Some reflections of Vietnamese and American Cultural values on Vietnamese-American Business Negotiation

Some reflections of Vietnamese and American Cultural values on Vietnamese-American Business Negotiation Lê Thị Vân Nga University of Languages and International Studies M.A Thesis: English Linguistics; Code: 60 22 15 Supervisor: M.A. Phan Thị Vân Quyên Year of graduation: 2011 Abstract. In the trend of globalization of the business world, the area of cross cultural business negotiation has become more and more popular. That is because cultural differences usually influence the negotiation process significantly and unexpectedly. Understanding and recognizing cultural variables of the counterparts from another culture will be most important in getting successful outcomes of a negotiation. This study aims to examine the ways of thinking and behaviors of Vietnamese and American business people in business negotiation to seek out the influence of their cultural values and potential problems in Vietnamese – American business negotiation. Furthermore, some solutions will be suggested to improve the negotiating process between business people from the two countries. Keywords. Tiếng Anh; Văn hóa; Đàm phán; Việt Nam; Hoa Kỳ Content CHAPTER 1: INTRODUCTION 1. Rationale of the study The increasing globalization of the economy has resulted in the tremendous growth in international market. As international business opportunities open, negotiations also increase. There have been so many studies about negotiation skills across cultures, but they only focused mainly on developed countries. Just few studies have been conducted in the Vietnamese market. Among various foreign investors are those from the U.S. The U.S Vietnam Trade Agreement has created opportunities for US investors in Vietnam and given Vietnamese businesses access to the U.S. market. With the development in US-Vietnam trade relation, the negotiations between Vietnam and U.S. partners grow to be a norm. This study attempts to explore one side of cultural differences - Vietnamese and American cultural values to find out how they are reflected on Vietnamese-American business negotiation. 2. Aims of the study - to find out typical Vietnamese and American cultural values. - to understand the nature of a cross cultural business negotiation. - to examine the potential problems in Vietnamese – American business negotiation. - to analyze how cultural values influence the negotiation process and outcomes. These aims are formulated into 3 following research questions: 1) What are the similarities and differences between Vietnamese and American business negotiation? 2) How are Vietnamese and American cultural values reflected in Vietnamese – American business negotiation? 3) What are potential problems in Vietnamese – American business negotiation? 3. Scope of the study The focus of this study is to investigate only some typical cultural values of the two target countries: Vietnam and the United States; and to find out how they affect Vietnamese- American business negotiation. 4. Methods of the study The study used mixed methods to find answers to the two research questions. The instrument for data collection in this study was the questionnaire. The data collected from questionnaires were analyzed quantitatively and qualitatively for descriptive statistics. 5. Significance of the study The results will be of some contribution to the literature of international business negotiation. The findings and comments of the study may be useful for raising the cultural awareness of Vietnamese and American businessmen when they meet up in a negotiation so that they can achieve success when they do business in the United States or Vietnam. 6. Organization of the study: This minor thesis consists of 5 chapters: introduction, theoretical background, methodology, findings and discussion, and conclusion. CHAPTER 2: THEORETICAL BACKGROUND 1. Culture 1.1. What is culture? 1.2. Components of culture 1.3. Cultural values 1.3.1. Vietnamese cultural values 1.3.1.2. Harmony 1.3.1.3. Respect 1.3.1.4. Duty and honor 1.3.2. American cultural values 1.3.2.1. Individualism 1.3.2.2. Self-reliance 1.3.2.3. Equality 1.3.2.4. Competition 1.3.2.5. Materialism and hard work 2. Communication 2.1. What is communication? 2.2. Cross – cultural communication 2.3. Potential problems in cross – cultural communication 3. Negotiation 3.1. What is negotiation? 3.2. Negotiation as a form of communication 3.3. Elements of negotiation 3.4. Business negotiation 3.5. Characteristics of business negotiation 3.6. Cross - cultural business negotiation 3.7. Potential problems in cross cultural business negotiation. CHAPTER 3: METHODOLOGY 1. Research method The methods used to process the collected data are both qualitative and quantitative. All the considerations, comments and assumptions are based on the analysis of statistic data and reference to relevant publication. 2. Data collection instrument Questionnaire is the instrument to collect data. The questionnaire consists of two parts. Part one is about personal information such as age, gender, nationality and especially experience in Vietnamese – American negotiation. Including 15 questions, part two aimed to collect information on their attitude and perceptions of what happen in a negotiation. The questions were arranged in the order of the main elements of a negotiation. 