The Influence of Cultural Diversity on International Business Negotiations
International business negotiations (IBN) are pivotal to nearly every facet of modern global commerce. These negotiations include selling goods and services, procurement of raw materials, product distribution, advertising, market research, licensing, technology transfers, franchising, manufacturing, and forming strategic alliances such as joint ventures, mergers, and acquisitions. International business negotiation is inherently complex, requiring the resolution of numerous issues through mutual agreement. Most of these negotiations occur through direct interactions between participants from diverse cultural backgrounds, each with unique negotiation styles (Srivastava, Singh, and Dhir, 2020p. 101709). Therefore, mastering the negotiations involves not only understanding the various topics at hand but also being culturally sensitive to the behaviors and characteristics of the partners involved, as this cultural sensitivity can significantly impact the success or failure of the negotiation process.
Background of the Study
The global marketplace has become increasingly interconnected, making international business negotiations more prevalent and essential. Enterprises expanding beyond national borders find different cultural environments, which influence the way of negotiation. Cultural diversity encompasses a huge variety of communication styles, decision-making, and negotiation strategies that may facilitate or hamper the negotiation process (Brett, Gunia, and Teucher, 2017, p. 292). It is just these types of cultural differences that are important for negotiators to develop trust, build cooperation, and reach mutually beneficial solutions. Traditionally, studies have documented that misunderstanding the culture or being insensitive can cause conflict or negotiation failure (Cox, 2022, p. 121). For instance, negotiators from high-context cultures, whose style of communication depends mostly on implicit messages and context, may feel strained while negotiating with individuals from low-context cultures where the type of communication is forthright. It finally ends in distrust and failed negotiations.
Appreciation of cultural intelligence and intercultural competence, in this regard, has been emphasized with the incorporation of a need for adjustment from one culture to another in negotiation strategies over the past couple of decades. Companies are spending millions investing in training programs that would enable their negotiators to effectively navigate cross-cultural interactions (Mhlongo et al., 2024, p. 1412). These types of programs work from the idea of building up negotiators’ sensitivity, empathy, and flexibility to adjust the approach based on the counterpart’s culture. Besides technological innovation, global disruptions, such as the COVID-19 outbreak, have increased virtual negotiations in which understanding of cultural diversity takes another ride (Bjola and Coplen, 2022, p. 4). Cultural dimensions—enhancing inner dynamics of negotiation by individualism versus collectivism, power distance, and uncertainty avoidance—raise the stakes (Beugelsdijk and Welzel, 2018, p. 1472). Researchers turn to develop strategies that are most likely to work across these cultural divides and impact performance in international business negotiation.
Research Problem
Cultural diversity is one of the major drivers in international business negotiations, given its impact on styles of communication, decision-making processes, and adopted negotiation strategies. According to Srivastava et al. (2020, p. 101706), the first thing a firm needs to do is to be aware of the culture of their negotiation counterparts so that they can adopt appropriate approaches due to differences in cultural backgrounds. An understanding of culture thus provides the base for developing a relationship founded on trust and accomplishing mutually advantageous goals. Stahl and Maznevski (2021, p. 4) argue that cultural diversity in teams can be an advantage in negotiation because, through the diverse culture, a negotiator may get insights into the counterpart’s culture, thus making it easier to come up with an agreement. Beugelsdijk, Ambos, and Nell (2020, p. 448) add that cultural diversity promotes good relations by understanding and respecting other groups’ values necessary for negotiation. Despite the apparent benefits, many organizations get entangled with cultural misunderstandings, resulting in conflicts and failed negotiations. Therefore, this paper aims to fill the gap by studying the influence of cultural diversity on international business negotiations so that companies can develop effective strategies to bridge cultural gaps and achieve successful outcomes.
Research Aim
This study aims to assess the impact of cultural factors on international business negotiations so that firms can acquire appropriate methodologies to deal effectively with such issues.
Research Objectives
- To understand the role of cultural diversity in international business so as to facilitate the analysis of how it affects business negotiations.
- To analyze and define problems that result from multiculturalism in global and international business transactions.
- To identify the measures that firms can employ in order to manage culture and overcome cultural barriers in cross-border commerce negotiations.
1.6 Research Questions
- How does cultural diversity impact international business negotiations?
- What challenges arise from cultural diversity in relation to international business negotiations?
- How can companies navigate cultural differences to be successful in international business negotiations?
Research Rationale
International business enterprises should know how cultural diversity affects business negotiations in the global marketplace. Cultural differences impact communication styles, decision-making processes, and negotiation strategies (Beugelsdijk & Welzel, 2018). By studying these cultural factors, a business can develop more effective ways to establish trust and cooperation with their intercontinental counterparts. Such knowledge helps evade miscommunication and disorders that emanate from cultural insensitivity. Understanding cultural diversity is key to negotiating more effectively and efficiently.
Moreover, recognizing the challenges that cultural diversity brings gives a business an advantage when dealing with potential barriers to international negotiation. This is regarding identifying specific cultural parameters likely to influence the negotiation dynamics and finding ways of adapting the strategy accordingly (Cox, 2022, p. 121). Businesses achieve this by being responsive to such factors to fine-tune their cultural intelligence and intercultural competence—tenets guiding organizations through complex global interactions. Training programs on equipping employees with such skills, in turn, better equip them for cross-cultural negotiation. This consequently results in stronger international relationships and more favorable business agreements.
Scope of the Study
This study focuses on analyzing the impact of cultural diversity on the negotiation processes of multinational corporations. The research investigates how cultural diversity affects the process of communication, decision-making, and strategies in the process of international business negotiations. This in-depth review will include available literature and case studies from various industries, highlighting common challenging issues and best practices. The research digs into these aspects to provide insights and recommendations on how businesses can enhance negotiation outcomes through better cultural understanding and sensitivity. This would be a useful analysis for companies involved in global trade to better navigate the complexities of culture.
Limitations of the Study
Several factors limit this research. First, secondary data may not capture the most current processes and practices effective in international business negotiations, excluding newer trends and changes. Secondly, there is a loss of focus on specific cultural characteristics or difficulties that various organizations encounter when employing a particular strategy. Therefore, the conclusions may not be generalizable to all industries or regions since cultural factors may differ in varying business domains and geographic locations.
