“The hidden challenge of cross-cultural negotiations” summary

Cultural differences can influence negotiations; cultural tendencies influence the way people act and how they expect to do things. It is necessary to understand that these differences exist and know the other side as to not be blindsided. This text focuses on “the ways that people from different regions come to agreement or the processes involved in negotiations.” Decision-making and governance processes change from culture to culture.

Map the players and the process:

1. Who are the players?

Sometimes there are more players than the ones at the negotiation table. This is the case with governments and other institutions and/or organizations. Sometimes it is not obvious: example of Germany (labor has equal representation on the board), China (party officials will have their say).

2. Who decides what?

It is essential to identify each player’s role and “who owns which decisions”. Example of Pirelli and Continental. In Japan, the board of directors may include representatives of constituencies, who may exert other powers not familiar to anglo-saxon companies (voting caps and power to block share registration).

3. What are the informal influences that can make or break a deal?

“Webs of influence”: government agencies, keiretsu in Japan (industrial groups linked by a web of businnes ties), in Germany there is the power of insurance companies like Allianz, in Italy there are powerful families, in Russia the mafia. Plus the power of informal influence (example of Honduras and how Stone Container did not account for the reaction of unions, businesses and the congress).

Dispute resolution also very different: in Japan they rely on relationships, in Russia there is almost no legal system. Many countries’ legal systems are corrupt.

Adapt your approach:

1. Top Down

The “real boss”, someone who won’t delegate in any meaningful way and will make the ultimate decision. A negotiator must identify who it is and not waste time speaking to middle-men. Even when the boss delegates authority it may be more efficient to go to the top straight away (example of an Italian company trying to acquire a division of a French conglomerate). But sometimes, “deals at the top may not translate to action on the ground”.

2. Consensus

Consensus is at the other end of the spectrum of decision-making.

It is specially common in Asian countries, and might have variations.

Example of the Yangtzee river in China = a lot of bureaucracy, several governmental institutions had to negotiate and see if their interests were being protected and their goals compatible. The US company did not see this coming, and therefore failed to look for potential enemies and allies.

“Consensus cultures often focus on relationships rather than deals.” Therefore “relationship building” is essential but also time consuming.

The other company must be open to provide a lot of information and repeat it.

They also need to be able to “pinpoint the source of the delay”.

They might need to change their focus from the negotiation to the relationship they should be trying to build and to interacting with people.

And they will need to adjust their expectations about how long the negotiation will take, as to avoid frustration. If the company is not ready for it to take a long time, than it might as well not start it. “A slow and painstaking negotiation process may lead to a decision that has more staying power.”

3. Coalition Building

They don’t require the agreement of every player but the “support of a sufficient subset of players – a winning coalition”. On the other side, a “blocking coalition that has interests no one can ultimately overrule can bring a proposal to a halt.”

In conclusion: every person is a set of cultures and we shouldn’t take the person in front of us as a representative of their country. Gender, ethnicity and profession also play a role. It is also important to understand the organization behind the person.

+ Edward T Hall’s “Silent Language”: relationships, communication, time and space.

+ Hofstede’s “Cultural Dimensions”: distribution of power, tolerance for uncertainty, individualism vs collectivism, harmony vs assertiveness.