Cross Cultural Business Negotiations (United States and Japan)

Abstract
Understanding Cultures and acquiring skills necessary to make a cross cultural business negotiation a successful and pleasant experience for both parties involved requires much more than just the overview of the culture and it becomes hard because of the complexity of the culture to grab the entire core of a foreign culture without investing enough time and effort into it, however initial understanding of the concepts can be a good start. General perception is that American business men or managers at times feel out of their comfort zone when negotiating with their Japanese counterpart because of the behaviours demonstrated by Japanese which are, just like any other culture, are simply based on their assumptions , beliefs, norms and customs which are unfamiliar to other party.

Understanding the cross cultural aspects are highly beneficial for either of the parties involved and can highly facilitate communication by decreasing the chance of any possible misunderstanding.

Either Americans or Japanese both have tendency to bring their own cultural background with them while negotiating which of course affects the behaviours and ultimately the end result.

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American and Japanese cultures hardly have any similarities so clashes caused by cultural differences are inevitable for example what may be considered acceptable by the standards of one party might not be acceptable by the standards of other. This makes understanding the cultural issues and behaviours in depth more important especially for Americans if they plan to negotiate with Japanese because Japanese might not give any direct clue about where the negotiation is heading as Americans expect from other American managers during business negotiations.

In this paper many cross cultural areas based on different models are discussed which helped us to identify the similarities and differences between these cultures, understanding of these similarities and differences can help managers to formulate right strategies to achieve maximum output from the negotiation process and make cross cultural interactions and negotiations a pleasant experience for both parties involved.

Cross Cultural Business Negotiations (United States and Japan) In today’s global world, businesses are continuously expanding all over the world. For the business world, there are no boundaries or borders. Companies are always moving to new places and finding new business opportunities, new business partners. And in this search, they are often expanding their business across countries. Although, companies are adopting an international approach and partnering with other companies across borders, in this process they have to cope with the cultural differences of different countries. Talking about American and Japanese business culture, there are huge differences between the two. If an American businessman decides to do with business with any Japanese company, he will have to plan and prepare for his meeting extensively. First, let’s talk about the differences in American and Japanese culture.

GLOBE Study was able to establish nine cultural dimensions which allowed capturing the differences and similarities between different societies and cultures in the basic nature of it, which consists of behaviours and artefacts, different beliefs and values a particular society have, interpreting patterns and assumptions. It allowed GLOBE to create country clusters. Now According to GLOBE’s country clusters U.S.A is in Anglo cluster whereas Japan is in Confucian cluster and differences become greater as the distance between clusters increase. Anglo and Confucian cultures are almost on the opposite sides. This means they hardly share similarities in context of dimensions given by Hofstede.

Power distance is first and recent trends suggest that Japan has just now started making its place near the world average in power distance for example victory of the democratic party of Japan in the elections of 2009 as they vowed to diminish the power of bureaucrats which makes it evident that they are becoming less tolerant of the power distance but still they have a long way to go. Americans on the other hand always had a low power distance as the Anglo cluster ranks high in participative approach but Confucian is at the bottom before Middle East. In Case of individualism Japan is at the collective end of the individualism/collectivism. Recent trend suggests that the relationships between employee and employer in Japan are becoming strained but collectivism is still more dominant. In context of this dimension Americans have one of the highest scores in individualism. The hierarchal structures of American organizations are designed for convenience and to make superiors accessible. Managers have high dependency on individual employees for their expertise.

Next dimension is of Masculinity/Femininity and Japan has one of the most masculine society around the globe. According to Hofstede’s original sample Japan ranked highest among all the countries in this dimension. Like many other dimensions trend in this dimension has also started shifting in Japan for example the equal employment opportunity legislation which happened in mid 80’s helped removing many barriers for the women but still according to studies more than 60% of working women quite their jobs after their first child. High ranking of Japan in masculinity also indicates that the Japanese society is driven by competition and achievement. Low score on masculinity or being placed on or close to femininity end means that the dominant values in particular society are caring for others and being more concerned about quality of life.

Americans ranked just slightly above the middle on masculinity which means that distance between these two cultures in context of this dimension is considerable. Next dimension is uncertainty avoidance. Talking about Japanese, generally they have tendency to avoid uncertainty but as in past years some manufacturers left Japan and this trend affected the tolerance for uncertainty in work environment. If trend continues it can significantly reduce the number of people who are loyal to the employer and can flourish the entrepreneurial trends which are commonly seen in United States as it will affect the number of job opportunities available domestically. Students after graduation will face immense competition and will probably have one shot at employment or they will be frozen out of the job market. United States is more risk taking society but currently it had also started to lean toward uncertainty avoidance because of some different trends, for example decline of the stock market and recent recession period of 2007-2009 plus the housing bubble bust.