LITERATURE REVIEW
Cultural Diversity in Global Market
The role of culture in determining the overall success of any business has increasingly widened as the world has become more interconnected. Successful businesses have to develop ways that they can serve consumers in different markets by adapting their products and services in ways that the target market prefers. Consumer preferences change based on different factors; including cultural factors. the overall success of a business in the modern market is greatly influenced by its ability to match its products and services to the unique consumer preferences (Patel, 2018). Such preferences may exist within the borders of the same market such as the European Union, the United States, and the People’s Republic of China. These markets are large and are commonly typified by the existence of different cultures.
The continued development of globalisation has meant that the considerations that need to be made relating to the success of businesses have increased. It is important for businesses to use more resources researching the unique traits and preferences of consumers in different markets to determine the overall feasibility of their ventures. It is common for businesses to provide different variations of the same product and service in different markets (Taylor and Zhou, 2019). For example, there are significant differences between global food chains such as McDonalds and KFC in different markets. Such differences exist inherently in each market that these businesses operate in (Jakobsen & Worm 2023). the development of the unique products and services for each market are made over time through persistent research.
Culture has a profound impact on the overall preferences that consumers have. The global market is typified by the existence of many cultures that that influence the decisions that individual consumers make relating to the consumption of goods and services. Modern businesses have to be knowledgeable on how to serve a culturally diverse global market. In many instances, the overall success of businesses takes the form of providing others with the goods and services they need for special occasions in their culture such as holiday celebrations, and other major cultural events (Beugelsdijk & Kostova, 2017). For example, the United Kingdom imports a lot of goods from China to during periods such as Eater and Christmas holidays. Hence, Chinese businesses have managed to cater to the needs of a different culture that they may not be a part of.
For the most part, the success of any business in a different culture happens with the use of partnerships and collaborations with local businesses to effect trade. For example, most of the goods sold in the United Kingdom from China are imported by local businesses that have entered into agreements with foreign businesses to provide such goods. This raises the need for the use of effective negotiations among such partners to ensure that there is mutual benefit, and that all parties involved are content with the arrangement (Soo Hoo, 2016). The role of highly capable negotiators is essential in ensuring that such desirable outcomes for all parties are achieved. Such negotiators need to be culturally intelligence and competent.
Rise of Globalisation
Globalisation has been one of the most impactful development in human society in recent decades. It has meant that businesses have access to a wider market across the world. For most businesses, this is an added advantage because they can benefit in many ways from a wider market. success in the global market means that businesses can achieve more than they can in localised markets that are relatively smaller in size. This has ultimately meant that such businesses have had to serve consumers in different cultures. Businesses that have managed to overcome the cultural barriers have exploited the many benefits and opportunities that are associated with global trade (Clegg & Casnici, 2023).
International business has arisen because of the many opportunities that have emerged in the global market. According to the United Nations, there are approximately eight billion people currently residing on earth. This is a large market that businesses can exploit by trying to reach a wider market. Many businesses have expanded their operations to the global market to reach a wider market that serve the purpose of increasing their revenue streams (Hult & Morgeson 2022). For example, large multinationals such as Apple Computers, Starbucks, and McDonalds realise a lot of their revenues from foreign markets. This has been one of the most important benefit for businesses to commence international operations.
Beside providing a larger market, the international market allows businesses to acquire new expertise and knowledge from their operations. The largest multinationals attract the most competent employees from their many operations. Such employees are expected to be culturally intelligent and interculturally competent. Many localised businesses do not require such employee or personnel because their operations do not cross cultural barriers. The emergence of international trade has hence presented many opportunities for existing businesses to expand and learn a lot more about how to improve their goods and services. This has happened more rapidly as more people have provide feedback that has been used to improve on the quality of specific goods and services (Nebozhenko & Rassadnykova 2023). For example, most eCommerce platforms such as Amazon have options to provide feedback about products sourced from all over the world. This has served as an important source of information on possible changes that can be made to ensure that such businesses continue to develop their offerings to the market.
The expansion of many businesses to the global market has resulted in the access to increased cooperation with other entities. Many multinationals cooperate with local businesses to support their operations. Local businesses are more knowledgeable about the local market, and also likely have existing supply chains and infrastructure to support their operations. International businesses have found such arrangements to be beneficial because they present a learning opportunity about the local market while enhancing their overall chances of attaining their desired success. This has resulted in increased cooperation between businesses in the international market with the intention of supporting the operations of each other (Asmussen & Fosfuri, 2023). These relationships have had a significant role in supporting the exchange of ideas and investment that have been beneficial to all parties involved.
Challenges in International Business
Although the international market has presented many benefits to individuals and businesses, it has also given rise to many challenges that did not exist before. Overcoming such challenges allows businesses to rip the benefits of international trade without facing any significant drawbacks. However, not all businesses are capable of dealing with these emergent challenges. A lot of changes have happened to businesses in the past few decades as globalisation has continually expanded and involved more entities all over the world. Many businesses have thrived while others have struggled.
Businesses in the international market have to be culturally intelligent, and interculturally competent. Each market in the international market is unique; some markets have multiple cultures that businesses have to contend with. The overall goal of being culturally intelligence is to meet the unique preferences of each market by ensuring that changes are made to the goods and services that maximise the possibilities of attaining success (Grosz & Jozsa 2023). In many instances, international businesses reach agreements with local businesses through negotiations to successful run their operations.
A major challenge that has arisen from the increased globalisation of trade has been the intensification of competition between businesses in the marketplace. Many businesses have found it difficult to compete with foreign imports that may be cheaper, of higher quality, or both. Although this is one of the main benefits presented by globalisation, it is a major threat to many businesses that may be uncompetitive (Pitman & Koponen, 2023). This has resulted in a trend where most of the world’s activities that support all business such as banking and manufacturing to be located in specialist locations such as China and the United States. Other markets find it more difficult to compete with dominant economies that specialise in specific areas of the global economy.
