Culture and negotiation

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Business negotiation process can be divided into three groups of variables that are presented in the Figure 1: the background factors, the process and the atmosphere (Ghauri 1996, 5).

Figure 1: The process of business negotiations (Modified from the figure of Ghauri 1996, 8)

Background factors influence the process of negotiation and the atmosphere. They include objectives that are the final stages parties desire to achieve and environment which means political, social and structural factors relevant to both parties. Also the market positions (e.g. monopolistic power) parties posses influence the background factors. As well as the third parties, and the negotiators themselves. Third parties are the ones who are affected by the negotiation or can influence it at some level, for example governments, agents, consultants and subcontractors. Negotiators influence the background factors with their experiences, negotiating skills and personality. (Ghauri 1996, 5-6.)

Atmosphere is a fundamental part of negotiation process. It is characterised as the perceived “milieu” around the interaction process, how the parties see each other’s behaviour and the properties of the process. In different processes there are different characteristics of atmosphere that dominate. Atmosphere can be conflicting or co-operative depending whether the parties have common or conflicting interests. The power versus dependence in the relationship means the property of the relationship, i.e. how power is divided between the parties. Also the expectations parties have influence the atmosphere. The expectations can be long-term (values and possibilities of future business) or short-term (prospects for the present deal). (Ghauri 1996, 6-7.)

The process phase of negotiation is divided into three stages which all are influenced by strategic and cultural dimensions. The first stage in order is the pre-negotiation stage. In this step parties make the first contact, gather information on matters relevant to the process, define their own interests and prepare the negotiation scheme. The second stage is the face-to-face negotiation. Parties access to this phase if they feel that the negotiation is the best alternative to find a solution to a joint problem. They evaluate alternatives present, select the ones compatibles with their own expectation and agree on all terms. The last stage is the post-negotiation, which includes writing, signing and implementing the contract. (Ghauri 1996, 10-11.)

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3. BUSINESS NEGOTIATIONS IN INTERNATIONAL SETTINGS

1. International business negotiations

With the globalization of business, the question of negotiating in international settings has received a lot of attention. When negotiating internationally, there are various distances between parties that influence the cost of the process. The clearest one of the distances is physical distance, but also there are economic, educational and cultural distances present. (Usunier 1996, 93.)

Parties in international negotiations come from different countries and have different cultural backgrounds. They may have different patterns of thinking, feeling and acting. (Hofstede – Usunier 1996, 119.) Due to the differences on parties’ cultures, the development of the negotiation process, and how parties understand the relationship are crucial (Ghauri 1996, 4). There are three different levels of culture that influence the behaviour of negotiators:

• national level (cultural differences between countries)
• organizational level (cultural differences between different types of organisations depending on their home country and industry)
• personal level (cultural differences between individuals due to different countries, organizations and especially due to their professional and regional backgrounds, sex and age) (Ghauri 1996, 4; Hofstede – Usunier 1996, 119-120).

The control and decision-making structure vary from culture to another, as well as the reason for trusting or distrusting the other party for his/her behaviour. Also tolerance of ambiguity during a negotiation process varies culturally. (Hofstede – Usunier 1996, 125.) In order to have success in international business negotiation, it is essential that negotiators involved understand the other party’s culture and, if needed, are able to adapt their negotiation strategy to be consistent with the other party’s cultural system (Ghauri 1996, 4; Onkvisit – Shaw 1993, 667). Cultural differences demand negotiators with special skills for communicating the desired information and emotions to the other party by spoken word, written word and non-verbal behaviour (Hofstede – Usunier 1996, 126). The more distant the parties’ cultures are from each other, the more difficult it is to adjust to it and communicate within it. Also to have culturally appropriate and acceptable purpose for negotiation is difficult in intercultural settings. (McCall – Warrington 1984, 34.) Parties should share some joint views of the world because when they are partners in the future, it is difficult for them to solve problems together without common “mental schemes” (Usunier 1996, 109).