3. Data collection procedure The questionnaires were delivered to American and Vietnamese business people in face-to-face meetings and conversations, and via email. 4. Informants 22 American and 22 Vietnamese business people were finally selected as eligible informants. Among these, only 8 Vietnamese and 3 American are female. The ages of all the informants range from 26 to 60. They are employers or employees in different types of company or business group. Their fields vary from sales, import/export to agency, etc. CHAPTER 4: FINDINGS AND DISCUSSION 1. Presentation and analysis of the data 1.1. The negotiators – the actors of a negotiation. While the Americans appreciate negotiating skills (64%), expertise (64%) and especially experience in negotiating with the counterpart (82%) and position (27%), the Vietnamese place most emphasis on negotiating skills (91%), then position (46%) and both expertise and experience in negotiating with the counterpart (both 36%), seniority (32%). 91% Americans do not care much about the balance in status, position and age of negotiators of the two parties. However, there is an opposite view of the Vietnamese in this situation: a half requires a balance between two parties and the rest suppose that it doesn’t matter. 1.2. The size of negotiation team. The majority of both Vietnamese and American people agree that the team size has certain influence on the negotiation outcome, but 55% of Vietnamese think that the influence is very considerable while most of the American (72%) said that it is small. The same percentage of both American and Vietnamese (18%) believe that the team size has no influence. Almost all Vietnamese and American agree upon the advantage of a large negotiation team. They highly appreciate the “making use of the smart of many brains” (55% Vietnamese and 64% American) and also care for the confidence of negotiators. The difference here is that no American thinks about “expressing the power over the counterpart” while 13% of Vietnamese like this. The same small number of Vietnamese and American people (5%) stated that there is no advantage. 1.3. Negotiation approach Up to 100% of Vietnamese people and almost all American ones (91%) choose the Integrative negotiation (win – win) as their negotiation approach. Only a few American negotiators (9%) prefer the approach of Distributive negotiation (win – lose). 1.4. Negotiating style The majority of Vietnamese people try to seek the initial agreements on very general principles. Then during the negotiation process, they will discuss each specific issue. This is inductive style. In contrast, American people prefer deductive style when 77% of them decide to get agreements on each specific detail first and gradually come to the end with general agreements. 1.5. Risk-taking 41% of Vietnamese informants are willing to take risks and the rest 59% try to reduce risk as much as possible. Meanwhile 59% of Americans willingly take risks and 41% will avoid. 1.6. Goal of negotiating Both Vietnamese and American business people expect to build a long-term business relationship with the counterparts and the negotiation seems to become the first step in the process. 1.7. The role of attorneys in the negotiation. A high rate of Vietnamese people (88%) underestimates the appearance of attorneys during the negotiation as they think more of the trust between two parties. In contrast, the majority of American people (64%) more highly appreciate the role of attorneys in the negotiation to ensure the legality of the contract. 1.8. Conflict management. Almost all American people and the majority of Vietnamese ones choose the solution- oriented approach to manage conflicts. Only a small proportion prefer avoidance-oriented one, in which the percentage of Vietnamese people is much higher than that of Americans. 1.9. Decision-making Up to 86% of Vietnamese negotiators try to seek agreement from other team members before making decision whereas only 14% think that they can make decision independently. This is completely opposite to the American negotiators when the majority of them confidently believe that they can decide themselves and the minority has to consult the team before making their mind. 1.10. Activities accompanying the negotiation 82% of Vietnamese people and 68% of Americans think that the relationship-building activity is essential. The people who often give gifts to the counterpart make up 73% of the total of Vietnamese and only 45% of the total of American. The majority of Americans (55%) think that it’s not necessary. 2. Similarities and differences between Vietnamese and American in business negotiation and the cultural explanation. 