Besides the many benefits of international trade, there is a challenge presented by widespread imbalances of trade. Many economies around the world struggle with imbalances of trade that result from spending more on imports than on exports. This has had a profound impact on the ability of businesses in countries with trade imbalances to compete in the international market. This presents many challenges that businesses in a deficit economy have to overcome (Plečko & Hojnik, 2024).
A common challenge that businesses have to overcome relates to the different legal frameworks that exist between countries. Each country has implemented unique policies that aim to support and regulate the operations of businesses in its jurisdiction. Local businesses are more informed are aligned with such guideline compared with external businesses. It is common for businesses to seek out ways that they can enter a market using already established local entities that are more capable of meeting the local legal framework (Ramadania, Suh and Rosyadi, 2023). For the most part, this is how most of global trade operates with many local businesses such as retailer importing final products from external markets. This ensures that they are capable of seamlessly running their operations based on partnerships with foreign manufacturers and suppliers.
Negotiations in International Business
Negotiations are a way to manage relationships that happen in many areas of society including in business (Kapur, 2024). They play a major role in ensuring that different parties can reach a consensus relating different issues. Hence, it is possible to reach important agreements that serve the benefit of all the parties involved through successful negotiations. Negotiations have become a common part of modern businesses because of the many benefits associated with cooperation and collaborations with other entities in the marketplace (Agha, 2021). Such negotiations may be used to achieve many goals based on the interests and motivations of the parties involved. Some of the main purposes of negotiations in international business include; building relationships, boosting the bottom line, conflict resolution, managing communication, and problem solving (Agndal & Åge, 2017).
International businesses have found it to be beneficial to create and build on relationships with other entities that support the overall set goals and objectives (Vojvodić, Martinović and Brajević, 2023). Such relationships can be used to meet objectives such as creating new networks or seeking new sources of expertise. This require the use of effective negotiations between different parties where the desired outcomes can be discussed. For example, an international business may be interested in entering a new market, and uses negotiation to build relationships with local entities that may ultimately lead to the attainment of the set goals. Building relationships though negotiation can also happen where businesses aim to expand their current arrangements with other entities (Dobre, 2021). The overall objective of such negotiations is to create mutually beneficial relationships that can serve to support international business activities.
International businesses find it important to boost their operations across many markets to respond to or exploit any opportunities that may exist (Wang and Wang, 2016). This has had a profound impact on their overall performance as it empowers them to make necessary changes that enhance their performance. These processes require a lot of negotiations with key stakeholders in the business to ensure that all the processes and steps that need to be taken adhere to the set standards and requirements. International businesses commonly use effective negotiations to boost their bottom line which requires them to be capable of reaching good agreements and be in a position to persuade others on key issues and ideas (Gökmen, 2019). The businesses are motivated by unique goals and objectives, and hence develop unique negotiation strategies and tactics based on their unique goals and objectives.
Modern supply chains are complex, and commonly requires parties from all over the world to work together to develop the final product (Anwar, et al 2024). For example, smartphones need important raw materials such as copper and lithium which many be sourced from mines all over the world while the final product will be assembled in a different country. Hence, there is a need to maintain favourable relationships among all the participants to ensure that the final product meets all the expectations of the stakeholders. Negotiators play a vital role of ensuring that all these processes are successful through conflict resolution. Conflicts commonly arise where the different entities involved in supporting an international business cannot agree on important details on their agreements. Resolving such conflicts require the use of effective negotiation skills which ensure that operations can run smoothly.
Negotiations in international business are also essential in ensuring that there is constant communication on the progress of the different processes that support such businesses. It is common to have international businesses running operations across the world based on the need for different inputs required to avail goods and services in the global market (Khakhar & Ahmed, 2017). For example, most electronics require the use of raw materials sourced from all over the world. The coordination of all the various processes needed to produce such electronics require a lot of negotiations between people in different parts of the world. Competent negotiators hence need to manage effective communications between all the parties involved in such businesses to ensure all internal processes proceed as needed (Dzogovic & Cucovic, 2024). The continued development and advances in telecommunication have eased the ability of negotiators to engage parties in international trade with relative ease.
An added advantage of running an international business is that there is a large pool of highly capable employees within the organisation. Negotiators in these businesses play an important role of assisting in problem solving where such problems might be more difficult for some of the players and stakeholders. The negotiators can tap into their vast knowledge in international organisation to provide possible solutions to the problems that need to be resolved. The ability for negotiators to resolve problems across the world to support the operations of international businesses has played a major role in supporting the continued growth of globalisation. These businesses have created a global network of highly skilled negotiators who can overcome many of the challenges that affect the attainment of the set goals and objectives (Haggenmüller & Oehlschläger, 2023).
Role of Culture in Successful Negotiations
Cultural differences play an important role in determining the overall success of negotiations (Upson and Ndemo, 2023). Hence, negotiators must be in a position to understand the overall impact of cultural differences in their operations to support the success of international businesses. The negotiation strategies and tactics used must be informed by the unique cultural differences that exist in specific markets in the global market. Culture has a profound impact on important values and attributes that individuals look for in any negotiations. Some of the most important considerations relating to cultural differences during negotiations include; attitudes, styles, time, risk, values, and language (Khakhar and Rammal, 2023).
The overall attitudes to negotiation differ from one culture to another. In some cultures, negotiations are viewed as a form of collaborative approach to achieving mutually beneficial outcomes while other cultures may view negotiation as an opportunity to be more competitive and assertive. It is important to have an understanding of the overall attitudes that each culture has towards negotiations, and make changes to the selected strategies and tactics to ensure that they reach the desired outcomes (Liu and Ma, 2019). This also means that the negotiation strategies and tactics used must be adapted to the unique culture in which they are applied.
Culture also has a profound impact on the type of style that is used to negotiate (Usunier 2019). Some cultures might prefer more direct approaches to negotiations while others might prefer indirect negotiations. This also means that there is a clear distinction between cultural preferences for either formal or informal styles to negotiations. The style used in negotiations refers to important aspects of the process such as the titles used, the dresses worn, and the ways the negotiator interacts with other people. For the most part, negotiation styles can either formal or informal. The formal style of negotiations involves addressing counterparts using titles while the informal style focuses on quickly developing relationships with the other parties (Mao, et al 2024).