In order to master the foreign, and frequently very different, cultural environment, businesspersons must prepare themselves ahead of time (Ferraro 1990, 2). Cultural differences demand also specific skills for preparing, planning and arranging negotiations (Hofstede – Usunier 1996, 126). When preparing for international negotiations there are many things that should be considered or done depending on the situation. The parties should identify contents of the deal, create alternatives, put themselves in the shoes of the other party, think the appropriateness of the message, build up relative power and choose the persons who will handle the negotiation. Careful planning before the negotiation takes place can lead to a great benefit to both parties and to their future relationship. (Ghauri 1986, 80-81.)

The idea that culture is learned has many important meanings for the conduct of international business negotiations. First of all, such an understanding can lead to a greater tolerance for cultural differences. Secondly, it reminds people that if they have learnt their own culture through the process of learning, it is possible to learn to operate in other cultures as well, even though it is more difficult. (Ferraro 1990, 21-23.)

People from different cultures have different values, different attitudes and different experience. They also have different strengths and different weaknesses. A good negotiator should become aware of his/her own strengths and the strengths of his/her particular culture and find a negotiation strategy that copes with those strengths. According to Gesteland (1999) there are two basic rules concerning the international negotiation process: the seller should adapt the buyer and the visitor should observe the local customs. (Gesteland 1999, 16, 61).

It has been stated that the results of intercultural negotiation are less favourable than the ones in intra-cultural (within a country) settings (Usunier 1996, 106). But also that when negotiators are skilled and well trained in working within different cultures, they can turn their knowledge into an asset and that way achieve better results (Hofstede – Usunier 1996, 126). Whether the company has success or it fails abroad, depends on how effectively its’ employees can exercise their skills in a new location. Less favourable results usually derive from an inability to understand and adapt to foreign ways of thinking and acting rather than from the lack of technical or professional skills. (Ferraro 1990, 7.) Negotiators should be conscious that people from different cultures operate different ways. Some writers point out that negotiators should not imitate other cultures, adapt or change themselves but to be just what they really are (Gesteland 1999, 61; Ghauri 1986, 81). Being themselves also means to be aware of local cultural characteristics and generally accept and honour local customs, habits and traditions (Gesteland 1999, 16; Ghauri 1986, 81). On the other hand, it has been stated that negotiators in the real-life situations adapt their behaviours in cross-cultural interactions (Adler – Graham 1989, 530).

The model presented in the Figure 1 applies also in international business settings. Environmental differences, especially in view of the culture and business traditions prevailing in different countries, are important things to take into account. It might be difficult to understand and adjust to each other’s culture or traditions, but it is very important to be aware of these differences. Post-negotiation stage also presents a crucial problem in the international negotiation process: which law should be chosen to regulate the contract and arbitration? This requires an entity like the International Chamber of Commerce to act as an arbitrator in all international deals. (Ghauri 1986, 73-82.)

As stated in this chapter, the cultural knowledge has a huge importance in international business negotiations and relationships. In the following subchapter we are going to talk more about those cultural characteristics that influence business negotiations between parties from different countries.

2. Cultural characteristics that influence business negotiations

As already stated, various cultures make up the character of an individual. All the cultures (national, regional, industrial, organisational and personal) have subcultures and even subsubcultures (Kapoor et al. 1991, 21, 25, 83). The fundamental differences between cultures have an impact on firm’s business success throughout the global marketplace (Gesteland 1999, 19). However, one should start preparing for international negotiations by learning one’s own cultural values and how much they differ from those of the other party (Hofstede – Usunier 1996, 126). What are the components of a culture that should be taken into account in international business situations? There is no sole opinion. Different writers have different points of view and different preferences. In this chapter we will observe some different views found in the literature.

Culture influences the way people perceive and behave in the marketplace. When talking about international business environment, culture is usually observed at a national level. (Kalé 1996, 22.) In intercultural encounter, negotiators should place more importance on the “soft facts”, i.e. the quality of human and social relations, than on the “hard facts”, i.e. legal and business matters (Usunier 1996, 93). It might be needed to adapt some positions of organisation to cope with local needs (Kapoor et al. 1991, 83). But also in order to be trusted by one’s own side, it is essential to share the national culture and values of the country one represents (Hofstede – Usunier 1996, 120). It is possible to notice that all cultures are logical and coherent systems and to make a conclusion that no culture is better or worse than other, only different (Ferraro 1990, 39).

