The basis for much of this international business activity begins with agreements reached between firms. Reaching satisfactory agreements requires negotiation and give and take by representatives from each firm, so that any important differences between firms can be eliminated. One potential barrier to this process may come from the cultural uniqueness that is present in each country. These cultural differences can and do impact behavior and understanding.
When negotiating internationally, ideas, expectations, and behavior can be culturally unique. Discussion and communication may be impeded because two sides think and act differently. When two people who think and behave differently attempt to communicate, the potential for disagreement and misunderstanding is great. For example, members of different cultures may focus on different aspects of an agreement. The implementation of a business agreement may be stressed in one culture, while the prevention of practical problems emphasized in another culture. In some cultures the attention of people may be directed more towards the specific details of the agreement, while other cultures may focus on how promises can be kept. Culture may cause people to view, or to value differently, the social interactions inherent in fashioning a business agreement. Different cultural systems could produce divergent negotiating styles, styles shaped by a nation’s culture, language, geography, history, and political system (Herbig and Kramer, 1991).
When negotiating across cultures, many of the rules used in one country may not apply elsewhere, especially when they may not be culturally acceptable by the other party to an agreement. For negotiators, this could include the concepts of give and take, of bargaining, or of compromise. The value of being frank and direct may be helpful to some and would help reach a quick agreement, but may not be acceptable behavior in another culture. Business owners from some countries may want to spend time building relationships and working slowly toward the achievement of that agreement instead of rushing into a new business deal.
The study of negotiation tends to include not only business relationships between parties, but also tactics, strategies, and positioning. However, in a cross-cultural context, two business negotiators could be separated from each other by a totally different language and culturally-based business etiquette, and also by a different way of perceiving the world, of defining business goals, of expressing feelings, and of showing or hiding motivation and interests. Being straightforward and aggressive may not necessarily be acceptable behavior for members of some cultures.
Cross-cultural negotiation is a field of considerable interest in this age of the global economy. Many authors have written books or articles concerning how to negotiate with firms from another culture. The most popular cultures to discuss are Japan (Graham, 1984, 1986; Kramer, 1989), China (Tung, 1982), and the Russians (Graham et al., 1992; Nite, 1985). Although many have discussed those elements in negotiations which are crucial to business success (see for example, Graham, 1985; Herbig and Kramer, 1991), few empirical studies have been conducted.
While negotiation is an area of research with numerous studies, few have been conducted on cross-cultural negotiations in a business setting. Tung (1982) found Japanese and Chinese bargaining behavior to be considerably different from that of Americans. Graham (1985) reported differences in business negotiating styles among American, Brazilian, and Japanese businesses.