MSc CROSS-CULTURAL MANAGEMENT (CCM) SIB7504-A

1. Introduction

Throughout an emerging economy, many enterprises today do business with foreign

corporations, large or small. Multinational companies (MNCs) have a challenge because
they started in one country and now operate in another, in various economies, and in
distinct cultural situations. Globalization is increasing variety and multi-cultural people.
Culture is crucial because it symbolizes one's mindset, shapes one's vision, as well as
shapes one's actions. During the MNC phase, people from many backgrounds
collaborate. Thus, managers and CEOs should be capable of recognizing and
analyzing cultural variances (Gregory, 2010)

Cultural actors may best contribute by cooperating. Managers should communicate

frequently and understand the organization's objectives, especially in multi-cultural
organizations with international branches (Wefald & Katz, 2007). The bulk of physical
barriers to interaction have been removed by technology. Managers, however,
encounter cultural hurdles. The main challenges are expressiveness, comprehension,
language, as well as nonverbal communication. Managers working in global
environments should be capable of communicating successfully across cultures.
“Cultural disparities increase the likelihood of communication barriers and
miscommunication” (Adler & Graham, 1989). To ease negotiations with multinationals,
more administrators are focusing on cross-cultural communication to address conflict.
Different national and organizational cultures are anticipated of foreign joint venture
partners from different countries, as well as multinational M&As (Mergers and
acquisitions) involving the merger or purchase of enterprises from several countries.
Such disparate groups should be pushed together to agree on strategic goals and
execute strategic plans. The purpose of this essay is to analyze the literature on cross
cultural management and how it is used to develop new international alliances with
domestic countries with diverse cultures.

2. Main text

Individuals from various who work together in an organizational context are the subject
of cross-cultural management research, which are concerned with how they behave.
Organizational behaviour concerns like inspiration, leadership, judgement, and team
dynamics are addressed in cross-cultural management research (Renwick, 1981).
Cross-cultural management research concentrates on the micro - level rather than the
macrolevel. 

In cross-cultural analysis, the positivist approach describes cultures as self-contained,

discrete, as well as stable entities constituted of different traits which can be seen,
quantified, and controlled (Yeganeh et al., 2004). In most cases, culture is considered
as a set of values that are represented through cultural aspects (Hofstede & Bond,
1984). Evaluating national rankings on these aspects as well as management practices
across nations may aid in the analysis and understanding of disparities in managerial
behaviour (Schwartz, 1994) (Tsui et al., 2007).

Cross-cultural management, according to Adler and Graham (1989), examines person's

attitudes in organizations all over the world, explains and distinguishes organizational
behaviour all over nations and societies, as well as strives to make clear and improve
interactions among work mates, managers, leaders, clients, contractors, as well as joint
ventures.

The growing coordination between organizations in diverse nations, whereby

differences in culture might cause challenges, demonstrates the need of cross-cultural
management (Usunier, 1998).

When a country endures "globalization," a large number of enterprises will be founded

in different regions throughout the world. Thus, there would be more activities taking
place all over the world, leading in cross-cultural interaction. People learn culture as a
result of learning, that involves communicating, that is a technique of coding and
interpreting the language as well as signs employed in this culture. Individuals, for
example, communicate by nonverbal means such as facial expressions, motions, body
language, voice, and etc. It is possible to say that culture and communication are
closely intertwined; when one must be exposed to a certain culture, communication is
necessary (Hooper et al., 2005).

Entrepreneurs who want to achieve on a worldwide scale must have a thorough

awareness of cultural differences along with international business communication.
According to Spector and Wagner (2010), culture has a significant impact on
international negotiations. The impact of language and perceived understanding on any
communication in interpersonal interaction, for example, is significant (Fatehi, 1996).
Cohen (1991) argues that cross-cultural negotiations are influenced by culture. He
thinks that cross-cultural incoherence could have a substantial influence on a
conference champion behaviour and outcome. Cross-cultural conversations must
consider the other group's culture and experience, along with personal relationships,
varied interpretation of these messages as well as emotions, and status and cultural
demands.