All these factors made people to seek for security and less risky investment opportunities. Another factor which might have effected is the treat they have from other emerging nations which are economically becoming more powerful and it can cause Americans to take more defensive stance and to look for more stable grounds rather than being risk taking society. One other dimension called pragmatism which deals with the behavioural trend of people about having the explanation of the things. If we talk about normative societies most of the people require of have a strong desire to have an explanation but in pragmatic societies, people might not require explanation for everything because they consider it almost impossible that a person can fully understand the phenomena around them because of the complexity of life. Americans have tendency to check and analyse the information they receive for validity. This trend in culture makes us consider most of the Americans as non-pragmatic but the fact that they are very practical should not be confused. Japanese culture is more of a high context culture.

In Japanese business culture, they have more sense of belonging i.e. insider vs. outsider. They are more focused towards building long term relationships. Japanese are more relationship oriented rather than task oriented. They are more focused on communicated understanding rather than formal information. On the other hand, American culture is kind of a low context culture. It is more oriented towards rules and tasks. Tasks are given more importance than relationships. Relationships are usually short-term dependant on the tasks. Now as we have established the base and have the general understanding about the differences and similarities among both cultures we can move forward to the negotiation process between American and Japanese Managers. When an American manager plans on doing business and negotiating with a Japanese manager, the American manager of course has to be more prepared compared to the Japanese. Although both managers will have to be prepared for the meeting and negotiation on their behalves, still in case where American is approaching the Japanese, he will have to fully understand the culture and cultural differences, and then plan accordingly for meeting and negotiation.

High context cultures are always harder to enter due to the fact that you cannot instantly create close relationships which are a trait of a high context culture. Americans need enough time to understand and gather information about the culture, and plan extensively before they are prepared enough for the meeting with such huge cultural differences. They will have to work continuously to build relationship that Japanese can trust and consider an insider. Although tasks are important to Japanese, still they are more focused on feelings rather than opinions and facts. As discussed before American culture promotes individualism while Japanese culture is more towards collectivism. It is due to these and many other differences that the Japanese culture is looked at as a big obstacle in the way of doing business with Japanese companies or in Japan but once they have enough understanding and have enough preparation the simple differences and ways of Japanese culture are not that hard to start building relationship and earning the opportunity to become a part of Japanese business.

For example, if an American manager wants to do business with a Japanese manager, and he is looking forward to a great start and getting a positive response, the first step in the meeting will be the greeting. Greeting is an important part of Japanese culture. Japanese people are always too polite. The bow is an integral part of Japanese greeting, to show gratitude. Although, westerners are not expected to bow, they are greeted with handshake combined with a slight bow from their Japanese counterpart. The next step is the exchange of business cards. In Japanese culture, followed by greetings, all the professionals present in the meeting are expected to exchange their business cards. It can be seen as a way of introducing yourself and your organization. An American manager should collect enough information and work on clarifying meanings of different aspects before getting into a meeting with any Japanese manager, as in Japanese culture, it is considered impolite to directly say something or directly refuse.

Disagreement is usually expressed nonverbally. Even if the Japanese are not interested to do business with you, they will not communicate it verbally or directly, in fact they will wait for you to lose interest. Even if talking about employees, in Japanese culture, non performers don’t get fired. They could be transferred to another department or any other organization but are not fired. So the American manager has to be prepared for understanding this type of situation where he could anticipate the response of his counterpart. When talking about meetings, American manager must understand that to Japanese, meetings usually mean the opportunity to exchange information. Decisions are not usually made in meetings. In Japanese culture, meeting could be attended by subordinates but no one is expected to give any response at that time. It might seem to the foreigner in this situation that no one is taking interest but he should not be disheartened. This is how Japanese usually do business. They don’t discuss with outsiders.

What American managers can do is they can take along an interpreter to help better understand the Japanese counterpart and the meaning of their behaviour. Japanese people also take time to develop trust and a better relationship. So it is not expected to get on the spot response from them. Japanese managers want to develop good and long lasting relationships before moving ahead in the business. In Japanese business culture, the core pillar of the culture is the company. The company shapes the image of the person. So much importance is given to the company that even in their usual matters of life; decisions like marriage or renting out property are based on the company one works in. If someone wants to rent an apartment, the landlord will want to know in detail about the company that person works in. Even if that person changes the job, he will be obliged to let the landlord know.

