Issues in International Business Negotiation - Iloka Benneth Chiemelie, Okafor Escalus

2.0 ISSUES IN INTERNATIONAL BUSINESS NEGOTIATION

Negotiation can be seen as a two ways (back-and-forth) communication process with the aim of achieving a consensus between two parties with some similar or different interest (Cascio, 1991). Negotiation is both a complex and emotional decision making process which involves numerous elements such as interest, opinion, legitimacy, alternatives, commitment, compromises, communication between two parties and relationships (Patton, 2005). Because negotiation involves flow of desires, agreements, wants, and opinions between two parties, it is clear to understand that its complexity has accompanying issues which will be discussed in the following paragraphs below.

2.1 CULTURE ISSUES IN INTERNATIONAL BUSINESS NEGOTIATION

Culture can be defined as the accumulation of shared meanings, rituals, beliefs, norms, and traditions which distinguish any given society from others (Soloman, 1996; Hofstede, 1980). Negotiation can be seen as a form of social interaction and naturally influenced by national culture (Brett, 2000). Culture is an issue in international business negotiation because, different culture have different ways of doing business such as just in time attitude of the US and Confucian ideology of the Chinese. These differences can influence business negotiation and possibly be a deciding factor on either the success of failure of the negotiation.

Causes of cultural issues in international business negotiation:Salacuse (1991, 1998), has been successful in identifying 10 factors that seem to be influenced by negotiator's culture in international negotiation. Such factors include:

1. Negotiating goals (contract vs relationship).
2. Attitudes to the negotiating process (win/win or win/lose).
3. Personal styles (formal vs informal).
4. Styles of communication (direct vs indirect).
5. Time sensitivity (high vs low).
6. Emotionalism (high vs low).
7. Agreement form (specific vs general).
8. Agreement building process (bottom up vs top down).
9. Negotiating team organization (one leader vs consensus).
10. Risk taking (high vs low).

For instance, the American's perception of negotiation is to arrive at a signed contract between parties involved, while Asians value negotiation as a process of building relationship between parties involved (Salacuse, 1991). On a similar note, Latin Americans display their emotions in a negotiation, but Asians hide their feelings (Salacuse, 1991). Culture impacts negotiation process mainly due to its effect on language and communication, and also through its effect on all aspects of negotiation process such as means, goals, and expectations.

Recommendations for controlling cultural issues in international business negotiations: Due to cultural influence on international business negotiation and the impact of internationalization on organisational growth, it can be argued that cultural effects on negotiation are a case that needs special attention. Just many other researchers, it is recommended that the best way to resolve this issue is by understanding and respecting each other's cultural values during negotiation in international businesses (Hoveyda, 2003; Beeman, 1986).

2.2 POLITICAL DIFFERENCE ISSUES IN INTERNATIONAL BUSINESS NEGOTIATION

The influence and interactions between governments and firms have been a long debated topic of discussion in management and economic research (Hillman et al., 1999; Shleifer and Vishny, 1994). Hillman (2005, p. 465) discovered, that despite reduced trade barriers through globalization, deregulation and privatization, government policies still play major roles on business are run  globally, through promulgated and enforced economic policies and regulations that directly change the competitive atmosphere a company is existing in (Mahon and Murray, 1981; Marsh, 1998;  Shaffer, 1995).

Causes of political difference issues in international business negotiation: What the above argument is trying to point is that difference in political factors of nations across the globe can influence the negotiation process in international business. For instance, while the Democratic system of government recognized the rights of individuals to own companies and business under their names (e.g. USA), the Socialist system of government is of the ideology that all industries where built by individuals or the government is a property of the government and the government can decided on whom gets the outputs (be it financial and resources) of these industries by virtue of legislative ruling in the country (e.g. Vietnam). This can be demonstrated in government subsidies, which is a common phenomenon in the global market place (Fisher, 2007; Schwartz and Clements, 1999).

Recommendations for controlling this issue: It is recommended that in other to reach an easy negotiation door, both parties should scrutinize each other's political system in other to eliminate possibilities of conflict in the future. Companies undergoing international negation can also adapt the policies and regulations of signed treaties between both countries (e.g. ASEAN, EU, ECOWAS etc.) this will eliminate any doubts and ensure a win-win strategy for both parties.

2.3 OPPORTUNISM AND UNETHICAL NEGOTIATION TACTICS ISSUES

Lewicki and Stark (1996) stated that effective negotiators arguably cannot be fully candid about their preferences and positions during negotiations; especially in international business where both parties are from different nations. Lewicki and Stark (1996) and Lewicki and Robinson (1998) went on to identify 5 types of unethical negotiation approaches as – inappropriate information gathering, information misrepresentation, competitive bargaining, false promises and attack on opponent's network.

