body language can be more of a hindrance than a favor. It can lead to misunderstanding since people of different cultures often have different forms of behavior for sending the same message. For example, nodding one’s head is generally meant to show agreement, to indic ate ‘yes’. To the Nepalese and Sri Lankans, however, it meant not ‘yes’, but ‘no’.So, as a master hand, he must try his best to know as much as information of his counterpart, the proficiency of languages and negotiation techniques are not enough, he also needs to have some mastery of the non-verbal behavior of different cultures. People use body languages more frequently in daily life. Excellent language and communication can help us make success.3.2 ValuesValues are the standards by which a culture evaluates action and their consequences. They affect perception and can have a strong emotional impact upon people. In different cultures, values may vary significantly. One’s proper actions in one culture can be seen as wrong in a moral sense in another culture.Thus, it is important to understand the prevailing values in a particular society and the extent to which they are respected in the everyday behavior of individuals. Values affect the willingness to take risks, the leadership style and the superior-subordinate relationships, etc. This is true for the relationships between negotiators within each team. Every culture has defined priorities for every aspect of social life. The discussion here will focus on values critical for understanding the economic performance of a society, more specifically, and the value that deserveattention in order to develop intercultural communication skills.3.2.1 Value towards TimeValue towards time and how they shape the way people structure their actions have a pervasive yet invisible influence on international business negotiation. Differences in punctuality, reflected in everyday negotiation behavior, may probably appear as the most visible consequence. But differences in times orientations, especially toward the future, are more important as they affect long-range issues such as the strategic framework of decision made when negotiating.3.3.2 Value towards RelationshipsDifferent patterns of relationship affect international business negotiations through the style of interaction between people, their decision-making process, and the way in which they mix human relationships and business matters, etc.3.3 Decision-making ProcessWhen faced with a complex negotiation task, people in different countries may use different approaches to make a decision. Knowing these differences will facilitate anticipating the reactions of the other side in business negotiation.4. Different Negotiation Styles4.1 The American Negotiation StyleThe United States is among the most advanced countries in economy and technology in the world. Both its language and currency occupy an important place in the world economy. English is the most commonly used language in international negotiations and fifty percent of the world trade adopts the U.S. dollars to settle accounts. All of these factors make the American feel very proud of their country and possess very strong national pride and glory, which are fully put up in their trade activities. They often leave a deep impression of superiority to foreign negotiators.Americans emphasize free competition and individualism. Very often, the emphasis on self-interest and freedom of the individual can run counter to cooperation, commitment and community. The business firm values the person who is mobile, energetic, creative and ambitious.4.1.1 Language and CommunicationFor the Americans, the stage of exchanging task-related information in business negotiations is relatively direct, with clear statements of needs and preferences. They may discuss topics other than business at the negotiation table, such as the weather, sports, etc., but not for long. They tend to spend most time in the stage of negotiation-persuasion. They take it for granted that the two parties of a business transaction shall both have good prospects of profit and they will put forward a they-think-it-most-reasonable plan in accordance with this principle. They prefer to clarify their standpoints at the very beginning of the first touch of the two parties and put out their plan so as to strive after the initiative. If there is a bifurcation, they seldom suspect their own analysis and calculation and usually ask the other party to consider the possibility of making re-composition. Americans tend to make concession throughout the negotiations, settling one issue, then proceeding to the next. Thus the final agreement is a sequence of several smaller concessions.Americans are apt to make censure on the other party of a negotiation, especially when the negotiation is out of their expectation. This is because they always think they are right all the time and doing reasonable things. They are lack of tolerance and understanding of other. They speak loud and fast. They seldom say sorry to others. They like taking themselves as the center of everything and expecting other people to do things as they wish. Their behavior in negotiations leaves an impression of being rude, arrogant and aggressive to the oriental.4.1.2 ValuesIn the United States, there are strong values regarding independence, freedom and individual equality. The sense of personal freedom is very strong. Individuals are not necessarily constrained to a particular social class, location or economic group by birth. As a result, individuals strive to achieve personal goals, seek personal autonomy and often prefer to act as individuals rather than as