School Papers

1.0 complex. When thinking about negotiation, people from

1.0
Abstract

 

It has become clear that in the last 20 years Internationally business
has evolved greatly and with the advancement of technology the world is a much
smaller place. With the increased development in communication and
transportation improving significantly, the world’s economy is growing. According
to both Hopmann (1995) and more recently Weiss (2006), this development has had
a major impact on culture and negotiation in the world today. It has allowed
different nations to do direct business with each other and makes us realise
the importance of the small and medium enterprise (SME) sector. Globalisation
and internationalisation has grown increasingly important, and at some point,
in time, there will be a need to deal with foreign client or customers. Osland
et al (2001) stated that, “small and medium size firms that have taken the
decision to internationalise and expand into the foreign markets are faced with
the challenge of choosing the best structural arrangements”, in doing this it
can allow the business to develop and grow, benefiting from the potential
intentional business has to offer.

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Negotiation
is a form of social interaction and a vital part in international business.
Carnevale (1992) described it as the process in which two or more parties try
to resolve perceived incompatible goals, this suggesting that any parties
involved in a negotiation can face different problems before reaching a
successful outcome. Interests are the concerns, needs, fears, desires
underlying negotiators conflicting positions (fisher et al., 1993). This is
demonstrated when each party have different cultural backgrounds and therefore
the problems can become more complex.  When thinking about negotiation, people from
all around the world no matter what their culture, will describe negotiation as
two or more people exchanging a series of offers. However, the west and the
East have created a number of readers to draw comparisons, due to differences
being noticeably different in their cultures. Western cultures “tend to view
negotiating as a competitive process of offers, whereas Eastern cultures view
the negotiation as an opportunity for information-sharing” (Foster, 1992 p272).
This way of thinking is the reason why negotiation styles differ when Welsh SME
owners negotiate with the Eastern world.

 

2.0
Introduction

 

With
the world becoming more and more interconnected, companies are seen to be
looking internationally to expand their businesses. This has caused many
challenges in business operations, according to Root (1994) “the global economy
has formed business environments that require companies to look past the traditional
thinking of the home market, instead looking at business from an international
global perspective”. Culture is a key factor when looking at cross cultural
negotiations, therefore it is important for Welsh SME to be aware of cultural
influences in the negotiation process. Due to the heightened interested, the
aim of this study is to understand the influence culture has on the
international supply chain in the negotiation process, specifically looking at
Welsh SME’s.

3.0
Research Aim & Objectives

The overall research of this study aims to enable the reader
to develop an understanding of factors that affect the success of SMEs in negotiations
amongst different cultures, specifically Wales and the Eastern World. The study
will use applicable culture theories which have been utilised to develop and
overcome differences in negotiating internationally.

Through the research it is intended to meet the following
objectives for this study:

·     
Develop and understand cultural theories to
obtain and identify different negotiation styles which will need to be adopted
by business people from a Welsh and Eastern cultural background.

·     
Be effective and enable Business owners/people
from Wales to have a good understanding of cultural backgrounds, to help create
effective cross-culture negotiations.

 

4.0
Literature Review

 

There has been a huge turning point in the world economy which is engaged
by the phenomenon of globalisation. Since the 21st Century we have
seen growth, the world has developed into a world in which now has national
economies, economies which are merging into an interdependent global economic
system, this is referred to as globalisation (Saee, 2005). Before this turning
point, the economics of the world was seen to be isolated, this can be blamed
on barriers affecting cross-border trade and investments; with additional
factors such as distance, time zones, language, regulations and culture differences
all playing a vital role in the process. Luo et al (2002) suggested that “economic
globalisation will increase the communication of economy and trading deals
amongst countries”, with this negotiation will play a vital role in any international
business deals.

 

Through research globalisation was first discussed by Levitt (1983), his
concept indicates that a person who travels encounter different cultures and
therefore with the help of technology people will be encouraged to travel.

