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Cultural influences affect business negotiations

Cultural influences affect business negotiations

Cultural influences affect business negotiations in the global village.

The line between the East and the West may have blurred long ago, but in December 2010, a group of researchers suggested that it is still visible in some ways, at least between Indians and Americans. Paying a Price: Culture, Trust, and Negotiation Consequences, by professors from the Indian School of Business (ISB), Hyderabad, and Kellogg School of Management, Northwestern University, Chicago, says that cultural influences dictate how much Indians and Americans trust other people.

Essentially, the report found that while Americans are more open and trusting, Indians are more cautious in their approach. A citation in the report says that "Westerners" are swift in assuming trust and believe that "others deserve to be trusted until they prove otherwise".

Paying a Price: Culture, Trust, and Negotiation Consequences says Americans are more trusting and Indians more cautious
"Easterners", on the other hand, are more careful and "condition their trust on the situation". That, in turn, affects the way the two cultures conduct negotiations. "Overall, the strategy associated with Indian negotiators' reluctance to extend interpersonal (as opposed to institutional) trust produced relatively poor outcomes," says the introductory note by Northwe s t e rn University's Brian C. Gunia and Jeanne M. Brett, and ISB's Amit K. Nandkeolyar and Dishan Kamdar. The researchers arrived at their findings by conducting three studies on a focus group of Indian and American MBA students and managers.

Tadato Kimura, General Manager, Marketing, Sony India, agrees that people from the West are flexible: "In my experience, companies in the West are more open in their business negotiations but they are very result oriented." When it comes to investing money, resources and time, they stick to the agreed contract, he adds. "In this way they are actually more structured. If we don't have a clear business objective it becomes difficult to deal with them."

East-West Divide

WEST: People believe others deserve to be trusted until proven otherwise
EAST: People are less trusting and condition their trust on situations

WEST: Cultures such as that of the United States have relatively fl exible social norms, which make people more tolerant of those who deviate from them
EAST: Behaviour is enforced through monitoring and sanctioning, based on clearly defined social norms

WEST: Companies believe their partners will use shared information in a mutually beneficial wayEAST: Companies worry that information they share may be exploited to their disadvantage

But Kimura doesn't believe in a defined East-West divide. "Indian companies cannot be classified as purely Eastern. Compared to Japanese companies, they are largely influenced by the West. Dealing with Indian companies is more like dealing with the West," he says.

Indians, in fact, are becoming more like Americans, says Sandeep Goyal, former Group Chairman of ad agency Dentsu India. "Around 30 years ago, Indians were like the Japanese in their ways of business and negotiation. Today it's different. Ten years from now they'll be closer to the American work culture than the Eastern work culture," he says.

Goyal has been closely associated with the Japanese right from his days as the head of the ad agency Rediffusion in the early 1990s. And he knows the lengths to which they will go to do things right. He says that it is almost customary for a Japanese company to present its clients and close business associates with small gifts while paying them a visit. "The monetary value of these gifts doesn't matter. They are a symbol of respect and care," says Goyal.

Such gestures are invaluable in building a strong relationship of trust. "When it comes to long business negotiations, all your faculties have to be alive. If you miss the meaning of a symbolic gesture like this it will work against you."

Managers who have worked with partners in Japan say that the Japanese take time developing trust. But once it is in place, they will go to great lengths in partnerships. Goyal would know; at Rediff, he handled several large accounts, including Sony, Panasonic, Fuji Film and Canon. He maintained good relations with his Japanese contacts even after quitting Rediff. Those relationships stood him in good stead in 2003, when Japanese ad agency Dentsu decided to enter India, partnering Goyal. This was despite him not having a single employee, client or even an agency to speak of. Now, that's some trust.

Published on: Feb 02, 2012, 12:00 AM IST
Posted by: Navneeta N, Feb 02, 2012, 12:00 AM IST