NCM/U5 Topic 1 Understanding Cultural Differences in Negotiation
There are several main areas where cultural differences impact negotiating. The following are all differences that may arise during the negotiation process due to cultural differences:
Desire for a long-term relationship or just a one-time deal
Preference to win negotiating or preference for a win-win negotiation
- Informal or formal attitude
- Direct or indirect communication style
- Show emotion or hide emotions
- Decisions made by the group or by the leader
Let’s look at each of these points to get a better idea of how they could affect negotiations.
First, we can discuss whether the negotiating party is looking for just a one-shot type of business or a long-term relationship. While some markets might be looking for just a contract (Spain, for example), members of other countries might be looking for a long-term relationship (India, for example).
Next, we have the win-win thought process of negotiations. Some cultures look at negotiating as a win-win type of process (as the Japanese do), but countries like Spain typically do not view the negotiation that way. They prefer to win the negotiation and are not as concerned with the win-win proposition.
Many Ways that Culture Can Affect Our Negotiation
- Negotiating goal: Contract or relationship?
Negotiators from different cultures may tend to view the purpose of a negotiation differently. For deal makers from some cultures, the goal of a business negotiation, first and foremost, is a signed contract between the parties. Other cultures tend to consider that the goal of a negotiation is not a signed contract but rather the creation of a relationship between the two sides.
- Negotiating attitude: Win-Lose or Win-Win?
Because of differences in culture, personality, or both, business persons appear to approach deal making with one of two basic attitudes: that a negotiation is either a process in which both can gain (win-win) or a struggle in which, of necessity, one side wins and the other side loses (win-lose). Win-win negotiators see deal making as a collaborative, problem-solving process; win-lose negotiators view it as confrontational. As you enter negotiations, it is important to know which type of negotiator is sitting across the table from you. Here too, my survey revealed significant differences among cultures. For example, whereas 100 percent of the Japanese respondents claimed that they approached negotiations as a win-win process, only 33% of the Spanish executives took that view
- Personal style: Informal or formal?
Personal style concerns the way a negotiator talks to others, uses titles, dresses, speaks, and interacts with other persons. Culture strongly influences the personal style of negotiators. It has been observed, for example, that Germans have a more formal style than Americans. A negotiator with a formal style insists on addressing counterparts by their titles, avoids personal anecdotes, and refrains from questions touching on the private or family life of members of the other negotiating team. A negotiator with an informal style tries to start the discussion on a first-name basis, quickly seeks to develop a personal, friendly relationship with the other team, and may take off his jacket and roll up his sleeves when deal making begins in earnest. Each culture has its own formalities with their own special meanings.
- Communication: Direct or indirect?
Methods of communication vary among cultures. Some emphasize direct and simple methods of communication; others rely heavily on indirect and complex methods. The latter may use circumlocutions, figurative forms of speech, facial expressions, gestures and other kinds of body language. In a culture that values directness, such as the American or the Israeli, you can expect to receive a clear and definite response to your proposals and questions. In cultures that rely on indirect communication, such as the Japanese, reaction to your proposals may be gained by interpreting seemingly vague comments, gestures, and other signs. What you will not receive at a first meeting is a definite commitment or rejection.
- Sensitivity to time: High or low?
Discussions of national negotiating styles invariably treat a particular culture’s attitudes toward time. It is said that Germans are always punctual, Latins are habitually late, Japanese negotiate slowly, and Americans are quick to make a deal. Commentators sometimes claim that some cultures value time more than others, but this observation may not be an accurate characterization of the situation. Rather, negotiators may value differently the amount of time devoted to and measured against the goal pursued.
- Emotionalism: High or low?
Accounts of negotiating behavior in other cultures almost always point to a particular group’s tendency to act emotionally. According to the stereotype, Latin Americans show their emotions at the negotiating table, while the Japanese and many other Asians hide their feelings. Obviously, individual personality plays a role here. There are passive Latins and hot-headed Japanese. Nonetheless, various cultures have different rules as to the appropriateness and form of displaying emotions, and these rules are brought to the negotiating table as well. Deal makers should seek to learn them.
- Form of agreement: General or specific?
Whether a negotiator’s goal is a contract or a relationship, the negotiated transaction in almost all cases will be encapsulated in some sort of written agreement. Cultural factors influence the form of the written agreement that the parties make.
- Building an agreement: Bottom up or top down?
Related to the form of the agreement is the question of whether negotiating a business deal is an inductive or a deductive process. Does it start from an agreement on general principles and proceed to specific items, or does it begin with an agreement on specifics, such as price, delivery date, and product quality, the sum total of which becomes the contract? Different cultures tend to emphasize one approach over the other. Some observers believe that the French prefer to begin with agreement on general principles.