Return to Home Page Cultural Influences in CrossCultural Negotiations: A revaiew of Hofstede by Paul Herbig I. Introduction Webster defines negotiate as: ìTo communicate or confer with another so as to arrive at the settlement of some matter.î Just like language is a basic communication tool in our daily life, negotiations also happen everyday, to discuss what to eat for dinner, where to go for weekends are all negotiations. Business negotiation tends to create the image of a smoky room full with people in suits and ties bargaining for what they want. While there has been a huge amount of change in business negotiations, the basic rules remain the same (Potts, 1996). Negotiators need to be clear about what they are after, know what their strength is. Usually, within the same culture, men and women have a different way to present the idea, to express themselves and have different approaches to solve problems. The situation will be worsen if they are coming from different culture background. Today, international trade has assumed an important role to the global economy, the volume of international trade has increased drastically during the last two decades. When international negotiation takes place, that means two businessmen from different cultures are trying to set a deal, they will need to overcome a lot of obstacles before they can reach the final agreement. It helps managers in the negotiation to identify the common goals to achieve between the two parties. If you do not understand the nature of the cultural difference, then, you tend to be obsessed with your own goals and become blind to the common goals and ideals. If the other side behaves against your expectation, you will start blaming your counterparts, as liars, illogical fools, idiots and "unfair wrong doers". Your counterparts will do the same and the result of the negotiation will leave a bitter after taste. (Common Problems in Cross-Culture Negotiation, p.1) The greater the cultural differences, the more likely barriers to communicate. Cultural interpretation and adaptation are prerequisites to the understanding of national and international business practice(Morden, 1995), especially when the purpose of a negotiation is to achieve a win-win relationship, rather than a win-lose relationship. The purpose of this paper is to explore some of the issues in international negotiation by applying Hofstedeís culture typology. Hofstede examined international differences in work-related values and divided it into four dimensions which are individualism, femininity vs. masculinity, power distance and uncertainty avoidance. The five countries will be analyzed are Canada, Mexico, India, Japan and Germany. II. Hofstedeís Theory & Negotiation Skills A. Hofstedeís Theory a. Individualism Individualist cultures are those where individuals are concerned primarily with their own interests. People are more or less on their own and are expected to take care of themselves. American culture is a typical type of individualism. Once the kids grow up, they are expected to leave the parents and live on their own, and they do not assume the responsibility of taking care of their parents. It is the same as in business practice, most managers make decisions on their own instead of asking for other peopleís opinion. In collective societies, everybody belongs to a certain group. This group protects its ìmemberî and expects their loyalty as return. The society also valued family and harmony very high. The typical example will be Japanese. All the employees have loyalty to the company, they work hard for the company (group) benefit, and the company hire them for life time as a return. The Japanese decision making process is called ringi. Since they work in a group, and harmony is important, Japanese tend to take a long time to reach decisions. Usually, people from individualistic culture are not comfortable of working with others. American will have to learn how to work in a team, because each team member see themselves more as an individual than as a part of a team. We can say team in a individualistic culture will not be as cohesive as it is in collective culture. b. Masculinity versus Femininity The predominant pattern of socialization is for men to be more assertive and women to be more nurturing. Masculinity societies are more assertive, aggressive and competitive. They value material success more, whereas feminine culture tend to place more value on qualities. In masculine countries, work is more central to peopleís lives, achievement is defined in terms of wealth and success. In a feminine country, work is less central, people prefer to work less hours rather than more salary, achievement is defined in terms of human interactions. We can say that masculinity cultures are more materialistic while feminine cultures are more environmental concerned. In U.S., boys and men tend to be more assertive; girls and women are more sensitive to social interdependence (Hofstede, 1980). The stereotype of the successful manager in this culture is a masculine one. The good manager is aggressive, competitive. The very expression of emotion is widely viewed as a feminine weakness that would interfere with effective business processes (Hofstede, 1980). A female manager probably will not perform as well as male manager in masculinity culture, especially in the Arabs countries, since in Muslim countries women have