Tuesday, November 13, 2012

N11: International and Cross-Cultural Negotiation

N11: International and Cross-Cultural Negotiation

These days, many companies are not doing business only in the US, but internationally and globally. People travel more frequently to contact with suppliers, partner, or consumers in different country. For many organizations, international negotiation has become usual. Therefore, to succeed in doing international business, it is very important that negotiators understand what they should do when faced with negotiating with someone from another culture.

First of all, there are two contexts that influence on international negotiation: the environmental and immediate context. The environmental context includes political and legal systems, international Economics, foreign governments and Bureaucracies, instability in a country, ideology, culture, and external stakeholders. The immediate context includes relative bargaining power, levels of conflict, and relationship between negotiators, desired outcomes, and immediate stakeholders. These factors are very good devices for guiding our thinking about international negotiation. Negotiators need to understand that these factors influence the negotiation process and can change over time. Therefore, international negotiation needs to be prepared and planned by monitoring the environmental and immediate contexts.

Besides above, culture is one of main factors that influence negotiation process. There are 10 different ways that culture can influence negotiations as following:
-       The way each culture defines negotiation
-       Culture influences the way negotiators perceive an opportunity as distributive versus integrative
-       The criteria used to select that will participate in a negotiation is different across cultures.
-       Cultures differ in the degree to which protocol, or the formality of the relations between the two negotiating parties, is important.
-       Cultures influence how people communicate, both verbally and nonverbally.
-       Cultures largely determine what time means and how it affects negotiations.
-       Cultures vary in the extent to which they are willing to take risks.
-       Groups versus Individuals.
-       Nature of agreements
-       Culture appears to influence the extent to which negotiators display emotions.

Lastly, this chapter concludes that negotiators need to be prepared and advised to be aware of the effects of cultural differences on negotiation and to take them into account when they negotiate. The best way to manage cross-cultural negotiations is to be sensitive to the cultural norms of the other negotiator and to modify one’s strategy to be consistent with behaviors that occur in that culture. 


1. How Do We Explain International Negotiation Outcomes?

International negotiations can be much more complicated

A.   Simple arguments cannot explain conflicting international negotiation outcomes
B.    The challenge is to:
C.    Understand the multiple influences of several factors on the negotiation process
D.   Update this understanding regularly as circumstances change

2. How are international negotiations different?

Two overall contexts have an influence on international negotiations:

·       Environmental context: Includes environmental forces that neither negotiator controls that influence the negotiation
·             Immediate context: Includes factors over which negotiators appear to have some control
Factors that make international negotiations more challenging than domestic negotiations include:
·             Political and legal pluralism
·             International economics
·             Foreign governments and bureaucracies
·             Instability
·             Ideology
·             Culture
·             External stakeholders

3. What is Hofstede’s Model?

Hofstede’s Model of Cultural Dimensions:

Individualism/collectivism: The extent to which the society is organized around individuals or the group

Ø  Individualism/collectivism orientation influences a broad range of negotiation processes, outcomes, and preferences
Ø  Individualistic societies may be more likely to swap negotiators, using whatever short-term criteria seem appropriate
Ø  Collectivistic societies focus on relationships and will stay with the same negotiator for years
Ø  Power distance: “The extent to which the less powerful members of organizations and institutions (like the family) accept and expect that power is distributed unequally”
Ø  Cultures with stronger power distance will be more likely to have decision-making concentrated at the top of the culture.
Ø  Career success/quality of life: cultures differ in the extent to which they hold values that promote career success or quality of life.
Ø  Cultures promoting career success are characterized by the acquisition of money and things, and not caring for others.
Ø  Cultures promoting quality of life are characterized by concern for relationships and nurturing.
Ø  Uncertainty avoidance: “Indicates to what extent a culture programs its members to feel either uncomfortable or comfortable in unstructured situations”
Ø  Negotiators from high uncertainty avoidance cultures are less comfortable with ambiguous situations--want more certainty on details, etc.

These days, many companies are not doing business only 

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