Studies conducted at the organizational level have looked at matters including the
importance of culture in mergers and acquisitions (M&A). A special focus has been
made on the impact of cultural gap, or the degree of diversity among the national
cultures of merging firms, on the outcome of the merger (Hennart & Zeng, 2002). Weber
et al. (2009) report that researchers are continuing to discover persuasive patterns and
suggest new advancements, such as the perceived prominence of national cultures
during communications in mergers and acquisitions (Yildiz, 2014)

Most international joint venture assessments start with a basic grasp of culture, that
defines the mindsets of its members. Hofstede and Bond (1984) provided cultural
dimensions that was particularly significant. Kogut and Singh (1988) proposed the
cross-cultural concept in a study examining the effect of cultural variables on market
entrance choice using Hofstede's approach indices.

According to Hofstede (1984), societies with little power distance have an egalitarian
distribution of jobs and decentralization is widespread. A significant power gap creates
an ethical mismatch between top and bottom management, so centralization is typical.
For such situations, low-power distance negotiators require less centralized
management cooperation. It reduces the ability to make a decision while taking action.

Individualists vs. collectivists: The intricacy of the difficulties in the agreement might
influence the membership of the negotiation team that is formed. Cultural inequalities,
and also the complexity of the negotiation issue, have an effect on the effectiveness of a
negotiating team in cross-cultural agreements. Whereas the negotiation teams in
collective societies tend to be large, those of individualist societies have a tendency to
be smaller, with even a single individual constituting an appropriate negotiating group.
Individuals are held in high respect and are considered exceedingly precious. As a
consequence, all team members should be taken into consideration and regarded with
respect (Chevrier, 2003). Individualistic cultures, on the other side, have a tendency to
bargain with people on a one-on-one basis at the negotiation table.

Femininity vs. Masculinity: What is the difference? In such a patriarchal society, male
negotiators are motivated to achieve success at the negotiation table. These individuals
seem to engage in 'win-lose' negotiations. Long-term relationships are valued in
feminine cultures, and negotiations are conducted in a 'win-win' way (Osman‐Gani &
Tan, 2002). Negotiation among men as well as women from cultures that are
traditionally masculine and feminine may be difficult. In a male society, ego defense is
essential, and compromise is discouraged since it is seen as a sign of failure. A rigid
approach will thus pose challenges for this particular culture as a consequence of its
historical background. These factors might lead to a deadlock in the negotiations.
Negotiators from a female-dominated society may be ignorant of the significance of the
masculine ego in the negotiation process. If they do not recognize the egos of their
counterparts, the bargaining step may be hindered.

Avoiding Uncertainty: In a variety of ways, the degree to which uncertainty is reduced

might impact the outcome of a negotiation. Information-gathering methods are valued
differently in cultures which depend on knowledge to decrease ambiguity and
complication, as opposed to cultures which place a larger value on avoidance of
uncertainty. According to Hamburg (2011), low-uncertainty avoidance cultures are
marginally more realistic as well as conservative in their market activities than their
counterparts and thus require more information. Such societies may commit more effort
and time to learning regarding the opposing party's beliefs, established corporate
practices, the layout of the companies, and even specific persons inside those
companies than they can to learning about their own (Usunier, 1998). Societies with a
high level of uncertainty avoidance, on the other side, need less information in order to
make decisions and implementing policies and initiatives. Yudhi et al. (2006) give the
example of the Japanese, who, as a culture with a great fear of ambiguity, would push
Americans for extremely specific facts and enquire about a big range of highly particular
issues at the negotiation table when dealing with them.

