THE IMPACT OF CULTURE ON TRANSNATIONAL INTERACTIONS. Charles B. Craver

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1 THE IMPACT OF CULTURE ON TRANSNATIONAL INTERACTIONS By Charles B. Craver Over the past twenty-five years, globalization has significantly affected business dealings as firms from one nation structure relationships with firms from many other countries. When we interact with persons from our own country, we assume a relatively common culture which can help to facilitate bargaining interactions. Although all persons from one nation do not behave alike, they tend to share certain values and behave in similar fashions. They usually speak the same language, and interpret verbal and nonverbal signals the same way. They enjoy similar foods and drinks. On the other hand, when we interact with individuals from other nations, language differences and cultural issues may arise. Should we negotiate in their language, our own language, or in a third language? Although many foreigners now speak English, they may prefer to communicate in their own language due to their greater fluency in that language and because of the fact they do not believe that Americans should be able to insist on the use of English. The participants may also encounter cultural difficulties. I. Impact of Cultural Differences Culture typically consists of such social phenomena as beliefs, ideas, language, and customs. These factors combine to provide members of each society with a set of shared values and beliefs that define how we envision ourselves and our societal groups. Culture significantly influences the way in which we communicate with each other. When we interact with persons from different cultures, national stereotypes may affect our approach. We often think we know what to expect when we deal with individuals from Eastern and Western European nations, from Asian countries, from Central and South American states, and from African nations. Some of these beliefs may be positive in nature, while others may be negative. Even when foreigners do not conform to anticipated stereotypes, we often ignore their individual traits and continue to let our stereotyped beliefs affect our expectations. II. Common Cultural Differences Some of the most apparent cultural differences concern punctuality and the physical distances we expect when we interact with others. In some cultures (e.g., U.S., Japan, most Western European nations), people are expected to show up for meetings on time. It would be considered rude if someone were to appear more than five or ten minutes past the scheduled time. On the other hand, in Latin American or Middle Eastern countries, it would be considered unusual if someone showed up on time. A thirty or forty minute delay would be entirely acceptable.

2 In some cultures, it is considered appropriate for persons commencing bargaining interactions to exchange small gifts at the beginning of their discussions. People preparing to negotiate with persons from such cultures should ask others or consult references to determine what kind of gifts would be proper. When individuals receive such gifts from others, they should be careful to demonstrate appropriate appreciation for what they have received. When strangers from different cultures meet initially, they are often expected to exchange business cards to provide each other with their contact information. In countries like the United States, recipients of such cards often put them right into their pockets. For persons from countries in Asia, this would be considered inappropriate. They usually have their personal information on one side of such cards in their own language and on the other side in the recipient s language. Persons provided with such cards are expected to carefully read the information provided to appreciate the precise title enjoyed by the individual involved, and they should place it on the table in front of themselves or on their note pad to demonstrate their respect for what they have been given. Individuals from different cultures have quite diverse spatial distances when they interact with each other. In North America, it is considered proper for interactants who do not know each other well to remain approximately two feet apart, especially during business discussions. Persons from these cultures find it difficult to interact comfortably with individuals from Middle Eastern countries who expect ten to twelve inch spatial distances. They are intimidated by the fact speakers get so close when they converse. On the other hand, when persons from close spatial distance cultures interact with people from more expansive spatial distance cultures, difficulties may arise. As one speaker closes the gap between themselves and their counterpart, the person desiring a greater spatial distance backs up. The initial speaker moves forward to close this unacceptable gap, and the listener again retreats. The person who desires to communicate in a more intimate setting may be offended by the effort of the other party to increase the spatial distance, and that individual may also interpret the other party s behavior as cold or disinterested. I have observed conversations at international conferences between individuals from different spatial distance cultures where one steps forward to close the gap, while the other steps backward to increase it. This continues over and over until the person desiring the greater spatial distance ends up with their back against a wall! In some cultures it is entirely appropriate to conduct business discussions during social events such as meals or cocktail parties, while in other cultures such behavior is considered improper. People from cultures that combine business and social interactions should respect the practices of persons from cultures which do not combine such discussions and refrain from bargaining talks during such social activities. Some cultures (e.g., United States) have low context language patterns, while other cultures (e.g. Japan) have high context patterns. In low context cultures, speakers tend to say exactly what they mean. If someone from such a culture is asked if they would agree to a particular term during a bargaining interaction that they would not find acceptable, they would be likely to directly reject that proposal. For persons from high

3 context cultures, such directness would be considered rude. They would be more likely to indicate that such a proposal might be possible, even though they have no intention of agreeing to it. If they wanted to make it clear that this provision could not be included, they might state that it would be difficult. This is why it is critical for negotiators to use highly knowledgeable interpreters when they interact with people for different communication cultures. It is not enough to understand each word being spoken. Interpreters have to understand each setting and nonverbal signals which might suggest that what is being said is not exactly what is meant by speakers from indirect cultures. III. Collectivism v. Individualism Are the interactors from a collectivist or an individualist culture? People from countries like the United States and England are quite individualistic. They value individual independence over group cohesiveness. They respect persons who employ personally assertive behavior to advance their own self interests. Their societal status tends to be based primarily on individual, rather than group, accomplishments. People from these cultures work to advance the interests of their firms or their clients more to demonstrate their own capabilities than to contribute to the overall success of the businesses involved. Many other cultures (e.g., Japan and China) have a collective orientation. Persons are defined more by their family and business ties than by their individual accomplishments. They are likely to be evaluated more by the achievements of their organizations, than by their own efforts. When people from individualist cultures interact with persons from collectivist cultures, both sides may have some difficulty appreciating the perspectives of the other. One participant is endeavoring to enhance their own reputation, while the other is committed to the advancement of their employer. What they should appreciate is the fact they both have similar goals. Even the individualist realizes that if they perform well on their own behalf, they should enhance the overall interests of the party for whom they are speaking. Individualistic cultures tend to believe that individuals are responsible for their own destinies. As a result, they tend to have few social programs. Members of these cultures are usually required to contribute to or provide for their own health care and retirement needs. On the other hand, collectivist cultures tend to have more social programs through which government entities provide for the health care and retirement needs of their citizens. When joint business ventures are being created, parties from such different cultures must appreciate these philosophical differences and respect the way in which such matters should be resolved in the country in which their joint venture will operate. Collectivist cultures are likely to require government approval of international business arrangements, to be sure that such deals will be good for everyone involved. Governments from individualist cultures are more likely to take a laissez faire approach, with minimal government involvement in such transactions. Persons from individualist cultures must appreciate the fact that the approval process in collectivist cultures may take several months to complete, and they must give their foreign partners the time they require to obtain such acceptance,

