Challenges of Business Negotiations in a Multicultural Environment

Challenges of Business Negotiations in a Multicultural Environment

1.0 Analysis of the Field

The field of multicultural management is important in dealing with new emerging issues in the workplace especially in cultural diversity and dealing with multicultural employees. Globalization has made it possible for people from different cultures to work at any part of the world. Consequently, most of the workplaces, especially multinational companies, have workforce made up of employees from diverse cultural backgrounds. Therefore, multicultural management is essential for the success of any organization which operates in a multicultural environment. Multicultural management is concerned with the process of developing policies, strategies and plans to be followed by an organization in managing culturally diverse workforce or handling issues involving business activities where people from multiple cultures are involved (Susskind and Ali, 2014). The field of multicultural management has become popular as the levels of cultural integration in the world increases. As a result, it is difficult to find workplaces made up of individuals from a single cultural background. The field of multicultural management has led to emergence of managers with capabilities of handling employees and stakeholders from various cultures backgrounds.

There are different important issues and dilemmas faced in the field of multicultural management. According to Taylor-Gooby and Waite (2014), the issues of policies of handling a multicultural society proves to be challenging in many places, such as the U.K. Therefore, the field of multicultural management is faced with dilemma of determining the right strategies that can ensure people from different cultures are accommodated within a single society or organization. Also, business negotiations within a multicultural environment prove to be a major issue that is faced in this field. Engaging in business negotiations within multicultural environment is not an easy task. The individuals engaged in business negotiations between organizations that comes from two different cultural backgrounds need to employ appropriate strategies (Olekalns and Adair, 2013). As a result, the multicultural management field is faced with the challenge of determining the right strategies to employ during business negotiations when dealing with multicultural teams. People from different cultures have their unique ways of lives and strategies that work in one culture may not work in other cultures; hence, coming up with the right negotiation strategies to fit in different cultural settings is not an easy process for managers in multinational organizations.

Finally, the field of multicultural management is faced with the dilemma of how to handle the concept of improving employees’ intercultural competencies. According to Gražulis and Markuckienė (2014), in order for employees in an organization to work in harmony with their colleagues and serve customers in a better way in multicultural environment, they need intercultural competency. However, organizations are faced with dilemmas regarding the best ways in which employees cultural competencies can be improved to enhance their cross-cultural communication skills. Dealing with teams of customers or employees from different cultural backgrounds is a problem for many managers, and empowering the employees with intercultural competencies is not easy as the process is faced with resistance from some employees. Nonetheless, despite the various dilemmas and issues facing multicultural management, it remains an important field, which is essential in management of cultural diverse workforce and business processes in the modern world. The development of this filed would be instrumental in enhancing the process of globalization and growth of the multiculturalism societies in the future.

 

2.0 Research Topic

The research topic for this paper is ‘challenges of business negotiations in a multicultural environment’. The aim of this research is to determine the challenges that are experienced by international businesses when engaging in business negotiations within a multicultural environment.

2.1 Research Background

Multicultural business negotiations are not easy processes. Teams of individuals who have unique beliefs, norms and values are involved in these types of business negotiations, making it hard to have a common ground on how rules of engagement can be handled. However, different studies have been carried out with an objective of highlighting some of the challenges experienced when dealing with business negotiations within a multicultural environment and the strategies that can be used in handling the challenges associated with these types of business negotiations. Susskind and Ali (2014) reveals that while engaging in multicultural environment, it is important to understand the culture of the people one is negotiating with so as to achieve the intended success. Applying negotiation strategies that are culturally sensitive makes the entire negotiation process a success. Thus, when making negotiations in a cross-cultural environment, communication is essential as it makes the negotiating parties to understand each other’s needs in an effective manner.  Therefore, having cultural empathy and cross-cultural communication skills is essential in engaging in productive business negotiations within a multicultural environment.

Additionally, Khakhar and  Rammal (2013) in a study aimed at understanding how culture impact business negotiations with Arab managers pointed out that political, social and cultural factors impacts on the negotiations between non-Arab managers and Arab managers. Hence, understanding the cultural and political environment of the negotiators determine the negotiation strategy employed by Arab managers in their business related negotiations within a multicultural business environment. From this study, it is clear that when engaging in business negotiations it is essential for an organization to ensure that it teams of negotiators  to understand the political, social and cultural environment of the other negotiating teams to come up with strategies that is culturally, politically and socially sensitive to the needs of the teams involved in the negotiations.

Furthermore, Jiang (2013) argues that culture determines the negotiation strategy to be employed by individuals involved in the negotiation process. iang point out that gaining a cross-cultural understanding of business culture and language is essential in ensuring the appropriate strategy is employed by individuals during the process of undertaking negotiations in the multicultural context. From past studies, understanding the body language in different cultural settings proves to be a major challenge that is experienced by multicultural teams of negotiations within a business environment. Özüorçun (2013) study attempted to investigate the role that body language plays in intercultural communications. The study revealed that different cultures have various aspects of body language that have unique meaning. Hence, when engaging in intercultural communication it is vital to understand the body language of the target culture so as to engage constructively in interactions.

