Academic journal article Academy of Marketing Studies Journal

Negotiating Successfully in Cross-Cultural Situations

Academic journal article Academy of Marketing Studies Journal

Negotiating Successfully in Cross-Cultural Situations

Article excerpt

INTRODUCTION

The impact of international business on American companies has been considerably understated. With two-way trade in goods and services amounting to well over $1 Trillion dollars, over 20% of the U.S. GDP in 1992, no part of the economy is sacrosanct and can avoid the international dimension. Over seventy percent of American firms are actively competing against foreign-based firms. If an American firm is not competing against a foreign firm, chances are that it is either being supplied by or selling to foreign based firms. Foreign direct investment in the U.S. has reached over $400 billion and continues to increase year by year. In the decade of the nineties, the only firms that will be exempt from dealing with foreign entities, either U.S. based affiliates or foreign customers, suppliers, or competitors will be those firms that are out of business or are going out of business.

At the forefront of international business opportunities are agreements between firms, among others. Agreements are the most important international documents that must be negotiated between firms and other entities of different nationalities. Since implementation of agreements has become increasingly difficult and complex, cross-cultural negotiations has begun to take on an increasing importance to the globalizing firm. Every sale or purchase has its negotiation aspect and every negotiation presents opportunities and dangers for both parties. International negotiations are fast becoming a fact of life for a growing number of U.S. based firms. Failure to negotiate effectively can undo careful prior planning; operating across national cultures often magnifies negotiation problems.

CROSS-CULTURAL NEGOTIATIONS

When two people communicate, they rarely talk about precisely the same subject, for effective meaning is flavored by each person's own cognitive world and cultural conditioning. When negotiating internationally, this translates into anticipating culturally related ideas that are most likely to be understood by a person of a given culture. Discussions are frequently impeded because the two sides seem to be pursuing different paths of logic; in any cross-cultural context, the potential for misunderstanding and talking past each other is great (Kramer and Herbig, 1993).

When one takes the seemingly simple process of negotiations into a cross-cultural context, it becomes even more complex and complications tend to grow exponentially. It is naive indeed to venture into international negotiation with the belief that "after all people are pretty much alike everywhere and behave much as we do." Even if they wear the same clothes you do, speak English as well as (or even better than) you, and prefer many of the comforts and attributes of American life (food, hotels, sports), it would be foolish to view a member of another culture as a brother in spirit. That negotiation style you use so effectively domestically can be inappropriate and when dealing with people from another cultural background; in fact its use can often result in more harm than gain. Heightened sensitivity, more attention to detail, and perhaps even changes in basic behavioral patterns are required when working in another culture (Moran and Stripp, 1991).

Different cultural systems can produce divergent negotiating styles-styles shaped by each nation's culture, geography, history, and political system. Unless you see the world through the other's eyes (no matter how similar they appear to you), you may not be seeing nor hearing the same. No one can usually avoid bringing along his cultural assumptions, images, and prejudices or other attitudinal baggage into any negotiating situation. The way one succeeds in cross-cultural negotiations is by fully understanding others, using that understanding to one's own advantage to realize what each party wants from the negotiations, and to turn the negotiations into a win-win situation for both sides (Herbig and Kramer, 1992b). …

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