Negotiators also need to factor in the role of risk appetite in each culture. Different cultures have different attitudes towards risk. While some may be more open to taking on major risks with the hope of getting big rewards, some try as much as possible to avoid such risks. It is hence important to consider the levels of risks that other people are willing to take on before the commencement of negotiations. The negotiator has to find a way to set the risks within the acceptable levels for the other parties.
Research has demonstrated that different cultures have different sensitivities to time. Some cultures are hence more sensitive to time than others, an may hence insist on punctuality, quick responses, and sticking to strict deadlines. When negotiating with parties from such a culture, it is important to ensure that their sensitivity to time is considered when making important decisions on the strategies and tactics to use. Some cultures are less sensitive to time and prefer to have a more accommodative approach that emphasises on building relationships by allowing negotiations to proceed slowly over time. The overall success of negotiations is significantly influenced by adjusting to the unique cultural sensitivity to time (Kappo-Abidemi & Oyewole, 2024).
Cultural values and norms are crucial to successful negotiations (Tung & Stahl, 2018). Such norms and values include principles such as the preference between collectivism and individuality and the need for interpersonal relationships during negotiations. Some cultures would prefer to negotiate with parties that they have built trust and good relationships with rather than having to engage strangers. Each culture is unique and requires the negotiator to determine the most effective way to engage individuals in each culture by considering their preferences to norms and values (Gavrić & Braje, 2024). In many cases, this requires negotiators to build long-lasting relationships that facilitate successful negotiations.
International businesses have to be comfortable using different languages to communicate with parties from all over the world. Language is one of the key aspects of any culture (Zipper-Weber and Mandik 2024). It plays an important role in defining how people communicate and interact with each other. Understanding the role of language in negotiations is critical to realising the desired outcomes. Such negotiations may either be successful of ineffective based on many challenges presented by language such as misunderstandings and misinterpretations (Othman & Ibrahim, 2022). It is recommended that negotiators should be conversant with the language of the other parties that they are engaging with.
RESEARCH METHODOLOGY
The identified research questions and objectives play a major role in the selection of the most appropriate research methodology. The research questions include; how does cultural diversity impact international business negotiations? what challenges arise from cultural diversity in relation to international business negotiations? And, how can companies navigate cultural differences to be successful in international business negotiations? The research objectives are; to understand the role of cultural diversity in international business so as to facilitate the analysis of how it affects business negotiations, to analyse and define problems that result from multiculturalism in global and international business transactions, and to identify the measures that firms can employ in order to manage culture and overcome cultural barriers in cross-border commerce negotiations.
The research methodology will use a mixed-method that makes use of both quantitative and qualitative data to support the attainment of the set research objectives. The research questions can be answered through the use of both qualitative and quantitative data that introduce novel insights into the research. Qualitative data will be needed to demonstrate the overall effectiveness of cultural intelligence and intercultural competence. Quantitative data will mainly be used depict the scale of effectiveness of negotiations that consider cultural factors of the parties involved.
Research Philosophy
This research will mainly rely on interpretivism to make sense of the vast amounts of data and information needed to fully respond to the research question, and answer the research questions. Interpretivism refers to the process of allowing researchers to interpret elements of the study. This philosophy allows for the successful completion of research in social sciences such as the overall impact of culture in international business negotiations. There are not clear ways of articulating or measuring the effectiveness of such efforts; but it is possible to conduct research and reach a credible outcome based on the support from various research studies.
This research will aim to focus on providing a better understanding of the overall impact of cultural diversity in international business negotiations. I will use sources from all over the world to provide different insights on the findings of different researchers on areas that can easily be related to the research questions. Hence, it does not develop a clear and scientific conclusion with quantitative data to support the evidence provided. Rather, it works to provide a better understanding of the research questions through the provision of vast evidence in support of key points.
Interpretivism rose from the need to have the human interpretation of data that is not possible in a positivism approach. Positivism is a philosophy to research that aims to definitively provide logical or mathematical proof from statistical analysis. It is an effective philosophy in natural sciences where the research questions can be answered exclusively using statistical analyses. However, the positivism philosophy to conducting research is ineffective when trying to complete research in most social sciences where human interpretation is needed. Unlike natural sciences that can easily be quantified, social sciences are more dependent on the interpretation that people have to the world around them.
This research involves many human interpretations of different cultural issues that are unique to specific regions and markets in the global market. It involves the use of many different sources that individually contribute to the research questions and objectives. Hence, most of these sources will have to be interpreted without the excessive use of statistics. Many of the sources used are mixed-studies where some data is provided, but there is a lot of reliance on human interpretation of the results obtained from the studies. The use of an interpretivism philosophy will present a good opportunity to interpreted these findings and incorporate them into the study.
Where appropriate, scientific analysis of data will be used to support the key ideas presented. This will mainly be based on the evidence provided by the different sources used. These sources individually contribute to the overall response to the research question. The data presented will serve to support key positions that provide a better understanding of the issues discussed. Using a mixed strategy serves to reinforce the positions taken to demonstrate the relationship between cultural diversity and international business negotiations. This will also make it easier to achieve the stated research objectives.
Research Approach
The main approach to this research will be the used of a mixed-method approach that combines the characteristics of both the quantitative and qualitative research approaches. This is the best option for this research because it presents many benefits that cannot be provided by either of the two approaches. A mixed-method approach allows the research study to be validated by verifying the results obtained from other studies because it combines the use of both quantitative and qualitative sources of data. It also gives room for the study of social sciences that cannot be entirely represented through the use of quantitative methods of doing research. For example, this study analyses the relationship between cultural diversity and the effectiveness of international business negotiations. It is important to include both the statistics and the opinions of experts in this area of study. Hence, this research will combine qualitative and quantitative sources to fully meet the set objectives.
Quantitative research approach is commonly used in natural sciences where it is important to quantify amounts and data to reach the desired outcomes. For example, the quantitative approach can be used to calculate specific metrics through the use of mathematical models. Although it is an accurate approach to determining specific amounts of data that is needed, this approach can only be used in instances where the research question focus on natural sciences; and can hence be quantified. However, it is limited in usability in social sciences that rely heavily on the use of human perception rather than on definitive scientific methodologies. The quantitative approach will hence be used along the qualitative approach to develop a more comprehensive understanding of the research questions, and to reach the set research objectives.
