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India and United States differences in Cross Cultural Negotiations.

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  • Negotiation is an important managerial skill. Theacceleration of globalization and the opening up ofmarkets in Latin America, Eastern Europe and Asiahave underlined the importance of culture ininfluencing negotiation processes and outcomes.Much has been written about the role that cultureplays in shaping negotiating outcomes, although itwould be fair to say that exploration of this matterwith respect to India is sparse. A common theme inmuch of the literature on cross-cultural negotiationsis that the negotiating style varies across cultures, andthat differences in negotiation styles often lead to abreakdown of negotiations. These differences, ifunanticipated and/or not effectively managed, cangive rise to negative emotions such as anger and mayprovoke distrust.
  • Indian cultural values: A blend of East and West?The Indian culture has been shaped by a widevariety of influences that include Hindu philosophy,British colonialism, Islamic influences and therealpolitik of the Cold Warera. The influences are varied both in terms of thecontent, their timing and their durability. Clearly, theHindu philosophy has had a profound impact on thebasic belief structure of the Indians, and itsimportance is self-evident given that more than 80 percent of the population in India is Hindu. Britishcolonialism or imperialism has sharply coloured theway in which the Indians interact with the West.Islamic influences have no doubt affected the socialtexture in certain parts of the country, but other thanthat, and the latent tension between the Hindus andthe Muslims, which occasionally erupts, Islam doesnot play an important role. Finally, with the steadyimprovement of relations between India and theUnited States, the tensions of the Cold War erabetween India and the United States seem to have allbut disappeared. Both India and the United Statesnow seem to be showing a new fondness for eachother, even though outsourcing concerns, have, oflate, highlighted some tensions between the twocountries.
  • Negotiationprocess is drawn-outThe negotiation processoften does not admit of aneasy conclusion. Indiannegotiatrs require a lot ofinformation and willsubject this information toextensive analysis. Theirhigh aspirations, belief inhierarchy and inability towork well as a team willcombine to make sure thatany negotiation will not bequick. As a Western negotiator once commented,"When you start negotiating they will never acceptyour proposal and they will try to squeeze as muchas possible. They will negotiate for weeks trying toget the best deal. And eventually you get so tired ofnegotiating for the last 5 per cent that you eventuallyagree to their price." The length of the process canmost certainly be unsettling for the North Americannegotiator who views time as money and would liketo move on to the next project once the ongoingone is completed. A good illustration of this is alsoprovided by the experience of independent powerproducers who sought to develop new power projectsin India in the 1990s. Many of these projectsencountered severe delays and many firmsdeveloping them chose to exit the country.
  • a) Coexistence of individualism andcollectivismA unique feature of the Indian mindset is that itcombines both individualistic and collectivisttendencies. As individualists, Indians are very goal orientedand aggressive, traits that are not unlikethose of the North Americans. At the same time,however, the Indians are a very family-orientedpeople and confine and ration their loyalties andaffections only among those who are close to them.It is the simultaneous presence of individualism andcollectivism that distinguishes the Indian managernot only from his North American counterpart butalso from his East Asian peer who is unquestioninglycollectivist in his or her orientation. Scholars havelong debated whether India is part of the East or theWest. They have come to the conclusion that theIndians are, on the whole, more Western than Easternin their way of thinking. This implies that theIndians can behave either in an individualistic or acollectivist manner, depending on the situation.The heightened context sensitivityof the Indian manager may make itdifficult for the North American manager to fullyunderstand his counterpart's actions. As a Westernmanager put it, "I feel that the most difficult thing isthat the Indians will tell you one thing, think another,and do a third thing, which is not what a Dane woulddo." (unpublished Master's thesis, M. Hughes,Aarhaus). A further implication is that the Indiannegotiator is not a good team player. Beyond theconfines of the familial in-group, the Indian negotiatordoes not work well as part of a team due to theingrained belief that he is right and the other personis wrong. I refer to this tendency as "anarchicalindividualism."