The most important factors affecting international business negotiations according to Ghauri (1996) are time, individual vs. collective behaviour, pattern of communication and emphasis on personal relations. He especially mentions the importance of different attitudes towards personal relations in negotiations. According to him, some cultures are more concerned with the issue of which they are negotiating about and the future of the relationship between the organisations than with the individuals who are representing these firms. Other cultures are found to place more importance to the personality of the negotiator than to the organisation he/she is representing or to the issue at hand. (Ghauri 1996, 11-13.)

Also Usunier (1996) states that different patterns of relationships (individualism vs. collectivism and patronage relationships) affect international business negotiations. They affect the way people interact with each other, the way they mix human relationships and business matters and what is their decision-making process like. However, the level of formality used when communicating public and private issues should be taken into account in all types of negotiations. Usunier divides the cultural factors into two groups: the situational aspects of the negotiation and the characteristics of the negotiators. According to him, other important characteristics of culture that influence negotiations, besides relationships, are language and communication, institutional and legal systems, value systems, time orientations and mindsets. Mindsets are the ways people address issues, collect relevant information and estimate the truthfulness. He states that culture has an indirect influence on the outcome of negotiations. (Usunier 1996, 95-98.)

Kapoor et al. (1991) indicate five cultural factors that influence negotiation process. The first one is culture and values that prevail in the host-country. In order to be able to deal with cultural differences, it is important to be familiar with the culture and business environment. The second factor is local laws and regulations from which it is vital to get accurate information. The third factor is the things that precede the negotiation. The knowledge of precedents helps a negotiator to analyse host-country and approve or disapprove similar proposals. This requires knowledge of the local environment. The fourth one is local power relationships because it is necessary to know where the power lies; who makes the most important decisions and who has a power to influence those decisions made. The last factor is local media. Some negotiations will receive public attention and be reported by local radio, newspaper, or television. It is important to find out what is said in those media and how media influences local people. (Kapoor et al. 1991, 83-84.)

When thinking how people from different cultures act in a negotiation situation, one should bear in mind the possibility that the information about behaviour or negotiation strategies might be collected during negotiations that take place within a country. Some characteristics may not occur when people negotiate with partners from other countries. (Usunier 1996, 97.) It is stated that negotiators in international encounters have developed a professional negotiation culture, which is more superficial than their national cultures. It makes the negotiation process easier because it consists more commonly understood symbols and commonly learned habits than shared values. (Hofstede – Usunier 1996, 120.)

As seen before, many authors stated that communication is one of the key components of culture that influences international marketing negotiations (Usunier 1996, 112). This is why in the next chapter we are going to describe communication in international negotiation more exactly.

3. Communication in international business negotiations

When doing business in international settings, it is important to have cultural knowledge and skills in intercultural communication (Usunier 1996, 93). How people communicate and how their world-views and attitudes are influenced by language, affects international business negotiations (Usunier 1996, 96). When negotiating in a foreign language, the knowledge of that language is not enough. One also has to know how the other party understands the negotiation process (what it includes) and which kind of behaviours can direct and influence the process. Also the paralanguage (the tone of voice) used is easily misinterpreted. For example, it is not rare that one thinks a foreigner is being angry, upset or embarrassed because of the tone of his voice and responds accordingly. (McCall – Warrington 1984, 42-46.)

In many cases when negotiation process takes place between parties from two different countries, they do not have a sufficient command of the language of the other party. In these kind of situations, the decision whether to use the opponent’s language at all, should be considered carefully. However, the efforts to use the other party’s language, even though not perfectly, are usually well recived. (ibid., 43-45.) If parties decide to use translators, the communication gets more imprecise and causes more problems for both parties (McCall – Warrington 1984, 43; Schuster – Copeland 1996, 132). Translators add their own interpretations to the process, and that way makes it more comlicated (Schuster – copeland 1996, 132). It is also possible that within a single negotiation team, more than one native language is spoken. In this kind of situation team communication can become even more demanding and in the worst case, key phrases can be totally misunderstood during back-and-forth translations. (Kapoor et al. 1991, 61.)

