Indian Negotiation Styles - Essay Example

? Week 2 Application Ali Ghandour Walden Doctoral Study Mentoring Indian Negotiation Styles Over the centuries, India has remained one of the most significant destinations for international commerce. A range of unique factors has contributed to India’s growing relevance in international trade. Processes of economic liberalization and globalization have contributed to the steady growth experienced in the country. India’s economic growth was estimated at 7.5 % in the year 2000. Some of the areas that have experienced significant growth include the Informational Communication and Technology (ICT) sector and import-export trade. A break from socialist policies to a capitalist oriented economic structure has been cited as one of the contributing factors to the country’s economic growth. Western countries have increased their levels of interest in the country for purposes of economic partnership. India’s high population estimated at over a billion has attracted foreign investors who seek market for their products or cheap labor. However engaging with India demands a deeper connection with the culture, attitudes, and philosophies underlying their business practices. Table of Contents ABSTRACT 2 The Problem 4 The Problem Background 5 Purpose of the Study 8 Research Question 10 Research Hypotheses 10 Literature Review 10 Research Methodology 11 Methods of Data Collection 13 References 16 The Problem Multinationals and other global business entities that have attempted to establish their businesses in India have been faced with unique challenges that demanded the understanding of the corporate climate. The levels of success or failure in Indian business are directly related to the manner in which international players adjust to the unique character of Indian culture. Studies have established a strong connection between culture and business in the Indian context. Past and recent analyses on Indian negotiating style show that the styles adopted in Indian business environment are largely consistent with their cultural believes, social values, and attitudes towards life in general (Stephen, 2010). Indians embrace family values and respect the aspect of honesty, respect, order, and hierarchy. Indian culture also features a strong element of interpersonal communications and relationships. The individual is never separate from the deal. They view the negotiation in human terms rather than strictly technical business processes. In essence, Indian negotiating styles combines the values of culture honesty and details in ways that focus largely on the results rather than the processes. It is therefore important for business theorists to establish ways of establishing ways through which the synergies of culture, attitudes, and values can be incorporated into business practice. It is currently not known how all multinationals in India can equally achieve success in their business processes, since the Indian culture and negotiating style poses a challenge to them. Although some multinationals in India have succeeded, a considerable number have registered failure, due to lack of knowledge on how to successfully negotiate in India. Failure of these multinationals to take into account the culture and negotiating styles of India will result in their continued low profitability and productivity in India. The Problem Background For more than the past twenty years, foreign companies have been trying to gain entry into the business environment of India. Although these organizations have always managed to enter the Indian market, they have failed to realize their target profits, even as their productivity decreases each year. This contrasts the fact that the revenue of India has kept improving for the past number of years. If the economy improves, one would expect also all the companies in the country to have increased productivity. However, this was not the case with foreign companies in India. While the growth rate of the Indian economy topped at 7 percent, the growth rate of multinational companies lagged behind, standing at less than a half of the Indian growth rate (Choudhary, Kshirsagar, & Narayanan, 2012). In India, business is considered as a culture and not simply a means towards profits. Success and failure are assessed in terms of the character and ability of agents rather than logical outcomes of strategies and processes (Martin, & Chaney, 2009). In the context of international business, the negotiation process in India is considered, in many circles, as a process of balance of power and an adjustment of equilibriums between the presumed cultural greatness of the west and Indian culture. Cultural balance and cultural universalism acquire more prominence to challenge the negative assumptions resident in theories of cultural relativism as understood in business context. Indian negotiating styles significantly rely on the details (Zubko, & Sahay, 2010). Issues are broken down into their constituent parts and analyzed in accordance with the manner in which they relate to the bigger picture. In essence, the process entails the realization of a range of issues that connect with outcomes. Usually, the focus begins with the bigger picture before attention is given to the driving factors and the specifics of the deal. Clarity and order in the details of the deal becomes necessary for purposes of assessing the feasibility of the deal. Naturally, Indians prefer the guidance of clear data and mathematical procedure towards the attainment of a given goal. This trait is consistent with the cultural attachment to matters of mathematical and scientific importance. Studies have connected these traits to the flourishing IT and medicine culture in the country. Family and business comprise the uniform continuum that forms part of the Indian culture (Desai, 2012). Appreciating the family connections behind India’s corporate world remains a key starting point of developing insights into the working of the system. Usually, knowledge on the role and place of family in the business environment is an important advantage in developing better negotiation strategies in the Indian business environment. Businesses are usually hereditary. Such knowledge should also be accompanied by the awareness of the kind of hierarchies that run through families and kinships (Gesteland, & Gesteland, 2010). The process of negotiation is usually considered in terms of the transaction of power and respect between the negotiating parties. Acknowledgement of status is considered of ultimate