HOW DOES CULTURE INFLUENCE INTERNATIONAL BUSINESS NEGOTIATIONS ?

        Culture miscommunication is a very big issue for business that we should certainly be aware of. There is today a greater recognition among specialists that cultural differences are affecting all facets of international business. Some cultural mistakes were made by big companies such as Coca-Cola in the 20’s, when the Chinese characters that sounded like Coke stood for a completely vulgar meaning in Chinese.

      Furthermore, the effect of culture when negotiating in an international business context is very relevant. The language of negotiation, the need to study the culture of the parties involved, building trust, personal relationships and appropriate training for international managers should all be based on culture awareness.

        Many authors presented culture as a key issue for big success in international business such as (Hofstede, Trompenaars, etc.), they created business etiquettes for each country according to important cultural differences and attractive conditions of investment. China and India are the two most attractive emerging economies nowadays in terms of investment; however, it is not easy to invest in eastern countries where cultural differences are extreme. An international business should cope with political policies and legal practices, economic forces, geographical influences and cultural factors. However, could the influence of national culture be substantial enough on the operations of international companies to outweigh their global convergence?

        Culture, as Geert Hofstede (one relevant author for business and culture) defined it, is "the collective programming of the mind which distinguishes the members of one group or category of people from another" (Hofstede, 1991). Besides, a company's culture is related essentially to long-standing employees, company’s regulation and aims. Although, it is impossible to circumvent the dimensions of business culture developed by Hofstede, they actually determine the differences between countries and nations.

• Power distance : means how the power is distributed in the hierarchy of the company. 
• Uncertainty avoidance : is related to how social rules influence decisions during unexpected events. 
• Institutional collectivism : the degree to which leaders encourage collectivism in the company. 
• In-group collectivism : the degree to which employees feel integration in the society. 
• Assertiveness : is related to the domination of individuals in their relationships with others. 
• Gender egalitarianism : means how the two genders are in less inequality. 
• Future Orientation : is related to whether people plan for their future, in professional matters. 
• Performance orientation : how individuals are encouraged, rewarded for their performance and excellence.

         Hofstede focused his research mostly on culture dimensions and found later on that it could be reduced to five as follows:

• Power distance (high/low). 
• Uncertainty avoidance (high/low). 
• Individualism versus collectivism. 
• Masculine versus feminine. 
• Short-term versus long-term orientation.

    
       In theory, we can observe that these five culture dimensions must determine the differences in national culture, and thus the business must be adapted to this culture. To prove that culture is a key element in doing business, we will have to refer to a case study, and for this, we will choose China as a country reputed to be a civilisation-state country with a totally different culture from that of the West, which relates more to a nation-state type of countries.

      In the 1980’s, China’s business started to become internationalised after a long period of protectionism. Being given the opportunities of expansion enabled henceforth by the largeness of the Chinese market, therefore, western companies needed to understand the Chinese culture in order to deal with Chinese suppliers or to penetrate the market. Some of them failed because the differences in culture were very large which caused intercultural miscommunication.

     One should know that relationships in China are very important to succeed in business. The moral relationship in business is due to trust and confidence between the two parts, even if the contract is made, the “Guanxi” which means the network of relationships that can make transactions very easy to happen, is privileged in Chinese business culture, indeed, these relationships can turn on to be very close and very long, so that favours can be granted from both sides.

         Consequently, we can see that the importance of maintaining good relationships has its roots in Chinese society and therefore in business, the Guanxi can relate to more than customers only, it reaches also suppliers, local authorities, banks and tax offices. Due to this, a whole department of sales will have to be responsible to manage all these relationships and to update the links within ,the network continually, so that they will never be lost, whereas some other business relationships can be created. In other words, the network has to become bigger not smaller. Western companies should thus be aware of developing these special relationships to meet the expectations of Chinese firms.

        The notion of "Mianzi" is also very important, it copes with the dignity of individuals and not losing face, this is a very important characteristic of the Chinese culture as well, because direct criticism will create a conflict to the Chinese, and it is very harmful psychologically for them, so when once face is lost in any type of relationship in China, it means that this one is terminated. The need of harmony, commitment and a good understanding of each other is very praised in China. This comes all from Confucian principles in the old tradition of the Chinese society.

         If we look at the example of a Taiwanese company, developed by Helena Chiu and Gerhard A.Wuhrer, which wants to create a partnership with a Chinese company, it would be much more easier, as the channel structure would be direct and shorter, composed from the main company and the end-user, the transaction will be carried out between those two parts, because the language barrier is inexistent, the closeness of the countries and the similar culture that gathers them makes the company in a very good position to manage the business properly. However, when this same company deals with a European country, in a context of embracing globalisation, the distribution will involve one or two middlemen, it could be an agent, a distributor or even an interpreter, so the production doesn’t reach the end-user directly, it has to be intermediated because those people have better communication skills and the Taiwanese company will have to use them to create a partnership with Western countries. We can register an organisational change due to culture. Schein (2004) listed some mechanisms for shaping and reinforcing the culture :

1. The design and structure of the organisation. 
2. The systems and procedures used. 
3. The rites and rituals. 
4. The design and lay-out of the organisation physical space. 
5. Stories of important events and people. 
6. Formal statements of the organisational philosophy.

       Furthermore, cultural dimensions affect also the company as a whole; it has to be adapted to the national culture criteria. In a level of managers, Nancy Adler (2002) stated by her research that cultural differences among managers working for a multinational company are significantly greater than cultural differences among managers working in their own native country. The degree of adaptation to the national culture is determined by the strength of the company’s culture and its effects on the market, whether it is strong and exportable enough or not.

         On the one hand, in the study of Van Oudenhoven and De Boer (1995), one sees that when the corporate culture and the national culture of two companies are similar, the cooperation would be easier, because it is obviously a positive relationship and the chances to fail in keeping this relationship are very small. On the other hand, the chances to fail when two partners are from different cultures are bigger. In fact, we need to have a larger understanding of cross-cultural behaviour.

      One concludes that the influence is greater than expected and we could never neglect its effects at every level of a particular business in an international environment. Cultural miscommunication is very costly; one can imagine it in a context of negotiations and all the consequences that may face the company in the future due to it. So, many multinational companies (MNCs) do understand the importance of cross-cultural diversity, in a sense that doing business must adapt to these very crucial variables related to culture. Eventually, every international business establishing itself in a country with cultural differences must be aware and adapt its operation to the national culture in order to succeed.