Discuss common traits which can influence the negotiation process in emerging markets.

Question

What will be an ideal response?

Answer 1

Collectivism – Individualism
Negotiation outcomes are assessed differently depending on the collectivist or individualist values within the culture. For instance in China or Indonesia group decision making is the norm and decisions are made through a process of building consensus. Pakistan, Peru, Mexico, Philippines, and Turkey also emphasize reaching a group consensus in their decision-making process (Moore and Woodrow, 2010). In collective cultures, indirect confrontation can be a better route in resolving conflicts, as such cultures often emphasize social harmony. Harmony can be damaged by conflicts, and direct confrontation can disturb harmony by leading to aggressive communications and implying blame. With indirect confrontation, negotiators can avoid blaming and disrespecting the other side while resolving issues (Brett and Gelfand, 2005). Instead of direct confrontation, negotiators can seek help from third parties who have relationships with both sides in order to overcome cultural gaps or express their concerns privately. They need to be patient and focus on expressing the benefits of the relation throughout the negotiation process and handle the disputes progressively. Cultures emphasizing harmony, often prioritize ‘saving face’ and preserving everyone’s honour. To that end, negotiators should refrain from openly criticizing and disagreeing with the other side throughout the business relationship (Katz, 2006).

Business environment in EMs is strongly affected by relationships (Constanza, 2009, Black and Morrison, 2010). In parallel, foreign firms trying to do business in these markets need to concentrate on building relationships which may translate into a longer term commitment as building relations takes time and requires frequent communication with prospective business partners (USCommerce, 2011a, UKTI, 2011). Then, negotiators need to account for the time and the effort necessary to build a relationship and to gain trust. In this effect, seeking help of outside contacts who can make the necessary introductions to initiate relationships may be helpful. In most EMs, changing members of the negotiation teams during the negotiation process may be damaging when the relationships are concerned (Katz, 2006).

Hierarchy
A major difference among many EMs and Western cultures is the emphasis on hierarchy. In most cases, EMs tend to be more hierarchical and bureaucratic. In terms of Hofstede’s cultural dimensions, this can be interpreted as having higher power-distance scores. Decision making in hierarchical structures is often by top management and subordinates need to consult with multiple authorities throughout the negotiation process. In bureaucratic societies, such as Russia or India continuous exchanges and approvals are often needed to reach decisions. In contrast, in individualistic societies, decisions are made by autonomous individuals or an autonomous group, so gaining consensus through the hierarchy or gaining the approval of the sole decision makers at the top is not necessary (Moore and Woodrow, 2010). When faced with hierarchical structures, negotiators need to consider the process of reaching consensus through the levels of the hierarchy or obtaining approvals from external influences. Foreign negotiators need to account for the time necessary for the approval process and also consider meeting the needs of each stakeholder by providing comprehensive information. Another challenge is identifying decision makers and contacting them through the negotiation process, or trying to reach a mutual agreement even before the negotiations. In hierarchical societies, negotiators also need to consider the necessity of involving senior executives in their organization, at least in the initial stages of the negotiation process in order to show respect and commitment (Katz, 2006).

Perception of time
Many EMs have a polychromic perception of time; thereby schedules may not be as rigid as Western nations. However, foreign negotiators need to take into account that they are expected to be on time for meetings and schedule their meeting ahead of time in these markets. Still, due to different perceptions of time, the meeting may not start or end in time, or follow an itinerary. Another aspect of a polychromic perception of time which influences the negotiations process is the negotiation style. Cultures with a polychromic perception do not single out and discuss selected topics in order, but rather issues are discussed simultaneously during the negotiations process (Morrison and Conaway, 2006).