  • CommunicationNon-Verbal: KinesicsBody LanguagesEyes ContactIndian prolonged eye contact is considered rude, but America; eye contact is a sign of honesty.Looking away is generally a sign of respect and dose not convey insincerity or dishonesty
  • Non Verbal: KinesicsGesture: The circle formed with thumb and first finger that means OK in the US is obscene in India.Touching: Avoiding touching someone’s head, even with children. When pointing at people, use your chin rather than a finger or your whole hand
  • Handing Business card and shaking head:Use your right hand only to touch someone, pass money orpick up merchandise, such as a business card. The left hand is considered uncleanGestures and Body Languages are usually much more extensive in India than in most other Asian Culture. However, avoid any physical contact with other people except for handshakes. Though elderly people may sometimes do so as a blessing.
  • Moving the head sideways in the United States denotes a negative response; in India, a sideways movement of the head carries a positive connotation of understanding
  • Saying Hello: The Western side-to-side hand wave for “Hello” is frequently interpreted by Indians as “no” or “go away.
  • High-ContextMore emphasis is on context and very little is explicitly spelled out in a document or in an agreementPersonal Greeting; “Have you eaten yet?” or “Where are you going?”Open disagreement and confrontation are best avoid, so you may not hear a direct “No”Meeting start with some small talk intended to establish personal rapport.Tone of VoiceUnless they hold senior positions, Indians, especially those in the southern and western parts of the country, usually speak ,quiet, gentle tones. At times they may ever appear a little bit Shy. Do not mistake this with lack of confidence. Their reticence and humility onle reflect their politeness and respect for others. Indians speak in quiet, gentle tones. Loud and boisterous behavior is often perceived as a lack of self-control. Loudness may also be equated with dishonesty.Greeting.Communication is generally INDIRECT because of their culture. When responding to direct question Indians may answer YES. Only to signal that they heard what you have said, not that they agree with it. Use Mr./Ms. Plus their first name, and introduce and greet older people firstIn Indian culture the respect enjoys depends primarily on his or her age, status and rank. There is also a deep respect for university degrees. Within Family – run business there is a common belief that outsiders are no to be trusted. The head of the family may even keep information from family members. Admired Personal traits include, friendliness and sociability, flexibility, humility, compassion , resilience and an ability to find common ground between opposing positions.”Open disagreement is avoid. When an Indian answer, “I will try,” he or she generally means ‘no.In business negotiations they will keep on saying “yes, yea” instead of a straight for work “no” to the proposal or terms they don’t want to accept. An Indian who considers you a Superior may hesitate to give you direct feedback. Instead, the person may tell you what he or she thinks you want to hear, especially when others are around. This is a way to save FACE for you and the individual. Similarly, if asked to give constructive feedback, people ay resort highlighting only the positives. , in which case you should listen carefully for what is not being said. comments and criticism may only be convey in private, and often indirectly through a third party. Similarly, it can be effective to delivery negative responses to your negotiation counterparts through a third party, which is a more face saving way. Meetings start with some small talk intended to establish personal rapport. This may include some personal questions about your family and allows participants to become personally acquainted. It is important to be patient and let the pace. People enjoy some friendly humor, but avoid appearing sarcastic or cynical. Primary purpose of the first meeting is to meet each other. Business may be discussed, but do not try to hurry long with your agenda. It is unrealistic to expect initial meeting to lead to straight decisions. Presentation material should be attractive. Indians enjoy technical expertise.
  • Low-ContextLittle emphasis on context and more on explicitly written statements in a document.Generally greeting; “Good morning, afternoon” or “How is going?”Too direct perceived rude and pushyVerbal : Low-Context : Indians perceive too direct as rude and pushy while U.S. prefer to be direct and to the point.Language:English is the language of international commerce, however different states in India each have different official language. Although Hindi is the official language across all of India , many of its states have different local languages , some more than one. Almost all business people speak English well. However, it is advisable to speak in short, simple sentences and avoid using Jargon or Slams.