The qualitative research approach is mainly useful in social sciences where human interpretation of data is needed to reach the desired conclusions. Unlike natural sciences that can easily be quantifiable, social sciences are more aligned with the perceptions that people have around the world around them. They also require the collection of vast amounts of data, but most of the analysis is greatly influenced by sociological concepts and their interpretations in huma society. This research intends to analyse the role of cultural diversity in influencing international business negotiations. Qualitative sources will play a major role in providing a lot of insights into the various ways other researchers have noted about the relationship between cultural diversity and international business negotiations.
Research Strategy
This research will use a deductive strategy where it begins with a theory that it ultimately aims to confirm. This strategy will involve a number of steps that will have to be completed to reach the research’s conclusions. The research strategy includes important elements of data collection and interpretation and is based on the research questions and objectives. Different strategies can be used in the research to ensure that the final results are supportive of credible conclusions. Different research strategies differ based on their ontological assumptions, steps, and starting points. They also differ because they use different styles of explanations and understanding of their research questions.
This research will employ a deductive strategy. A deductive strategy begins with an explicit hypothesis or set of hypotheses that form the theory which could provide a good response or explanation for a particular problem. It then uses different sources to test the hypothesis presented for credibility. The hypothesis created for this work is that “cultural diversity is highly influential during international business negotiations.” By using the deductive strategy, the next steps in the research will be to try to validate this hypothesis by collecting a lot of relevant sources that either support or reject it. Hence, deductive strategies to research create a hierarchy that begin with a theoretical to an observational position. This can also be viewed as beginning from an abstract position to a concrete understanding of the research topics.
The choice of this strategy is based on the fact that the hypothesis is based on a social science topic rather than a natural science. It is possible to create a hypothesis in social sciences with the intentions of creating a study that can either support or refute it. This work will try to either support or refute the hypothesis that “cultural diversity is highly influential during international business negotiations.” Hence, the deductive strategy follows these fours steps; developing a theory, creating a hypothesis about the theory, observing and analysing the validity of the hypothesis, and finally the confirmation or rejection of the hypothesis.
The theory is the foundation of the research and serves to start the process of creating a hypothesis. For this work, the main theory is that globalisation will continue to expand as more businesses and people enter the market. The hypothesis is based on a basic understanding of how international businesses negotiate to maintain their global operations. It serves the purpose of creating a framework that can be used to complete scientific research to validate or refute these claims. The next step requires the observation of results from various scientific studies that are closely related to the research questions and objectives. Collecting as many scientific studies as possible is necessary to find a good response towards whether the hypothesis is credible or not. The final step involves making conclusions and recommendations that either support or refute the hypothesis.
Methods of Data Collections and Analysis
The study aimed to respond to the research questions by synthesising evidence from both qualitative and quantitative studies. It will hence involve a systematic literature review of relevant studies that contribute significantly to the research questions and objectives. To ensure that the sources selected would adequately respond to the research questions, many quantitative studies were included to support the evidence provided in many of the qualitative studies. This allowed for the development of an informed position on the research topic by synthesising a lot of data from different sources.
The selection of the studies to use was based on the PICO framework that focuses on the populations in the study, the interventions used, comparisons made, and the final outcomes. For this research the populations studied mainly revolved around business people in the international market place. The population were selected from any part of the world with the requirement that they were involved in the global trade. It was important to ensure that this population was involved in doing both business and negotiations with other parties. Some of the studies included did not included provided more insights into the research questions that others.
The intervention referred to the use of business negotiations by the select population. For the most part, the selected populations had to be involved in business negotiations with other parties. Some of the negotiations did not have to be for expansion purposes of the business into new markets. However, negotiations were required to be present to provide a better understanding of the different levels of effectiveness attained where different approaches are used. The research questions guided the selection process of the sources that included the use of negotiations.
Comparisons were made between the effectiveness of negotiations with and without considerations for the cultural factors. The main purpose of the research was to determine the effectiveness of negotiations involving international businesses in relation to the considerations of the cultural influences that needed to be made. This would serve the purpose of providing a better understanding of the overall role of cultural intelligence and intercultural competence among negotiators in the global marketplace.
The outcomes referred to the overall success of business negotiations based on the cultural considerations made by the parties involved. The negotiations were considered to be a success where the business people were in a position to meet their intended outcomes. The level of success in each study was considered to determine if all the goals set out were attained.
The ethical completion of the research ensured that all the sources used also adhered to high ethical standards. Each of the sources was determined to have followed an ethical process to realise the final results.
DATA ANALYSIS AND PRESENTATION OF FINDINGS
Electronic searches were based in the following databases and resources; EBSCO, JSTOR, EconLit, Factiva, ProQuest, Google Scholar and PrivCo. These databases provided a large number of relevant research studies that significantly responded to the set research questions. Their publications are mainly peer-reviewed, and included a lot of details about how each study was completed. The initial searches were based on a selection of key words presented in the table below. Each of the selected studies was stored to ensure replicability.
| Key research questions/ Databases | How does cultural diversity impact international business negotiations? | What challenges arise from cultural diversity in relation to international business negotiations? | How can companies navigate cultural differences to be successful in international business negotiations? |
| Keywords selected from;
· EBSCO, · JSTOR, · EconLit, · Factiva, · ProQuest, · Google Scholar and · PrivCo |
· Cultural diversity in international business
· Cultural factors in business negotiations · International business negotiations · Role of culture in business negotiations · Successful international business negotiations |
· Cultural Challenges in international business
· Cultural diversity in international business · Cultural diversity and business negotiations · Overcoming cultural barriers in business negotiations · Overcoming cultural barriers in international business |
· How to be successful in international business negotiations
· Overcoming cultural differences in business · Overcoming cultural differences in international business · International business negotiations success. |
*All the searches had to be published within the last eight (8) years to be considered viable.
Some changes were made to the search strategy to match the particularities of each of the databases selected. Some of the databases had a limited number of keywords used, and the number of results obtained. Synonyms were used to reduce the keyword count where necessary.
