Negotiation is a discussion used for the resolving of disagreements, this also produces an accord on certain courses of action for the purposes of satisfying a range of interests. Using the right strategies in negotiation between two or more parties is important for an amicable outcome. Cultural differences are a common issue and a topic of discussion in many cases in today’s society. They often bring about conflicts that are hard to resolve.
The purpose of this paper is therefore, to examine the issues that can arise in negotiations between two parties with different cultural perspectives, the desire for different outcomes and the strategies used by each party. This case study is about Moho Athman. He is western educated but comes face to face with the ugly norm that is cultural rigidity. This happened when he took a career as a marketing manager in the family’s textile business after he graduated.
The case revolves around an Islamic Indonesian family running a business. The heads of the family run the business and attribute their success to upholding Islamic beliefs and family values. Moho, the son of the CEO had been sent abroad to acquire an MBA in Australia. Upon his return to Indonesia he took up a career as the marketing manager in their family’s textile business. Moho had embraced western views on management.
He cannot put into practice what he has gained because he meets with stiff opposition from conservative family members such as Fatima, his cousin and Hamid Athman, his uncle. They strongly believe in the traditional Islamic way of running the business. His attempt to bring his ideas forward is met with both scepticism and doubt. But the discontent of the workers who are treated in an unfair manner that is not based on their productivity is a sign of hope for him. This is because if he succeeds in implementing his ideas, he will have their support. But the problem is that this chance is not available given the high level of opposition he’s getting from his family members, who make up the management.
He wanted to introduce participative management and teamwork, which allows individuals from various levels within an organization to have influence in organizational strategies and that information sharing, decision making and problem solving is balanced between staff under them (Kim, 2002). He also wants to introduce decentralized profit centers, job standards and a performance appraisal system. He intends to fuse his ideas in the management and running of the business, but he faces stiff opposition from his father, uncle and cousin. As a result, they don’t trust him and claim that he is too young and inexperienced for the post he has been given.
The key issues are Moho’s views on the necessary changes for the firm to continue being successful, employee dissatisfaction with how they are rated and paid, and the family’s view on fundamental Islamic principals in running the business. The Islamic principles, of which Moho’s family upholds, can be defined by the following principals:
- “Fulfilment of promises (pacts and contracts-or verbal and written)
- Exactness in weights and measures (specifications) in all business related items including work, wages and payment, and labour movement
- Truthfulness, sincerity and honesty. While lying and cheating are condemned, the quality of truthfulness, sincerity and honesty is not only commended but commanded by the Quran (Quran5 5:7-9a nd8 3:1-6)
- Efficiency, i.e. jobs should be carried out without any lapse or omission, with best planning and to be the best of their efficiency and competency
- Selection of merit. The Quran standard of eligibility is the required merit and competency for the job (Quran2 8:26)
- Investigation and verification. They are essential because they constitute a prelude for the right and ethical conduct. The Quran commands to probe and verify any given statement or piece of information before making a decision or taking any action accordingly (Q uran1 7:36,a nd4 9:6)” (Abeng 1997)
In spite of this, Moho has hopes that through his workers and father, he will be able to persuade his relatives and slowly take the business through the cultural shift.Moho’s ideology about running the business is as a result of the further studies he undertook. He knows that in order to get maximum output from his staff, he should motivate them. This he intends to do by introducing performance contracting, which would rate an employee according to the level of his output.
He is also trying to get them on board to be part of the company’s decision making body and also intends to look into their salaries. This way they would feel that their views are valued and that they are part of the business. This would go a long way to change their perspective about their boss and lead to more productivity in their part.
Moho is using some frames in negotiating change. The substantive frame comes into play as a result of his comprehension of what the conflict is all about. This happens to be a clash of cultural beliefs. He does not intend to wash away or do away with the cultural forces. Instead his intention is to fuse this culture with professionalism in order to bring out the best in everybody; the staff and the management.
The outcome frame is seen in Moho’s objective to make what he views as necessary changes to how the firm is managed and the processes needed to continue being successful. It is a hard path to tread but if he keeps it up and convinces the conservative members of his family to give him a chance to apply his strategies, eventually their business will thrive further. The identity frame; Moho acknowledges Islamic principles with which he was brought up with, but has relaxed views with the exposure to westernized practices in business and sees the value in westernized concepts in business. The loss/gain frame, through which he views the changes he’s agitating for, is to him positive for the firms continuing success and characterization frame, whereby he views his father as more tolerant of modernized practices than his conservative uncle and cousin.