Causes of unethical negotiation tactics: Al-Khatib et al. (2008) compare the negotiation ethics of US and Arab executives and found that opportunism had significant effect on the perception of all unethical negotiation tactics in US executives, while in the Arab executives; it had significant relationship with inappropriate information gathering, misrepresentation and false promises. Newstead et al. (1996) went on to support this argument by stating that cheaters in the negotiation system recognizes their faults and tries to blame it on the problem rather than themselves.

In a simples frame, this can be seen more like a parties tendencies to take advantage of other parties either by misrepresenting information to look bigger than its original concept or by attacking opponents from their weaknesses. This is a serious issue as mistakes in international business negotiation can result to lose of both financial and intellectual capital in their thousands; possible leak in the future on the truth can also result in conflicts between involved parties.

Recommendation for controlling this issue: it is recommended that negotiating parties should adapt ethical approach and selfless services meant at helping each other and ending with a benefit results for both parties in the present and future. This is essential in building and maintaining international business relationship.

2.4 ISSUES OF ECONOMIC DIFFERENCES IN INTERNATIONAL BUSINESS NEGOTIATION

In multi-national companies, many workforce decision situations can be characterized as mixed motive and many of these involve small economic groups (Brett, 1991). For instances, issues related to salary and wages, budgeting, alliances, purchasing, and strategic issues, where parties are non-identical in their individual preferences.

Causes of economic difference issues in international business negotiation: According to neo-classical theories of economic growth, there are tendencies for poor countries to increase their international trade options by converging their income to that of rich countries, thus reducing economic differences both in national and international businesses which will smoothen the business negotiation process.

Nevertheless, some endogenous growth models, stresses profits from international trade as being ambiguous. Grossman and Helpman (1991) identified the importance of international commerce in facilitating knowledge transfer and spill overs, and also considered numerous cases in which international trade can slow down economic growth such as out sourcing of intellectual capitals to rich countries.

Recommendations for controlling these issues: In international business negotiation, companies look into economic benefits that they will gain from their parties while negotiating business deals (Lewicki and Stark, 1996). These benefits can range from low production cost and low risk level to high profit generation. In other to solve these issues, it is recommended that an international economic treaty be adapted in international negotiation to offer both parties fair shares of both the involved risk and economic benefits from such negotiations. This will clear doubts from the atmosphere and encourage agreement reach rate.

2.5 ISSUES OF LEGAL DIFFERENCES IN INTERNATIONAL NEGOTIATION

Differences in legal system can affect the negotiation process as common ideologies across countries have proven that certain business related issues which are against the laws in some countries are accorded normal norms in other countries and the development of legal system can determine how serious a nation handles business illegalities such violations of copy right and patent right acts.

Causes of issues related to national difference in international negotiation: Demirguc-Kunt and Maksimovic (1999) discovered evidences to support the relationship between legal system and development of businesses in a country. Countries with civil law tradition seem to have developed financial markets and have a tendency to be bank-based system, while common law nations on the other hand tend to be more market-bases system with financially advanced markets.

For instance, a negotiation between companies from China and Saudi Arabia to establish tobacco or brewery (alcohol) plant in both countries could have stricter legal procedures and restriction in Saudi Arabia compared to their Chinese counterparts as both tobacco and alcohols are deemed unethical and against the Islamic commandment by the Kingdom of Saudi Arabia. Issues like this can influence the success of a negotiation process to a high degree or either positivity or negativity throughout the negotiation process.

Recommendation for controlling this issue: In order to resolve these issue, it is recommended that business should try to understand the does and don'ts of their specific country of interest they wish to invest it, as well as looking into the legal protections offered in these countries towards their business assets such as copyright and patent rights. This will ensure that both parties end up with a strategic agreement that offer business securities in countries involved.

CONCLUSION

Negotiation in generally can be influenced by numerous factors from parties negotiating, which can lead to either the failure or success of the whole negotiation process. This factor is made more complicated in the international scene because business operations differ amongst businesses and their places of origin. Thus, these factors were taken into consideration in this research paper to determine what and how they influence businesses processes. Some of the points highlighted where the effects of culture, government and law of any given country and corporation. Although the differences between organisations can result to unsuccessful negotiation process, numerous recommendations were also highlighted on ways to control the negativity associated with international business negotiation.

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