importance in the general process of negotiation. This particular attribute is consistent with the caste nature of Indian society, which requires an appreciation of classes, divisions, and hierarchies. Language plays an important role in India’s communication style. Generally, Indian business negotiations are conducted in vocabularies of respect and honor (Zubko, & Sahay, 2010). Certain words and responses that are innocuous in the general western discourse are usually considered as offensive or rude within India’s cultural and business context. Denials, oppositions, and rejections have to be conducted in kind words that do not provide any hints of rudeness or lack of finesse in the communication process. However, emotional appeals and vigorous defense of facts is permissible as a way of building advantage on aspects of the deal. Such negotiations should, in most cases, be accompanied by workable details, examples, methods, and all relevant information that would provide both competitive advantage and influence in the part of the deal. Proof and details are necessary factors for furnishing optimism in the deals. Feedback remains one of the key factors in effective business communication within the Indian context (Gesteland, & Gesteland, 2010). Generally, feedback implies a sense of respect and trust, which are the necessary characters of nurturing and sustaining long-term business relations within India’s corporate environment. Honesty, fidelity, and compromise are some of the factors that determine the level of success of negotiation in the Indian business environment. Presentation and character are some of the factors that guarantee success or failure in the Indian negotiating environment. Indians prefer and develop trust and respect in people who dress modestly and whose character displays a certain level of honor. Negotiation is considered as a process of socialization. Indian culture encourages socialization among equals. Therefore, it becomes important to adjust one’s demeanor and presentation in the course of negotiations. The key to improving in business transactions in India calls for managers to learn how to align their business goals and objectives with respect to the Indian culture and negotiating style. With this realization, some multinationals in India started to adopt elements of the Indian culture in their company practices and policies, and they learnt the negotiating styles of India. This ensured a considerable difference in the productivity and performance of multinationals in the Indian business environment. In the past few years, multinationals have started to register positive improvement in their productivity in India, compared to the previous years. Today, however, there remains a disparity in the performance level of multinationals in India. While some succeed in their businesses in India and get commendable profits from this, others are suffering huge loses, even though to them, they are adhering to the right standards of business in India. Nonetheless, it is believed that the cultural aspect of India is quite complex and rigid, and yet some of these cultural elements are reflected in the business negotiations style. This in turn has made Indian negotiation style to be quite complex and fixed as well. If multinationals ignore the Indian negotiating style and culture in their business, they are therefore, more likely to fail today, as most evidence point to this. It is advantageous that multinations adapt to Indian negotiation and culture, even as today the country is expected to grow by 6 percent every year, which is a growth rate of some of the big emerging economies. (Choudhary, Kshirsagar, & Narayanan, 2012). Purpose of the Study This research on the international business negotiations in India, aims at understanding the business negotiating style of India, including the variety of ways through which they negotiate, why this is important in India, and the different factors that shape or influence international business negotiations in India. The international business negotiations do not only involve communication in the economic context among countries. Cultures of the different participating countries play a big role in the international negotiation process (Ayoko, 2007). During the process of negotiation, the ideas and behaviours of the different parties are shaped by their own national cultures. In India, culture is the core and basis of business, thereby, playing the greatest role in their negotiations. The purpose of this study is therefore, to determine how different cultural components of the Indian culture influence their international business negotiations. Among the important cultural components in India, which this research will discuss, is the cultural factor of Language. The researcher noted that this is an influential aspect of Indian culture in their international negotiation process, as this generally influences the communication process during the negotiations. Normally, different countries exhibit varying values, thinking patterns, and group consciousness (Mayrhofer, 2004). During negotiations, these differences always come up. Therefore, the study will address these important aspects with regard to India, and their negotiation styles. Among the values that the Indians uphold are feedback, which is based on mutual trust, honesty, and understanding, use of respectful and kind language in communication, and ensuring that there is clarity in communication. All these Indian values influence their international business negotiation styles, therefore, are of interest to this study. This study mainly aims to establish why culture is a great player in the international business negotiations in India. Hollensen (2001) notes that, the cultures of the various parties in the negotiation process need to be understood, for a successful negotiation to be reached. This helps in gaining of balance between the cultures of the different parties in the negotiation, thus, this becomes a good strategy in negotiation processes among different countries. This study also has the purpose of determining how social organization in India influences their international business negotiation styles. This is with respect to the family unit, which plays a great role in the Indian business. Therefore, this study will seek to understand how the role of the family unit in Indian businesses is transferred to their international business negotiations, and how this role of the family unit will shape and influence the negotiation styles in