Cultural differences play a significant role in negotiation styles. Both spoken and nonverbal communication can impact a delicate negotiation between two or more parties. Taking the time to learn about cultural differences and business etiquette is an important part of preparing for any important business negotiation.
One basic difference between cultures is the way time is perceived. A culture's relationship to time defines it as either a monochronic or a polychronic culture. Characteristics of a monochronic culture include a preference and expectation for schedule adherence, meeting agendas, scheduled breaks and detailed communication. Countries considered to be monochronic are countries such as the U.S., Switzerland, Scandinavia and Germany. Japan also falls in this category. In contrast to the monochronic cultural perspective on time, polychronic cultures start and end meetings spontaneously, take breaks as necessary and are comfortable with a less structured meeting where dialogue and information flows freely. Countries identified as polychronic include France, Italy, Greece, East African countries and Mexico.
Many negotiations are less than successful, ending abruptly when one party decides they are being rushed or disrespected. Different cultures' expectations can differ radically about the formality of the negotiation process. For instance, if an American called a Japanese negotiator by his first name at a first meeting, the Japanese businessperson would be offended. In the U.S., a person's first name is often used as a sign of friendliness. This is representative of the type of misunderstanding that undermines many negotiation efforts. A formal style of negotiation includes using a person's titles and refraining from conversation directed toward a person's family or private life. Anecdotes are considered too informal for people to introduce into the conversation. The Germans and the Japanese are thought to be more formal than Americans.
Business people from different cultures have varying objectives when they participate in a negotiation. This is a very important distinction that should be understood prior to attending a meeting. Americans attend negotiations seeking an agreement, often in the form of a contract. The Spanish also strive to obtain a contract as a sign of successful negotiation. Conversely, in Latin American countries, parties focus on developing the relationship. Similar to the Latin American culture, the Japanese are likely to focus more on the relationship being forged and less on the details.
Interpreting behavior is always a challenge in an important negotiation. Understanding both verbal and nonverbal communication is helpful for interpreting the actions of someone from a different culture. A good example of nonverbal communication that can be significant is eye contact. In the U.S., Canada and Arab countries, direct eye contact is considered a sign of trustworthiness. Where misunderstandings could crop up is how differently Asian countries view eye contact. In Asian society, looking down is considered a sign of respect.