A business anecdote concerning a Japanese and a British manager who conduct a deal in English language illustrates this point. While the British manager goes through the contract clause by clause, setting out his conditions, the Japanese manager keeps saying 'yes'. By the time the British manager has reached the end of the text and conditions, he thinks he has clinched the deal, only to be told by his Japanese counterpart that he now has got to go back to his headquarters to discuss the matter with his boss. What the British manager understood by 'yes' was agreement with the clauses; what the Japanese manager meant by 'yes' was 'yes, I hear you, carry on, tell me more'.

There are of course other aspects of culture which manifest themselves in a negotiation situation.

As Hagen (1988) points out, foreign partners not only speak languages other than one's own, but also have a tendency, for cultural reasons, to think in different ways and have different priorities in the way in which they do business.

For example, some people prefer to conduct their business meetings with foreigners, initially at least, in a formal manner, and would be offended to be addressed by their first name; some might believe that the use of an informal style and first name would signal to the partners that they are trusted. Two partners from these different cultural backgrounds could easily misunderstand each other if they engaged in negotiations without a prior knowledge of one another's assumptions and values.

Take another example of cultural differences among business negotiators. In some cultures, people involved in business deals, would like to build up personal relationships first and establish the trustworthiness of their trade counterparts before going on to engage in business contracts and activities with them.

Language

One of the major issues concerning negotiations with trade partners from other cultures is language. Although it is not always necessary to know the partners' mother tongue, various research studies have shown that a correlation exists between successful company performance in winning new business in foreign markets, and the ability of the company to conduct its business in the language of the customer.

Competence in foreign languages is most needed by those involved in export, marketing, sales, technical work, arranging a joint venture deal and any other activities aimed at establishing and facilitating trades between companies and institutions concerned.

It is of course possible, and that is precisely what many business people do, to hire an interpreter. But the knowledge of a partner's language or the use of an interpreter is not enough to create shared understanding between people from different cultural backgrounds. Language represents and expresses the culture, the value systems behind it. Not knowing this underlying culture can cause problems.

As Jankowicz (1994) points out, some people tend to underestimate the difficulties involved in the creation of shared understanding and scarcely recognize the issue of cultural differences.