The negotiation tactics Moho is using comprise; consultative approach, where he gathers information and views from the employees on what type of change is needed within the firm, and informs the leadership. Given his position and being a family member, he could institute these changes in his department (marketing), but instead preferred to involve the other stakeholders of the business through negotiations.
His tactics also include the application of the incremental change policy. It is definitely not possible to change the way the business runs overnight since this is the way it has operated for a long time. Therefore, using a slow approach that includes talking to each individual member about his ideas and trying to convince them to support him is one option. Since what he wants to implement is sound, the positive feedback will make them give him a chance to apply more of his principles.
Given the fact that his father is more tolerant of western approaches to management than the other members, he may be the right person to start with. Far from the above, Moho can ask for a unique scenario where he agrees to perform on a contract basis. He will ask for the permission to apply his principles in a department of his choice for a given period of time. They should have an agreement that if the department performs better than it is currently doing, he not only retains his position but also gets the leeway to apply the new ideas to the rest of the business. There is no doubt that there will be a positive change if Moho applies the qualitative approach to any department in the business.
Hamid Athman’s negotiation tactics, is based on distributive bargaining (win-lose). This is in direct conflict with Moho. He views himself as an experienced elder within the business. He neither considers nor embraces the ideas or principals being suggested by his nephew. He applied the hard ball technique by possibly playing Moho’s father against him. Hamid Athman’s major concern is the impact of Moho’s ideas to a business that the family has operated for a long time. He fears that these ideas may lead to collapse of the family business. There is no doubt that he wants the best for the business and this is why he and Ali have even discussed the idea of Moho marrying Fatima.
Since Moho cannot be wished away as a family member, Hamid can come up with a strategy that can deal with Moho once and for all. This could be by outlining to Moho what he expects of him in terms of management, in turn letting Moho assure him that his ideas will not create disrespect for Islamic ideals and lead to business failure. He will then give Moho a short but reasonable experimental period to run a department using his ideas and the outcome will settle the conflict once and for all. Including the other members in this conversation will make it both effective and smooth.
Hamid’s frames include: the Substantive frame, Hamid understands the issue and conflicts have arisen as a result of his nephew’s ideas in wanting to change work standards in the business which seem to contradict the families’ values and beliefs. He is against this because he thinks the business is as good as it is because they uphold Islamic rules and values. The outcome frame whereby Hamid has a strong belief in Islamic fundamental principles and suggests that Moho works closely with him.
This is likely to engage primarily in distributive (win-lose) negotiation. The Identity frame, Hamid’s view on Moho is that he is young and inexperienced where as Hamid is respected as an elder in the business, this has resulted in Moho earning mistrust amongst the family elders. The Characterization frame, Hamid views Moho as young and inexperienced for the role given to him by the family in the firm. Instead he proposes that he should have a lesser role and work closely with him. The Loss or Gain frame. His perception of the change is negative, and believes that implementing modernised concepts will be of detriment to the family’s traditional values (Lewicki, Barry & Saunders 2007).
After an extensive research and study of 50 countries and 3 regions, Hofstede identified four dimensions to classify the way people in different countries interpret their cultural environment. It was given an index score and then ranked in order based on their score. A brief summary of the four dimensions is listed below:
- Power Distance Index (PDI) – “is a measure of the relationship between individuals of different status within a culture”
- Individualism Index (IDV) – “is the degree to which people in a country or region learn to interact with each other”
- Masculinity Index (MAS) – “identifies cultural variability based on what are considered appropriate gender roles of that culture”
- Uncertainty Avoidance Index (UAI) – “Extreme uncertainty creates intolerable anxiety. Every human society had developed ways to alleviate this anxiety. The ways belong to domains of technology, law and religion”.
The most pronounced Hofstede cultural dimension in this case is power distance. Power distance is referred to as ‘the extent to which the less powerful members of organisations and institutions (like the family) accept and expect that power is distributed unequally’ (Hill 2007, pp. 236).
According to the findings of this research, it was discovered that power distance was very high in Indonesia at 78, in contrast it is relatively low in Australia at 36 (Hofstede 2009, p. 1). This therefore means that the culture of closeness among people and families including the government and business leaders and their employees is higher in Australia while in Indonesia there is no closeness (Hofstede 1996, pp. 45-46). This is why Moho’s open mind is not welcome by his family members who feel that their power will be interfered with if the employees are engaged in participatory management. Cultures with stronger power distance are more likely to have decision-making concentrated at the top of the culture, in the case of Athman decisions are being made from the board down.
