Business Negotiation: A Cross Cultural Perspective from Collectivism and Individualism Introduction
Business negotiation can be defined as "a process in which two or more entities come together to discuss common and conflicting interests in order to reach an agreement of mutual benefit" (Harris and Moran, 1987, p.55). As we know the international business negotiations are significantly increased accompany with the ever-increasing interdependent relationships due to globalization. According to Graham et al(1994) these interdependent relationships are set up through trade and commercial activities, such as mergers and acquisitions, investments, and supply chain management , and these transactions are always started through various forms of negotiations. Despite the intention of negotiating parties is to reach mutual benefits, it cannot be easily achieved in real-life situation. Tung(1988) claimed negotiation failure rates keep at alarmingly high levels. In many cases the failure of business negotiation is resulted from misinformation and misinterpretation of cultural idiosyncrasies (Graham et al, 1994). Metcalf et al (2007) confirmed that cultural factors can confound, stretch, and frustrate negotiations. The attached case is a very good evidence of failure resulted from misinformation and misinterpretation across cultures. The American sales manager negotiated in different ways with her inter-organisational partners from Japanese culture in order to satisfy the requirement of its multimillion-dollar order of its American customer; however the outcome is they lost the contract because they could not respond actively to satisfy the customer. And the misinformation and misinterpretation between the American sales manager and her Japanese partners is the main cause of failure. In line with the emerging importance on international business negotiation, it becomes apparent that the international business negotiation has obtained considerable attention from researchers. According to Reynolds et al(2003 ) the categories of interest on these studies fall into five main areas: environmental and organisational conditions; cultural influences; characteristics of the individual negotiators; the negotiation situation; and the outcome of the
negotiation, in addition almost all researches on international business negotiations from 1990 to 2000 paid close attention to cross-cultural issues. However, Leung (1997) affirmed that cross cultural research on negotiations lacked coherent framework. And he further argued that the researchers adopted extensive cultural variables to explain negotiation; however the mediating variables that interknit those variables with negotiation behaviours have still need to be tapped. Based on the case of failed negotiation between the American sales manager and her Japanese partners mentioned above, this essay will discuss the cultural diversities in international business negotiation from collectivism and individualism dimensions that were defined by Hofstede (1984). This essay will start from the basic values and norms in collectivism and individualism, and then I will analyze the impact of the ideology differences on the five stages of negotiation process, decision-making and conflict resolution for negotiators from the two different backgrounds. After that I will recommend four useful guidelines for businessmen to reach optimal negotiations, and I will conclude the essay lastly. Diversities on Business Negotiation in Collectivism and Individualism Culture is the distinct character of a social group and it is manifest in shared values, beliefs and norms of the group, and it is visible in the pattern of behaviours that the group members typically respond to a problem of social interaction (Smith et al ,2008). So the values, beliefs and behaviours in international business negotiations are the typical responses of the individuals from different social groups. Hofstede (1984) commentated that...
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