Denmark: Negotiating Across Cultures - Part 2

From ExecutivePlanet.com

Consequences of Cultural Differences

Differences in ways of thinking, behaving, and in managing conflict have a profound impact on how successfully or unsuccessfully the parties are able to negotiate or conduct business transactions. Cultural differences can generate misunderstandings, sow the seeds of distrust, and/or generate negative emotions among the negotiators. When managers differ in their basic thought processes, misunderstandings are all but inevitable.

For example, they may draw conflicting interpretations as to why a particular issue has been raised in the first place. Moreover, the two sides can misread the commitment of the other party in entering into a particular deal. In other words, there are a myriad of ways through which conflicting patterns of thinking may impede effective negotiating.

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The irony is that negotiators might not even be aware of the fact that they are making biased judgments! The inability to recognize the partiality of the judgments made by negotiators has a number of consequences. First, it can slow down the process of any negotiations, if not disrupt them entirely. Second, misunderstandings prevent negotiators from maximizing joint gains from the business interaction.

Moreover, cultural differences can also prevent trust from forming between sides in a negotiation, or worse, sow the seeds of distrust. When negotiators do not trust each other they are unlikely to share information for fear of being taken advantage of. They are also likely to be overcritical of the positions advanced by the other negotiator. For example, they may look for flaws or errors where none exist and/or invent reasons as to why the deal may not be possible. Finally, the lack of trust lessens the motivation of the negotiators to bridge the differences that exist between them.

Cultural clashes also have the potential of generating negative emotional reactions between parties in a transaction. The Meiji Borden dispute, the General Motors- Volkswagen conflict, and the Enron-India saga are all examples of situations where emotions ran high among the parties.

Mr. Kumar is an associate professor of International Business at the Aarhus School of Business in Aarhus, Denmark. There he teaches courses in international negotiations and cross-cultural competence. To contact Mr. Kumar, send your e-mails to rkumar@mail1.stofanet.dk.

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