India. Additionally, the researcher noted that Indians are known to be strategic people in their businesses, prioritizing the long-term business benefits. Therefore, this study will also determine how this aspect is applied to international business negotiations, and how it influences the Indian negotiation styles. Having a clear understanding of the negotiation styles of a country helps successful business and social interactions. Therefore, this study is important, as it sheds light on the negotiation styles of India, and this will be beneficial to American companies interested in doing business with Indians. In addition, anyone involved in different levels of social interaction with Indians, or in any other activity that requires negotiation with Indians, will find this study useful too, as it gives details of the negotiation styles of India. This study focuses on the negotiation style of India in international business negotiations, with respect to their culture, which greatly shapes their negotiation styles. Research Question This study addresses the question: What are the elements that shape international business negotiating styles in India, how is the process conducted, and how can this process be made effective? In addition: To what extent does the Indian culture influence American businesses in the country? Research Hypotheses Multinational companies and other business entities, which know and understand the Indian culture, their style of negotiation, and adhere to these, are more likely to succeed in doing business in India and interacting with Indians, compared to those multinationals and businesses that lack knowledge about Indian culture and negotiation style. Literature Review Neelankavil & Rai (2009) note that cultural environment, including social systems, is external to a company, but influences the company’s operations, as well as behaviors. They argue that it is more challenging for a company to operate in an international business environment, than a domestic business environment. Additionally, according to Katz (2008), for a multinational company to be successful in a new business environment, it is important that the company studies the dynamics in the new environment, and evaluate its probability of adapting to the required standards. Multinationals must respect and adjust to the personal, business, and social behaviours, as required by the Indian culture. On the other hand, Ro?iger & R?Iger (2009) consider the Indian culture as diverse and quite restrictive. For instance, during the negotiation period, meetings are not arranged for using indirect communication mediums such as mails, text messages, among others, but only through direct face-to-face communication. The negotiation process in India is built on trust of the involved parties, and these must exhibit trust, which is the core of Indian negotiation style. The Indian negotiating style is also more prolonged, with many procedures, compared to that in the US and other countries. This negotiating style is more rigid and fixed, competitive, and goal-oriented. Therefore, there is no room for compromise (Ro?iger & R?Iger, 2009). Therefore, this could be one of the reasons as to why adapting to Indian culture and negotiation style is challenging to some multinationals. Research Methodology This section comprises information about the methods of data collection and general methodology that will be employed in this dissertation, in order to find solutions to the research question: What are the elements that shape international business negotiating styles in India, how is the process conducted, and how can this process be made effective? In addition, to what extent does the Indian culture influence American businesses in the country? In this dissertation, the main type of data that will be used is qualitative data. The major reason for choosing qualitative data is that for the research question to be answered; only data, which is subjective in nature, needs to be captured. The nature of this study, with regard to the research question, mainly calls for the use of qualitative data, since the answers gathered in this research might not be quantifiable or objective in any way. According to Kothari (2009), when choosing a methodology for research, it is essential that the research is well acquainted with the disparities between qualitative and quantitative data, to help in the making of a right choice. Therefore, having known the nature of this research, a choice of qualitative data, is agreed upon. Qualitative research mainly involves the collection of data, which is subjective in nature. In this case, therefore, a qualitative research comprises data on issues that are subjective, including behaviour patterns, experiences, and attitudes, among others. This is collected by subjecting the participants to in-depth interviews, focus groups, among others. According to Myers (2008), the methods used in qualitative research are meant to enable researchers to debunk various behaviors or actions among the respondents in their respective cultural and social contexts. Myers (2008) has identified one benefit of qualitative research, as having the ability to understand the different contexts in which various people act. On the other hand, quantitative research is a kind of research where the data collected is quantifiable. Unlike in qualitative research where the data is subjective in nature, in quantitative research, the collected data is objective in nature. In quantitative research, there are various variables in the research, and the size of the sample in this study is often larger than that of qualitative research. In addition, quantitative research is carried out using surveys, questionnaires, and interviews, among others, which are all performed on a large scale basis, compared to qualitative research, where participants are dealt with one after another. Therefore, quantitative research is faster than qualitative research, based on the procedures involved in both processes (Bryman & Bell, 2006). Therefore, as it turns out, both qualitative and quantitative are approaches, which are different, but used in the collection of data. Each approach is employed to a research study, depending on the type and nature of data, which needs to be collected in the study. Not all the research methods available can be termed as entirely good or bad, because, these are employed in different studies, therefore, they can be appropriate in specific study types, or less appropriate in others (Kothari, 2009). Therefore, in this