Current research on the subject of multicultural business negotiations has also focused on the impact that culture has on ethical perspective of individuals. Culture influences a person believe on what is right and wrong. For example, in western cultures there is a belief that giving gifts in the form of money during business negotiations is a form of bribery and should not be accepted. However, in the Chinese culture, the behavior of giving gift to win business contracts is allowed and is termed as ethical. Therefore, when negotiating with a team of Chinese concerning a business deal, it is essential to understand this cultural behavior so as to embrace and learn how to handle it if one comes from western culture. The current information on this topic shows that culture is the main factor to consider when engaging in international business negotiations within a multicultural context. Therefore, it is essential to understand the way in which different aspects of culture poses challenges when individuals engage in international business negotiations in a multicultural environment.

2.2 Current Theories and Debate Areas

Different theories have been put forward with an objective of explaining culture in various societies. Since culture is the beliefs, values, norms and way of life of people, it influences the behavior of individuals during business negotiations (Susskind and Ali, 2014). Understanding the culture of the people whom you intend to engage in business negotiations with is essential forming the right strategies to make the whole process cultural sensitive and successful in the long-run. Having a deeper comprehension of various theories on cultural perspectives and multiculturalism is essential in making negotiations in multicultural environment a success.

One of the widely theory of multiculturalism is Hofstede’s Cultural Dimension Model. The model aims at explaining the culture of people in different societies using six major dimensions. There are six key cultural dimensions according to this theory. One is the six dimensions is concerned with the less powerful individuals in an organization accepting and expecting power is usually distributed unequally (Minkov & Hofstede, 2011). The second element is individualism vs. collectivism, concerned with understanding with the extent to which individuals are integrated into groups in a community.

The third component is uncertainty avoidance which is concerned with the tolerance of the society for ambiguity. The other cultural dimension is femininity vs. masculinity which concerned with understanding the society preference for heroism, achievement, materials rewards and assertiveness for success. The other cultural dimensions include indulgence vs. restraint and short-term orientation vs. long-term orientation.  This theory is useful in understanding the behavior and actions of people toward different issues in life such as power, uncertainty, liberties and other within a business context. Hence, the theory forms the foundation of undertaking successful business negotiations within a multicultural environment, which are sensitive to the cultural needs of the multicultural team involved in the negotiations.

The social identity theory developed in 1979 by Turner and Tajfel helps in understanding how culture influences the behavior and action of people in a particular societal setting. The social identity theory was initially created to help in understanding the psychological basis of social groups’ discrimination. The theory argues that social identity is an individual sense of who they are on the basis of their group membership (Ellemers & Haslam, 2011). The theory points out groups such as family social class which individual belonging is an important source of self-esteem and pride. This theory is applicable in understanding how social groups such as family, friends influences the social behavior of the people from a cultural that is different from one during multicultural business negotiations.

Additionally, institutional theory authored in 1977 by Rowan and Meyer helps in understanding culture in different societal settings. This theory is concerned with explaining social structures in a society. Institutional theory takes into consideration processes through which structures such as rules, norms, schemes as well as routines become established authoritative rules to guide social behaviors (Aten, Howard-Grenville and Ventresca, 2012). The theory is applicable in helping to understand social structures and how they affect business negotiations within a multicultural business environment.

There have been ongoing debates related to concepts of multiculturalism in the context of international business operations, especially negotiations associated with international business activities where multicultural teams are involved. One of the areas that the debate has focused is on how culture influences multicultural business negotiations. For example, Olekalns and Adair (2013) indicate that cultural differences poses huge challenges when engaging in business negotiations as managing cross-cultural negotiating teams is not an easy thing. The debate aims at understanding the way in which culture can act as a barrier of international business negotiations within multicultural settings if it is not handled in the right way. The second area of debate has been concerning what are the best business negotiation strategies to employ within a multicultural setting. The aim of the debate is to ensure that multicultural business negotiation teams have appropriate strategies to help guide their negotiation process, such as common way of viewing certain issues and decision making can help in making negotiation process easier. For example, Peleckis (2014) in this debate argues that having an effective negotiation team with appropriate analytical skills help in achieving positive results during multicultural negotiations. Peleckis also indicates gaining cultural, linguistic and legal issues related to the target country play a crucial role in making the negotiation process a success.

 

2.3 Industries Impacted by the Research

My research on challenges experienced when engaging in business negotiations within multicultural environment will be beneficial to different industries. One of the industries that will benefit from this study is the healthcare sector. According to Reeve (2014), the healthcare sector is faced with a major challenge of determining ways in which it can enhance cultural accommodation, especially while dealing with workforce from diverse cultural settings. Therefore, the sector is expected to benefit from the study by understanding some of the challenges it will expect to face when handling multicultural teams of employees during business negotiations and strategies that it can use for purposes of handling these issues.