a member of a group. Individuals are being empowered as decision-makers for their group, division or companies. Their communication pattern tends to be present-oriented, self-oriented and action-oriented.They place great value on time. Using time efficiently is a critical goal and admired skill. They do not like “meaningless” talk even in very important negotiations. They will tend to be impatient when process of negotiation slows down. If you are wasting their time, they will think you are stealing their money, because in the American thought, “Time is money.” They cherish time very much and are alwayspunctual. Another manifestation of the American businesspersons cherishing time is that they prefer to do things orderly and set up plans well in advance and they do not like uninvited guests with no appointments beforehand. It is both impolite to arrive early or late when you come to the appointment with an American. To them, foreigners who do not respect this time orientation are viewed as less professional or less sophisticated than those who do.Americans pay attention to the contracts and rely on law. They take business contracts purely as they are and they cannot bear the mixture of business and friendship. No matter in what good relations, even between a father and a son, it should be absolutely clear in the economic interests. Hereby, Americans cannot understand the Chinese traditional ideas that old friends should provide more preferential treatments and more benefits to each other.4.1.3 Decision-making ProcessIn the American view, a business negotiation is a problem-solving activity, the solution being a deal that suits both parties.When faced with a complex negotiation task, Americans tend to divide the large task into a series of smaller tasks. They may settle one issue at a time, with the final agreement being the sum of the smaller agreements. For them, process in the negotiation is measured by how many issues have been settled.The decision making process is just like a cost-benefit analysis applied to all parties who would be touched by the decision. A decision can produce the greatest net profit when all the costs and benefits to all the affected parties are taken into account is considered as a right decision. So, the Americans usually list the possible effects and estimate their costs and benefits as accurately as possible.4.2 The Japanese Negotiation StyleThe experts of negotiation in the world have the unanimous agreement that Japanese are the most successful negotiators. Japanese culture teaches Japanese people to put individual desire into harmony with and submit to collective decision. Therefore, Japanese people take it as the most important to seek the harmony of human relations. And any business negotiation held under such circumstances will be going on all right.The Japanese personality generally is self-confident and flexible. They are diligent, thrift and cautious.4.2.1 Language and CommunicationIn Japanese culture, indirect and vague expression is more acceptable than direct and specific references. They are very keen on saving face both for themselves and for the others in any situation. Japanese people never turn down any offer directly. “Ha Yi”, the meaning of which is YES in a dictionary, is the most popular word that Japanese when they are listening to the other side of the negotiation expressing their standpoints, providing their offers and even bargaining. They do not mean it when they say “Ha Yi”. What t hey want to express is “go on please, we are listening.” This phenomenon greatly confuses many foreigners who have got in contact with Japanese for the first time.Avoid direct communication on money issues, leave this to the go-between or lower position staff. Try not to praise your products or services directly, let your literature or go-between do that.Traditionally, it was considered disrespectful and dangerous to look into another person’s eyes. Even today, the majority of Japanese avoid the embarrass ing direct eye contact with negotiators on the other side. They feel not comfortable with too much direct eye contact from the other side. Thus Chinese negotiators may think that something must be wrong, because the Japanese won’t look at them in the eye, as we take this as an ordinary source of information about the other person’s feelings.4.2.2 ValuesThe Japanese are more family and group oriented than of individualism. Group leadership is regarded more than individual initiative.Saving face and achieving harmony are more important factors in business dealings for the Japanese than achieving higher sales and profits. Japanese people pay so much attention to establishing the good human relations in doing business that many experts of negotiation think that friendship and trust are very important to advance good cooperation with them.Sending gifts is the most popular phenomenon of Japanese society. It is a way of showing courtesy, the ardor of entertaining guests and expressing regard, and an intention to establish profound friendship. The value of gifts given to the Japanese should be equal to their positions and there should be a difference between the gifts president and vice president. Otherwise, the former would have a feeling of being insulted and the latter would feel embarrassed.The patience that the Japanese shows in negotiation is well known in the world. The Japanese patience does not mean slowness, but careful decision, adequate preparation, thorough consideration and step-by-step negotiation. For obtaining an ideal transaction, they can wait for two or three months with no complain at all, as long as they can reach their set