lower status than men. c. Power Distance Power distance measures human inequality in organizations. Cultures with a low power distance views everybody is equal, people tend to respect individual. In high power distance culture, people tends to accept inequality in power and authority. The lower education, lower-status occupations tend to produce high power distance and the higher-education, higher status occupations tend to produce low power distance (Hofstede, 1980). Education seems like the dominant factor. In most European countries, managers usually have a college degree. People are status concerned in high power distance countries. Again letís use decision making process as an example. In low power distance country, employees prefer a ìconsultativeî manager and managers take subordinatesí suggestions into consideration when they make a decision, whereas in a high power distance country, employees are perceived afraid they usually have to agree with their supervisorsí decisions. d. Uncertainty Avoidance This is the extent to which those in a culture become nervous by situations that are unstructured and unpredictable. Low uncertainty avoidance cultures tend to have fewer rules and more acceptance of diversity of thought and behavior. On the other hand, high uncertainty avoidance cultures try to minimize the anxiety with a thorough set of strict laws and behavior norms, they tend to resist changes and fear of failure. According to Hofstede, the faster economic growth is correlated with higher uncertainty avoidance (Hofstede, 1980). Hofstede also stated in his book: Uncertainty-avoiding rituals in organizations do not make the future more predictable, but they relieve some of the stress of uncertainty by creating a pseudo-certainty within which organization members can continue functioning. To the category of uncertainty avoiding rituals we can count the following items. Memos and reports Certain parts of the accounting system A considerable part of planning system A very considerable part of control systems A final uncertainty ritual is the nomination of experts (Hofstede, 1980) Again, using Japanese decision making as an example. Hofstede believes that group decision making can be seen as a way of avoiding risk for the individual, because they like to work in a group, and if the decision went wrong, the whole group took the responsibility instead of any individual. B. Negotiation Behavior a. Attitude towards Time Due to the value differences among different cultures, people has different way of looking at time and scheduling. In rigid time society, punctuality is critical. Monochronic is the term for these clock- and schedule worshipping cultures. German will be a typical example of monochronic society. They usually show up for their appointment on time and somehow they might be a few minutes early. Japanese also value punctuality and strict adherence to schedules (Gesteland1996). In contrast, in fluid time societies, which can also be called as polychronic cultures, people pay less attention on strict punctuality and are not particularly obsessed with deadlines. Like most Latin American countries, business meetings are usually started one or two hours later than it scheduled. Most likely, developed countries tend to be monochronic, whereas most developing countries are polychronic. Sometime, the orientation to time can vary from different areas in the same countries. Using U.S. as an example, in New York, you can usually see people walk faster compare to people in Houston, even both are big cities. Geographic location also seems as a major factor, clocks tick slower for warm climate countries. b. Relationship Focused versus Deal Focused Relationship-focused people prefer to do business with friends, families, and persons well known to them. They always want to know their business partners very well before talking business with them (Gesteland, 1996). The business relationship is based on trust, and networking is very essential for doing business in these countries. Most likely the masculinity cultures tends to be deal focused whereas femininity cultures are more relationship focused. For deal-focused cultures, people are relatively open to do business with strangers, such as north Americans, northern Europeans, and Australians. To them, business has nothing to do with their private life. On the other hand, the Arab world, most of Africa, Latin America, and most Asian countries are strongly relationship-focused cultures. For those countries, relationship goes first. Get to know the pattern and establish some kind of trust and friendship is very essential to a relationship focused culture. In general, we can say relationship focused or deal focused is somehow related to the economy of the country. Most developed countries tend to be deal focused while most developing countries are relationship focused. c. Formal versus Informal Business Culture In formal business culture, most of the organizations are in steep hierarchies, people are more status and power conscious than those from informal business culture where everybody are viewed equally. In high power distance countries, the hierarchies are very essential to the business organization. Most of Asia, Latin America, Europe and Arab world can be categorized as formal business culture. Respect is very important in formal business culture, how you address a person is one of the