 

Ayoko (2007) recognised that every business negotiation is different.
Ohanyan (1999); Yook and Albert (1998), suggested that “negotiating can differ
greatly across cultures, from contract to relationship”, both these theories
relates to Foster (1992) which was mentioned earlier and strengthens the theory
that negotiation is very complex and is influenced by the participants own
national culture and thinking patterns. It can be very difficult due to the
fact that international negotiations involve different values and negotiation
styles, which all need to be considered as important factors in the whole
process (Mayrhofer, 2004).

 

Reducing unemployment and poverty is a worldwide phenomenon, and support
for businesses in the small and medium sector has contributed to the heightened
knowledge of this area. 

SMEs are well recognised academically and through policy literature, Birch
(1989), Storey (1993) and most recently Abdullah & Beal (2003) are all
authors who have published resources on this topic. Successful SMEs is not only
an area of interest in Wales but has been analysed by researchers, at least
since the Bolton report (1971). However, the SME sector in the national
economic and social development of Wales has been recently recognised through
the welsh government as one of its main priorities despite the issue of Brexit,
“Small businesses are the lifeblood of the Welsh economy, we want to see our
SMEs flourish, creating economic growth” (Hart, 2016). In 2016 a £21 million
finance package was made available to expand SMEs in wales and more recently, Welsh
Language Minister Alun Davies recently announced that he has committed £400,000
to help small and medium enterprises to become more bilingual (gov. wales,
2018), therefore if Wales is to be successful in negotiations, then it would be
beneficial to have an understanding of each party’s culture and adopt a negotiation
strategy that is consistent with the other party’s culture (Hollensen,2001).

 

5.0 Methodology

5.1
Ontology

Ontologies are pattered ways of a single person in the world
that are lived and experienced. Gruber (1993) defines ontology as “an explicit
specification of a conceptualisation”. Whereas, Chamdrasekaran et al. (1999)
suggests “content theories about the sorts of objects, properties of objects,
and relations between objects that are possible in a specified domain of
knowledge”. 

Subjective ontology is perceived social phenomena that is
based on feelings and experiences that differ but are continually being
accomplished.

Objective ontology portrays the position that social phenomena
and their meaning have an existence that is independent and easy to prove.

For this research, Subjective ontology will be used.

5.2
Epistemology

Epistemology is the science devoted to the discovery of the
proper methods of acquiring and validating knowledge.

Subjective epistemology is characterised primarily by
perceiving mind.

Objective epistemology is characterised primarily by
physical extension in space and time.

For the research, subjective epistemology will be used, as
negotiations in business differ due to a number of factors, using subjective
epistemology will allow for interpretation to be integrated with the experience
of participant, thereby transforming knowledge acquired into something that can
be used on behalf of oneself or working community.

5.3
Philosophical Position

Through this study an Interpretive research method will be
used, this element seeks to understand the multiple social constructions of
meaning with a particular context (Richie & Lewis, 2003). Through this it
presents a philosophical approach that is based on the belief that is important
to understand the world of lived reality and situation-specific meanings
(Stewart and Shamdasani, 1994). However, Cohen, Manion and Morrison, 2000
suggested that interpretivist rejects the view that behaviour is consistent and
can be socially identified and tested accordingly.  

5.4
Inductive Approach

Hussey & Hussey (1997) defined inductive approach as a
theory in which development is made through observation of empirical reality.
Using this approach through the study will allow the researcher to gain a
realisation and understanding of the meaning participants attach to events,
benefiting the collection of qualitative data.

This research will use Qualitative data in order to capture
subjective data, this will allow answers to be captured relating to the
objectives discussed earlier. When starting research methodology, it is
important to recognise which type of data you will be using therefore “having a
good understanding of qualitative and quantitative research methods” according
to Dawson (2009).

