The cultural aspects of international business negotiations - A case study of Finnish-Russian business negotiations

Abstract

Understanding cultural differences is critical to the success of firms engaging in international business. The main objective of this study is to analyze the business negotiations in Russia, and especially how the different cultural aspects affect the business negotiations between the Finnish and the Russians. The key cultural elements in the international business negotiations studied here are communication, values, attitudes, thinking and decision-making processes. Also Hofstede’s cultural dimensions are studied.

In addition to cultural factors the context or "frame" in which these negotiation processes take place is studied. This is done by studying the background factors and the situational factors. The background factors are objectives, negotiating strategies, and the negotiators. The situational factors are the newness of the situation and the negotiating tactics. The business negotiation process is studied by using the process model developed by McCall and Warrington (1989). They divide the negotiation process into five stages: pre-negotiation stage, distributive bargaining stage, integrative bargaining stage, decision-making and action stage, and post-negotiation stage.

The empirical part of the study contains six case studies, all of which are Finnish companies or Finnish subsidiaries of international companies with considerable experience of face-to-face sales negotiations with the Russians. The companies were all from the transport and haulage branch. The study and the personal interviews is made by using a pre-planned question list developed based on the the theoretical framework. One of the key conclusions is that the features and elements of both strategies or approaches (distributive and problem-solving) are often found in the international business negotiations. The overall conclusion of the empirical study is that the distinguishable features of Russian culture, and especially their effects on business negotiations are diminishing. The negotiation process model used in this study was not found to be entirely applicable to the negotiations in the transport and haulage branch. A developed model is introduced in the end of the study.