2.1. Similarities In the selection of negotiators, both Vietnamese and American value some criteria like negotiating skills, expertise and experience in negotiating with the counterpart; almost all Vietnamese and American enjoy win-win approach or integrative negotiation; both Vietnamese and American desire to establish a long-term business relationship with the counterpart; they both think highly of building the personal relationship with the counterpart before starting negotiation; they use solution-oriented approach to manage conflicts during negotiation. Vietnamese are more concerned about saving face of the other party. They desire a result that is good for both sides so no one will be hurt, no party has to “lose”. They want to express “harmony” by spending time building personal relationship. Moreover, Vietnamese collectivist culture gives them a big desire for building relationship. A long-term relationship, especially with counterparts from a big developed country like the U.S. will bring Vietnamese business people with more chances of technology transfer that will be used to create the products later (Cellich & Jain, 2004). The values of duty and honor make Vietnamese individual carry themselves with the utmost dignity in all circumstances so as to not bring shame to oneself and his group. This is expressed in their goodwill to find solution to manage conflicts during negotiation. For American, though their sense of “competition” is very high and they usually try to compete and win at any price to get their interest, it does not mean that they want the other to “die”. That’s why they still prefer a win-win negotiation in which they can win but their counterpart does not have to lose. However, for American business people, it is likely that they find it necessary to build a long-term relationship as it will bring back more opportunities to enlarge their business or gain profits from the counterparts. 2.2. Differences - Vietnamese emphasize negotiating skills, position and seniority while Americans focus on experience, expertise. Due to the hierarchy expressed in the “respect” for people who are senior in age, status, or position, Vietnamese choose members with seniority and at least a high-rank representative to be part of the negotiating team. This high-rank official will have more authority in making concessions and agreements. Therefore, more Vietnamese people require a balance in status, position and age. American culture values “equality” and “individualism”. It is the equality of chances and responsibilities. For them, any representatives with negotiating skills, expertise, and experience will do best at the negotiation. They have high sense of self-reliance and responsibility. So what they care most is the success of the deal, not the age or status of the counterpart’s team members. - Vietnamese prefer to come to the negotiation with a large group, which help them feel more confident. As being collectivist people, they present ideas, make decisions and take responsibilities for those decisions as a group, not as an individual. On the contrary, American people tend to focus on individual qualities and thus they can independently act at the negotiation and take individual responsibility for their own decisions. - Vietnamese negotiators prefer the deductive style. After the agreements on principles are reached, they will continue to discuss each specific detail. This style provides the framework for dealing with the issues as they occur and helps them avoid uncertainties in the negotiating process because all the principles have already been established up-front. Americans usually negotiate inductively. They often look for agreements on very specific details and then collect them to come to the overall agreement. That is the way they are willing to face and deal with difficulties right away. These are expressions of the two different cultures: collectivist cultures value “harmony” which means people try to be less confrontational. However, the values of individualism, self-reliance and competition of American culture give people the willingness to cope with any problems. - Fourthly, American people tend to practice gift-giving and attend entertainment activities before or after the negotiation less than Vietnamese people. They may think that it’s time-consuming while in their mind “time is money” and “business is business.” Being known for “hard work and materialism”, they always try to make use of time and get works done as effectively as possible. Vietnamese are often more concerned with building relationship with their foreign business counterparts. Giving gifts or inviting counterparts to restaurants or karaoke, etc. are their ways to gain good impressions from the counterparts and a good relationship as well as the trust between the two sides will be built. - Fifthly, collectivist Vietnamese business people are more affected by the reputation and the status of the counterparts or the introduction of a third party and their basis for trust is often on mutual respect among the parties involved. - Sixthly, Vietnamese underestimates the role of attorneys more than Americans. For Americans, the appearance of attorneys in the negotiation is important and compulsory to ensure the legality of the contract. Because the individualist culture of Americans makes them more rational whereas collectivist Vietnamese tend to be more sentimental. - Lastly, negotiators from individualist culture like Americans seem to be more independent and assertive in making decision whereas the collectivist Vietnamese tend to be much more interdependent. 