research, the qualitative approach is employed, because, the data that needs to be collected is subjective in nature. As Bryman & Bell (2007) note, this approach is of essence, as it helps in subjectivity understanding. There are a number of advantages in using qualitative data in research, as opposed to quantitative data. The advantages of this approach in research mainly draw on its underlying philosophy and the core assumptions it holds (Myers, 2008). Therefore, since this study is concerned with the views of respondents on the entire process of international business negotiating styles in India, and observations on how this affects American businesses in the country, it is more appropriate to employ the qualitative approach, as it will guarantee detailed information on the subject under study. Methods of Data Collection In this dissertation, both primary and secondary data will be collected, and analysed in order to help in the exploration of the research question. The data collection method, which is selected for this research is the in-depth interviewing method. In this method, the type of interview employed has no specific structure. This is conducted at the personal level, where an individual will be subjected to different intensive questions. The individual is required to express himself or herself freely, while giving information about the research topic. While doing this, the researcher will not in any way whatsoever, influence the information given to them by the respondent. Different factors come into play during the process of negotiation between parties from different cultural backgrounds. Salacuse (1999) came up with a number of factors, which affect cross-cultural business negotiations. These can be used as a basis for describing the business negotiation style of Indians, and can also be used to develop the disparities between Indian ways of negotiation, with regard to the American way. These two steps will then help in understanding the process of business negotiation in India. The differences established between Indian and American ways of negotiation, will help unravel the impact on American companies in India. According to Salacuse (1999), the sensitivity of time, personal styles, and the goal of negotiation, are among the different factors which he identified that influence the negotiation process. In this research, these three factors will be the basis upon which the questionnaires used will be drawn. Business practitioners from both the American side and the Indian side will answer the questionnaires, and all must have businesses based in India. The nature of the questionnaire will bear an in-depth interview for the respondents, which is important in order for them to provide detailed information that is sufficient to answer the research questions. The respondents will be interviewed from the comfort of their business premises. This venue is appropriate, as it ensures that the respondents are comfortable and relaxed, since they are more familiar with the area. In addition, this will also help respondents to be more open enough to express themselves freely. The researcher will play the role of explaining and simplifying questions in the questionnaire, in order to the respondents to give relevant answers, after a clear understanding of the questions. The type of data that will be collected and analysed in this research will include both primary and secondary data. Primary data will be collected through questionnaires, as well as direct observation, and interviewing. On the other hand, secondary data will be collected from published sources bearing information on the research topic. Therefore, before embarking on the collection of primary data, the researcher will first consult secondary data sources, as this will also provide an important insight into the issue under research. The use of secondary data in the research will be helpful as the data is easy to analyse. This also saves time, which would have otherwise been dedicated to interviews from person to person. However, secondary data is more useful in quantitative data, as this requires large amounts of data. Therefore, this saves more time in quantitative research (Sapsford & Jupp, 2006). .Sapsford & Jupp (2006) note that, if secondary data is used in quantitative research, it is cheap for the researcher to complete the research process. This is because most of the background information is already available, including literature reviews and case studies. The main disadvantage of solely relying on secondary data is that it is not possible for the researcher to confirm the validity of the research findings. Therefore, secondary data present a challenge of low reliability. Nonetheless, in this research, I will use more authentic secondary sources, including books and reliable journals. This will help in shading more light on the research topic. The information will also be compared to the research findings to show any relationship. References Choudhary, V., Kshirsagar, A. & Narayanan, A. (2012 March). “Strategy Practice: How Multinationals can win in India.” McKinsey Quarterly. Retrieved 17 February 2013 http://www.asia.udp.cl/Informes/2012/multinationals_india.pdf Bryman, A. & Bell, E. (2007). Business Research Methods. London: Oxford University Press. Desai, R. (2012). Indian Business Culture. London: Routledge. Gesteland, R. R., & Gesteland, M. C. (2010). 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(2009). “Basics of International Business.” New Jersey: M.E. Sharpe. Ro?iger, J. & R?Iger, J. (2009). “India as Destination for Western Retailers.” New York: Diplomica Verlag. Salacuse, J. W. (1999). Intercultural Negotiation in International Business. Group decision and negotiation, 8(3): 217-236. Sapsford, R. & Jupp, V. (2006). Data Collection and Analysis. London: SAGE. Stephen, B. (2010). India. London, Great Britain: Kuperard. Verma, R. (2008). Growth, trade, and structural change in low income industrializing economies. University of Southern California). ProQuest Dissertations and Theses, 65-n/a. Retrieved from http://search.proquest.com/docview/304467319?accountid=14872. (304467319). Wilks, L. R. P. (2007). Cultural differences in ethically questionable negotiation behaviors. University of Calgary (Canada)).ProQuest Dissertations and Theses, 136-n/a. Retrieved from http://search.proquest.com/docview/304899163?accountid=14872. (304899163). Zubko, K. C., & Sahay, R. R. (2010). Inside the Indian business mind: A tactical guide for managers. Santa Barbara, Calif: Praeger. Read More