In successful negotiation it is important to be aware of the whole process, to be able to understand and use influencing behaviours and to have empathy for the opposing side’s culture. Language is a tool for all these three matters. Every spoken language have to cope with the objectives resulted from them and be supported by its own non-verbal gestures and expressions. (McCall – Warrington 1984, 65.) When parties in negotiation do not share the same culture, the communication process, which takes place between them is more demanding compared to one within a single culture. The understanding of a spoken language can be even more difficult because people frequently speak several different languages or different forms of the same language depending on the social situation (formality between speakers, relative status, sex, age). (Ferraro 1990, 59; Onkvisit – Shaw 1993, 257; Schuster – Copeland 1996, 132.) If individuals do not share the same codes used in communication, this can create problems also for establishing credibility and trust (Usunier 1996, 99). That is why specifying and understanding cultural differences is vital in order have success in intercultural communication (Schuster – Copeland 1996, 33).

In cross-cultural situation when people from different speech communities meet, non-verbal messages are very heavily relied on. Non-verbal messages are very easily over-generalised (Ferraro 1990, 68-70). Misinterpretation can lead to hostility in parties’ relationship (McCall – Warrington 1984, 51). An effective communication is essential for negotiators to operate efficiently and to meet their objectives and especially when they develope and nurture their relationships (Ferraro 1990, 45; Kapoor et al. 1991, 60). Business activities always take place between individuals, no matter of industry or country. The success in business life depends on whether the individuals have an ability to connect with one another, trust one other, understand one other and to develop common goals with one another. (Schuster – Copeland 1996, 131.)

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4. FINNISH-AMERICAN NEGOTIATION

1. Hofstede´s four-dimensional model

Hofstede’s model includes many of the most important cultural characteristics that influence the negotiation situation (see chapter 3.2). Hofstede’s four-dimensional model has been considered a significant means of describing cultural differences between nations because it is based on an empirical research and therefore offers the advantage of quantifiably. Hofstede’s model combines national, economic, and political indicators. (Kalé 1996, 22.) Since Hofstede invented his model, it has been widely used in order to determine organisational structure and managerial practices as well as to obtain guidance for understanding differences in the “collective programming of people”. (Murphy 1999.) The four dimensions are based on statistical aggregates and they can only provide hints on how individuals behave. They do not prescribe exactly what we should expect when we interact with individuals from different countries (Jackson 1995, 2.)

As mentioned in the chapter 3.1 Hofstede’s model is based on values. Values are one part of the culture and affect significantly the way people behave and act. Values and characteristics in Finland are for example putting a lot of value on work, diligence, stamina, managing well, honesty, trustworthiness, modesty, unsociability, shyness and silence. Finland is also considered to be located in periphery and this gives the Finns to some extent a reputation of yokels. (Salminen – Poutanen 1996, 91.)

1. Power distance

Power distance is “the extent to which the less powerful members of institutions and organisations within a country expect and accept that power is distributed unequally” (Hofstede 1991, 28). This means that the level of inequality lies behind the followers as much as the leaders (Hofstede – Usunier 1996, 121). People have unequal physical and intellectual capabilities. Some societies allow these inequalities to grow into inequalities in power and wealth. These kinds of societies are characterised by a large power distance. Those societies characterised by a small power distance do not emphasise such inequalities. They aim for maintaining a relative equity in the distribution of power, status, and wealth. (Kalé 1996, 23.) In all societies inequality is present, but in some societies more strongly than in others (Hofstede – Usunier 1996, 121). Power distance between a boss and a subordinate is the difference between the extent to which the boss determines the behaviour of his/her subordinate and the extent to which the subordinate determines the behaviour of his/her boss (Hofstede 1980, 72). Power distance is a continuum in which countries are not just divided between “high” and “low”, but they can be anywhere in the middle. (Hofstede 1980, 82, 91, 103.)

Hofstede (1980) assumes that the larger the power distance, the more centralised is the control and decision-making structure. In the larger power distance countries, negotiations have to be concluded and accepted by the top authority. In these cultures, employees are seen afraid of disagreeing with their bosses as well as approaching and contradicting them. Bosses are seen as autocratic or paternalistic. Employees are dependent on their bosses. (ibid. 92-94.)

