Negotiating In The Global Marketplace Essay, Research Paper
Successful business negotiation is tough enough when the person sitting across the table is another American. But when you are trying to hammer out a deal with someone from another culture-from Japan or Latin America, from Australia or the middle East; the process becomes infinitely more complex. In Chapter four of International Business Law and its Environment Richard Schaffer discusses several methods of resolution, including mediation and arbitration. In this critical analysis, I shall discuss different negotiating styles that can help avoid some of the difficulty and uncertainty when dealing with individuals from different countries.
Recent research into the processes of negotiation has revealed key aspects of negotiation in which cultures tend to differ. Among others, Geert Hofstede has done much research into culture s effects on business attitudes, for example (which has important implications for negotiations), while Stephen Weiss has done significant studies on culture s effects on the negotiation process proper. Mr. Hofstede discusses four areas of critical importance when negotiating with people from different cultures: Power distance, individualism verses Collectivism, Uncertainty avoidance, and masculine verses Feminine.
Power distance as a dimension measures the way individuals relate to authorities at work in different cultures. What the Author discovered was that in some cultures, those who hold power and those who are affected by power at work are significantly far apart (high Power distance). In other cultures, the power holders and those affected by the power holders are significantly closer (low power-distance). High power distance, for example, usually mandates respect for age and seniority. The style of management by the powerholder can be paternalistic. Status is often ascribed, and outward forms of status, such as protocol, formality, and rigid hierarchy, are regarded as important. I addition, decisions regarding appraisal, reward, and redress of grievances are usually based on personal judgments made powerholders or those connected to powerholders. Relative to many other cultures in the world, the United States has a fairly low power distance rating (along with New zealand, Australia, Nordic cultures, and Germany), compared to the high power cultures of Latin American, South Asia, and certain Arab countries. A low power culture like the United States would value competence over seniority and the style of management would be more consultative. In this case the subordinate probably feels entitled to provide feedback to superiors if the information were useful or important to both parties. Status would be less achievable, and the tone of communication would much less formal, with an overt disregard, or at least a questioning, of the importance of symbols of status, rank, and hierarchy. In addition, systems redress, appraisal, and reward would be based on professional criteria and not personal judgment or connections.
Individualism and collectivism are terms of culture, not economic, and they refer to the orientation that people in different cultures have toward their work. Do we work for our own individual benefit, or do we work for the benefit of the greater group, the family, the clan, the company, the country? Those cultures that are more individualistic subscribe to self-interest oriented theories of work and economics. Individuals in these cultures tend to be self actualized and self-motivated, and their relationships with colleagues are based on self interest. They are generally task oriented, have a high comfort level with anonymity, and seek individual reward and appraisal. In contrast, those cultures that are more collectivist subscribe to group oriented theories of work and economics. People there are motivated by the desire to advance the interests of the group. Their relationships with colleagues are based on mutual self-interest, they are emotionally dependent on the success of the group, and they seek reward for the group. At the negotiating table, differences in this dimension can clearly cause serious conflict. Individual responsibility for making decisions is easy in individualist cultures; in group oriented cultures this can be difficult. Americans for instance expect their Japanese counterparts to make decisions right at the negotiating table, and the Japanese are constantly surprised to find individual members of the American team promoting their own positions, decisions, and ideas, sometimes openly contradicting one another. Americans, subscribing in general to the value of individualism, are often unaware of how powerful and extreme a value it is here, and of how much it permeates all aspects of our work.