goal and a better outcome. Time is not the first thing for them. Japanese’s patience in business negotiations has some thing to do with their attention to establishing trustworthy personal relationship, which they think takes time to examine. They are not used to the way the occidental people handle business with no attention to human feelings.4.2.3 Decision-making ProcessIn general, decision-making in Japan is a communal affair requiring unanimous approval by management. In this decision-making style, everyone must be convinced, not just the key decision-maker.Most Japanese companies use some form of a system of decision-making known as document system. A manager who is in the lower ranks of management drafts a proposal after achieving consensus within his own group. The proposal is circulated to the heads of other sections and departments. If they approve, they stamp their name seals on it. If they disapprove, they either refuse to stamp it or put their seals on it upside down. In either event, the document is then passed up through the different levels of management until it reaches the president. If everyone stamps the proposal, it becomes company policy. If all do not stamp it, it is usually sent back to its originator with certain suggestion. Although Japanese people need quite a long time to make decision, their actions are very quick once the decision are set.4.3 The German Negotiation StyleThe industry in Germany is well developed and with high productivity. The first-class quality of their products in the world, which they are very proud of, is mainly due to the exactness and concreteness of their industry’s technology criteria. Accordingly, they often take their own products as the criteria when making purchase from other countries. So, if you want to do business with them, your products must satisfy their requirement.Prudence and earnestness are the key cha racteristics of German people’s negotiation style. They attach importance to and stress the feasibility of their scheme and seldom give big concession to the others, for they firmly believe that theirquotation is reasonable.4.3.1 Language and CommunicationMany Germans speak excellent English, whereas it is rare to find a non-German who speaks excellent German. The German language is difficult, so do not overlook using translator, no matter how proficient you are in German. Sometimes, through their body languages, you can guess the meanings. You must know their cultural background, it is very helpful for you to communicate with them smoothly.4.3.2 ValuesGerman people are well worthy of the name of being efficient. Their motto is “do it right away” and they do not like the way of waffling in negotiations. They are highly responsible and efficient in their work and you will never see piles of documents on German people’s desks. German people judge whether a person is competent or not, just go to see the efficiency of his handling things.Conservatism is an outstanding feature of the business culture. Security is valued greatly in Germany. So negotiator need to feel secure in the knowledge of the task they have delegated. Decisions are made after careful, thorough and precise analysis, so that risks are minimized.Time schedules are strictly adhered by the Germans. Punctual delivery means on the day precisely. Formality is a necessary sign of respect. Business is serious business. These are the values that pervade the society and are the foundation on which German businessmen build.Germans are very pragmatic people, and they look for concrete, technical evidence of excellence and superior performance in products. Promises showcased in elaborate presentations do not carry them away. Your product or service must be proven to be superior in order for it to sell to the Germans. So, arm yourself with all the data and documentation you can get.Whenever German negotiators express their agreement orally, they will stick to their words. Ultimately, they will put their oral agreements into writings. All the provisions are quite specific. It is always better to have the assistance of a German lawyer in drafting the contract and checking that its provisions conform to your oral agreement. Be precise in your wording of the contract. The Germans will especially appreciate that.4.3.3 Decision-making ProcessThere is a big gap between the top and bottom in large German corporations. Regardless of the size of the organization, decision-making is centralized. As a general rule, power remains at the top. One-person decision-making is even more common in medium and small size firms. Large organization use committees to arrive at decisions. Germans tend to arrive at decisions rather slowly.5. ConclusionFrom the above, we can see clearly that there are many differences in negotiation styles between eastern and western countries. We can see clearly that they have different ways of communication, values and decision-making process. They are all based on cultural differences. The thesis can help us to understand their cultures, and then get a perspective of their negotiation styles. Mastering different negotiation styles can build a good negotiation atmosphere, provide basis for negotiation tactics and improve the quality of the negotiation. The negotiation style plays an important role in negotiation, and it matters whether the success or failure of negotiation. Sometimes, details decide all, so negotiator must perfect every aspect around the negotiation in order to win more opportunities.If we cannot change the cultural differences, we must adapt ourselves to the environment in order to control the situation and win the contract finally.。