Regarding power distance and equality in the Nordic countries as well as in the USA the level of power distance can be said to be low. Comparing Finland with the USA it can be noted that the Finnish power distance index is lower than in the USA. (See table 1 in appendix). However the difference is not significant. Low power distance usually means that everybody has the same rights and privileges. In general the society also takes care of the weak ones and there is no clear authority. Values like democracy and equality are emphasized in society as well as in working life. However, these issues are also affected by masculinity. Therefore the caring of the less-fortunate is in the more masculine USA far from what it is in the Nordic countries. (Salminen – Poutanen 1996, 15-16.)

2. Individualism vs. collectivism

This dimension describes “the relationship between an individual and his/her fellow individuals, the collectivity which prevails in society” (Kalé 1996, 23). In other words, it describes the degree to which the individuals are integrated into groups and reflects the ways in which people live and work together (Hofstede – Usunier 1996, 121; McCall – Warrington 1984). One extreme includes societies, which have very loose ties between individuals, and everyone is expected to look after their own self-interest. The other extreme includes low individualism societies. These societies have very strong ties between individuals that form the in-group. (Kalé 1996, 23.) In international business negotiations in order to be able to formulate arguments and presentations, it is important to know whether the opposite party is collectivist or individualist, i.e. whether it is looking for a collective solution or an individual benefit (Ghauri 1996, 12).

When considering collectivism and individualism in Finland and in the USA it can be stated that both of these countries value more individualism, in which identity is based on individual rather than on society. It is typical to think in I –form in these countries. (Salminen – Poutanen 1996, 17.) However as can be seen from the table 1 in appendix the USA ranks higher in individualism than Finland.

As Finland and USA are both individualistic cultures they are also task oriented. Time is very relevant in task oriented cultures. The time concept in the U.S. is rational, individualistic, masculine and short-termed. This means that efficiency and work results are valued more than relationships. In Finland time is perceived somewhat in the same way as in the USA. Small talk is considered to be waste of time in Finland. As a representative of a culture with a monochronic time concept the work is done conscientiously form the beginning until the end. Decisions are made in small circles and delegated forward. The Finns do not communicate much and are not relationship oriented. The Finns concentrate more on reports, computer data bases and notes than on relationships. (Salminen – Poutanen 1996, 23, 31, 74, 100.)

3. Masculinity vs. femininity

Sex roles between cultures vary a lot. The fourth dimension has to do with “the extent to which societies hold values traditionally regarded as predominantly masculine or feminine”. A masculinity index describes how far people tend to adopt goals more popular among men or women. (McCall – Warrington 1984, 83.) Masculine goals include assertiveness, respect for the super-achiever, and the acquisition of money and material possessions. Feminine goals are characterised by nurturing, concern for the environment, and championing the weaker. (Hofstede – Usunier 1996, 122; Kalé 1996, 23.) Higher the score in this index, greater the difference between men and women in the same jobs (McCall – Warrington 1984, 83).

Finland is characterised as a low-masculinity culture (see table 1 in appendix). All the Nordic countries are feminine but Finland is the most masculine country within this region. Feminine cultures emphasize solidarity and modesty. In addition there is little competition. (Salminen – Poutanen 1996, 19.)

This means Finnish do not support ego-boosting behaviour and have sympathy for weaker. Negotiations between feminine cultures are easier than the ones between masculine cultures. (Hofstede – Usunier 1996, 126.) In these cultures more women hold more qualified and better paid jobs (Hofstede 1980). Feminine cultures have closer relationship with managers and they prefer working in a friendly atmosphere. They also find employment security important. These kinds of cultures prefer shorter working hours to more salary and think that companies should not have affection on the private lives. (Hofstede 1980, 188-198.)

In comparison in the U.S. money makes the world go around. Often success and at the same time a person’s value is measured in money only. A masculine culture emphasizes hard values like achieving, accomplishing and competing. (Salminen – Poutanen 1996, 19.) Of the Hofstede’s four dimensions this is the one with the biggest difference between USA and Finland. This can make the negotiation situation more challenging.  

