by Sally Acharya, American Weekly, Feb. 28, 2006
Q:
What are some of the key cultural differences that have to be taken
into account for effective business negotiations?
A: What works in one culture
may not work in another . . . In some cultures, bargaining is the expected
style of negotiation. In others, bargaining is precisely what you don’t
want to do, because it becomes a sign of distrust. You really need to know
what style you’re going to employ . . .
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courtesy
of Dean Foster |
Typically in Middle Eastern and Arab cultures, bargaining is expected, because it’s actually a way of building a personal relationship . . . You wouldn’t pay the first price; the shopkeeper would offer you tea; you’d sit down, get to know each other. There’d be much discussion about price. Eventually the price you settle on is an expression of the ‘price I offer to good friends.’
In cultures like Scandinavia, to start out at one price and settle for another indicates you’re not a trustworthy person, because if that’s the price you’re willing to settle for, why did you ask me to pay something higher? So we have an issue right there if Swedes and Saudis try to negotiate . . . This [intercultural misunderstanding] bleeds over into national headlines all the time . . .
Certain cultures we refer to as hierarchy cultures. In these cultures, the grey-haired old man is the one that makes the decision, and people who are younger and less experienced usually do not make suggestions and do not make decisions overtly at the table, although they may have the expertise to inform the decision maker on the side.
These are very different from what we refer to as egalitarian cultures . . . Some of the East Asian cultures are hierarchy oriented, such as Japan and Korea; a more egalitarian [one] would be the Dutch . . . For all these different [cultures], it’s on a scale. There’s no absolutes. So the degree to which one is [hierarchical or egalitarian], and how the culture expresses its [identification], differs quite a lot.
Q:
Where does the U.S. fall on this scale?
A: We are not extreme. We’re
on the egalitarian side, but on a scale of one to 10, with one being the
most egalitarian, we’re a three or four . . .
Q:
Are there risks when Americans are negotiating in cultures that appear on
the surface to be very similar to us—for instance, in Europe?
A: It’s a phenomenon
of what we call cultures of similarity. Whatever apparent similarities there
are, we tend to latch onto them, and they mask the hidden differences. And
then, of course, they come back and bite us . . . In Scandinavia, there’s
such a strong egalitarian tradition that Swedish and Scandinavian managers
in business will not make decisions unless they’ve got the input of
everyone on the team, and previous agreement of everyone . . . Americans
expect managers to be a bit more ‘take charge’ and don’t
have the patience for letting the Scandinavian manager make decisions his
way. He’s often seen as procrastinating or weak, while the Swedish
manager is viewing the American as fairly immature, only developing consensus
after the decision is made anyway . . .
Q:
What are some of the best and worst practices in intercultural negotiations?
A: Best practices are when
you consider and are aware of and work constructively with the cultural
differences that are going to be at the negotiating table. Worst practice
is when people walk in there assuming that even though there are cultural
differences at the table, it’s not going to matter. That will immediately
blow up, and some of them become major issues.
Q:
What changes have you seen in the field over the years?
A:
It used to be we’d have to talk about the reasons for understanding
culture, and the benefits of doing so . . . Now we don’t have to do
this so much. With more mature companies, they’ve been out there,
stubbed their toes; they know they need to do this.
With new companies, every new company is immediately a global company. You may be in your basement in Silicon Valley but you’re global. There is a lack of experience, yet the need is very great.
Q:
What does it take to put knowledge into practice and be truly effective
at the bargaining table?
A: You really have to do your
homework. You have to know. There’s no easy way around it. You either
go with mentors, or you read, or you learn, or you trip up . . . and learn
through the school of hard knocks. There’s a lot on the line.
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