Cultural Aspects of International Business Negotiations
Clarke Ricks School of Business,
Liberty University
BUSI 690: Policy and Strategy in Global Competition
Dr. Hicks
June 30, 2022
Cultural Aspects of International Business Negotiations
Cultural differences do have an impact on international business negotiations. When
negotiating internationally, one needs cultural knowledge and skills in intercultural
communication. Many agreements have to be negotiated, drafted, signed and finally
implemented: sales contracts, licensing agreements, joint ventures and various kinds of
partnerships, agency and distribution agreements, turnkey contracts, etc. Negotiation is not
only based on legal and business matters, hard facts which are often emphasized as being the
sole important facts, but also on the quality of human and social relations.
There are various kinds of “distances” between the potential partners: physical distance
certainly, but also economic, educational and cultural distance, which tend to inflate the cost of
negotiating internationally. Difficulties in interacting, negotiating, planning common ventures,
working them out and achieving them together are deeply rooted in the cultural, human and
social, background of business people.
What is Culture?
Culture is complex, multiple and hard to understand. Culture in today’s context is different
from the traditional, more singular definition, used particularly in Western languages, where
the word often implies refinement. Culture is the beliefs, values, mind-sets, and practices of a
group of people. It includes the behaviour pattern and norms of that group—the rules, the
assumptions, the perceptions, and the logic and reasoning that are specific to a group. In
essence, each of us is raised in a belief system that influences our individual perspectives to
such a large degree that we can’t always account for, or even comprehend, its influence.
Much of the problem in any cross-cultural interaction stems from our expectations. The
challenge is that whenever we deal with people from another culture—whether in our own
country or globally—we expect people to behave as we do and for the same reasons. Culture
awareness most commonly refers to having an understanding of another culture’s values and
perspective. When talking about culture, it’s important to understand that there really are no
rights or wrongs. People’s value systems and reasoning are based on the teachings and
experiences of their culture. Rights and wrongs then really become perceptions.
Political, economic, and social philosophies all impact the way people’s values are shaped.
Our cultural base of reference—formed by our education, religion, or social structure—also
impacts business interactions in critical ways. As we study cultures, it is very important to
remember that all cultures are constantly evolving. When we say “cultural,” we don’t always
just mean people from different countries. Every group of people has its own unique culture—
that is, its own way of thinking, values, beliefs, and mind-sets.
How Cultural Differences Impact International Business Negotiations
Professionals err when thinking that, in today’s shrinking world, cultural differences are no
longer significant. It’s a common mistake to assume that people think alike just because they
dress alike; it’s also a mistake to assume that people think alike just because they are similar in
their word choices in a business setting. Even in today’s global world, there are wide cultural
differences, and these differences influence how people do business. Culture impacts many
things in business, including
The pace of business;
Business protocol—how to physically and verbally meet and interact;
Decision making and negotiating;
Managing employees and projects;
Propensity for risk taking; and
Marketing, sales, and distribution.
There are still many people around the world who think that business is just about core
business principles and making money. They assume that issues like culture don’t really matter.
These issues do matter—in many ways. Even though people are focused on the bottom line,
people do business with people they like, trust, and understand. Culture determines all of these
key issues.
When you’re dealing with people from another culture, you may find that their business
practices, communication, and management styles are different from those to which you are
accustomed. Understanding the culture of the people with whom you are dealing is important
to successful business interactions and to accomplishing business objectives.
Manners and customs refer to individual and collective traditional customs, fashion,
manners, and habits. It is a kind of behavioural pattern observed in a specific socio-cultural area
for a long time. Custom is formed from history, so it has a very strong social behavioural effect
on its members. Custom is the foundation and complementary part of social morality and law,
including national customs, holiday customs and traditional etiquette. Each country has its own
customs and etiquette, which are not easily changed.
Ways of Thinking: thinking patterns refer to forms of reasoning and approaches to problem
solution. Thinking patterns differ from culture to culture; a logical, reasonable argument in one
culture may be considered as illogical and un-demonstrated in other culture. Negotiators have
different ways of thinking, thus they have different thinking modes for negotiating.
To conduct business with people from other cultures, you must put aside preconceived
notions and strive to learn about the culture of your counterpart. In reality, understanding
cultural differences is important whether you are selling to ethnic markets in your own home
country or selling to new markets in different countries. Culture also affects you if you’re
sourcing from different countries, because culture impacts communications.
Your understanding of culture will affect your ability to enter a local market, develop and
maintain business relationships, negotiate successful deals, conduct sales, conduct marketing
and advertising campaigns, and engage in manufacturing and distribution. Too often, people
send the wrong signals or receive the wrong messages; as a result, people get tangled in the
cultural web.
It is critical to understand the history and politics of any country or region in which you
work or with which you intend to deal. It is important to remember that each person considers
his or her “sphere” or “world” the most important and that this attitude forms the basis of his
or her individual perspective. We often forget that cultures are shaped by decades and
centuries of experience and that ignoring cultural differences puts us at a disadvantage.
