to Hofstede’s Dimensions of National Culture
An effective business negotiation is very significant in achieving a successful business relationship. As the businesses expand globally, so do the conflicts between the interacting parties. These conflicts only get amplified if the interacting parties are from different cultural background. An individual's cultural background plays a big role in his perception, which affects his judgment, motivation and behavior at the bargaining table. The perception of an individual is the manifestation of the deeper held values and beliefs he has grown up with. In short, culture affects the whole negotiating process. A better understanding of the intercultural differences helps to gain a better insight into the cultural aspects of the negotiating styles and thus achieve a mutually acceptable solution by avoiding unnecessary cross-interactions. This research paper endeavors to study the impact of Hofstede’s dimensions of national culture on negotiating styles for productive and successful business interactions.
Importance of Effective Cross-cultural Negotiations
Negotiation is a significant part of business transactions. With the expanding global economy, there is a shift towards increased business interactions. Consequently, conflicts occur. These conflicts only get amplified if the interacting parties are from different cultural backgrounds. Negotiation is a way to come to a mutually acceptable solution in case of a disagreement between the parties in discussion. When negotiating, understanding the values of the parties involved goes a long way in striking a winning deal. If the parties agree with each other by making an effort to establish a common ground, the chance of a win-win situation materializing increases. Goodwill and the desire to achieve a favorable outcome is generated amongst the negotiating parties which makes it easy for a party to compromise, if required. However, if the parties disagree with each other and make no substantial effort to resolve the conflict, they end up in a win-lose situation where one party views the gains of the other as its loss. The values of individuals are a derivative of their cultural backgrounds which explains the differences in their perception, judgment, motivation, and behavior. A better understanding of these cultural differences helps in avoiding misinterpretation and miscommunication during the negotiation process. Phatak and Habib (1996) observed that most of the international business negotiations could not fulfill their potential expectations because of cultural faux pas, and in order to succeed, the international business negotiators have to be well versed in the cultural nuances and unspoken language of the party at the other end of the table. A study conducted by Brett and Okumura (1998) indicated that intracultural negotiators had better outcomes than the intercultural negotiators, who lacked in understanding of priorities of the other party. A study conducted by Imai and Gelfand (2010) illustrates that cultural intelligence is a key predictor of intercultural negotiation effectiveness.The culturally educated negotiator is better positioned to evaluate the risk profiles, expectations, and beliefs that can help avert conflicts.
Hofstede’s Criteria for Cultural Behavior
Culture is a way of life, it is the sum total of learned behavior, values, and traditions developed by a group of people and transmitted from one generation to another. Hofstede (1980) states that people are mentally programmed to behave in a particular way depending on their national culture. He further based national culture on four dimensions: power distance, uncertainty avoidance (UAI), individualism-collectivism, and masculinity-femininity. Later, he added a fifth dimension, long-term orientation and a sixth dimension, indulgence versus restraint. Appendix A gives a...