The culture of a civilization, according to Trompenaars and Hampden-Turner (1998),

influences the effectiveness of a negotiating approach in the same way. When it comes
to successfully balancing cultural holes, cross cultural management is very crucial in
evolving the different phases of negotiations, such as preparation, recognition of the
interests of different negotiating parties, along with comprehending the consequences of
a negotiation's failure. Negotiation is a natural response to crisis resolution as well as
also reflects the evaluation of political circumstances. To produce the best possible
arrangement, the Multinational Corporation must often negotiate with the host country's
officials. In order to make such pledges or concessions, a multinational corporation
(MNC) and its home country would discuss how much capital the MNC is ready to give
up in return. Most of the time, the initial range of concerns includes highly sensitive
topics including recruitment practices, large financial investment, taxes, and ownership
control. It is also possible to utilize negotiation to develop cooperative agreements with
local firms and to get the operation functioning. While the firm is still in the planning
stages, other areas of negotiation include infrastructure development, the hiring of more
domestic managers, new acquisitions or exports of supplies and completed goods, as
well as the recuperation of sales (Kimmel, 1994).

CCM is often used to negotiate the development of a medium- to long-term partnership

among two enterprises from different nations that requires continuous communication.
An International joint venture (JV) is created if two or more organizations combine their
resources to establish a third firm which will offer services and manufacture goods
(Kandemir & Hult, 2005).

Integrated negotiation is based on the leader's readiness to identify changes as well as

mutually beneficial solutions, along with resource generation. To see the prospect of an
integrative agreement, negotiators should grasp their own as well as other rivals'
interests and importance. Knowing what to do in an emergency aid in a compassionate
grasp of what is required and what does not. The importance of an issue is
demonstrated by information about the parties' objectives. The reduction of judgmental
errors and improved communication facilitate the revealing of such aspirations and
ambitions.  Rather, you must accommodate to various cultures in order to achieve
effective discussions. Weiss (1994) emphasizes the issue of adaptation with regard to
his suggested culturally appropriate methods, that are decided by the negotiator's
familiarity with the competitor's culture, and also the competitor's awareness and
comprehension of the negotiator's culture. The needed degree of adaptability is
determined by a combination of two elements. It's depicted in the diagram below:

Figure 1: Weiss' Strategic Framework (Weiss, 1994)

Moreover, Various foreign negotiating strategies influenced by culture, shifts in ideology

(for example, the collapse of the Soviet Union), and also the transformation from such a
command market-based economic system in Eastern Europe; the WTO's inspiration of
trade barrier decline and the development of regional organizations, particularly the EU;
cross-border discrepancies in taxation, currency, worker interactions, as well as
monetary directive.  Integrative negotiating in multinational corporations comprises
cooperation among the two partners in order to merge interests, increase profits, and
engage in the transaction. Every business aspires to generate earnings and benefit both
partners. This method is known as the win-win scenario, which may not mean that
everyone receives exactly everything they desire, however instead that the contract aids
all parties in keeping what counts most while still benefitting from the arrangement
(Belshek, 2006). 

The agreed-order concept asserts that "trends of significance along with action in the
corporation arise from the connections as well as commitments of its members"
(Borders, 2000). Members of a German-Japanese strategic partnership confronted a
variety of challenges based on the stage of industrial expansion. Differences in national
and corporate societal beliefs, such as forms of evaluation and personalization of
responsibility, contributed to the consolidation of issues. As a consequence of these
difficulties, negotiated tactics and a unique company culture have been developed. In
conclusion, they show that the development of company culture is more directly linked
to urgent issues as well as their settlement than to the cultural character of persons
involved in the connection.

3. Conclusion

Negotiation is a kind of communication among contracting parties with a purpose, a

mutually accepted aim to pursue, such as forming a significant international joint
venture with a local country which culture is distinct from that of the home based
MNCs. In terms of addressing their opponent utilizing their language, attitudes,
traditions, values, and religious views in an overseas negotiation, entrepreneurs
need first comprehend their counterpart's culture. It may be argued that MNCs can
effectively organize their negotiations by recognizing cross-cultural differences and
similarities, as defined by Weiss' strategic framework, which can be utilized to select
a negotiating strategy.
4. Reference list

