June 26, 2011 · Print This Article
Dr. Akash Dania, an assistant professor of finance in the School of Business, recently had his manuscript “Approaching the Asian elephant: understanding business-to-business relationships in India” published in the International Business and Economics Research Journal.
In a globally connected business world, it has become important to understand how business is conducted in different countries where cultural backgrounds vary significantly from the United States. As emerging markets grow more significant for multinational companies, it becomes imperative that foreign firms identify factors that contribute to successful negotiations and business strategies.
This study proposes and empirically tests a framework that measures the impact of “social formalities” and “power distance” on business relationships in context of India, a rapidly expanding emerging market. The model shows that power distance sets the stage for negations, and the respect for social formalities sets a tone of mutual reference and understanding that will facilitate the establishment of a foundation for long-term business relations.
An important implication of this research is that foreign companies should place their managers (negotiators) within the foreign social context. Being sensitive to local values and customs conveys a willingness to facilitate communication by understanding the parties’ mutual cultural differences and establishes a personal relation based on mutual respect and trust. This sensitivity and its impact will help the negotiation process move through its various stages and culminate in a business-to-business relationship.