Specifics of conducting negotiations in a multicultural business environment

Specifics of conducting negotiations in a multicultural business environment

Negotiating or resolving conflicts in different business settings leads to different behaviors, profiles, and the use of different strategies by negotiators. Difficulties in negotiations arise when representatives of different cultures have to reach an agreement.

This means that negotiators (who belong to different business cultures) should react differently in the same situation and therefore should be approached selectively here.

Still, is there a significant difference in the behavior of negotiators from different countries and the strategies they use? How in practice and through what are the possible bigger or smaller differences expressed? The answer to this question can be given using an example – a comparison between the representatives of the German and Dutch monocultural environment.

The cultures of the Germans and the Dutch can be compared through two of Hofstede’s dimensions: distance and avoidance of insecurity.

Different types of managers

There are different types of managers around the world (Asians, Latin Americans, Germans, Dutch) to which several types of organizational culture correspond: Zeus, Apollo, Athens, Dionysius.

Company culture type “Zeus”: it is typical for small entrepreneurial companies that have a centralized management style (management by the entrepreneur).

Corporate culture type “Apollo”: in the center has placed the position (role), not the person; individuals, in doing their work, are “part of the machine.”

Athens-type corporate culture: the only experience is a source of power and influence. Management is interested in successfully solving problems.

Corporate culture type “Dionysius”: In all these cultures, the individual is subordinate to the organization, but in the Dionysian culture, individuals support each other to achieve their goals. This is a culture that is preferred by professionals: they can keep their freedom, but at the same time be part of the organization.

Compared to the Dutch managers, the German managers have slightly higher results in terms of avoiding uncertainty. They have a strong need to avoid failure and have many rules and procedures. There is little difference between the two cultures (Dutch and German) in terms of power distance.

Along with other southern and eastern European countries, there is too much power distance. German managers are characterized by a strong avoidance of insecurity.

For the Dutch, unlike the Germans, personality orientation plays a leading role. They are long-term and pragmatic, which is why they are often referred to as the “Chinese of Europe”.

Femininity prevails in Dutch culture. Eastern Europeans are generally short-term. This is the only dimension by which they fall into the group of so-called. Western civilizations. Quality of life is important to them: they are feminine rather than masculine. They do not live to work, but rather work to live. According to these indicators, Eastern European managers are approaching the so-called Latin American type of business culture.

German managers interrupted the discussions

The Germans do not take the interruption of the discussion badly, on the contrary – by interrupting, they show that they are listening and that they are engaged in the discussion. The Dutch do not consider it polite to emphasize their point of view.

An important principle in Dutch business practice is consensus (decisions are made after everyone has heard and agrees; if there is disagreement, a compromise solution is sought). In this regard, the Dutch manager needs the freedom to apply his approach to work. The Bulgarian tends to “be his boss”, but prefers someone else to be responsible for his possible unsuccessful actions. In slang, this is expressed as “passing the ball”.

Dutch managers follow the principle “Business before pleasure”

Two popular expressions in the Netherlands read: “Business is business”. “Business before pleasure”. The Dutch are more impressed by actions than by words. A characteristic feature of the Dutch is their tendency to perfectionism, which leads to intransigence and avoidance of unreasonable compromises.

This perfectionism causes the majority (74%) of them to look for the reasons for failure mainly in themselves and not in external circumstances (according to a survey of 15 thousand managers worldwide). Approximately the same percentage, but in the opposite sense, is observed in Eastern European managers: according to them, they have very little influence on the things that happen to them (73%).

For comparison: the average Bulgarian has a “higher self-confidence” in this regard – only 53% of the Bulgarian population attributes their current situation mainly to external circumstances. The situation is different for Eastern European managers: the vast majority of them tend to look for failures in themselves.

Difficult negotiations

Negotiators often describe their negotiating partner (s) as “difficult” because they encounter a culture other than their own (the visible part of the so-called “cultural iceberg” is only 10%, the remaining 90% remain below the surface).

The results of a study covering Germany, France, the United States, China, Mexico, and Japan show significant cultural differences both in terms of the negotiation process itself and in terms of expectations for the outcome of the negotiations. The conclusion is that the success of the negotiations depends on the use of an appropriate strategy, taking into account the cultural characteristics of the negotiators. Reference: “Negotiation strategies in a multicultural business environment”, https://www.nebraskasocialstudies.org/negotiation-strategies-in-a-multicultural-business-environment/

Americans are individualistic in negotiations

Americans are highly individualistic, while Chinese and Mexicans (and Japanese) are dominated by collectivism. In Mexico there is a great power distance, in the USA and Germany it is relatively low, and so on.

Data from a study of Eastern European entrepreneurs – small business owners show that individualistic norms and values ​​prevail over collectivist ones. This is also confirmed by a study at the national level. Therefore, the culture of entrepreneurs in terms of the dimension “individualism-collectivism” is similar to the national one.

The comparison between the two studies suggests that in Eastern Europe there are no major differences in the mindset of small business owners and ordinary people. In our opinion, however, entrepreneurs – owners of the growing medium-sized enterprises of the new economy – think quite differently (more individualistically).

Comparison of the views of top managers in large companies

A significant difference is observed by comparing the views of top managers in large European companies and owners of small companies. The diffusion of the so-called individualistic mentality among the first group is more limited than the second (59 and 72, respectively). If we summarize the results of these three studies, we can conclude that in Eastern Europe there is no statistically significant difference in the individualistic orientations of employers, managers, and ordinary workers.

However, the results of several other empirical studies position Eastern Europe in the collectivist part of the continuum. According to H. Hofstede, “Eastern Europe is collectivist rather than individualistic.” Although Eastern Europeans are perceived more as individualists, their collectivism is historically conditioned (mostly as a result of the suppression of individuality during Ottoman rule).

The peculiarities of the national culture can be analyzed in terms of the time needed to conduct each of the stages of the negotiation process.

Studies of German, French, Mexican, American, Japanese, and Bulgarian business culture

If we summarize the results of the research of German, French, Mexican, American, Japanese, and Bulgarian culture and their influence on the negotiation process, we can conclude that differences are observed at each stage of the negotiation process in terms of the time required to conduct:

Collectivist cultures spend more time establishing an understanding with partners. Interaction and cohesion are crucial to these cultures.

Collectivist cultures will also spend more time establishing a negotiating position.

Cultures with a long power distance are less prone to compromise. They spend less time on this element than American companies because, in highly hierarchical societies, compromise is a sign of weakness. In China, for example, business negotiations often have unsatisfactory results, with compromises being made too often or reached too quickly.

“Male” cultures are less likely to waste time convincing the other party.

Managers who need security in negotiations

Cultures with a high need to avoid uncertainty spend more time reaching an agreement. To reduce the risk, they spend time on all points of the agreement, whether they are insignificant).

Collectivist cultures pay more attention to pre-meeting planning and post-meeting analysis than individualistic cultures. The analysis of the time required for preparation shows that American companies devote the least time to prepare; China and Japan spend the most time (2-3 days). Americans spend less than a day discussing negotiations (so-called “debriefing”), while Asian companies spend 3-4 days.

On the other hand, when Asians make a decision, it is made. While, for example, Bulgarians make a relatively quick decision, but then hesitate in their right, especially when they encounter significant obstacles in its implementation.