4. Uncertainty avoidance (UAI)

Uncertainty avoidance means a lack of tolerance for ambiguity and the need for formal rules (Kalé 1996, 22). It indicates “the extent to which certain culture programs its members to feel either uncomfortable or comfortable in unstructured, new, unknown and surprising situations” (Hofstede – Usunier 1996, 122). The two extremes of this dimension are weak and strong uncertainty avoidance societies (Kalé 1996, 22-23).

Uncertainty avoiding people have higher job stress and greater generation gap. In the higher level positions the average age is higher. They think that managers should be selected on the basis of seniority and that managers should be experts on the field they manage. (Hofstede 1980, 132-140).

In the uncertainty avoidance Finland takes place more or less in the middle of the continuum. But USA locates even lower. (See table 1 in appendix).

Low uncertainty avoidance countries do not feel threatened by ambiguity and uncertainty and they do not feel a need to control environment, events and situations (Kalé 1996, 23). In the negotiation situation, the Finns prefer higher structured, ritualistic procedures than the Americans. The Finns worry more about the future. (Hofstede 1980, 132-133.)  

2. Communication styles in the USA and Finland

Even though the differences between the American and Finnish cultures were not found to be that different according to Hofstede’s model, there seems to be bigger differences in the communication ways of these two countries. In this chapter some general main points of the American and Finnish communication ways in negotiations are introduced without making a clear distinction between verbal and non-verbal communication.

What comes to conversation topics in negotiation situations, in comparison with many other countries the Finns draw clearly a line between work and private life. At the working place, in negotiations and in meetings the Finns do not talk about their private life very openly. In conversations the Finns are work oriented and small talk (if there is any) does not include private life. In working life the Finns prefer to do the work individually. (Salminen – Poutanen 1996, 100.)

Finland and the Finnish culture are often characterized as being in the interface of the West and East. This statement is based on our geographic location and on our history. In communication the Finns have got more influence from the Eastern high context style that values silence. Also modesty that is connected to Lutheranism as well represents the Eastern influence. Part of the Finnish modesty is also the lack of expressions and gestures. Whereas individuality and need for privacy are characteristics that have come form the West. (Salminen – Poutanen 1996, 96, 99.) High context, also known as Eastern style, is based on indirect expressions. Listening, how things are said, who says and what is behind words are considered important. Whereas low context style is also said to be Western style that uses straight expressions, values speaking and silence is perceived as negative. (Lewis 1992, 70.) American style is an example of the Western low context (Salminen – Poutanen 1996, 32, 70).

In the West it is sometimes hard to understand the Finnish communication style and thinking. For example while talking the Finns take long breaks in between that are hard to interpret for people from other cultures. This characteristic is affected by what is considered to be polite and what not in a culture. (Salminen, Poutanen 1996, 98.) The Western style leaves less time for the Finns to react. The Finn might feel not to get a chance to speak because the other one is constantly speaking. Finnish politeness means leaving the other in peace. In Western countries silence means an existence of a problem. Silence is interpreted as arrogance, rudeness, impoliteness or even stupidity. The Finns are sometimes irritated by the American communication style which is based on questions, remarks and compliments. (Salminen, Poutanen 1996, 70-73.)

American businessmen have a reputation of being the toughest ones in the world but in many ways it is easy to get along with them because their business philosophy is simple. Their goal is to make as much money as possible in the shortest possible time. Hard work and speed, opportunism and use of power characterise their means to accomplish their goals. Decisions have nothing to do with emotions and that is why Americans are frequently described as ruthless. (Lewis 1992, 124.) Finns have good chances to succeed with Americans. The Finns have a reputation of being straightforward leaders among ”open and sincere” Americans who are irritated by the Eastern ”pettifoggers”. (Lewis 1992, 125.)

American communication ways in negotiations can be described with the following attributes:

• Individualism (negotiators make decisions independently, usually no group decisions)
• informality
• seem naive (e.g. speaks only English)
• use of humour
• show all the cards at once in start
• take chances but make a good plan in advance
• time is money
• want to make a deal at once and settle the details later on
• do not like silence
• lack of patience
• opportunism
• persistence
• rudeness, think that the American way is the best way
• ignorance of other cultures. (Lewis 1992, 125-128.)

