Making Negotiations Work Across Cultures
How do cultural differences between parties affect the process of negotiation and how can approaches be adapted to achieve the best outcomes?
The spread of the COVID-19 pandemic across the globe may have decimated society as we know it, but it has also served to illustrate just how fundamentally connected we all are, through travel, tourism and trade.
World trade has grown rapidly in recent years, driving global growth. According to the World Trade Organization, there has been a near 40-fold increase in the volume of world trade since 1945.
As trade has grown in volume, it has also evolved, with changes in the patterns of trade and increases in supply chain complexity necessitating the development of enhanced business practices.
Of course, in any trade deal, the practice of negotiation plays a key role. What specific challenges arise when negotiating across borders and cultures?
In order to be successful, it is vital that negotiation planning considers cultural differences.
Culture can be defined as the way of thinking and doing things that, in a society, are passed on from one generation to another.
It is determined by many factors over time, expressed through customary behaviour and includes language, norms and values that collectively create a pattern of human behaviour.
Cultures differ between countries, and within them, also exist within organizations, particularly where there are low levels of staff turnover.
As the world becomes a smaller place, we could be forgiven for thinking that we have been brought together within one global culture. While the English language dominates and digital communications transcend culture, Hofstede et al (2010) argue that this is an illusion as ‘while software of the machines may be globalized the software of the mind is not’.
While individual cultures remain, as do the differences between them, perhaps our shrinking world means that we understand and respect each other’s cultural differences a little more. Despite this, there are widespread implications for negotiation planning and execution.
A lack of understanding of cultural differences can be disastrous for negotiations, but it can be difficult to fully comprehend a culture without being immersed in it for a period of time.
While this is not practical for the purposes of negotiation planning, there is, fortunately, a wealth of research in the area of cultural indicators, with four particularly relevant for effective negotiation:
- Individualistic vs collective;
- Authoritative vs egalitarian;
- Short-term vs long-term;
- Monochronic vs polychronic.
These measures of culture each deliver specific impacts on negotiation. For example, a negotiator used to an individualistic culture, where members of a society tend to look after themselves and their immediate family only, will need to establish a strong rapport with a collective opponent from a society where individuals are part of strong, cohesive groups.
Once culture is broadly understood using the four key indicators, effective negotiation planning demands recognizing key cultural differences.
Prior research is needed into cultural protocols. In most parts of Asia, for example, it is necessary to use both hands when presenting a business card, while in parts of the Middle East it is important never to hand something over with your left hand.
As establishing rapport is a crucial part of the negotiation process, the importance of prior knowledge of protocols should not be underestimated.
Lost in translation
As negotiation requires parties to interact and reach an agreement, key parts of the process are communication and language. However, cultural differences can affect how we communicate and use language and there are the key differences to consider when negotiating - preserving face, directness, context, embellishment and even lying.
The gestures and actions that accompany human interaction are also extremely important. While ‘thumbs-up’ is a positive sign in most Western cultures, it will not help your negotiating cause in parts of the Middle East! Here, there are four main areas to examine:
- Gestures to reinforce what is spoken;
- Gestures that have their own meaning;
- Body language;
- Gaining commitment.
Culture, bribery and corruption
While infrequent in Western business, corruption is often prevalent in bureaucratic and authoritative cultures. It can take many forms - from the unethical use of authority for personal gain to bribery, extortion or even embezzlement.
The advice here is to prepare fully and watch for the ‘signs’ when negotiating across cultures so that your responses are up to speed should corruption ever be encountered.
Adapting for culture
The meteoric rise of China to become the world’s second-largest economy clearly shows what adapting and engaging with different cultures can achieve in terms of trade.
There are a number of practical ways in which the negotiation approach can be tailored to bridge cultural differences, including determining culture, understanding differences and planning.
Of course, the most important part of the process is actually doing it – determining a country’s culture and cultural indicators before planning to build rapport, as well as listing specific uses of verbal and non-verbal language in a personal ‘culture plan’.
This extract from Negotiation for Procurement and Supply Chain Professionals by Jonathan O’Brien is ©2020 and reproduced with permission from Kogan Page Ltd.