3. Potential problems in Vietnamese – American business negotiation and some suggested solutions. 3.1. Potential problems - More emphasis on the balance of status, position and age, Vietnamese negotiators may be unsatisfied with the younger and status-lower American negotiators. - There may be misunderstanding between two parties in suggesting and accepting activities around the negotiation. Vietnamese negotiators are likely to experience the feeling of disappointment in such case as their American counterparts are not excited about participating in activities which are aimed at personal relationship building. - U.S. negotiators often expect to be able to complete negotiations timely and efficiently. So they may feel impatient when Vietnamese negotiators are slow in making- decision process as they have to consult every team member, or they even delay making decision (if the representatives are lower-ranked officials of the organization.) 3.2. Some suggested solutions - Before the negotiation, both Vietnamese and American negotiators should spend time learning about the counterpart’s culture such as ways of thinking, rules of behaviors… When already having certain knowledge about each other’s culture, each party should try to predict the possible situations if they negotiate with the counterpart and prepare possible solutions for those situations. When being well-informed, each party will be more well- prepared which helps minimize misunderstandings, culture shock in negotiation. - Vietnamese business people had better prepare carefully for the issues that will be introduced at the negotiation table, which can be conceded and which cannot. With careful preparation and prediction, they will be more decisive and assertive. In addition, Vietnamese companies should not send too many representatives to the negotiation as they can choose only who are with knowledge and negotiating skills, provide them with authority to decide right at the negotiation conference. - For American business people who are doing business with Vietnamese counterparts, it is crucial for them to spend time building personal relationship with their Vietnamese counterpart to shorten the distance and create good impression. Additionally, they should try to be more patient at the negotiating table while their counterpart comes to the final decision. CHAPTER 5: CONCLUSION 1. Conclusion American negotiators tend to emphasis on individual values such as self-reliance, equality, competition, materialism and hard work. They highly appreciate individual negotiators with negotiating skills, expertise and experience in negotiating with the counterpart, who can deal with any possible risks and has the complete authority to make decisions at the negotiation. Their main objective is the negotiating itself, so they do not care much about the position or age of the other negotiators or the size of the negotiating team, as well as not spending too much time on other activities around the negotiation such as giving gifts to the counterparts, going to restaurants or karaoke, etc. During the negotiation, they follow deductive style to seek agreements and always find solutions to manage conflicts. In contrast, Vietnamese negotiators are affected by their collectivist values such as harmony, respect, duty and honor. Their ways of thinking and behaviors at the negotiation meeting are clear expressions of those cultural values. Their selection of negotiators also includes the criteria of seniority and status and they prefer a balance of age, position from the counterparts. Coming to the negotiation table with a large team, they make decision together and take collective responsibility. They expect an outcome with the winning of both sides. Vietnamese negotiators think highly of building relationship and usually organize activities for that purposes such as dining, karaoke… or giving gifts to the counterparts. Their negotiating style is inductive and they would rather reduce risks during negotiating. Their approach to deal with conflicts is solution-oriented one. 2. Limitation of the study With the limited relationship, the researcher was unable to directly approach the informants to have some interviews which help to make their answers in the questionnaires more explicit with more ideas or explanations. If only interviews were carried out, there would be more interesting findings in this research. 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Some reflections of Vietnamese and American Cultural values on Vietnamese- American Business Negotiation Lê Thị Vân Nga University of Languages and International Studies. reflected on Vietnamese- American business negotiation. 2. Aims of the study - to find out typical Vietnamese and American cultural values. - to understand the nature of a cross cultural business negotiation. . used by Vietnamese and American business people. - Non-verbal communication in Vietnamese- American business negotiation. - Cross cultural study on business negotiation between Vietnam and another