Cross Cultural Negotiation

What is it?

Africa does not have a well-developed industry for pharmaceuticals, medical supplies and medical equipment. Healthcare procurement is therefore likely to involve international sourcing and negotiation with suppliers from other countries.

One factor to consider in an international negotiation is that of national culture. Hofstede identifies six cultural dimensions which, taken together, summarise a country’s national culture.[1] The dimensions are defined and explained below.

Definitions:

PDI	Power distance index. The degree of inequality that exists and is accepted between people in society.
IDV	Individualism versus collectivism. The strength of the ties that people have to others within their community.
MAS	Masculinity versus femininity. The traits or characteristics typically associated with being either male or female.
UAI	Uncertainty avoidance index. The extent to which people in society are not at ease with ambiguity and uncertainty.
LTO	Long-term versus short-term orientation. The time horizon that people in society display.
IND	Indulgence versus restraint. The degree to which societies exercise control over their impulses and desires.

Explanations:

PDI	Low score: power is shared, is widely dispersed and society members do not accept situations where power is unequal.	High score: society accepts an unequal, hierarchical distribution of power and people understand their place in the system.
IDV	A low score indicates a collectivist society with a tightly-knit social framework.	A high score indicates individualism and a loosely-knit social framework.
MAS	A low score indicates femininity: a preference in society for co-operation, modesty, nurturing, and quality of life.	A high score indicates masculinity: a preference in society for achievement, heroism, assertiveness and material reward.
UAI	Low score: people are more relaxed and are open to new ideas and experiences.	High score: people attempt to make life as predictable and controllable as possible.
LTO	A low score indicates short-term orientation. This is reflected in the importance of short-term gains and quick wins.	A high score indicates long-term orientation with a focus on future rewards, perseverance and thrift.
IND	Low score: there is more emphasis on suppressing gratification, more regulation of people's conduct and behaviour, and stricter social norms.	High score: emphasises relatively free gratification of people's drives and emotions, such as enjoying life and having fun.

It should be noted that not everyone in a given country is programmed in the same way; there are considerable differences between individuals. It may well be that the differences between individuals in one country are larger than the differences between countries. However, although the dimensions are generalisations, most people are strongly influenced by the society to which they belong. The cultural dimensions are therefore a useful starting point for understanding the people you are negotiating with in an international context.

What does it look like?

CULTURAL DIMENSIONS
(Hofstede)

Source: https://corporatefinanceinstitute.com/resources/knowledge/ other/hofstedes-cultural-dimensions-theory/

How does it work in practice?

South Africa is the largest importer of medical devices by value in Africa. USA, Germany, Netherlands, China and Japan are the five largest exporters in the same category.[2] It is useful to consider how these countries compare against Hofstede’s cultural dimensions (see below). This exercise also facilitates a comparison of one African, one American, two European, and two Asian countries, all of which have very different cultures.

A comparison of the national cultures of USA and China is very revealing. USA is an egalitarian, individualistic and indulgent culture, with a short-term orientation. In contrast, China is hierarchical and collectivist, with a long-term orientation and strict social norms. Or compare the risk-taking culture of China and the conservatism of Japan. Negotiation is often difficult in these cross-cultural situations, with enhanced risk of misunderstanding and frustration. South Africans do not appear to have cultural extremes and sit somewhere between the other countries in most of the dimensions. This may give them an advantage in negotiating with other cultures.

A study of South Africans negotiating with Chinese counterparts found that the Chinese did indeed value personal relationships, emphasise hierarchy and status, and display a long-term orientation. The South Africans had four dominant success factors for dealing with these cross-cultural relationships: persistence and patience; relationship building; cultural sensitivity and understanding; and preparation.[3]

[1] https://www.hofstede-insights.com/

[2] https://oec.world/en/profile/hs92/medical-instruments

[3] Horwitz, Frank; Hemmant, Russell; Rademeyer, Conrad; Chinese business negotiations: South African firm experiences and perspectives; South African Journal of Business Management, Volume 39, Issue 1, 2008, pages 1-13

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