Cultural Differences in International Business Negotiations
1.Introduction
With economic globalization and China entry into WTO, commercial contacts among various countries are bound to be increasingly substantial. As a result, negotiation among people who come from different cultural backgrounds will certainly become a universal issue that arouses concern among people in different countries. A great number of multinational corporations and international companies have been mushrooming in our country. The fast changing international economic environment brings domestic corporations great business chances and challenges. How to negotiate with people from different cultural backgrounds and who come to work with different work-related values effectively? Hence, enhancing cross-cultural sensitivity as well as improving cross-cultural negotiation and cooperation becomes crucially important. In short, at no time in history has there been so great a need for international business negotiation skills.
Culture is a dynamic, multidimensional, complex, and all-pervasive phenomenon. Clearly, no shortage of definitions of this concept exists. As history keeps moving forward, so does culture. Of course, the process of change is gradual and difficult, sometimes painstaking, even revolutionary. But we should also keep in mind that the part of culture at the base of the iceberg that is deeply rooted in a nation? Tradition and ideology resists to any changes. This relative stability of the core aspect of culture that both unifies and makes each culture unique. Different value orientations exert great impact on perception of leadership, ways of management, and process of decision-making as well as on negotiations.
2. Culture and international business negotiations
2.1. Characteristics of culture
Regardless of how many definitions of culture we could have examined, there would have been a great deal of agreement concerning the four major characteristics of culture. Being aware of these characteristics will help one become a better communicator. One can notice the strong connection between culture and communication. More importantly, since most of culture is below the conscious level, learning about culture can therefore be a stimulating awakening as he gives meaning to his actions and the actions of others.
2.2. An introduction to business negotiations
Negotiation is a kind of basic human activity that we are involved everyday. It is a process of giving and taking where both parties modify their offers and expectations in order to come closer to each other. It occurs to create something new that neither party could do on his or her own, or resolve a problem or dispute between the parties3. A modern definition of negotiation widely accepted is two or more parties with common and conflicting interests enter into a process of interaction with the goal of reaching an agreement .
Business negotiation refers to the negotiation that takes place in the business world and deals with business relationship. Business negotiation may be understood as encounters between firms (or economic organizations) with the goal of reaching agreements to gain economic benefits.
In international business settings, the development of the negotiation process and how parties perceive the relationship are crucial. This process is influenced by some facts and factors beyond the negotiation process in question. Cultural difference is one of the most important factors. Culture is a major determinant of strategies and tactics in international business negotiations, because negotiations involve communication, time, and power, and these variables differ across cultures. Cultural differences create a challenge to the negotiators involved, and demand understanding as well as flexibility. An ability to assess these differences and properly handle the consequences is essential for success in international business negotiations.
3. Cultural differences in international business negotiation
3.1 Personal space
Our Personal space, that piece of the universe we occupy is contained within an invisible boundary surrounding our body. Edward Hall's work has demonstrated clearly that cultures differ substantially in their use of personal space. Cultures that stress individualism generally demand more space than do communal cultures.