important way to show your respect to northern Europeans. U.S.A. and Australia has very informal business culture. For example, in Germany, most of the people prefer to be addressed by their last name , doctors are addressed as ìMr./Mrs. Dr. , while in informal business culture, such as U.S. and Australia, people call each other by their first name. Dress code can be another way to reflect the formality of the culture. Usually Europeans will not wear sweat shirt and pants to go out, not even to the grocery store, but in U.S. you see people wear slippers, shorts at everywhere. Even in a theater in U.S., it should not be a surprise if you see somebody wearing jeans and T-shirts. d. Expressive versus Reserved Culture A major misconception about nonverbal messages is that they are universally understood. Even if we do not speak a common language, we can supposedly communicate with foreigners on a rudimentary level by utilizing nonverbal channels (Kublin, 1995). Latin Europe and the Mediterranean area are among the worldís most expressive cultures while Asia, Nordic and Germanic Europe are the most reserved. Hand shake, eye contact, comfort distance, and touch are some of the sub-categories for nonverbal communications. In Germany, a soft handshaking will be interpreted as weak, but in most Asian countries, gentle handshaking is a way to express politeness, but in Japan people bow instead of shaking hands. In Muslim, Hindu, and Buddhist cultures, you only shake right hand, since the left hand is using for the toilet and considering dirty. In highly expressive culture, intense direct eye contact can be expected whereas in reserved culture, people feel more comfortable with moderate to indirect eye contact. Kublin defines comfort distance as: Comfort distance is the distance, more accurately the range, at which people feel comfortable interacting with one another. The distance varies from one culture to another. Other factors determining comfort distance include the respective ages, status, genders of the participants, and the context. (Kublin, 1995) Comfort distance can also be called as ìspace bubbles.î Most of the Arab countries, Latin Europe, and Latin America prefer 20-35 cms distance while most Asians, North Europeans and North Americans are comfortable with 40-60 cms. Touch behavior regarded as proper in one culture may be quite inappropriate in another. In some culture, people rarely touch one another unless they are relatives or friends. Other cultures are on the opposite side. According to Kublin: Eastern and southern Europeans, Latin Americans and Arabs tend to be physically demonstrative, whereas northern Europeans, Japanese, Chinese and Southeast Asians usually are not. Americans tend to fall in the middle (Kublin, 1995). People from France and Latin American countries kiss each other on the cheek while they greet each other. Some other countries rub noses when they say ìHiî. Most southeastern Asian countries only shake hands. If you try to say ìHiî to a Japanese woman by kissing, she might get frightened, since Japanese usually bow at such occasion. Applications Countries Analysis a. Japan Over two-thirds of US-Japan negotiation efforts fail even though both sides want to make a deal. Cultural differences are the major barriers to a successful agreement (Herbig, 1991). In Hofstedeís book, Cultureís Consequences: International differences in Work-Related Values, it states that Japanese is a collective and masculine society. It has medium power distance and high uncertainty avoidance. It seems like that Japanese has relationship focused, detail oriented, punctual, and formal business culture. In Mintuís study, it proves that Japanese negotiators are more relationship and future oriented. They emphasize the establishment of long-term associations. They are willing to cut price to a business partner because they look to the future and broader pictures (Mintu, p.92). Unlike American, Japanese are slower to make an initial offer and when they do, it usually includes all the details and major issues. Moreover, once the offer is made, the Japanese are less likely to change it until the final agreement is imminent (Hartfield, 1991). People are usually status concerned. The Japanese negotiation team usually has a leader from a higher level. This person will overlook the whole negotiation process without being notice as a leader by the other party. As I mentioned before, face saving is very important since Japanese value harmony. There is a Chinese proverb, Da-Tong-Shao-I, originally quoted from Chuang-zi, a Chinese thinker and philosopher around 4 to 3 century BC. Literally it means ìbig sameness, small difference.