Selection of Studies
An independent process was performed to review the different searches based on the inclusion/exclusion criteria. The process was repeated to ensure that all the identified studies met the requirements set for the research. The searches on the different databases provided a lot of results that has to be filtered. Each was analysed for its possible contribution to the research questions. Only studies that could directly contribute to the research questions, and that adhered to scientific processes were selected. They also followed an ethical process to reaching their results. The risk for bias in each study was analysed. Studies had to demonstrate a minimal risk of bias in their methodologies and analyses to be included in the research.
Data Extraction and Management
The following iformation was initially obtained from each source; study type, date of publication, authors, type of publication and the publication status. Some of the additional information that was obtained from most of the sources included the interventions made, research design, outcomes of the interventions, and the overall outcomes for the international businesses.
Data Analysis and Results
The following table details the specific contents of each of the studies used in the research. It contains different key categories needed to support an effective response to the research questions identified.
| Study | Purpose | Study type/ Design | Target/ Control Group | Outcomes | Internal Validity Assessment | Comments (Scale) |
| Agndal, H. & Åge, L.-J., 2017 | To review of articles on business negotiation published between 1995 and 2015 | Literature Review | Articles on business negotiation published between 1995 and 2015. | A cognitive paradigm, psychological approach, typically relying on experiments and statistical testing of findings.
A behavioral paradigm, largely concerned with mathematical modeling and game-theoretical models. |
Low risk of
Bias OR Analysis error |
It shows that business negotiation is an ongoing practice based on continued research. (3) |
| Anwar, S., Ekawati, I. & Ramadian, D., 2024 | To develop an optimization model of the negotiation process between supplier (farmers) and collector (buyer) in gambier supply chain | Applied research | Supplier (farmers) and collector (buyer) in gambier | It developed models that were verified through computational testing using both real and estimated data. The research results can assist the related actors in the gambier supply chain. | Low risk of
Bias OR Analysis error |
The study demonstrates the effectiveness of changes to negotiation strategies (4) |
| Asmussen, C. G. & Fosfuri, A., 2023. | To develop a model where an MNE collaborates, monitors, and negotiates prices with a supplier whose CSR breaches may be revealed by the MNE, external agents, or remain hidden. | Applied Research | multinational enterprises (MNEs) | It illustrates how MNEs may face a hold-up problem when irresponsible actions by suppliers are made public, and the suppliers have the power to engage in opportunistic renegotiation.
It also shows that greater monitoring by MNEs can have negative consequences by weakening the MNE’s bargaining position or even prompt more irresponsible actions by the suppliers. |
Low risk of
Bias OR Analysis error |
This study serves to advance international business research on value chain sustainability (4) |
| Dobre, A. C., 2021 | To outline a consideration on how to
achieve win-win negotiations and what kind of principles we can use for a successful negotiation process. |
Descriptive design | Business negotiators | It provides an outline on how to achieve win-win negotiations and what kind of principles we can use for a successful negotiation process.
|
Low risk of
Bias OR Analysis error |
It demonstrates how negotiations are crucial to business, and the important role of culture (4) |
| Dzogovic, S. & Cucovic, A., 2024 | To investigate the significance of science diplomacy at the convergence of politics, diplomacy, and science, emphasizing its heightened relevance in contemporary geopolitics and economic development. | Descriptive Design | Students | The study showed a positive evaluation of science diplomacy by students, indicating their recognition and appreciation of its utilization in enhancing negotiation outcomes over international business contracts.
|
Low risk of
Bias OR Analysis error |
This work further supports the focus on different consideration during international business negotiations (4) |
| Gavrić, T. & Braje, I. N., 2024. | To investigate the occurrence of conflicts in family businesses; focusing on their impact on founder behaviour and organizational culture | Qualitative study | 17 participants in family-owned businesses | It showed that task or process-based disagreements can act as catalysts for founders to re-evaluate their behaviour.
It also reveals that the features of organizational culture within family businesses can be instrumental in managing conflicts effectively. |
Low risk of
Bias OR Analysis error |
This study showed the importance of fostering a culture of open communication, critical thinking, and respect within family firms (3) |
| Grosz, A. S. & Jozsa, L., 2023. | To explore the role of cultural background in business negotiation and potential conflicts of international businesses | Qualitative study | 10 business people | The research found that the business culture of the studied countries is primarily determined by the values of religion.
|
Low risk of
Bias OR Analysis error |
This research clearly determines the direct relationships between culture and negotiations in international business (5) |
| Haggenmüller, S. & Oehlschläger, P., 2023. | To provide probable future developments in the form of holistic scenarios for business negotiations | Structured, multi-method approach | Business owners | The most probable future development in business negotiations include; digital intelligence, business as usual, powerful network – the route to collaboration, powerful network – the route to predominance and system crash. | Low risk of
Bias OR Analysis error |
This article provides a better understanding of the possible development that will greatly influence the future of international business negotiations (4) |
| Kappo-Abidemi, C. & Oyewole, O. O., 2024 | To identify some demographic statistics of employers in technological microenterprises, investigate the factors influencing organizational culture and assess organizational culture’s influence on business success among employers in selected technological microenterprises. | Descriptive Design | 213 business owners (employers) | This study showed that eight variables (climate, customer demand, technological changes, observed behaviour, norms, consistency, adaptability, and sense of mission) are important factors to consider when measuring the organizational culture of employers in technological microenterprises for better business production. | Low risk of
Bias OR Analysis error |
This study goes into more detail about the many variables that determine the overall success of a business.