Then the landlord will take decision about continuing to let that person live there or not based on the reliability of the new company. Japanese people are socially ranked based on the company they work for. Japanese people are not expected to change jobs. The careers are developed within the company compared to careers developed within the market in American culture. In Japanese culture, people are expected to work for the same company throughout their life until they retire. This is helpful for both the company and the employee. Company saves the cost of new hiring and training while employees choose to be on a safe path and they have a sense of security in their careers. The same thing can be connected to business partners. Japanese managers will not move forward until they get to build a trustworthy relationship with an American manager. But once the relationship is developed, it will go a long way and the Japanese would like to keep on doing business as they look for consistency.

This Japanese sense of loyalty could be very beneficial for the foreign company. Another part of Japanese culture is punctuality. So when planning for a meeting, the American manager should take note of being on time. They have exact specified start times and end times. Even deadlines are strictly followed. So being on time also shows your interest and helps develop some of the trust. Another aspect of Japanese business culture is that they don’t talk about money specifically. If money is discussed right away, it is taken as if the only concern is money here and that is all the reason negotiations are taking place. Japanese managers like to refer to money by expressions that are associated with it like payments, profits, wages, salaries etc and they only discuss it what they consider to be the right moment for it. Still their major concern is always about building relationships.

If any manager starts away by talking about money he will be considered greedy and ill mannered. One reason of not talking about money is that they consider counterparts to be outsiders unless they are able to develop enough trust. Also in cases where Japanese managers think that they are comparatively in weak position, they avoid using negative words while talking about their organizations. It is expected that the other company will not be interested to do business with them if they are in a weak position. So in such cases, they attract the interest of the other company by using words such as profits and success. Japanese managers try to develop interest in their company by taking confidence in their company and showing satisfaction in their performance. At first, Japanese managers like to gather as much detail as possible about their counterpart and about the organization they are representing. It is then followed by a careful decision of whether they are ready to do business with them or not.

So American managers should not get in any hurry and should not be expecting on the spot response. The first step for the Japanese managers is to determine the value of whatever is being offered. Even the foreign manager should not jump to talking about money as this is considered as an ill manner when one talks about money before them making a decision whether or not they want the service or business partnership. So any manager should wait for them to start talking about money as for Japanese, money or price is the second step in any negotiation although for Americans, this is considered to be an important part of any negotiation. Before entering into negotiation, American manager should study or understand the importance of nonverbal communication in Japanese culture. As we know that Japanese managers or businessmen are not that much straightforward, so their response is often portrayed by non verbal expressions or their body language.

Non verbal communication could include facial expressions, eye contact and other body language. But it could prove to be hard to detect as Japanese people are very subtle compared to Americans. Another strong part of Japanese culture during any business meeting is the exchange of gifts. Japanese always present their counterparts with gifts or exchange gifts as this is considered to be a demonstration of appreciation and courteous feelings. They consider it to be the part of their manners to give or receive gifts by standing up and using two hands. If these manners are not followed, Japanese feel hurt and take it as no value was given to their gift. A gift also serves the purpose of showing that they want to have some kind of relationship built with each other.

The intention of building a relationship is made clear. Exchange of gifts is considered to be a part of Japanese greetings. As for Americans, gift giving is usually associated with asking for any favour or getting a return out of it. But for Japanese it is a mere custom and a way to praise. Contrary to American business culture, a delay in making any decision is not considered to be someone’s inefficiency. They rather take it as a difference in decision making process. But once they take the responsibility of completing a job, one can easily put their faith on them even if it is out of reach of their capabilities and they have a way of coming out with exceptional results.

Conclusion
Compared to other business cultures in the world, the Japanese business culture is unique in its own way. And it may seem like an obstacle, but once one get to understand the basics of culture, it also provides security to their business by building life time relationships. Some of the traits of Japanese culture are their loyalty, consistency, collectivism, their way of giving respect. If American managers do their research before meeting Japanese managers for negotiations, and take care of little details while complimenting them in accordance with their culture, Japanese will be very pleased and any negotiation can be expected to result in favour of both the parties. Japanese are pleased by foreign managers who are acquainted with their customs and they will in return make the American managers feel more comfortable and relaxed. And at the same time it will be beneficial by enhancing the communication among both parties. In short, awareness of cross culture is the key to better communication between two so distant cultures.

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