Corruption and Public Welfare

Corruption is a major detractor from global welfare and local economic development. Its consequences are shoddily built roads, structures that collapse, clinics with equipment purchased at high prices or inappropriate specifications. In all such circumstances vast public expenditures do not achieve the envisioned use and local interest suffers.

Typical side payments are 10-15 percent of all major expenditures, with much higher levels in the developing world. “It is human nature to lubricate relationships with gratuity” was a typical statement, with more diversion attributed to high-context cultures [e.g., Latin American, Latin Europe, and Asia] and less to low-context ones [e.g., United States, Northern and Germanic Europe]. Yet, the social acceptance of corruption was seen as a bigger danger because it protects the elite from domestic scrutiny and control. Therefore, the ongoing impact of the U.S. Foreign Corrupt Practices Act and the OECD discussions were seen as instrumental in reducing or at least containing such misappropriations. More multilateral action is seen as necessary to ensure broad, continuous and relentless enforcement of measures against violators. Beneficiaries of ill gotten gains from bribery should eventually be pursued globally to disgorge their ill gotten gains.

This is an excerpt from Dr. Czinkota’s book Global Business: Positioning Ventures Ahead, co-authored by Dr. Ilkka Ronkainen.

Michael R Czinkota and Ilkka A Ronkainen, Global Business: Positioning Ventures Ahead (New York: Routledge, 2011), pg. 105.

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Negotiations in Other Countries: Part 1 of 2

We sometimes have to do things overseas that we would not do at home because what is acceptable and expected in our domestic markets might not work elsewhere–and vise versa. Bridging the cultural chasm is essential for success in negotiations, but it has the potential to offer a much bigger impact than that. The continuing efforts of marketers to understand cultural issues help them identify terminology that is persuasive, but, more than that, these efforts help secure important assimilation of value systems.

Meeting face-to-face generates a global connectedness that helps businesses on a personal level, but helps cultures on a global level. This enhanced “one world” sense can contribute to undermining support for terrorists, who polarize and alienate, rather than unite, world cultures. These suggestions regarding different styles for different regions will help negotiators adjust to the style of the host country.

Learn as much as possible about the other group’s traditions and culture first. Ask consultants and local representatives to help identity the critical behaviors or details that can make or break a relationship. For example, in highly structured societies such as those of Korea, people respect age and position, so do the same.

Rituals are important and should be respected. For example, in Asia a first encounter must include the exchange of business cards. Those who have not packed them should get replacements printed immediately. Add a translation to the back of the card so it can be read in the other group’s native language. The exchange of business cards is so important that some airlines offer to print the cards as a service to their business travelers when customers make a reservation for travel to regions where it is a common ritual.

Show respect by reading cards as they are received. Demonstrate the significance of the card’s symbolism by holding it with both hands before tucking it carefully away in the protected location, such as an inner jacket pocket, card holder, or wallet.

Use the company’s best people. Some companies make the mistake of assigning global negotiation to their less talented players. This could indicate that the organization either is not concerned about the outcome or doe snot understand the significance of a successful outcome. Because of the importance of business partner relationships and the impact a successful contract has on the company’s overall health, the negotiating team should feature a company’s top talent.

Use a team. Bringing in specialists will strengthen the company’s position and ensure that all points of view get proper attention. Expanding the team also allows less experienced participants to observe and learn more while participating less than they could without the backup. In addition, it helps a company match the firepower of the other group. While Western negotiation teams tend to have just two to four people, Chinese teams might have as many as ten.

Match titles. Negotiators will be more effective in certain regions if they make certain that the “rank” of the most senior member of their team matches the most senior member of the counterpart’s team. It can be an important sign of respect. Titles sometimes offer surprising leverage abroad, as well. For example, when meeting the chairman of the U.S. Democratic Party in China, people respond with greater respect than one might expect and certainly with more respect than is offered in the U.S. This is because Mao Tse-tung, the remarkably powerful former leader of the Communist Party in China, was also a party “chairman.”

Keep the team’s disagreements private. Just as parents work to present a unified front with their children, negotiators need to bring a single voice to the conference room. Team conflicts will exist , of course, but they should be imperceptible and kept out of the negotiation room. Otherwise, the team could be subject to a competitive “divide and conquer” strategy.