  • (b) Social relationships are not that importantat the outsetIn India, an ingrained streak of individualismprecludes the necessity to develop relationships atthe beginning of negotiations. This culturalcharacteristic will surely please North Americans,for it does have the critical implication that businessnegotiations are not constrained, at least initially,by the lack of a relationship. There is less of a needfor lavish banquets or after-hours drinking, as is oftenthe case in Japan or China. But the fact thatrelationships are less important at the onset ofnegotiations does not necessarily imply that the timerequired to complete thenegotiation will beshortened. Further, whilerelationships may be lessimportant at thenegotiation phase of theproposed venture, theirimportance is likely toincrease during theoperational stage of theventure. Relationships are important at this stagebecause they may help to align the expectations ofall of the parties more accurately and further signal the sincerity of theforeign investor to the Indian partner.
  • a) Be patient but firmAn ample supply of patience is an essentialingredient for negotiating in India. Lack of patiencewill only create frustration and anger, adding to thestress of conducting negotiations in a faraway land.Frustration and anger may, in turn, lead the NorthAmerican negotiator to become aggressive, and thismay not go down well in a culture where nationalisticsentiments are high. That said, there are areas wherethe North American negotiator can most definitelymake his influence felt. If, for example, there arecertain procedural issues with which the NorthAmerican negotiator is unhappy, he or she cancertainly try to exert some influence. As one Westernmanager has remarked, "…and I remember the firstclashes we had really were when we had the meetingswith the Indians who came one hour, up to two hourslate, and they did just that….We said that if we can'teven agree on a meeting time, then there's no hopeof us setting up a joint venture together. Afterwardsthere were no problems."
  • (d) Attitude towards timeUnlike North Americans, the Indians have asubjective view of time. A recent study ofnegotiators from 12 different cultures found that theIndians were the least sensitive to timeconsiderations (JeswaldSalacuse, The GlobalNegotiator : Making, Managing and Mending DealsAround the World, Palgrave MacMillan, 2004; seearticle by Professor Salacuse in this issue of IveyBusiness Journal). This lack of sensitivity to timestems from the fact that Indians do not feel the samesense of urgency to conquer the world as NorthAmericans. They have more of a "being" than a"doing" orientation, and this difference in theorientation to the world is likely to affect their
  • ( c) NationalismA Pew Center study recently found that India wasthe most nationalistic place on the earth. People arevery sensitive to any action by foreigners, and inparticular, investment actions that may be viewedas detrimental to the country's welfare. Althoughsuch sentiment is not unique to India per se, it isprobably more easily aroused here than in many othercountries. The high degree of nationalistic sentimentis a product both of British imperialism and thestrained relations between the United States andIndia during the Cold War.Nationalistic sentiment has a number ofimplications. First, foreign investors may be held toa higher standard than the local firms. It also impliesthat foreign investors' projects, especially highlyvisible ones, will be evaluated very closely. Third,foreign investors will be constantly under pressureto gain and maintain their legitimacy in the eyes ofthe stakeholders.
  • c) Contractual obligations do not have thesame sanctityContractual obligations do not have the samesanctity in India as they do in the North Americanbusiness culture. The Indian businessperson hastraditionally had to operate in a chaotic environment.Infrastructural weaknesses such as a lack of anadequate, reliable supply of electricity, politicalinstability, nationalistic concerns, judicial delays, acultural bias that favours flexibility, and a fear ofbeing taken advantage of are likely contributors tothe Indian preference for open-ended obligations.The Indian penchant for searching for the idealsolution only aggravates this problem, inasmuch aschanged circumstances imply that the negotiatedcontract may not have been the optimal one. Forexample, the Indian can continually insist that theforeign partner assist them on a long-term basiswithout getting any equivalent concessions. If thisexpectation of generosity is not met, Indians willcome to resent their foreign colleagues. The generaltendency to renegotiate does not sit well with theNorth American negotiators. It undermines theirsense of control and confidence and may lower theirperceptions of the trustworthiness of their Indiancounterparts.
