International business negotiations have several factors that make them more complicated than those conducted among companies in the same country. Differences in legal structures, cultural norms and religious observances can add to the complexity involved in reaching even the most routine business agreements. The negotiation tactics that worked when dealing with Canadian conglomerate may not work as well with a Japanese manufacturer. An understanding of the factors that affect negotiations across borders, oceans and cultures can help businesses achieve success on a global scale.
Attitudes About Risk
Nearly every business negotiation entails some level of risk. Some cultures encourage risk-taking and adventurous behavior in business, while others favor a more risk-averse approach. Negotiators should understand the cultural attitudes about risk before proposing any agreements that may include high risk levels. For instance, cultures that encourage freedom of thought also often encourage risk and exploration, while those cultures that favor traditional ideas may be less willing to depart from those ideas and explore risky situations.
Relationships between governments and the businesses within their jurisdictions can also affect negotiations with overseas partners. Businesses in countries where the government encourages corporate growth and development operate differently than firms in countries with tight regulations. For instance, the government of Thailand has encouraged entrepreneurs and welcomed international partnerships. In countries with stricter regulations, government bureaucracies can make international negotiations more difficult than American companies are accustomed to encountering.
A major hurdle in international negotiations can arise when cultures clash over their communication styles. Even when both parties speak the same language, they may consider that the same words have different meanings. A culture that values expediency, efficiency and fast results may view the word "soon" as meaning "immediately." The same word, "soon," might mean days, weeks or even months to cultures that place more emphasis on taking their time and evaluating every aspect of the agreement.
Cultural aspects also affect how companies structure their decision-making processes. Some cultures favor an authoritarian, top-down approach while others seek out consensus and group unity. For instance, American companies tend to have a lead negotiator who speaks for the entire group. Many Asian cultures, including the Japanese and Chinese, favor consensus and teamwork when reaching a decision. These differences can lead to unmet expectations and frustration from both parties, so identifying the structure of the negotiating team is a vital part of a successful international negotiation.
- Ivey Business Journal: The Top Ten Ways That Culture Can Affect International Negotiations
- Immigrant Institute: Dimensions of Success in International Business Negotiations
- Sodertorn University: International Business Negotiations
- University of Colorado: A Beginner's Guide to International Business Negotiations
- Peter Nguyen/iStock/Getty Images