Speak the language, even if it is just a few words. In an ideal situation, the negotiator speaks the customer’s language fluently. If both teams are using English, but only one team has native English speakers, that team should be careful to avoid jargon and colloquialisms.

Making the effort to learn the language of a potential partner shows commitment, good faith, and sincerity, even if all the team masters is a few greetings or phrases. As international marketing becomes more important, companies will hire people who can speak several languages, particularly those of countries where the company plans to do business. These individuals can become part of the negotiating team, serving as translators when there are language barriers. There are drawbacks associated with using translators or interpreters, though. They impede spontaneity. Their presence can offend an executive who believes he speaks the other language fluently. The companies might be discussing confidential information they do not want to share with an outsider. On the other hand, the fact that they slow things down can provide each team with time to give more thought to what is being said.

Anyone involved with international business will want to learn at least one foreign language. This exposes the learner to new cultures, new thinking, and new ways of doing things– all of which better prepares the marketer for the global marketing experience.

Watch body language, too. Sitting in what might be considered a comfortable position might be interpreted in China as a lack of control over the body and, therefore, a lack of control over the mind.

This is an excerpt from Dr. Czinkota’s book Global Business: Positioning Ventures Ahead, co-authored by Dr. Ilkka Ronkainen.

Michael R Czinkota and Ilkka A Ronkainen, Global Business: Positioning Ventures Ahead (New York: Routledge, 2011), pg. 152-154.

The Cultural Faux Pas

There are a number of resources available to help international marketers avoid unpleasant cultural mistakes when traveling overseas.  Executive Planet is a wiki-like resource featuring a country-by-country list of business etiquette guidelines. use this site or another reference resource to become familiar with the destination country or the mores of the people being entertained. Here are a few examples of potential pitfalls to help those involved appreciate the importance of understanding the culture they are dealing with:

  • Gifts. It is customary to exchange gifts in Thailand on the second meeting but gift-giving is considered a bribe in China. Avoid black or white wrapping paper in India because both are considered unlucky. Do not offend the gift-giver there by opening a gift in front of them, because that would not be polite, but do give thanks.
  • Names. Do not use first names with Japanese colleagues. Use their title or their last name and the prefix “san,” as in “Czinkota san.” It is the equivalent of “Mr.” or “Ms.” The use of san is not appropriate for spouses or children, though. In Mexico, a business card will include the surname of the individual’s father followed by the mother’s surname, but it is the father’s surname that is used when addressing the individual. This means that Senor Jorge Raul Rodriguez Mendez is Senor Rodriguez, not Senor Mendez.
  • Touching. Do not hug people in the Netherlands or Russia.  And by all means, do not give the German Chancellor a shoulder rub, as former President George Bush did for Angela Merkel during one of his trips abroad. Public displays of affection are verboten in India, too, as actor Richard Gere discovered when he kissed an Indian actress on the cheek several times at a charity event– the government issued a warrant for his arrest on obscenity charges.
  • Hand signs. In countries such as India, using the left hand for anything is cause for concern, so do not do it. In Indonesia, pounding the fist into the palm of the other hand could be considered an obscene gesture.
  • Social situations. Do not bring up business topics during social engagements in Australia and Thailand. Leave it to the local hosts to decide if business conversations are appropriate. In Australia, make sure that everyone takes a turn at buying a round of drinks. It is not wise to directly reject a social invitation in India. Even if it is not possible to attend, saying “I hope I can be there” is more acceptable. When doing business with a Scot, do not ask personal questions, even though that might be how to begin to establish a relationship with domestic colleagues.
  • Dining out. In Muslim regions, people believe the left hand is dirty, so using it to eat is inappropriate and disrespectful. In all regions, never refuse to eat the local delicacy, no matter how unpleasant it might seem.

This is an excerpt from Dr. Czinkota’s book Global Business: Positioning Ventures Ahead, co-authored by Dr. Ilkka Ronkainen.

Michael R Czinkota and Ilkka A Ronkainen, Global Business: Positioning Ventures Ahead (New York: Routledge, 2011), pg. 156-157.