î However, the original meaning of it is to concentrate on the common goal. It is a often used proverb when there is a need to resolve conflict of interests or to reach a mutual agreement (Dai-Doo-Sho-I, p.1) Japan is also a low-contact culture. Unlike most other western countries, Japanese are very modest, lovers do not kiss in public, businessmen do not tap each othersí shoulder. Body language is very restrained, formal, with small gestures. Japanese does not like direct eye contact, and they get offended if you look them straight into their eyes. b. Germany According to Hofstede, German has low power distance score even the culture is very status concerned. Most likely Germans are uncomfortable with uncertainty, and they are individualistic. Germans like to set rules and stick with them. Even though their uncertainty avoidance are not scored as high as Japanese, they do not feel comfortable if they do not have fully control over the situation. Privacy is very important to Germans. Most German managers have their own office and the door is always closed. Houses in German are far apart from each other, so the neighbor will not be able to look at your backyard. We can say German culture is masculine. The stereotype of manager will be a thirty five years old male. In general, Germans are very straight forward and they pride themselves on speaking their mind (Gesteland, 1996). Germany is a monochronic culture. Punctuality is highly valued, schedules, and meeting agendas are strictly followed (Gesteland, 1996). Germans tend to be deal-focused in business. German society retains a certain level of social formality which also has an impact on business protocol. Formal behavior is a way to show appropriate respect to people with high status, especially in southern Germany. You can expect to work with a German business partner for many years and still address him by last name. c. Mexico Hofstede believed that Mexican culture is high power distance, high uncertainty avoidance, masculine and collective. Because of the masculinity, Mexican men are not used to dealing with female executives. Like most other Latin American countries, Mexicans are family oriented and expressive. Due to their collectivism, we can say Mexican businessmen are more relationship focused. In the business relation, they prefer to start business by establishing a good relationship with their patterns. Mexicans value deep, long-lasting relationships. ìWho you knowî is the major factor in business success. Since Mexicans are family oriented, do not expect absolute punctuality in Mexico. This is because Mexicans do not value time as a valuable asset as North Americans do. Local Business people may be half an hour to an hour late, while visitors are expected to be on time (Gesteland, 1996). Mexicans take their time coming to a decision on your proposal, so it will be wise to give a deadline earlier than your target date. Mexicans are expressive. Their comfort distance is smaller than North Americans, they tend to stand and sit closer to others and use frequent hand gestures when they talk (Gesteland, 1996). Like Germans, Mexicans address people by using their titles and family names. d. Canada Canada is a bilingual and bicultural country. The major cultural groups includes the Francophones and the Anglophones (Mintu, 1991). In Mintu and Calantoneís study, they stated: In particular, French Canadians have been criticized for their work ethic in favor of their families. For example, they would forego additional responsibility and achievement in favor of activities related to the building of a social image. Conversely, English Canadians are more achievement oriented and competitive (Mintu, 1991). Since the majority of the population speaks English, and also due to the limitation of the resources, only Anglophones will be used in this paper. Canada and Mexico scored totally different on Hofstedeís four culture dimensions. Figure 1: Values of the Four indices for Canada and Mexico. Power Distance Uncertainty Avoidance Individualism Masculinity Canada Mexico Source: Cultureís Consequences, International Differences in Work-Related Values, 1980. Compare to Mexico, Canada has lower power distance and uncertainty avoidance score, Canadians tend to be more individualistic and less masculine. Therefore, it seems like Canadians are more deal focused, and monochronic. We can also say that Canada has a moderately informal business culture and they are more reserved than Mexicans. Most Canadian can get down to business at the first time when they meet their partner, to them it is unnecessary to know their counterpart and build a relationship. They tend to trust their partners unless they are proved to be unreliable. Canadians value punctuality, since time is money to them. Compare to north Europeans and southeast Asians, Canadians are expressive, but compare to Latin Americans, Canadians are reserved. e. India According to Hofstede, Indians rank high in power distance, which means they perceive great power distance, however, Indian manager tends to underplay the use of power and instead prefers to utilize a consultative approach to managing employees. (Hader, p.12) Due to the caste system existing in the society, Indians are status conscious. They often associate high status with high authority. Like most other Asian countries, India is a collective society but surprisingly unlike Japan, Indians are not masculine. Indian negotiators are strongly relationship focused. In India you need to make a friend before you can make a deal (Gesteland, 1996). Once a good relationship is established, the negotiation process can begin. Be prepared that Indian negotiators bargain longer, are more competitive and maximized their gains relative to US (Hawrysh, p.29). We can also say Indians are polychronic because of its geographic location. An appointment with a senior official will usually be delayed for half an hour to an hour without the courtesy of an apology (Gesteland, 1996). Like most of their neighbors in South and Southeast Asia, Indians consider people and relationships more important than schedules and