Negotiation is a very common phenomenon. It is a process that takes place in everyday life when two or more people have conflicting interests and they want to reach a common solution that benefits them both.
In business life, it is widely used to form business relations in order to offer both parties some benefits. Face-to-face negotiations are crucial aspects of all inter-organisational relationships. They take place for example when agreeing on joint ventures, mergers and acquisitions, licensing and distribution agreements, and sales of products and services.(Adler – Graham 1989, 512-515. ) The amount of foreign trade is increasing heavily and everyday more and more business negotiations take place between people from different countries and cultures. In order to have success in these kinds of negotiations, which can be vital for companies, there are several cultural factors that should be taken into account (Ibid. , 512-515.
) The main purpose of this study is to describe business negotiations in intercultural settings.To be able to do that we find it important to describe on one hand what culture is and on the other hand what negotiation is and what are the characteristics of culture that influence intercultural business negotiations. First we will start by explaining the concept of culture and the negotiation process in general and then continue discussing culture’s effects on cross-border business negotiations. Finally, we shall put our findings into action by studying some specific cultural features that can be observed in business negotiations between Finland and USA.In the comparison between the American and Finnish negotiation ways the concentration is on examining some general differences that give some guidance and help to understand the other party.
The purpose of this study is not to make a thorough analysis of these two cultures because there are also the individual and company factors affecting the negotiations. 2 CULTURE AND NEGOTIATION 2. 1 Definition of culture Culture has many definitions. All people in the world and every aspect of human life is touched and altered by culture.Culture affects everything people have, think and do as members of their society because material objects, ideas, values and attitudes, and normative or expected patterns of behaviour make up culture. (Ferraro 1990, 18; Hall 1976, 16; Usunier 1996, 94. ) Culture cannot exist on its’ own and is always shared at least by two members of a society (Onkvisit – Shaw 1993, 257).
Culture is not genetically herited, but learned in interaction with one’s environment (Ferraro 1990, 19; Hall 1976, 16). Culture is passed from generation to generation.It is changing all the time because each generation adds something of its own before passing it on. (Onkvisit – Shaw 1993, 258. ) It is usual that own culture is taken for granted and assumed to be the correct one because it is the only one learned, or at least the first one (Ferraro 1990, 21-23).
It is possible that an individual shares different cultures with members of several different social groups of which he/she is part of. In a particular situation he/she switches into the culture that is operational at that moment. (Usunier 1996, 95.)Culture is the one that defines the boundaries between different groups (Hall 1976, 16). Culture also prescribes the behaviours that are considered acceptable in a social group (Onkvisit – Shaw 1993, 257).
Hofstede defines culture as “the collective programming of the mind which distinguishes the members of one human group from another”. This definition covers what he has been able to measure, i. e. systems of values, because nearly all mental programs are affected by values. (Hofstede 1980, 21-23. ) Hofstedei?? s four-dimensional model is based on the differences between values.Values are the most fundamental components of national cultures. Values are the facts that make cultures different.
Other components are more superficial: visible, conscious, and easier to learn. Values determine what is required and forbidden, what is good and evil, what is right and wrong. They also determine the way an individual thinks and are partly unconscious. They are acquired in the family life during the first years of our lives, then developed further at school and reinforced in work organisations and in daily life within a specific national culture.(Ferraro 1990, 92; Hofstede – Usunier 1996, 119-120; Kapoor et al. 1991, 22. ) The knowledge of values that prevail in a culture is important because individuals behave according to them and in business life they have an affection for example on the willingness to take risks, the leadership styles and the superior-subordinate relationships (Usunier 1996, 96).
In order to be able to understand successfully the environment of international business, it is important to examine cultural values of both one’s own and the other party’s cultures. (Ferraro 1990, 92. ) 2.
2 CommunicationCulture has a huge influence on the way people communicate. Communication is used to transmit images, concepts, ideas, and perceptions from sender to receiver. It is a very demanding process because the message transmitted and received can be easily misunderstood. (Schuster – Copeland 1996, 131-132. ) Communication can be divided into three categories: verbal (spoken language, use of words with specified meanings), paraverbal communication (tone of the voice, meaning of silence) and non-verbal communication (communicate without using any words at all) (Ferraro 1990, 45; Gesteland 1999, 63).In order to understand spoken language completely, one also has to have knowledge of non-verbal signs (McCall – Warrington 1984, 46). Verbal communication means to use words that have mutually understood meanings and are linked together into sentences according to consistently followed rules (Ferraro 1990, 45). Language is a system for organising information and releasing thoughts and responses in other organisms, not a system for transferring thoughts or meanings from one brain to another (Hall 1976, 57).
Language used in verbal communication is not a universal means of communication.It is deeply rooted in a particular culture. (McCall – Warrington 1984, 55. ) Language is closely related to culture. It is impossible to understand a culture without taking into account its language(s) and vice versa. (Ferraro 1990, 52.
) Usually a culture is most clearly recognised because of the language spoken in that culture (Hofstede 1980, 27). Some languages are confusing and foreigners find them difficult to understand. It is necessary to know these aspects and be able to read between lines. (Ghauri 1996, 12. )Non-verbal communication means emotions, attitudes and feelings showed with different gestures and motions (McCall – Warrington 1984, 48) Understanding of non-verbal communication is said to be the most important part of communication between two different cultures (Usunier 1996, 112).
Non-verbal communication patterns depend on many variables, for example social class, education, occupation and religion. Non-verbal signs assist the interpretation of verbal messages and they have greater significance than the verbal aspects (Ferraro 1990, 68-71; McCall – Warrington 1984, 65.) Non-verbal messages can enhance, contradict or confuse the sent verbal message (Schuster – Copeland 1996, 131). From the verbal and non-verbal signals sent and received, parties involved in communication try to make an analisis of the other party, both at professional and at personal level (Kapoor et al. 1991, 46). The situation affects on how verbal and non-verbal behaviours are mediated by the opposite parties (ibid 1991, 52-66).
2. 3 Negotiation process Negotiation is a process that takes place between two or more parties with conflicting interests (Hofstede – Usunier 1996, 125).The negotiation leads to a joint action, which has to cope with parties’ individual objectives that define or redefine the terms of their interdependence (McCall – Warrington 1984, 13). Negotiation is a tool used in everyday life to manage relationships. Some conflict situations demand more intensive preparation, planning, and negotiating than others because of the higher stakes involved (e.
g. business relationships). Nowadays business negotiations are recognised as a part of the managerial process.
They are highly relevant especially when implementing business strategies.(Ghauri 1996, 3. ) Parties’ goals for negotiation is to achieve an agreement that offers them a better deal than they would get simply accepting or rejecting the other party’s offer (Ghauri 1996, 3; Hofstede – Usunier 1996, 125). Negotiation can also be referred as win-win negotiation where both or all parties can achieve equally beneficial or attractive outcomes (Ghauri 1996, 3). Outcome of negotiation process is undefined at the beginning of a negotiation (Hofstede – Usunier 1996, 125). Parties negotiate voluntarily and can at any phase of negotiation quit the process (Ghauri 1996, 3).