Adler, N. J., & Graham, J. L. (1989). Cross-cultural interaction: the international

comparison fallacy? Journal of international business studies, 20(3), 515-537.
Belshek, J. A. (2006). The influence of culture on the negotiation styles of British
students. Annual review of education, communication and language sciences, 3,
1-24.
Borders, P. A. (2000). Negotiating Organizational Culture in a German-Japanese Joint
Venture. Human relations, 53(4), 451-487.
Chevrier, S. (2003). Cross-cultural management in multinational project groups. Journal
of world business, 38(2), 141-149.
Cohen, R. (1991). Negotiating across cultures: Communication obstacles in
international diplomacy. Washington, DC: United States Institute of Peace.
Fatehi, K. (1996). International management: A cross-cultural and functional
perspective. Prentice Hall.
Gregory, R. (2010). Review of the IS offshoring literature: the role of cross-cultural
differences and management practices.
Hamburg, A. (2011). Comparative analysis of Romanian and German negotiation style
based on cultural differences. Annals of the University of Petroşani. Economics,
11, 127-138.
Hennart, J.-F., & Zeng, M. (2002). Cross-cultural differences and joint venture longevity.
Journal of international business studies, 33(4), 699-716.
Hofstede, G. (1984). Culture's consequences: International differences in work-related
values (Vol. 5). sage.
Hofstede, G., & Bond, M. H. (1984). Hofstede's culture dimensions: An independent
validation using Rokeach's value survey. Journal of cross-cultural psychology,
15(4), 417-433.
Hooper, C., Pesantez, M., & Rizvi, S. (2005). Cross-cultural communication and
negotiation. Prieiga per Internetą: http://www. hooper. cc/pdfs/cross-
culture_negotiation. pdf.[Prisijungta: 2011 03 07].
Kandemir, D., & Hult, G. T. M. (2005). A conceptualization of an organizational learning
culture in international joint ventures. Industrial marketing management, 34(5),
430-439.
Kimmel, P. R. (1994). Cultural perspectives on international negotiations. Journal of
Social Issues, 50(1), 179-196.
Kogut, B., & Singh, H. (1988). The effect of national culture on the choice of entry mode.
Journal of international business studies, 19(3), 411-432.
Osman‐Gani, A. M., & Tan, J. S. (2002). Influence of culture on negotiation styles of
Asian managers: An empirical study of major cultural/ethnic groups in Singapore.
Thunderbird International Business Review, 44(6), 819-839.
Renwick, G. e., Adler, N. J., Moran, R. T., and Russell; P. (1981). The Management of
Intercultural Relations in International Business. Intercultural Press.
Schwartz, S. H. (1994). Beyond individualism/collectivism: New cultural dimensions of
values.
Spector, B. I., & Wagner, L. M. (2010). Negotiating international development.
International Negotiation, 15(3), 327-340.
Trompenaars, F., & Hampden-Turner, C. (1998). Understanding cultural diversity in
business. Irwin, London, England.
Tsui, A. S., Nifadkar, S. S., & Ou, A. Y. (2007). Cross-national, cross-cultural
organizational behavior research: Advances, gaps, and recommendations.
Journal of management, 33(3), 426-478.
Usunier, J.-C. (1998). International and cross-cultural management research. Sage.
Weber, Y., Tarba, S. Y., & Reichel, A. (2009). International mergers and acquisitions
performance revisited–the role of cultural distance and post. In Advances in
mergers and acquisitions. Emerald Group Publishing Limited.
Wefald, A. J., & Katz, J. P. (2007). Leaders: The strategies for taking charge. In:
Academy of Management Briarcliff Manor, NY 10510.
Weiss, S. E. (1994). Negotiating with'Romans'-part 2. MIT Sloan management review,
35(3), 85.
Yeganeh, H., Su, Z., & Chrysostome, E. (2004). A critical review of epistemological and
methodological issues in cross-cultural research. Journal of Comparative
International Management, 7(2), 66-86.
Yildiz, H. E. (2014). Not all differences are the same: Dual roles of status and cultural
distance in sociocultural integration in cross-border M&As. Journal of
International Management, 20(1), 25-37.
Yudhi, W., Nanere, M., & Nsubuga-Kyobe, A. (2006). A comparative study of
negotiation styles of education managers in Australia and Indonesia.
Proceedings of the Asian Forum on Business Education,