Culture in Negotiations across Cultures in Business. An Encounter and Business Negotiations between Iceland and Portugal

Term Paper, 2019

24 Pages, Grade: 1.3


Table of Content



3.1 Time Orientation: Monochronic vs. Polychronic
3.2 Communication during negotiations: Hall's framework of High-context and low-context communication
3.3 Gesteland's' Patterns of Cross-Cultural Business Behavior: Deal-focus vs. Relationship-focus

4.1 Critical Incident: “Portuguese-Icelandic Business opportunities"
4.2 Reflection of the critical incident
4.3 Recommendations for the next meeting




Table of abbreviations

Abbildung in dieser Leseprobe nicht enthalten

1 Introduction

Cross-cultural negotiations are getting more and more important in the business context. Doing business abroad, using sources and hiring workforce from other cultures make cross- cultural negotiations between professionals necessary, especially in times of globalization. In international business, great benefits can be gained from cross-cultural negotiations, nevertheless negotiations across cultures are more complex than negotiations between persons from the same country or culture. Negotiations between people from different cultures add an entire dimension to any negotiation introducing inter alia language barriers, differences in body language and alternative ways of expressing pleasure or displeasure with the elements of the deal that is negotiated. A professional negotiator has to understand the cultures of the participants, as well as culturally specific aspects.1 2 People that are involved in international negotiations have to acquire a skill set that is useful in the prevention of undesired perceptions and that promotes successful negotiation outcomes. According to the authors Shi and Wright the business executive's work has an increasingly international orientation and international business negotiation becomes an important competency in a global business environment.3 4

Due to the significance of cross-cultural negotiations in international business and the importance of the topic for individuals, young professionals and students that operate in a cross-cultural business context, the term paper focuses on the role of culture in negotiations across cultures in business. Starting point of the term paper will be the theoretical analysis of the selected cultures of Portugal and Iceland with the help of relevant theories/approaches regarding culture's impact on negotiations. The impact of culture on negotiations in business will then be analyzed in a practical part with the help of a specific critical incident with focus on the Portuguese and Icelandic culture.

The term paper focuses on selected cultural aspects. The focus was chosen on aspects that show the most interesting differences between the cultures of Iceland and Portugal and that are most interesting for the critical incident . T he term paper focuses on communication aspects, that are important during negotiations, as well as the monochronic and polychronic time orientation and Gestelands' pattern of relationship-focus and deal-focus.

2 Comparison Iceland and Portugal

Before analyzing the two countries on cultural impacts on negotiations, it is important to give a brief basic overview of Iceland and Portugal in order to provide a similar ground understanding of the countries.

Starting with Iceland, the 103.000km25 large island lies in the Arctic Region of Northern Europe and had a population of 337,000 in 2018. The islands capital city is Reykjavik, which has 216.000 inhabitants in its region. In addition, 95% of the population is Christians. Next to Icelandic, English is a widely spoken language. Moreover, Iceland has a strong Democracy and its currency is the Icelandic Krona (ISK). Coming back to its geographical location, Iceland is not only surrounded by water but covered by glaciers, geysers, and ice, and has more than 20 active volcanoes. This is due to the fact that the country lies on two tectonic plates. This is important as the island is famous for its geothermal vents, numbers waterfalls, mud pools, and hot springs.6 Therefore, water is a very important factor all over the island. In addition, fisheries is one of the pillars of the Icelandic economy. It is an important factor for the nation's export revenue and for the country's GDP. Hence, it is of fundamental importance for Iceland to be sustainable and responsible when it comes to maintaining a healthy marine ecosystem. Finally, the island has therefore a lot of commitments through national laws and international agreements.7

On the other hand, Portugal is only significantly smaller than Iceland with approximately 942,090km2.8 Nevertheless, with a population of 10,813,834, Portugal is the larger country by inhabitants. As well, most of them are Christians. Lisbon is the Capital of the democratic country in which Portuguese and Mirandese are the official languages. As part of the European Union, Portugal has the Euro as currency. Moreover, it is the westernmost point of Europe and has a long Atlantic coastline which is especially famous for surfers and tourism. Most of Portugal’s inhabitants are living along the coastline. This is due to the fact, that this rich habitat for calms, tuna, sardines, oysters, and crabs, is important for Portuguese fisherman.9 As a maritime country, the ocean is a fundamental part of the identity of Portugal which shaped the way of life over centuries. Therefore, the sustainable use and conservation of the marine biodiversity is of high importance for Portugal beyond borders.10

Despite the fact that both countries are geographically far apart, this brief overview shows how important the ocean is for both of them. Sustainable and conservational usage of water around the world is a key element for the future of both countries and therefore a binding factor to do business with each other. Therefore a relationship between Portugal and Iceland is realistic and a view on their individual cultures is relevant.

3 Analysis of Iceland and Portugal

Before doing business and negotiating in an intercultural context, it is important to know the culture of the business partner. Therefore, the following chapter is focused on the analysis of both countries' cultures impacts on negotiations in international businesses through relevant theories and approaches.

