Study the following situation and answer the questions that follow in APA format.
The focus of much research has been on examining the negotiating behavior of a few countries, notably the US, China, and Japan.Only limited research has been done on how buying/selling negotiations are conducted in the Arab world (weir, 2000).This is in spite of the fact that the Middle East is an important economic region due to its natural resources and its strategic importance.The World Invest) ranks one country in the region, Saudi Arabia, twelfth in the top 20 host economics for FDI inflows.
International business people need to have good understanding of how culture affects the way in which negotiations are conducted business decisions taken in such an important economic region.Khakhar & Rammal (2013) address this need by exploring key cultural socioeconomic factors that influence the negotiation process between Arab negotiators and foreign counterparts.The researchers interviewed 30 Arab managers in Lebanon with experience in conducting international business negotiations.As English widely spoken in the Lebanese business community, there was no need to conduct the interviews in Arabic.
At the time of the interviews, political conflict and uncertainty was influencing business activities in Lebanon, and the managers said that sometimes they had to hold important commercial negotiations in another country in the Arab world, such s the United Arab Emirates, where there were signs of political instability, and where there was a more favorable climate for deal making and relationship building.
Wasta at work
In the Middle East, wasta (networks and connections) is similar to guanxi in Chinese business culture (Hutchings & Weir, 2006).The researchers found that using wasta is an accepted business practice in the Arab world, and that business relationships are strengthened by its use.In the Arab world, negotiations are conducted with several businesses simultaneously, and usually the organization with the strongest wasta connections is the one that secures the deal. One manager explained that the connections he had in the Ministry of Economics and Trade helped him speed up registration procedures for a foreign business partner that would normally take several weeks.
Role of trust
The interview data suggests that in the Arab world the concept of trust is linked to the size of company with which negotiations are being held.Many managers said they would trust a large foreign MNE more than they would a smaller company looking to enter the Arab region.The managers thought that trust precedes business in most countries in the Middle East, and the managers themselves tended to spend much time and effort at the pre-negotiation stage building a personal relationship with foreign negotiators, and considered this investment in relationship building as a vital part of the negotiation process.
Several respondents made the point that they found it difficult create a trusting personal relationship with negotiators form the US and UK because of their business-like, time-conscious attitudes.This business-like approach allowed formal negotiations to begin quickly, but because of the lack of a personal relationship and trust, the Arab negotiating team normally required much more detailed information about the options that were on the table before an agreement could be reached.As a result, more time was required to complete the negotiations that would between the negotiators.
The Arab negotiators interviewed by Khakhar & Rammal (2013) deviated sharply from the emotional pattern of decision-making and persuasion often ascribed to negotiators in the Middle East.Glen et al. (1977), for instance, contrast the emotional persuasion styles used by negotiators in the Middle East with the rational styles used in the US.The Arab managers interviewed by Khakhar & Rammal (2013), however, made their decisions rationally rather than emotionally, and took into consideration the various contextual factors of negotiations.They carefully assessed opportunities and potential financial outcomes.
The Arab negotiators also deviated from stereotype by using direct rather than indirect communication.In negotiations with a foreign negotiating team, they would, for instance, openly state the importance of their business networks and how their opponents could benefit from these networks.Information provided by the managers revealed that the concessions they made in international business negotiations were carefully planned.The managers made sure that they did not deviate too much from their desired outcomes and goals.
Unlike Hall’s (1966) classification of Arab countries as polychronic societies in which deadlines are not adhered to, the Arab managers – in another deviation from stereotype- tended to display monochromic attitudes about meeting negotiating deadlines.According to Hall, negotiators in polychronic societies engage in multiple activities simultaneously and view time schedules as flexible.For instance, they will permit a negotiating session to continue until everything has been covered.
Source:Khakhar & Rammal (2013)
- When conducting negotiations with Arab negotiators, the Western style of negotiation can be counterproductive. Explain why.
- Using wasta is an accepted business practice in the Arab world. What is wasta? What are the advantages of using it as seen through the eyes of Arab managers?
- Describe some similarities and differences in negotiation styles between Arab-style negotiation and negotiation styles in your chosen country.