Uncertainty Avoidance is a dimension that measures the comfort or discomfort people in different cultures feel in the presence of uncertainty. In some cultures, people commonly seek to avoid ambiguous, uncertain, unpredictable, or risky situations, while in other cultures, people can be more comfortable with ambiguous, unpredictable, uncertain situations and seek out risk. High avoidance of uncertainty can mean that decisions are made slowly and carefully, after much consideration of all possible details, often by many people. Low avoidance of uncertainty means there is a lot more shoot from the hip decision making, with fewer people involved and less information required; low risk avoidance moves fast, takes risks, and bounces back. High risk avoidance cultures need lots of formal bureaucratic rules in order to feel comfortable; they rely on rituals; standards, and formulas; they trust only those closest and most reliable. There is often a sense that planning is very essential, for fate is unpredictable and the world is forever a dangerous place. For most people from these cultures, the rules are meant to be followed; there is often an accompanying low tolerance for differences and ambiguity and a tendency to reveal thoughts, feelings and emotions only carefully, if at all. In contrast, people in low uncertainty avoidance cultures can dislike hierarchy-they tend to find it inefficient and destructive. They rely on principles that guarantee safe actions and view planning less as a way to inevitable catastrophe than as a way to be able to control the future. For people in this cultures things usually move fast. There is more tolerance, and even acceptance, of ambiguity and difference; and thoughts and feelings, in the form of information and emotion, are usually more freely expressed. In relation to other countries in the studies, the United States has a fairly low need for certainty (more risk taking, more entrepreneurial, more comfortable with uncertainty) are Jamaica, certain Nordic nations and Singapore (which has the lowest need of all). The author states that it is important to remember that low risk avoidance does not necessarily mean high risk-taking. Many of these cultures have to learn to survive in the face of great uncertainty. For them, therefore, uncertainty is not something to put great energy into avoiding, since it is daily and inevitable. The dynamic pacific Rim dragons, like Hong Kong and Singapore, have risk taking and entrepreneurship as part of their Chinese cultural heritage s, in addition to a powerful drive to keep the ever threatening disasters of the unpredictable future at bay. For most Americans, the experience of working in their companies overseas offices-particularly in more conservative risk avoidance cultures-can be extremely stressful. They often find themselves caught in the middle between how they know things really are in their new home and how headquarters wants them to be. The American in the middle often knows, for example, that things will simply take more time in the country of assignment, while it may be difficult to explain exactly why to home office.
Finally, Masculine versus Feminine is a choice of terminology based on the degree to which cultures value certain gender associated qualities; self assertion and task orientation or nurturing, quality of life, and relationship orientation. Those cultures that are more masculine tens to value self assertion and task orientation and usually ascribe such traits quite specifically to men, while the women in such societies are associated with the nurturing, quality of life aspects of society and are so ascribed these responsibilities. Such societies tend to favor a sharp, rigid division of sex roles. Relatively speaking, the United States is not as masculine oriented as one might think, while certainly ranking on the task oriented side, it is not significantly so. The more masculine countries surveyed include Mexico, Spain, and Switzerland. The most masculine culture surveyed was Japan, women on career paths are still uncommon (although this is changing), and the male work ethic in Japan is fierce. There are long hours at the office and then after work at the bars. While there is some dispute about the overall efficiency during such long working days, there is no doubt that the Japanese are extremely task oriented. So are the Koreans, and yet they score as being significantly more feminine than the Japanese in the study do. This could mean that there is higher value put on quality of life and relationship concerns and that the Korean man must assume some of the responsibility for those issues in family life. Accordingly, the sex role differentiation in Japan is much more rigid. Some of the most feminine cultures on the other hand, include most of the Nordic countries. This, too, is changing somewhat, as middle of the road Scandinavian socialism is currently becoming reexamined for the 1990s and beyond. The four dimensions discussed above by Mr. Hofstede goes a long way to examine some of the difficulties involved in dealing with people from different cultures. The very definition of negotiation can vary culture to culture. What a negotiation is designed to accomplish is seen differently in New York, Paris, and Beijing. In this situation we are talking about the possibility of mutually exclusive expectations. Before one even comes to the table, such differences in the meaning or purpose of the negotiation affect the negotiation. For example, while most Americans generally view negotiation primarily as an opportunity to accomplish or resolve a substantive issue, many cultures view negotiations as an opportunity to build a relationship; resolving a particular issue is simply not the first goal. Such cultures often view the initial meeting as the beginning of a larger negotiation encompassing many meetings. Americans have learned the hard way, when negotiating with people from these cultures.
In conclusion, the globalization of American business (and world) business is proceeding at an unprecedented rate. New markets and new labor forces, spawned by new technology, are fast making once domestic companies international and once international companies global. The new global manager, negotiator, trader, arbitrator, or general manager then, is someone who, now more than ever, understands the differences between the peoples of his or her global organization, in order to help them. As Americans learn to deal with people from different parts of the world, we learn better ways to succeed in the global market place. People who make it their business to understand other cultures, would win the global market place, and that beats the confusion of misunderstandings in legal contracts, and winding up at the mercy of the courts.
Ellen Raider. The Art of Negotiating globally . Bellevue Public Library, Bellevue, Washington.
Dean Allen Foster. How To Negotiate Business Anywhere . Bellevue Public Library, Bellevue, Washington.
Schaffer, Richard. International Business Law and Its Environment. Chapter Four.