Significance of Cross-cultural Negotiation Skills

But with the rapid phase of globalization; growth in Free Trade and the relaxation of Foreign-Direct-Investment policies of many of the previously closed economies, today's business executives are required to deal with counterparts from different countries on a regular basis. In such business relationships, a high level of cross-cultural negotiation skills becomes prerequisite for success. While many companies may attempt at setting up International Joint Ventures (IJV's) or enter in to strategic alliances and mergers, many such attempts do not progress further than the negotiation process, mainly due to the challenges in managing the cross-cultural communication process.While there are varying views of national culture and the degree of its impact on organisational behavior, there is much consensus that it embodies norms, values, artifacts and symbols, which results in diversity in communication and interaction process within a cross cultural setting. It is also a key factor in gaining an insight into how people behave in different countries, their preferences, attitudes, values and beliefs.
 While it is mostly the social and anthropological meaning referred to in culture that has implications for cross cultural business, other manifestations of culture in terms of how people dress, greet others and eat are all at the tip of the "cultural iceberg" which needs to be considered in understanding national cultures. It is also true that different histories shared by nations affect their national cultures and a good example is the frugality and long term orientation which are hallmarks of Japanese culture, stemming from their struggle to rebuild their nation after the World War II over a prolonged period of time.As national cultures carry a direct impact on organisational behavior, the business practices, business relationships and all other areas of organisational activities tend to be influenced by the differences in national cultures. Although some multinational companies may have implemented standardized organisational practices in their subsidiaries across the world, the acceptance and effectiveness of such implementations tend to be superficial and differences in national cultures tend to affect the core values of the people at a more fundamental level.
Thus the importance of understanding national cultures becomes critical if businesses are to understand how and why people from different cultures will behave differently affecting business dealings (Francesco & Gold, 1998). This understanding would be the foundation of gaining effective cross cultural negotiation skills that would facilitate success in establishing international mergers and strategic alliances. When the significance of cross cultural negotiation skills for business success is being considered, it is important to understand what actually entails cross cultural communication. "Cross cultural communication occurs when a person from one culture sends a message to a person from another culture" (Adler, 1991 cited in Weiss, 2003, page 185). To make this communication process effective the communicating party should have a clear knowledge of the cultural values and assumptions which relates to each other's national cultures.