Reading: The hidden challenge of cross-border negotiation

The hidden challenge of cross-border negotiation

In international deal, negotiators have to manage with local traditions and customs because it is directly linked with the shape of governance and the decision-making process. Cultural differences influence the business and can completely turn a deal to a failure if some cultural tendencies are not respected. In fact, from a country to another the perception of the individual or the group in a company, the importance of time in negotiation is very different. The negotiator must consider in depth the cultural tendencies and not only the protocol because an attitude can be misunderstood or considered as disrespectful by certain cultures. In cross border negotiation, the way to reach agreement the process or the decision making can diverge from culture to culture due to different behaviours and core beliefs and not only legal regulations.

In all negotiations, there is always many people involved in the deal, influencing more or less the final decision. This is why it is very important to identify all the players committed into the negotiation. Abroad there is always extra players in the compromise and can make the decision making even more difficult. Indeed, applying “home” views or principles of corporate governance and decision making to international negotiation can affect negatively the negotiation process.

Moreover, in a cross-border negotiation the people who decide can vary. Therefore, stakeholder need to know who decides what to avoid any failure to understand each player’s role. Recognize who has formal decision rights in negotiation id more difficult cause of suppositions on culture. In less familiar environment, it is crucial to understand both formal decision rights and cultural background.

Furthermore, knowing which people are going to finalized the deal is essential but not enough because negotiators need to also know what are the informal influences that can make or break a deal. In fact, many countries have powerful networks of influence which have more potential than the parties including in the deal. For instance, it can be insurance companies or big families.

It is very frequent that companies with strong legal systems underestimate the power of informal influences or external factors because they presume that the foreign legal systems will enforce the same formal dispositions as the one they have in their country. Obviously, there is a huge gap between the laws written on codes and their application in practice.

In a word, a successful cross border negotiation evolves eliminate any home markets guesses and the development of a clear view of the players who are likely to influence the decision-making process. In every negotiation, each party try to influence the issue of the organizational process, process different in all the cultures involving different negotiation strategies. It can take 3 different forms: top down, consensus and multistage coalition building. In the top down form, the negotiator tries to enter in contact directly with the boss or with people outside the process. In some cultures, its more effective to interact directly to the top of the organization.  But this strategy need to be taken carefully because subordinate players can have opportunities to fail the deal.

Then, a consensus require agreement among the members of the other side, from the broader enterprise and external stakeholders and governments. The need for consensus affect the negotiating strategy. There are cultures where consensus is the base of the negotiation, they are focus on the relationships more than the deal and take a lot of time to investigate about the other side and try to create a strong relation before the deal. In that situation relations are more important than the deal itself. The consensus is always linked with a high demand of information asked by the other side. Each party need to be prepared to provide all the information necessary to convert the potential doubters. The negotiators should focus on the interaction with the other side and try to reach an internal position rather than be concentrated on the bargaining table. At the end, the party need to adjust their own expectations of how long the deal will take. A decision taken in a slow negotiating process is more durable and the agreement is reaching more quickly. In the case of consensus, deal require more time, more relationship buildings and more information.

At least, some decision processes are less defined or not require the agreement of every players, they are called “winning coalition”. And when the interests cannot overrule the negotiation, a “blocking coalition” can totally stop the deal.

To conclude, it appears that cultural fidelity is not always simple because every individual represents various cultures with divers negotiation styles. To manage cultural differences in a deal it’s important to compile the governance and the decision-making processes which can take very different forms in a culture from another one. Design the strategy and elaborate the tactics to reach the right people with the right arguments is the best way to complete a successful sustainable deal.      

General cultural differences not only influenced negotiation, but also affect the expectations of a specific process. It concerns the view of the process, the approach in the creation of the agreement, the form of the agreement and its implementation.