(3) |
| Khakhar, P. & Rammal, H. G., 2023 | To explores biculturals’ key factors and attributes and how their cultural knowledge and identification influence International Business Negotiations (IBNs) and help their firms outperform others | Semi-structured interviews | 35 bicultural senior managers | The study highlights three essential qualities and behaviors that allow biculturals to act as a bridge between the parties during IBN: adaptability, cultural frame switching (CFS) and creativity. | Low risk of
Bias OR Analysis error |
The study shows that bicultural business owners can use their identity to support the overall success of their businesses. (5) |
| Liu, X. & Ma, Z., 2019. | To explore personality effects on the endorsement of ethically questionable negotiation strategies in Canada and China | Descriptive Design | 400 business professionals | The results show that the Big Five personality traits strongly affect the endorsement of ethically questionable negotiation strategies (EQNS) both in Canada and in China, but in different ways. | Low risk of
Bias OR Analysis error |
This study has significant implications on business ethics for negotiators. (5) |
| Nebozhenko, T. & Rassadnykova, S., 2023. | To evaluate the interdependencies among globalization, economic growth, and international business relations | Statistical analysis | Trade indicators spanning the years 2000 to 2022 | The study finds that there are intricate interconnections and dependencies existing between globalization, economic growth, and international business relations.
These interconnections are intricately linked to the exchange of technologies, knowledge, investments, and the rapid advancements observed in information and communication technology (ICT). |
Low risk of
Bias OR Analysis error |
This study shows that there is a large connection between international trade, and overall business relations. It hence supports the hypothesis developed at the beginning of this research. (4) |
| Ramadania, R., Suh, J. & Rosyadi, R., 2023 | To determine the relationship between consumer ethnocentrism, cultural sensitivity and brand credibility toward purchase intention to domestic products | Survey | 120 consumers | The results showed that cultural sensitivity has a negative influence on consumer ethnocentrism and purchase intentions of domestic brands.
Brand credibility and consumer ethnocentrism were found to have a positive effect on domestic brand purchase intentions. |
Low risk of
Bias OR Analysis error |
This source serves to demonstrate the relationship between important cultural factors and overall brand credibility. (5) |
| Soo Hoo, P. L., 2016. | To provide the theoretical link of cultural dimensions of culture for international business negotiations. | Descriptive Design | n/a | The study helps to identify effective communicative behaviours in business negotiations which are useful insights for international business practitioners. | Low risk of
Bias OR Analysis error |
This source directly responds to the identified research questions (5) |
| Taylor, C. & Zhou, J., 2019. | To investigate how private corporations understand and utilize cultural training between two countries | Interviews with global managers | n/a | This study showed that concerns regarding intellectual property and trust were main focuses of global managers when doing international trade. It explains that culture plays an important role in determining overall business success. | Low risk of
Bias OR Analysis error |
This source showed some of the considerations that global managers make in relation to responding to cultural differences in the international marketplace (5) |
| Tung, R. L. & Stahl, G. K., 2018. | To take stock of the literature on culture in International Business by looking back in terms of evaluating what we know and what we do not know; and looking forward by identifying emerging trends and outlining avenues for future research | Descriptive design | n/a | It finds that understanding the relationship between culture and international business can help overcome the fragmented, discipline-based approach which has contributed to the persistent problems that have plagued the study of culture in IB in the past. | Low risk of
Bias OR Analysis error |
The source directly responds to the research questions selected (5) |
| Upson, J. W. & Ndemo, B., 2023. | To advance knowledge of how national culture affects firm behavior | Survey design | 263 small- and medium-sized enterprises (SMEs) | It shows how effective the Hofstede’s cultural dimensions and Meyer’s culture scales are in predicting differences in the awareness-motivation-capability framework of competitive dynamics across four national cultures. | Low risk of
Bias OR Analysis error |
This source directly shows the relationship between cultural factors and overall business success (4) |
| Usunier, J.-C., 2019. | To show that understanding the complex range of factors that impact intercultural business negotiations (ICBN) is a fundamentally important skill | Literature review | This study shows that understanding the complex range of factors that impact intercultural business negotiations (ICBN) is a fundamentally important skill managers and senior executives who find themselves negotiating with international partners who differ in terms of culture, communication style, time orientation, as well as personal and professional backgrounds. | Low risk of
Bias OR Analysis error |
The source helps managers to avoid naïve behaviour by proposing a framework for linking cultural aspects to other major situational and dispositional variables in the ICBN process (5). | |
| Vojvodić, K., Martinović, M. & Brajević, M., 2023. | To examine the success of the negotiation process and address the differences in success assessment between industry groups | Descriptive design | n/a | In the primary and secondary sectors, outcome and deadline-related measures of success are not affected by negotiation frequency or domestic market dominance, while there is a weak positive relationship between negotiation frequency and overall satisfaction.
Managers who negotiate more frequently report higher satisfaction with negotiation outcomes and overall satisfaction |
Low risk of
Bias OR Analysis error |
This source provides important insights that are needed to provide a better understanding of the negotiation process (4) |
| Wang, Y. & Wang, K. Y., 2016. | To argue that opportunism is more fundamental than differences in our understanding of international business negotiation behaviour. | Descriptive design | n/a | It shows that relationships between parties’ ex-ante credible commitments and ex-post dispute resolution strategies and explores how institutions moderate such relationships in shaping international business negotiation behavior and process. | Low risk of
Bias OR Analysis error |
This source shows that the overall success of any negotiations is based on opportunism (3) |
| Zipper-Weber, V. & Mandik, A., 2024. | It investigates if multicultural teams can be an essential part of the global workforce and whether positive effects exist regarding dynamic capabilities, learning and knowledge transfer. | case study, qualitative observation and semi-structured expert interviews | n/a | The study reveals that applying a qualitative design allowed the needed exploration and show that multicultural, geographically dispersed teams are positively experienced and considered necessary in today’s globalised world. | Low risk of
Bias OR Analysis error |
This source showed that there is a lot of influence in the overall success of large multinationals based on cultural factors (5) |
Results
21 selected sources were found to contribute directly to the research questions. However, each of these sources focused on different aspects of the relationship between culture and international business negotiations. A scale was developed from 1-5 to demonstrate the degree of evidence in each study relating to the extent of influence of cultural diversity on international business negotiation (1 being the lowest, and 5 being the highest). The score of each source is included in the comment section.
The results show that most of the studies showed that there was a strong correlation between cultural diversity and the overall success of international business negotiations. The review could not find any conclusive studies that opposed this conclusion. Rather, most focused on various aspects of the topic.