Using different approaches when researching data allows the
researcher to capture different types of empirical data, these methods are not
seen to be good or bad, but rather more or less suited to the task in hand
(Veal, 2005). Dawson (2009) suggests that “qualitative research explores
subjective issues, behaviours and experiences through employment methods such
as interviews or focus groups”, whereas quantitative research generates
statistics through the use of large-scales observations such as questionnaires
or structured interviews (Creswell, 2009). Veal (2005) indicates this by
comparing “the term qualitative as a technique that is used to generate qualitative,
rather than quantitative information”. In order to meet the objectives
discussed and have a subjective understanding, the underlying philosophies of
qualitative research methods will be used to allow attitudes, behaviour and
experiences to be explored. The focus groups will be small however, this will
allow for more time to be spent with each person and therefore applying this
strategy will allow an in-depth data analysis on the views each person has of
cross-culture styles in business.

6.0
Limitations

6.1
Sampling

The research will have a time constraint of six months. Due
to this constraint, the researcher will focus on a small judgement sample
consisting of 5 -10 people from Welsh SMEs. The respondents will be business
owners or of management level with experience in supply chain negotiations
including signing contracts, selling and buying products.  The types of businesses that were used were
SMEs in the manufacturing sector. There will be a maximum of 10 questions used
for the in-depth interview in order to meet the factors identified by Salacuse
theory, for this reason and due to time scale, the respondents will need to be
given plenty of notice when scheduling time and dates to conduct the
interviews. This may cause limitations in the research process due to
cancellations and lack of time.

6.2
Ethical Issues

When conducting qualitative research ethical issues are
faint compared to quantitative research. Qualitative research has a focus on
examining people in their own environments, therefore potential ethical issues
may arise when a researcher needs to have access to a working environment, this
creating an uncomfortable effect on participants.

In order to address ethical issues participants will be made
aware in advance of the research purpose. All information will be kept
confidential and correspond to Bell (1999) theory that names, identities,
personal information of participants will not be disclosed to comply with
ethical reasons. This is also an important factor when earning peoples trust
and obtaining good data rather than bad data, which can be developed when trust
is not gained.

 

Findings

This research set out to find answers to what are the
cultural differences that affect business negotiation for Welsh SMEs trading internationally?

The in-depth knowledge gained when conducting interviews,
initiated by probing, allowed to gain an understanding about the participants
cultural background and experiences.

From using a qualitative dialogue framework data obtained
from answer given by participants give a clear understanding of how they valued
their negotiating skills and behaviours when dealing internationally. However,
as it a reflection on how they saw themselves then a true reflection may not
have been determined and is not a true reflection on how culture affects
international negotiations.

Furthermore, the findings indicated that the data presented
gave an indication that negotiation can be determined by culture as well as a
number of other influencing factors such as age, gender, sex and the nature of
the transaction being discussed.

Conclusion

Through this study it has concluded that understanding the
success of a small medium enterprise is a complex challenge. As suggested by
Simpson et al. (2012), a business success is a matter of opinion, which can be
influenced by internal and external factors being met or exceeded, and some
maybe critical to the success.

Within the literature review an analysis of different
cultural theories was used to directly link candidates own influences on
business negotiations styles in Welsh SMEs and how their cultural understanding
affected this. Using Salacuses cultural theory was the most relevant theory for
the research to be carried out, it allowed the researcher to focus primarily
the impact culture had on business negotiation styles.

Research Methodology was next discussed. The research was
determined to be a subjective report, using ontology and epistemology elements of
philosophy. The philosophical approach used was interpretivist factoring in an
inductive approach. It was decided that the data collection element of the
research would include qualitative research which enabled the researcher to
conduct in-depth interviews as the most effective way of a data collection
method.

From the data collected and using Salacuse theory, the finding
indicate that it can be easily used to identify which negotiating style will
work best for Welsh SMEs, highlighting any possible traits. This information
should then be used to develop and assist in successful negotiations between
Welsh SMEs and the Western World.

Furthermore, through the research it has been identified
that globalisation and negotiations throughout the world are deep rooted
values, but are changing over time as the world develops in the process of
international trading. 

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