3.1 Time Orientation: Monochronic vs. Polychronic

Cultures are different concerning their perception of time. These differences are an important aspect during cross-cultural negotiations, because the risk for possible misunderstandings due to different time perceptions is high. The different cultural perceptions of time are a key variable that influences negotiations and poses its own challenges.11 Therefore a closer look will be taken at the Monochronic and Polychronic time perception of Edward Hall.

The author Hall distinguishes two types of time systems: monochronic and polychronic.12 In cultures with a monochronic time system, time is used in a linear way where people perform one activity a time and schedule their activities in order to manage these activities sequentially and successfully.13 Moreover, the focus of people from cultures with a monochronic time orientation is on information rather than on people. People from cultures with a Polychronic time system focus on more than one task and depend less on detailed information, and schedules.14 They are far more relaxed regarding schedules and punctuality and often interrupt their work. Relationships are far more important for polychronic cultures instead of punctuality or the work itself.15

The differences regarding the two time orientations can also be seen in negotiation. Negotiators from polychronic cultures tend to start and end meetings at flexible times, take breaks when appropriate, sometimes overlap talk and view start times as flexible and don't take lateness personally. Negotiators from monochronic cultures in contrast tend to prefer scheduled beginnings and endings, scheduled breaks, deal with one agenda item at a time and view lateness as an evidence of lack of respect. Negotiators from monochronic cultures may find the polychronic workstyle confusing, irritating and sometimes even annoying.16 17

Analysis of Iceland and Portugal:

North-American and Northern and Central European people are said to have a monochronic perception of time, whereas Mediterranean, South-American, Asian and African people have a polychronic attitude towards time.18 The selected cultures Iceland and Portugal differ when it comes to the perception of time. Portuguese people are seen as polychronic and often take a holistic approach and may jump back and forth between topics rather than addressing them in sequential order, whereas I celandic people prefer a monochronic work style. Portuguese negotiators may also sometimes request urgent changes during the negotiation. This is often a way to test the flexibility of their negotiation partner. The two extremes in behavior with regard to time can have important implications in business projects or business negotiations when monochronic and polychronic people work together.19 20

3.2 Communication during negotiations: Hall’s framework of High-context and low- context communication

Communication is an important component of culture and a key element to success in negotiations across cultures. It plays an essential role in negotiations between counterparts from different cultures and is one factor that determines whether a negotiation is successful or not.21 A significant dimension regarding communication and language that could be changeable depending on the cultural pattern is the implicit or explicit characteristic of communication.22 Therefore a closer look will be taken at Edward Hall's theoretical framework of high- and low-context communication that describes the way in which human communication styles differ.

In cultures with low-context communication the meaning is expressed through explicit verbal messages in written and oral communication.23 The recipient gets a lot of information from the message itself. Spoken or written words are important (e.g. detailed minutes, agendas and contracts). Low-context communicators prefer direct communication; things are clear, linear and verbal for them.24 Communication is result-focused and thinking-oriented.25 High­context cultures differentiate in the way of communication. In high-context cultures a part of the message is in the person and the context of the message. Non-verbal communication is a very important aspect in these cultures. Meanings or intentions are expressed through implicit context, including gestures, social customs, nuance, silence or tone of voice. Relatively little is explicitly transferred. In high-context cultures it is important how the message is delivered, whereas in low-context cultures the content is of primary importance.26 27 27

Hall characterizes Asia, Arabian and Mediterranean cultures as high-context cultures, whereas US-Americans as well as Central and North Europeans are rather classified as members of low-context cultures.28

The belonging to the group of high-context culture or low-context culture also influences the different stages of negotiations.

High-context cultures put a special emphasis on the preparatory stage of a negotiation by attempting to build a personal relationship with their negotiation partners. They also try to adopt a long-term orientation and try to maintain the relationships beyond the negotiation. Negotiators from low-context cultures separate personal life and relationships from work relationships and focus on the current issue in the agenda. Moreover the interaction during the negotiation is different. Low-context cultures are direct, explicit, based on facts and openly aggressive when it comes to the negotiation. High-context cultures are implicit, indirect and focused on maintaining harmony during the negotiation. Agreements in are sometimes informal and do not have any legal legitimacy in high-context cultures, because of the fact that harmony is so much valued. When it comes to the final stage of a negotiation, which involves reaching an agreement, low-context cultures regard the contract as a explicit message, while high-context cultures see the contract as a kind of a gentlemen’s agreement, emphasizing that the main purpose is not the deal itself, but the building of a relationship and the quality of the relationship.29

Analysis of Iceland and Portugal:

If we take a closer look at the two selected countries, it can be identified that Iceland can be characterized as a low-context culture. Icelanders are direct communicators and it is important for them to be direct and honest, to tell other people what they think is right and to keep their word. Icelanders have a good intention when they say what they believe is the best course of action. The direct style of communication could be misunderstood and may appear very cold and disrespectful to people who belong to a high-context culture. When communicating, Icelanders don't give much away about how they feel through facial expressions or body movements. Because of the fact that Icelanders don't seem to loosen up easily or use many nonverbal gestures compared other cultures, people from other cultures often have problems knowing what to make of them.30 Portugal on the contrary can be characterized as a high-context culture according to Hall's framework. The Portuguese often prefer about what to say and how to say it. The Portuguese do not like verbal directness or confrontation. Thus it may be rather difficult to get to the point or to get an honest answer from them. It is therefore beneficial to use a similarly indirect approach when dealing or negotiating with people from Portugal, otherwise they might perceive their counterpart as rude if he or she is too direct.31

3.3 Gesteland's’ Patterns of Cross-Cultural Business Behavior: Deal-focus vs. Relationship-focus

Gesteland created the patterns for Cross-Cultural Business Behavior for the purpose to provide predictability and decrease confusion within negotiations. Therefore, he clustered global business practices into logical patterns, as those are known to be more understandable for an individual. The main concept of this theory is to allow an interpretation of human behavior, which varies between cultures. Especially, when it comes to business behavior this theoretical input may help to bridge cultural gaps between counties as it takes preferences into account and therefore, increases the understanding of differences.32

In the following, this subchapter is looking deeper into the dimension of business, deal- focused cultures versus relationship-focused cultures.

Business deal-focused countries are very task oriented, typically strong English-speaking, and usually very direct within conversations. It is widely accepted to express disagreement and certain tolerance is shown to conflicts. Moreover, those countries typically do not have any difficulties when communicating with foreign culture. Next to time, as well punctuality is very important as it indicates efficiency. It is all about negotiation and the eventual transaction. Hence, there is a minimum of socializing during business. Finally, this is a main aspect which indicates that deal-focused cultures can as well vary from each other.33 34 In business relationship-focused cultures, the focus of the negotiators is often more on the interaction than on closing the deal. Only if the interaction with the business partner, not its company, is right, a foundation of trust is created which leads to further negotiations. Hence, it is important for those cultures to spend some time to develop a relationship before getting down to business. Moreover, it is seen as impolite and unfriendly when rushing to negotiations. In addition, it is important to avoid embarrassment. Hence, communication is more indirect. Finally, a strong relationship between business partners is a key to success.35 36 36

Analysis of Iceland and Portugal:

Coming back to the two countries of Portugal and Iceland, one can easily see that Iceland is more business deal-focused whereas Portugal is more business relationship-focused. As mentioned in the subchapter before, in Iceland communication is very direct, punctuality highly valued, and concerns directly addressed. Contrary, Portuguese do not like to address concerns directly. For them the relation to their business partner firstly needs to be right, before they have enough trust to make a deal. Establishing a relationship between the business partners, not their companies, is a key to assure trust. In addition, maintaining cordial and honest relations is crucial to make a deal. Nevertheless, both countries vary a bit from the described position, as no culture can be categorized in its full extant.37 38 39


1 Cf. Green (2019)

2 Cf. Costin (2015), pp. 185

3 Cf. Khakhar and Ahmed (2017), pp.25

4 Cf. Shi and Wright (2001), p. 365

5 Cf. Iceland Monitor (2016)

6 Cf. KWTG (2019)

7 Cf. TOGTI (2019)

8 Cf. MLE (2019)

9 Cf. Kleuskens (2019)

10 Cf. Vitorino (2017)

11 Cf. Macduff (2006), pp. 37-40

12 Cf. Kawar (2012), p. 108

13 Cf. Rothlauf (2014), p. 35

14 Cf. Kawar (2012), p. 108

15 Cf. Schmidt (2007), p.44

16 Cf. LeBaron (2003)

17 Cf. Katz (2008), p.4

18 Cf. Duranti and Di Prata (2009)

19 Cf. Katz (2008), p.4

20 Cf. O'Brien (2016), p.100

21 Cf. Staff (2019)

22 Cf. Danciu (2010), p.92

23 Cf. Nam (2015), pp. 378

24 Cf. van Nispen (2017), p. 263

25 Cf. Schmidt (2007), p.42

26 Cf. Nam (2015), pp. 378

27 Cf. van Nispen (2017), p. 264

28 Cf. Rothlauf (2014), p.32

29 Cf. Costin (2015), pp. 189

30 Cf. Kristjansdottir (2017), p.3

31 Cf. Katz (2008), p. 2

32 Cf. FANDOM (2019)

33 Cf. Rodgers (2018)

34 Cf. FANDOM (2019)

35 Cf. Rodgers (2018)

36 Cf. FANDOM (2019)

37 Cf. Business Culture (2019a)

38 Cf. Rodgers (2018)

39 Cf. CG (2019)

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Culture in Negotiations across Cultures in Business. An Encounter and Business Negotiations between Iceland and Portugal
University of Applied Sciences Aschaffenburg
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culture, negotiations, cultures, business, encounter, iceland, portugal
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Julian Rudolf (Author), 2019, Culture in Negotiations across Cultures in Business. An Encounter and Business Negotiations between Iceland and Portugal, Munich, GRIN Verlag,


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