CONCLUSION AND RECOMMENDATIONS
This work aimed to respond to three main research questions; how does cultural diversity impact international business negotiations? what challenges arise from cultural diversity in relation to international business negotiations? And, how can companies navigate cultural differences to be successful in international business negotiations? International business negotiations are pivotal to nearly every facet of modern global commerce. These negotiations include selling goods and services, procurement of raw materials, product distribution, advertising, market research, licensing, technology transfers, franchising, manufacturing, and forming strategic alliances such as joint ventures, mergers, and acquisitions.
The role of culture in determining the overall success of any business has increasingly widened as the world has become more interconnected. Successful businesses have to develop ways that they can serve consumers in different markets by adapting their products and services in ways that the target market prefers. The continued development of globalisation has meant that the considerations that need to be made relating to the success of businesses have increased. It is important for businesses to use more resources researching the unique traits and preferences of consumers in different markets to determine the overall feasibility of their ventures.
Culture has a profound impact on the overall preferences that consumers have. The global market is typified by the existence of many cultures that that influence the decisions that individual consumers make relating to the consumption of goods and services. Modern businesses have to be knowledgeable on how to serve a culturally diverse global market. For the most part, the success of any business in a different culture happens with the use of partnerships and collaborations with local businesses to effect trade.
Globalisation has been one of the most impactful development in human society in recent decades. It has meant that businesses have access to a wider market across the world. For most businesses, this is an added advantage because they can benefit in many ways from a wider market. Negotiations are a way to manage relationships that happen in many areas of society including in business. They play a major role in ensuring that different parties can reach a consensus relating different issues. Negotiations have become a common part of modern businesses because of the many benefits associated with cooperation and collaborations with other entities in the marketplace. Some of the main purposes of negotiations in international business include; building relationships, boosting the bottom line, conflict resolution, managing communication, and problem solving.
International businesses have found it to be beneficial to create and build on relationships with other entities that support the overall set goals and objectives. Such relationships can be used to meet objectives such as creating new networks or seeking new sources of expertise. This require the use of effective negotiations between different parties where the desired outcomes can be discussed. Modern supply chains are complex, and commonly requires parties from all over the world to work together to develop the final product. Negotiators play a vital role of ensuring that all these processes are successful through conflict resolution. Conflicts commonly arise where the different entities involved in supporting an international business cannot agree on important details on their agreements. Resolving such conflicts require the use of effective negotiation skills which ensure that operations can run smoothly.
Negotiations in international business are also essential in ensuring that there is constant communication on the progress of the different processes that support such businesses. It is common to have international businesses running operations across the world based on the need for different inputs required to avail goods and services in the global market.
Cultural differences play an important role in determining the overall success of negotiations. The negotiation strategies and tactics used must be informed by the unique cultural differences that exist in specific markets in the global market. Culture has a profound impact on important values and attributes that individuals look for in any negotiations. Some of the most important considerations relating to cultural differences during negotiations include; attitudes, styles, time, risk, values, and language. Culture also has a profound impact on the type of style that is used to negotiate. Some cultures might prefer more direct approaches to negotiations while others might prefer indirect negotiations. This also means that there is a clear distinction between cultural preferences for either formal or informal styles to negotiations. The style used in negotiations refers to important aspects of the process such as the titles used, the dresses worn, and the ways the negotiator interacts with other people.
Research has demonstrated that different cultures have different sensitivities to time. Some cultures are hence more sensitive to time than others, an may hence insist on punctuality, quick responses, and sticking to strict deadlines. Cultural values and norms are crucial to successful negotiations. Such norms and values include principles such as the preference between collectivism and individuality and the need for interpersonal relationships during negotiations. Some cultures would prefer to negotiate with parties that they have built trust and good relationships with rather than having to engage strangers. Each culture is unique and requires the negotiator to determine the most effective way to engage individuals in each culture by considering their preferences to norms and values.
International businesses have to be comfortable using different languages to communicate with parties from all over the world. Language is one of the key aspects of any culture. It plays an important role in defining how people communicate and interact with each other. Understanding the role of language in negotiations is critical to realising the desired outcomes.
Recommendations
The research determined that there is a close relationship between cultural diversity and the effectiveness of international business negotiations. It is hence important to ensure that negotiators working for international businesses are highly competent at ensuring that the cultural factors that influence the success of their businesses are well understood and are included in decision making. Two of the main skills that negotiators should possess include cultural intelligence, and intercultural competence. Cultural intelligence refers to the ability of an individual to function well in a new culture because they are confident and informed about that culture. In most cases, the individual is confident in a new environment because they have adapted to the cultural settings of the other party. It is hence important for negotiators to be familiar with the culture of the parties they are engaging with. Intercultural competence refers to the ability of a negotiator to understand and respect other people of a different culture. It involves the use of specific skills, attitudes and knowledge about the other culture to make a good negotiator.
Negotiators should also emphasise and focus a lot on doing comprehensive research about the specific markets they are targeting. It is common for international businesses to venture into new markets. It is recommendable that negotiators should prioritise completing extensive research about the specific markets they venture into. Specifically, they should develop a comprehensive analysis of the target market through considerations such as the cultural factors that influence the consumer tastes and preferences. The overall success of any business venture in the international market is greatly influenced by the capabilities of the negotiators, and other business stakeholders, to have a good understanding of the market they are venturing into.
This work has also shown the many benefits associated with making business partnerships with other entities. The international business community commonly need to negotiate between parties that are involved in doing trade. Effective negotiations means that there is an opportunity that all parties involved can get to benefit significantly from increased collaborations and partnerships. For example, if an international business aims to venture into a new market, it might be beneficial if it partnered with an already established entity in that market that has an existing infrastructure to reach the market. This ultimately means that such ventures do not have to be expensive, and are also likely to be successful because of the local knowledge and expertise of one of the parties involved. It is hence recommended to enter into negotiations with other parties to reach mutually beneficial arrangements.
The final recommendation is that international businesses should focus on building relationships with those they intend to negotiate with. The research determined that having good relationships between negotiating parties enhances the chances of realising mutually beneficial arrangements. It is difficult for successful negotiations to involve complete strangers who are not familiar to each other. Hence, negotiators should always pay close attention to the type of relationships they have with the parties they intend to engage.
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