deadlines. Additionally, Indians prefer to work only during daylight hours, and the sunset marks the end of the day (Hader, 1996). Germany vs. Japan Both Germans and Japanese are detailed oriented and very punctual. Both takes time to make decisions, but Japanese are slower on making decisions than Germans. The differences between these two cultures can really create conflict and misunderstanding during negotiations. Unlike Germans, Japanese are not straight forward, their Noís are said indirectly. Germansí frankness may make Japanese feel losing face in front of their counterpart. Since Japanese are relationship focused while Germans are deal focused, the first meeting between them might be like: Germans are ready to negotiate based on the information they have and do not feel the need to develop a close personal relationship with the other party, on the other hand, Japanese do not feel comfortable to start business without knowing their counterpart first. Germans usually emphasis on the legal aspects and the fine points of the written agreement, but to Japanese contract is an expression of intent (Gesteland, 1996). If German brings a lawyer to the negotiation table, most likely Japanese will feel offended since trust is very essential to start a business to them. Germans like to maintain a clear separation between their professional and private life, since they believe friendship and personal relationship can complicate negotiations (Herbig, 1997). On the other hand, Japanese often use the entertainment time to establish a close relationship with their counterpart. Interesting enough, both like to drink. Sakit to Japanese is like beer to Germans. Sometime, Sakit can be a good lubricant to a sticky negotiation (Gesteland, 1996). Since Japanese score the highest for masculinity (Hofstede, 1980), German female negotiators may have a hard time to deal with Japanese. C. Japan vs. Mexico This will be a very interesting situation, since the two cultures are almost opposite to each other except both are relationship focused. Japanese are punctual, so if they set up an appointment with Mexicans they will show up on time, while Mexicans might be half an hour late. Compare to Japanese, Mexican are extremely expressive, they use a lot of hand and arm gesture. Instead of shaking hands, Mexicans often tap each other while Japanese usually bow, therefore, both might feel uncomfortable while they first meet. Since Mexicans tend to be hard bargainers, their opening offers usually have some extra pads, this approach may backfire with the Japanese, since to Japanese any major concession on price or terms should have a persuasive reason (Gesteland, 1996). The dress code and formality of business culture tend to be alike between these two countries and both use entertainment as a good opportunity to establish a good relationship with their counterpart. Indian vs. Canada Now letís take a look at how Indian negotiators will work with Canadian negotiators. Different attitudes towards time might cause Canadian feel insulted if Indians do not show up for their appointment on time. During the meeting, there will be a lot of interruptions every few minutes, usually an hour meeting might take half day. Connection and networking are essential for succeed business in India. Even both countries speak English, but Indian English is sprinkled with local terms which might cause confusions (Gesteland, 1996). Indians value respect for age and authority. Youngsters are expected to defer to elders; white hair confers status (Gesteland, 1996). Age and white hair are symbols of experiences and knowledge, while Canadian might related these two to old and slow-paced. Also, female English-Canadian negotiators may not receive the same respect as they usually do in Indians, therefore, they might not perform as well as male negotiators. Conclusion In summary, several suggestions will help you to succeed cross-cultural negotiation. 1). Be prepared. A famous Chinese proverb, ìKnow your enemy and yourself well to win the war,î may explain the idea of preparation. You need to be cleared about what your counterpart is after, in another word, what is their ultimate goal is. 2). Be culturally sensitive. Different cultures have different norms and taboos. Avoid being ethnocentric, expecting people are all different. Do not apply your culture value to others and criticize the differences. 3). Be flexible, try to avoid conflicts. A good result of negotiation is to achieve a win-win situation which is a mixture of agreements that both parties can benefit from. References Anonymous. ìCommon Problems in Cross Cultural Negotiationî, http://www.ict.co.jp/japa- bus/cross-cul-negotiation.html. (Accessed: 02/11/97) Anonymous. ìUnderstanding the Business Culture of Japanî, http://www.ict.co.jp/japa- bus/Business-culture-1.html. (Accessed: 02/11/97) Anonymous. ìDai-Doo-Sho-Iî, http://www.ict.co.jp/japa-bus/daidoshoi.html. (Accessed: 02/11/97) Gesteland, Richard. Cross-Cultural Business Behavior. Handelsh(jskolens Forlag, Copenhagen Business School Press, 1996. p.17. Hader & Peterson. Doing Business in India. Unpublished, 1996. Hartfield, Edward F. ìStrategies for conducting Successful Negotiations with Japanese Firmsî. East Asian Executive Reports, April 1991. p. 14. Hawrysh & Zaichkowsky. Cultural Approaches to Negotiations: Understanding the Japanese. 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