  • (e) Hierarchical cultureThe Indian culture is hierarchical. Top-downdecision making is the norm, and more often thannot there is only a downward flow of information inan organization. Subordinates will rarely, if ever,disagree with their superiors, even though they maydisagree with the nature of the decision or themanner of its implementation. This hierarchicalcharacter is accompanied by a parallel tendency forthe subordinates to want to be nurtured by theirsuperiors. The subordinates expect the superior tobe benevolent towards them, and if this benevolenceis reciprocated, the subordinate is also likely torespond by remaining loyal.
  • The core Indian cultural values that we havedescribed paint a portrait of the Indian negotiator asa complex, highly imaginative individual. Thecomplexity derives from the fact that his or herbehaviour is influenced by cultural values that areassociated with inconsistent behavioural patterns.Thus, as an individualist, the Indian negotiator maybe highly aggressive; at the same time, as a collectivist,he or she may be passive and reluctant to express hisor her views absent consensus. The negotiator's richimagination may express itself in high aspirations,creative problem solving and/or excessive paranoiain which he or she is able to find problems just abouteverywhere. This may be further fuelled by a highdegree of nationalism. What, then, are theimplications of the Indian negotiator's behaviour?
  • Negotiating in India poses a unique set ofchallenges for the North American negotiator. NorthAmericans are goal-oriented and time-consciousnegotiators whose interest, above all, is in comingto an agreement in a timely way. This style mayencounter problems in the Indian context and we haveattempted to outline why this may often be the case.This does not imply in any way that all NorthAmerican negotiators will experience problems, orthat all of these problems will always arise in allnegotiations. OUR purpose has been merely to identifywhat these problems are and the strategies that mightprove effective for the North American negotiatorin coping with the cultural challenges in India.Although the negotiation style in India may bedifferent from that in North America, NorthAmerican negotiators can cope with these challengesif they understand the skills needed to operate inthe Indian business environment, are prepared tomake the effort to learn new ways of doing things,and appreciate the constraints of doing business ina still-emerging economy. As the Western expatriatemanager, Silvio Napoli once put it, "To succeed inIndia you have toe one-half monk and one-halfwarrior. So far, I've learnt to develop my monk part." b
  • Cross Cultural Presentation

    1. 1. Indian and WesternInternational & Cross-Cultural Negotiations Christy, Husain, Tanapat, Isis
    2. 2. India• Area: 1,269,338 sq miles• Population: 1,214,464,000• GDP per capita (2008 PPP US$): $3,354.394• Parliamentary form of Government• World’s largest democracy• World’s 4th largest economy United States• Area: 3,794,066 sq miles• Population: 317,641,000• GDP per capita (2008 PPP US$): $46,652.680
    3. 3. Indian and WesternIndian GDP Growth Rate
    4. 4. North America GDP Growth Rate
    5. 5. Things you need to be toldbefore negotiating with Indians• Use titles to address your Indian counterparts.• Wait for a female business colleague to initiate a greeting.• Remain polite and honest at all times.• Do not take large or expensive gifts.• Do not refuse any food or drink offered to you during business meetings.• Avoid topics about Pakistan and Kashmir.
    6. 6. Meetings and GreetingsWhen doing business in India, meeting etiquette requires ahandshake. However, Indians themselves use the namaste. Schedule Meetings at least four weeks in advanced.
    7. 7. Business Meetings and Negotiations1. Negotiations, always bear in mind that they can be slow.2. Indians do not base their business decisions solely on statistics, empirical data and exciting PowerPoint presentations.3. Do not be confrontational or forceful. Criticisms and disagreements should be expressed only with the most diplomatic language.
    8. 8. Cross Cultural Differences• Individualism and Collectivism: Indians relate to the obedience to, respect for, and financial support of parents as a collectivist value system. U.S. on the other hand pay more attention to their own needs, taking advantages of personal gain or enrichment.• Power Distance: India’s culture prefers high power distance inside its hierarchical organizations. In the US, low power distance thrives inside flattened organizational models.
    9. 9. CommunicationNon Verbal: Kinesics• Eyes Contact: Indian prolonged eye contact is considered rude, but American; eye contact is a sign of honesty.