4 Persons from individualist cultures tend to feel more comfortable with overt displays of power than individuals from collectivist cultures. As a result, negotiators from countries like the United States do not hesitate to break off negotiations if they are not progressing well or to sue their business partners when disagreements arise. On the other hand, bargainers from countries like Japan find open displays of power to be crude and inappropriate, and they hesitate to initiate law suits. They believe that such behaviors are likely to cause their partners an unacceptable loss of face. They prefer to explore their differences in a more indirect and less adversarial manner. When people from individualist cultures interact with persons from collectivist cultures, they should minimize the use of confrontational tactics which might negatively impact their relations. They should appreciate the fact that negotiators can be forceful without being pushy or offensive. Persons from individualist cultures tend to have short time frames when they make business decisions. They hope to achieve expeditious results for which they can take credit. People from collectivist cultures tend to have more expansive time frames. They are entirely comfortable with delayed gratification, so long as their organizations do well in the long run. They also require organizational approval of business arrangements which may take time to generate. It is thus important for persons from individualist cultures who may possess final authority to bind their organizations to be patient as their collectivist counterparts seek the consensus they need from persons within their own organizations. IV. Impact of Socio-Economic Differences Individuals from lower socio-economic cultures tend to be intimidated when they interact with persons from wealthy cultures, especially when they meet in the gilded offices of their wealthy counterparts. They tend to have short term objectives designed to immediately advance the economic interests of their clients. On the other hand, people from wealthy nations are more likely to have longer term perspectives due to the fact they do not require immediate returns on their investments. When individuals from rich nations interact with parties from poor countries, they should look for ways to provide some expeditious benefits even if their primary objectives may be of a much longer time frame. V. Importance of Learning About Opponent s Culture Before persons from one culture interact with individuals from different cultures, they should take time to learn about the cultural background of their adversaries. It is beneficial to explore the national histories and cultural practices of those persons. There are two recent books I would recommend to introduce people to such issues: How to Negotiate Successfully in 50 Countries by Olegario Llamazares (Global Marketing 2008) and Kiss, Bow, Or Shake Hands by Terri Morrison and Wayne Conaway (Adams Media 2d ed. 2006). Both books briefly describe the cultural protocols in the different countries,

5 and they provide national histories and government practices. Other books provide more expansive descriptions of the cultures associated with specific countries. When individuals travel to foreign countries to conduct negotiations, they should respect the histories and cultures of their hosts. Most of us are proud of our national histories and our cultures. We like to share such things with our guests and expect them to appreciate these factors. I have often been told by foreigners how rude Americans are, because they show no interest in such matters. When they are offered an opportunity to visit local museums and other places of historical significance, they decline. They are impatient and wish to focus immediately on the issues they intend to address. They should accept the generosity of their hosts and take the time to learn more about the national histories and cultures of those persons. In most cases, they should actually find this process interesting and rewarding. They will learn important considerations regarding their adversaries, and they will demonstrate respect for the cultures of those persons. When I teach negotiation courses, I always emphasize the importance of what I call the Preliminary Stage where the participants work to establish rapport with each other and positive bargaining environments. We tend to interact more effectively with people we like than with persons we do not like. During this part of interactions, the participants should engage in non-controversial small talk to get to know each other. This is especially critical when people from different cultures are involved. Both sides tend to allow their stereotypical beliefs of each other to influence their expectations. Negative preconceptions may have a deleterious impact on their dealings. If the negotiators can establish mutually beneficial relationships, this should make it easier for them to achieve accords. It is also important to use the Preliminary Stage to establish relatively positive and optimistic negotiating environments. Empirical studies have demonstrated that people who negotiate in positive environments behave more cooperatively, reach more agreements, and achieve more efficient terms than persons who bargain in negative environments. VI. Conclusion When individuals interact with persons from other countries, they should appreciate the potential impact of cultural differences. They should take the time to learn about the cultures of their opponents, even though all persons from the same culture do not necessarily behave identically. They should also use the Preliminary Stage of their interaction to get to know each other personally and to establish some rapport. They should finally seek to create positive bargaining environments which should make it easier for the parties to achieve efficient agreements.

6 Charles B. Craver is the Freda H. Alverson Professor at the George Washington University Law School. He is the author of Effective Legal Negotiation and Settlement (Lexis 6 th ed. 2009); Skills & Values: Legal Negotiating (Lexis 2009); and The Intelligent Negotiator (Prima/Crown 2002), and coauthor of Legal Negotiating (Thomson/West 2007) and Alternative Dispute Resolution: The Advocate s Perspective (Lexis 4 th ed. 2011). He can be reached at ccraver@law.gwu.edu