Second, the study is expected to be beneficial to the manufacturing industry. The players in the manufacturing industry are largely involved in international business negotiations, concerning entry of new markets or production deals, and they have to handle multicultural teams of negotiations. The industry can benefit from the findings of my research by understanding the probable challenges to expect in such kind of negotiations and ways the problems arising from cultural differences can be handled in a way that the entire negotiations are a success in the long-term (Khakhar and Rammal, 2013). Also, the service industry such as banking organizations will benefit from the findings of this study. They will gain understanding of how to handle different cultural ethics when handling business negotiations.

The benefits of the findings my study can be maximized by players in different fields, if they can be published in renown international journals or publications so that they can be read by managers who deal with multicultural business negotiations. The findings can benefit them in a big way to overcome challenges that they might experience when undertaking multicultural business negotiations in the future.

3.0 Future Directions

3.1 Further Research

There are areas that need further research related to the topic of my research. One of the areas that need further research is the effectiveness of various negotiation strategies within the context of multicultural business environment. Most of the negotiation strategies that will be discussed in my study will be general in nature, and hence, there will be need of carrying out deeper analysis of their effectiveness in handling negotiations where multicultural teams are involved. According to Olekalns and Adair (2013) argue that different negotiation fits in various circumstances. Hence, there will be need to carry out a further research with an objective of determining where appropriate to use the strategies in undertaking multicultural business negotiations. Second, there will be a need of undertaking an empirical study on the same research topic, whereby, larger sample sizes will be used to ascertain whether the findings of presented are accurate and true.

3.2   Impact on the Field of Multicultural Management

The findings of my study will be beneficial to the field of multicultural management. One of the important areas that this study will help in improving is in relation to the training of employees to be involved in multicultural setting negotiations. According to Gražulis and Markuckienė (2014), intercultural competency is essential to allow workers in an organization to serve culturally diverse employees in an effective manner. The intercultural competency trainings are supposed to be based on information related to some of the challenges that employees might encounter when dealing with individuals from different cultural backgrounds, and this information will be availed in this study. Second, the study will beneficial to the field of multicultural management by adding new knowledge on how effective business negotiations can be undertaken within a multicultural setting. The study will provide information on some of the strategies that can be utilized in overcoming challenges encountered when dealing with cultural diversities in business negotiations. Last but not least, the findings of this study will be useful in providing information on the research gaps related to this topic on multicultural management that need to be filled in the next five years.

3.3 Recommended Strategies

One of the strategies that I would recommend to be used by organizations when undertaking multicultural business negotiations would be approaching the negotiations from the host country cultural aspect. According to Susskind and Ali (2014) approaching multicultural negotiations from the host country perspective creates conducive environment for undertaking negotiations with culturally diverse team efficiently. Second, I would recommend that when undertaking international business negotiations in different culture form the home culture, the negotiation team to understand body language of the other team of negotiators. Özüorçun (2013) notes body language play an instrumental role in cross-cultural communications. Given communicating in the right way is crucial in winning business negotiations; it is significant to understand the meaning of various body languages within the context of the cultural origin of the team of negotiators. This would ensure that one gain adequate cross-cultural communication skills that are instrumental in making multicultural business negotiations a success.

References

Aten, K., Howard-Grenville, J., & Ventresca, M. J. (2012). Organizational culture and institutional theory: A conversation at the border. Journal of Management Inquiry, 21(1), 78-83.

Ellemers, N., & Haslam, S. A. (2011). Social identity theory. Handbook of theories of social psychology, 2, 379-398.

Gražulis, V., & Markuckienė, E. (2014). Current issues of the development of employee intercultural competency in a work environment (a case-study of small municipalities of Lithuania). Socialiniai Tyrimai, 2014(3), 78–89.

Jiang, Y. (2013). Business Negotiation Culture in China-A Game Theoretic Approach. International Business Research, 6(3), 109. doi:10.5539/ibr.v6n3p109.

Khakhar, P., & Rammal, H. G. (2013). Culture and business networks: International business negotiations with Arab managers. International Business Review, 22(3), 578-590, https://doi.org/10.1016/j.ibusrev.2012.08.002.

Minkov, M., & Hofstede, G. (2011). The evolution of Hofstede’s doctrine. Cross Cultural Management: An International Journal, 18(1), 10-20.

Olekalns, M., & Adair, W. L. (Eds.). (2013). Handbook of research on negotiation. Edward Elgar Publishing.

Özüorçun, F. (2013). The Importance of Body Language in Intercultural Communications. LAÜ Sosyal Bilimler Dergisi, 4(2), 70. Dio/5000070664.

Peleckis, K. (2014). International business negotiations: innovation, negotiation team, preparation. Procedia-Social and Behavioral Sciences, 110, 64-73, doi: 10.1016/j.sbspro.2013.12.848.

Reeve, I. (2014). Multicultural health care? Cultural accommodation in non-devoted policy sectors. Canadian Public Administration, 57(4), 609–622. doi:10.1111/capa.12092

Susskind, L. E., & Ali, S. H. (2014). Environmental diplomacy: negotiating more effective global agreements. Oxford University Press.

Taylor-Gooby, P., & Waite, E. (2014). Toward a more pragmatic multiculturalism? How the U.K. policy community sees the future of ethnic diversity policies. Governance, 27(2), 267–289. doi:10.1111/gove.12030

 

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