A summary of Hofstede dimensions model of cultural difference is summarized in the table below;
Table 1: Cultural Dimension of Australia Vs Indonesia
*Estimated from the graphs below
The biggest cultural differences between Australia and Indonesia are the inverse relationship between Power Distance Index (PDI) and Individualism Index (IDV). According to this, Australia has a very high IDV with a low PDI while Indonesia reflects the opposite having a high PDI with a low IDV. Both countries have similar MAS and UAI. They are therefore considered to be irrelevant in relation to this case study.
The main consideration applicable to this case study would be to examine the cultural differences in terms of PDI and IDV. The tables included in the appendix, illustrate the salient characteristic of PDI and IDV (adopted from Cross-Cultural Negotiation).Therefore on the basis of the tables above, the implications of the case study can be summarised in the followings table:
Table 2: Low and High Power Distance and Individualism of Australia & Indonesia.
|Low PDI – Australia (Moho)||High PDI – Indonesia (Hamid)|
|Reject concept of differentiation among the workers||Thinks that Moho os too young and inexperience|
|Recognise individual ability and performance and be rewarded|
|Moho’s approach of participative management and team work|
|Decentralised profits centres|
|Wants to add a performance appraisal system, rating each employee|
|High IDV – Australia||Low IDV – Indonesia|
|Recognise individual ability and performance and be rewarded||Prefer to management groups rather then individuals|
One way to resolve the conflict is by Moho using his more tolerant father to negotiate a slow but incremental approach. This he should do while assuring the rest of the team that Islamic traditions are not at stake. The success of whatever he applies will ultimately allow him to apply more of his ideas. Competitiveness in international business requires modern management ideas like the ones Moho has (Hill 2001, pp. 19-22).Therefore he should try all possible means to implement them without spoiling its operations. There is also a need to consider the following factors which could account for the growth and success of the business:
- The company’s growth in Europe and North America, both countries are western and have a high IDV. Therefore it would be considered that Moho’s approach (western management) would be more appropriate. However, there is also the concern that Moho may not have enough experience.
- Currently the company seems to be quite successful. It is then considered that the current management approach seems to be working. However the success could be due to the fact that it is operating in a culture of low IDV and a high PDI, whereas the management system/approach may or may not be effective in a culture that has the opposite effect (i.e. High IDV and low PDI in western countries); and
- Hamid’s approach may be successful in other Asian countries or Muslim regions that have similar cultural dimensions to Indonesia.
Moho needs to thoroughly plan his strategy before negotiating the changes in that he should define the issues, assemble these issues, and define the interest of each party involved in the business. Moho should be keen to know the limits, setting targets, assessing constituents, analysing the other parties, present the issues to the party and also define the protocols involved.
He would also need to decide on a strategy. He should employ two strategies in the given case, ‘integrative negotiation’ and ‘cultural responsive’ negotiation strategies. In integrative negotiation, both parties would gain from the experience and none would feel it has lost. Moha has demonstrated this strategy by identifying the problem within the business which is the concept of differentiation among workers. Cultural responsive strategy involves holding the negotiation while keeping in mind the aspects of life the people hold dear. These aspects are defined by blocks such as attitudes, behaviour, norms and values.
He understands these issues and brings the interests and needs to the surface by taking it to his superiors. Moho also generated alternatives and solutions by introducing two concepts which he learned when he earned his MBA,’ participative management and teamwork’ and ‘decentralised profit centres’.
Further strategies that need to be discussed by all parties involved during the negotiation process. These include Identifying key points in which the company can and cannot adapt and also identifying the needs of the customer in the various locations(i.e. customers in Europe and N. America in relation to the needs of the Asian customer). They should establish the limitations of the company and the business’ future intentions and its international growth
In a synopsis, the case identifies many issues involved not only in negotiation between businesses, but also in negotiating within cultures and the different perspectives of management. More importantly ,it has identified the power distance between western and Asian cultures. Moho is facing this crisis, the effects of a wider power distance and a conservative leadership. He will need to plan his negotiation carefully and ensure he has the correct strategies to win over his elders.
He needs to convince the leadership that culture alone cannot hold the business together in the long run. That modernity is fast encroaching and the global trend businesswise is headed towards accommodating the employee as an important part of the business, and that he is not a mere worker. He might be required to lobby his father, who is more tolerant to the western culture, and offer to demonstrate that his ideas can improve performance while protecting Islamic traditions.
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