Academic journal article Review of Business

How Location Impacts International Business Negotiations

Academic journal article Review of Business

How Location Impacts International Business Negotiations

Article excerpt

Introduction

The impact of international trade on U.S. organizations has been understated. The international dimension affects all parts of the economy, with two-way trade in goods and services amounting to more than $1.6 trillion or nearly 25 percent of the U.S. GDP [4]. The growing commercial opportunities in international markets will include cooperation as well as competition with non-U.S. firms. Furthermore, the overall financial benefits of exporting are also becoming more evident. A recent study showed a widening gap between growth rates for exporting versus non-exporting small U.S. businesses, 31 vs. 25 percent, respectively for the past year [22]. In total, the 1990s has ushered in economic and political developments that make international trade an inevitable reality for most thriving U.S. businesses. Some examples are NAFTA, the dissolution of the Soviet Union, new alliances in the Pacific Rim, increased capitalism in communist countries, and the formation and consolidation of the European Union.

Negotiated agreements between organizations are at the forefront of international business opportunities. In fact, agreements are the most vital mutually developed documents among firms, international or domestic [85]. Regardless of the international dimensions, most business transactions have a negotiation aspect that presents opportunities and difficulties for all involved parties. With cross-cultural negotiating, possible benefits and roadblocks often are magnified due to increased legal and cultural complexity. In fact, many recent international deals have involved more than two countries [5,9].

One critical aspect of cross-cultural negotiations is place, a choice of the actual site and its effect on the particular negotiation strategy [8]. As a result, the role of place variations in related global negotiations strategies are examined and some general recommendations for cross-cultural negotiations supporting win-win outcomes are discussed.

Cross-Cultural Negotiations

When two people communicate, they rarely talk about precisely the same subject, since meaning is based on an individual's perceptions and cultural conditioning. In international negotiations, the potential for misunderstanding and distorted messages increases significantly. Effective international communication translates into an anticipation of culturally rooted ideas most likely to be understood by a person of a given culture. Otherwise, perceptual bias intervenes because different social systems produce divergent negotiating styles shaped by each nation's culture, geography, history and political system [2,20].

This strategic failure is often associated with communication "noise," namely any factor, including stress, which interferes with the receiver's comprehension of the sender's intended message. A lot of noise can also be attributed to the influence of place on the negotiation process [19]. For example, nervousness due to unfamiliar surroundings or a strong reliance on the physical characteristics of a meeting site when interpreting a counterpart's integrity is a noise contributor in the cross-cultural negotiation process. Logically, minimizing noise between negotiating parties will facilitate successful outcomes [19].

In cross-cultural negotiations, many of the strategies and tactics used domestically may not apply, especially when they are culturally unacceptable to the other party [7,19]. One succeeds in cross-cultural negotiations by fully understanding one's negotiating counterpart(s). This understanding is used to improve one's own advantage by (1) recognizing and identifying each party's expectations as expressed in the negotiations and (2) turning the negotiations into win-win outcomes for all parties. A "win-win" outcome is one that incorporates the concerns and meets the goals of all negotiating parties [19].

Site Selection

Site selection is a critical variable in the influence that place has on the intercultural negotiation process. …

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