Cultural Impacts on Business Negotiations in Emerging Markets : Cases of Norwegian Enterprises in Indonesia

Abstract

The main topic of this thesis is the cultural impact on successful business negotiations in emerging markets, with focus on Norwegian companies operating in the Indonesian market. The research problem is stated as: How do cultural differences influence Norwegian managers’ business negotiations in Indonesia? Historically, there have been several studies conducted on cross-cultural business negotiation. However, a study on what cultural factors impact Norwegian enterprises’ negotiation with Indonesian actors has not previously been done. Therefore, this thesis seeks to contribute to explore the topic and provide a deeper understanding of the challenges Norwegian managers encounter in business negotiation processes in Indonesia. The findings could be of interest to other Norwegian enterprises operating in Indonesia, as well as to those planning on conducting business through negotiations there in the future. The research method used in this thesis is a qualitative case study from a primary sample of four Norwegian companies with experience of operating in the Indonesian market. A secondary case study organisation was included to provide external viewpoints and relativity. Data was collected through in-depth interviews with people in current or previous managerial positions from each company. Finally, there are some personal observations from one of the researchers. With a structural basis in the framework of international business negotiations by Ghauri and Usunier (2003) and Salacuse (1999), supported by other theory, the main findings in this thesis were that there indeed exist many cultural differences of impact. The business environment is arguably very complex, and culture is complicating the various types of negotiations among the participants. Findings suggest that the cultural impacts on negotiations must be viewed in the contexts of background, atmosphere, process and strategy, which are all dynamic and interrelated. Central results from the case study participants were differences in communication, collectivism versus individualism, power distance, hierarchical structures, time management and emotionalism. Above all, establishing trusted, personal relationships with the other negotiation party was found absolutely critical to business negotiation success. As negotiating in Norway might be an exercise in reasoning, negotiating with the Indonesians might be an exercise in harmony management.