Overcoming Cultural Barriers in Negotiations and the Importance of Communication in International Business Deals

Negotiating skills and negotiation techniques for handling counterparts from different cultural backgrounds at the bargaining table

By on / International Negotiation

the importance of communication in international business overcoming cultural barriers in dealmaking negotiations

Communication in negotiation scenarios is the means by which negotiators achieve objectives, build relationships, and resolve disputes.

Communication becomes even more important when negotiating counterparts are from different cultures. The following question was posed to our Negotiation newsletter editorial board and Program on Negotiation faculty member Jeswald Salacuse offers his insights.

Question: Before taking my new job, I had 10 years of successful experience negotiating with suppliers all over the United States. The company I just joined sources materials and components from almost everywhere but the United States. What advice can you give me on negotiating with foreign suppliers?


Click here to download your copy of International Negotiations: Cross-Cultural Communication Skills for International Business Executives from
 the Program on Negotiation at Harvard Law School.


Answer: When negotiating with foreign suppliers, you’ll confront a variety of obstacles, such as unfamiliar laws, ideologies, and governments, that are usually absent from negotiations with U.S. suppliers. One particular obstacle that almost always complicates international negotiations is cultural differences between the two sides.

Culture consists of the socially transmitted behavior patterns, attitudes, norms, and values of a given community, whether a nation, an ethnic group, or even an organization.

Understanding a foreign counterpart’s culture is a lot like peeling an onion, as you interpret behavior to reveal attitudes, which reflect norms, which are founded on values.

Differences in culture complicate business negotiations and relationships in many ways.

The Importance of Communication in International Business: Three Aspects of International Negotiations

First, they can create communication problems. For example, if in response to one of your proposals your Japanese supplier says, “That’s difficult,” you might erroneously
assume that the door is still open for further discussion. In fact, your supplier, coming from a culture that avoids confrontation, may have been giving a flat no.

Second, cultural barriers also make it difficult to understand each other’s behavior.

Americans may view the hiring of relatives as dubious nepotism, but Lebanese counterparts may consider the practice to be necessary to securing trustworthy, loyal employees.

Third, cultural considerations influence the form and substance of the deal. For example,when McDonald’s first franchised its operations in Thailand, it insisted on strict adherence to its traditional American menu.

Later, under pressure from its Thai franchisee, it permitted the sale of noodles, a dish traditionally served on auspicious occasions. Sales increased as a result.

Since differences in culture will invariably require adaptation of products, management systems, and personnel practices abroad, you need to be open to your suppliers’ suggestions for change.

Finally, culture can influence the way people behave and interact at the bargaining table.

In some countries, such as Spain, business negotiators’ primary goal may be to achieve a signed contract, whereas negotiators in other cultures, including India, may be more focused on establishing an effective long-term relationship, I found in one survey.

The Importance of Communication in International Business: Four Strategies for Handling Cultural Differences at the Negotiation Table

Here are a few simple rules for coping with cultural differences in international negotiations and transactions:

Negotiation Strategy #1. Do your homework about your supplier’s culture.

Through reading and conversations with those who know the country concerned, you can learn a lot. Don’t overlook your suppliers as sources of information about their culture. They will usually welcome your interest.

Negotiation Strategy #2. Show respect for cultural differences.

Inexperienced negotiators tend to belittle unfamiliar cultural practices. It is far better to seek to understand the value system at work and to construct a problem-solving conversation about any difficulties that unfamiliar customs pose.

Negotiation Strategy #3. Be aware of how others may perceive your culture.

You are as influenced by your culture as your counterpart is by his. Try to see how your behavior, attitudes, norms, and values appear to your foreign supplier.

Negotiation Strategy #4. Find ways to bridge the culture gap.

Cultural differences create a divide between you and your suppliers. Constantly search for ways to bridge that gap. A first step in bridge building requires you and your suppliers to find something in common, such as a shared experience, interest, or goal.

Related Business Negotiations Article: Three Sources of Power at the Bargaining Table


Click here to download your copy of International Negotiations: Cross-Cultural Communication Skills for International Business Executives from
 the Program on Negotiation at Harvard Law School.


Adapted from “Ask the Negotiation Coach: Bridging the Cultural Divide,” first published in the July 2011 issue of Negotiation.

Originally published in 2014.

Comments

2 Responses to “Overcoming Cultural Barriers in Negotiations and the Importance of Communication in International Business Deals”

  • Alistair W.

    I have researched and written about the subject of cultural difference in the context of negotiation and would make 3 observations
    1. “Culture” is not just about geography and ethnicity. IBM or Procter and Gamble have strong corporate cultures that impact upon negotiations.
    2. The fundamental principles of negotiation apply across cultures.
    3. the extent to which a negotiator must factor cultural difference into their thinking will depend on their position of power and the nature of the specific negotiation

    Reply
    • Keith L.

      Thank you for your comment Alistair. Indeed, culture can also be institutional and the impact this has on a negotiator is probably dynamically different but substantively similar to the challenges negotiators face bargaining across cultures.

      Reply

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