The calm and pragmatic Finn manages well with these characteristics. The Finn is also familiar with informality, calling by the first name, humour, persistence, rudeness, technical competence, mutual admissions and with consistency to sticking what has been agreed. The Finn wants to save time as well and avoid complex patterns. But the Finn must be aware of the American way to follow strictly what has been written down, letter by letter. They will sue if the agreement is not followed and the American law system is rather different. However the Americans value the persistence of the Finns but a part of their game is to irritate and threaten with power. The American friendliness means nothing and they forget your name the day after the deal has been made. For the Finns it is easy to get inside the American culture because there is so much information available and therefore have good knowledge as an advantage in negotiations. Americans think that the Finns are cunning, inert and hard to figure out. (Lewis 1992, 128.)

The above mentioned points are good to remember when negotiations between Americans and Finns take place in order to avoid misunderstandings and misinterpretations. This is of course only guiding information because communication style is also dependent on a sub culture, age, generation, domicile, education and social position (Salminen – Poutanen 1996, 74).

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5. SUMMARY

The purpose of this study was to describe business negotiations in intercultural settings. We decided to do this by first concentrating on the definitions of culture and negotiation and then concentrating on the characteristics of culture that influence international negotiations. Afterwards we took Finnish and American cultures as an example.

The purpose of the chapter 2 was to define what is culture and negotiation. The most important points of chapter 2 were that culture can be concluded as a phenomenon that has an effect on everything. It can be defined in many ways. Culture is learned, not genetically inherited. Also an important part was the definition of culture by Hofstede: “Culture is the collective programming of the mind which distinguishes the members of one human group from another”. After describing culture, we concentrated on communication in general. The two different elements of communication, verbal and non-verbal communication were specified. Spoken language was stated as a very important tool when communicating but in order to understand the message totally, the understanding of non-verbal communication, i.e. gestures, expressions, is even more important part. Important about negotiations is that it is a very common tool used in many different situations, as well as in business world. Parties negotiate voluntarily and their aim is to achieve benefits they could not get any other way. We described the whole process of business negotiation.

As culture plays such a huge role in international business negotiations, the purpose of the chapter 3 was to present some different views on what kind of cultural traits affect business negotiations. In this part we presented different points of view of the cultural aspects that influence international business negotiation. Especially the views of Ghauri, Usunier, Kapoor et al. and Hofstede were presented. In the communication part, the most important point stated was that it is an essential part when creating and maintaining relationships. When parties from different countries and cultures negotiate, the understanding of other party’s culture is a crucial element in order to have success. Also some special skills for communication are necessary. It might be needed to adapt one’s behaviour but most of all be aware of one’s own culture and understand how it differs from the opposite’s culture.

Our purpose of the fourth chapter was to study some general differences between Finnish and American ways of negotiate. We used Hofstede´s cultural dimensions as a framework for comparison. There are not big differences between these two cultures according to Hofstede´s results. The biggest difference was found in the dimension of masculinity versus femininity. Hofstede´s framework has been criticized on both empirical and theoretical grounds. For example it has been conducted only once and information is based on only one company. (Weber et al. 1996, 1219.) Even though, the values behind these two cultures are quite similar, there are huge differences in communication customs between Finnish and American culture. For example, Finnish people value silence while the Americans perceive it negatively. What makes it easier for these two cultures to accomplish their common goals, is that they both have similar time concept, and are both task-oriented, for both of them time is money and results are pursued effectively. Both cultures also put more emphasis on individual than on society. The Finns have the advantage of knowing the American culture better than Americans know Finnish culture.

Finally, we want to make a conclusion: International companies should pay more attention to the running of international business negotiations and achieving knowledge of the other party’s culture. However, also knowing one’s own culture is very important. Business managers should never trust the results of different research without a doubt. Different studies are only suggestive and the best research is always one’s own experience. That can be achieved only in a negotiation table with foreigners.

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APPENDICES

Appendix 1 Scores of Hofstede´s research

Table 1: Scores on four dimensions for 50 countries and 3 regions (rank numbers: 1=lowest; 53 = highest) (based on Hofstede – Usunier 1996, 123.)

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