    10. 10. CommunicationNon Verbal: Kinesics• Gesture: The circle formed with thumb and first finger that means OK in the US is obscene in India.• Touching: Avoiding touching someone’s head, even with children. When pointing at people, use your chin rather than a finger or your whole hand
    11. 11. CommunicationNon Verbal: Kinesics• Handling business card: Indians prefer use of right hand while handling a business card
    12. 12. CommunicationNon Verbal: Kinesics• Shaking head: Moving head sideways in US denotes a negative response while in India it carries a positive connotation of understanding.
    13. 13. CommunicationNon Verbal: Kinesics• Saying Hello: The Western side-to-side hand wave for “Hello” is frequently interpreted by Indians as “no” or “go away.”
    14. 14. CommunicationVerbal : High-Content • Tone of Voice: Indians speak in quiet, gentle tones. • Greeting: Indians prefer Mr./Mrs. Plus their first name. When the Indian says “I will try”, he or she generally means “no”
    15. 15. CommunicationVerbal : Low-Context•Indians perceive too direct as rude andpushy while U.S. prefer to be direct and tothe point.•Language:English is the language of internationalcommerce, however different states in Indiaeach have different official language.
    16. 16. Key Factors in Doing Business in India•Doing business in India involves building relationships. “Trust”•Time- Punctuality is expected, although flexibility is paramount.•In U.S. they budget their time as they budget their money.
    17. 17. Bargaining in IndiaIndians love Bargaining and haggling.• Prices reduces more than 40% between initial offers and final agreement.• Use of Deceptive Techniques: – Lies – Fake non-verbal messages, – Pretending to be disinterested • Defensive Tactics: Blocking and Changing Subject • Emotional Intelligence: Guilty, Grimacing. • Corruption and bribery are quite common in Public and Private sector. • Bribe are view as nice gift
    18. 18. Salacuse’s Framework
    19. 19. Survey Results Indians Vs. North American Impact of Cultural Differences Using Salacuse’s Framework
    20. 20. GOAL Indians North Americans 50% 30% 30% 30% 20% 20%10% 10% 0% 0%
    21. 21. ATTITUDE Indians North Americans 50% 40% 40% 30% 20% 10% 10% 0% 0% 0% 1 2 3 4 5 Win/WinWin/Lose
    22. 22. Personal Style Indians North Americans 67% 33% 30% 30% 20% 20% 0% 0% 0% 0%1 Informal 2 3 4 5 Formal
    23. 23. Communication Indians North Americans 50% 50% 40% 40%10% 10% 0% 0% 0% 0%1 Direct 2 3 4 5 Indirect
    24. 24. Time Sensitive Indians North Americans 50% 40% 30%20% 20% 20% 10% 10% 0% 0%1 High 2 3 4 5 Low
    25. 25. Emotionalism Indians North Americans 60% 40% 30% 20%20%10%10% 10% 0% 0%1 High 2 3 4 5 Low
    26. 26. Agreement Form Indians North Americans 70% 56% 33% 30% 11% 0% 0% 0% 0% 0%1 Specifc 2 3 4 5 General
    27. 27. Agreement Building Indians North Americans 56% 30% 22% 20% 20% 20% 11% 10% 11% 0%1 Bottom-up 2 3 4 5 Top-Down
    28. 28. Team Organization Indians North Americans 60% 50% 20% 20%10%10% 10% 10%10% 0%1 One 2 3 4 5 ConsensusLeader
    29. 29. Risk Taking Indians North Americans 50% 40% 40% 20% 20% 20% 10%0% 0% 0%1 High 2 3 4 5 Low
    30. 30. Questions?
    31. 31. Conclusion and Recommendations • Be Patience but Firm • Learn about Indian Culture • Be Polite and Friendly • Do not express negative comments • Be Flexible on Time Management • Respect their Nationalism
    32. 32. ReferencesKumar, Rajesh. 2005. “Negotiating with the Complex, Imaginative Indian.” Ivey Business Journal. (March/April):1-6.Katz, Lothar. 2008. The Negotiations Reference Guide to 50 Countries Around the World. orld. November, 12th.
    33. 33. • THANK YOU!