Approaches While Negotiating in Another Business Culture
If you have visited countries other than your own, you might have noticed that the culture is different from home. It might not be much difference, perhaps it’s just a few norms separating this culture from your own. If you travel far, chances that the differences in culture are more significant. This phenomenon is also the case when negotiating in another culture. We say it’s a clash between business cultures. In this article I will discuss how different business cultures might create difficulties in negotiations, and hopefully provide you with a few tools to overcome these difficulties.
“International business deals not only cross borders, they also cross cultures.”
Ivey Business Journal (2004)
Richard Gesteland is an American businessman who did research on business cultures. It is his dimensions that will be used through this article. As a starting point, and an absolute foundation for communication between business cultures, it is worth to note his “two iron rules of business”:
The visitor is expected to understand the local (host) culture
The seller is expected to adopt to the buyer. The customer is king.
The first potential pitfall when negotiating is when relationship-focused and deal-focused cultures meet. Gesteland claims this dimension makes a “great divide” in the world. In a relationship focused culture, people tend to avoid doing business with strangers. The participants of this culture would rather prefer to do negotiations with personal contacts. In a deal-focused culture, the marketer will often be able to make contact with a potential buyer without having any personal relationship or common external contact in common with him.
Examples of relationship focused cultures are countries from most of Asia and Latin America. Examples of deal-focused cultures are countries from Northern Europe like Norway and Germany, but also countries from North America and Australia.
So how do you overcome these differences, and succeed in your communication? If you come from a deal-focused culture and will negotiate with a representative from a relationship focused culture, you might consider arranging for a suitable person or organisation to introduce him. In that way you might be able to build a relationship, and hereby trust, faster. The first meeting is crucial to establish a good relationship, and you might consider to not start the business discussions at the first meeting.
Another dimension defined by Gesteland is the clash between direct and indirect communication. In a negotiating setting, this will dimension will especially express itself in how explicit the respective negotiator formulates his wishes and intentions. A negotiator with a direct communication approach has as a priority to be clearly understood and might show anger. A negotiator with an indirect communication approach will on the other hand prioritise to maintain harmony and choose his words carefully.
To overcome this dimension, it is key to show a certain flexibility. It will be the safest approach to choose your words and body language carefully. To succeed in business negotiations internationally, it is necessary to learn the ability it includes to handle both of these kinds of communication.
In relation to the previous discussed dimension about direct and indirect communication, Gesteland defined a dimension involving the clash between hierarchical (formal) and egalitarian (informal) business cultures. A formal business culture, often organised in hierarchical structures, tend to reflect major differences in status and power. On the contrary, informal business cultures are based on more egalitarian principles with smaller differences and power.
If you come from an informal business culture and are going to meet with a negotiator from a formal business culture, the first action to consider is to dress up in an appropriate matter. This does not necessarily mean that you must perfect the Windsor-knot on your tie, but a nice shirt should be considered a minimum in such a situation. Do not forget to address the negotiator in a polite way! First impression is everything; if you start behind the eight ball, you will never get in front. Therefore, it is a handy rule of thumb that if you are in any doubt, choose the formal way of behaving. Finally, it cannot be understated that knowledge about your field of business will be decisive in what the other negotiator will think about you.
Norway and USA are examples of informal business cultures, while China and Germany are examples of formal business cultures.
In negotiations with representatives of other business cultures, you might observe that they have a different view on time than you do. This is the central point in the last Gesteland dimension I will discuss in this article. In the business world we find both ridged (monochronic) and fluid (polychronic) time business cultures. While the monochronic business culture find punctuality very important, this is not the case with a polychronic business culture. Another aspect of this dimension is that a negotiator from a monochronic tend to find interruptions in a meeting disturbing and disrespectful, it might be welcomed by a negotiator from a polychronic business culture.
Norway, USA and Japan are examples of business cultures with a monochronic business culture, while China is an example of a business culture with a polychronic business culture.
“The great diversity of the world’s cultures makes it impossible for any negotiator, no matter how skilled and experienced, to understand fully all the cultures that may be encountered.” (Ivey Business Journal, 2004). As a leader or negotiator, it will either way be central to meet cultural differences with understanding and knowledge. If you follow the two iron rules of business and obtain knowledge about the respective business protocol, you will have come a long way in succeeding at cross-cultural negotiations.
References:
Gesteland, Richard R.: Cross-Cultural Business Behavior : A Guide for Global Management (2007)
https://www.linkedin.com/pulse/direct-indirect-communication-styles-marjorie-friesen/
