THE ENTREPRENEURIAL PERSPECTIVE

Maaja Vadi, Triin Kask, Keit Lõhmus University o f Tartu

Abstract

Our study explores how Estonians perceive G erm ans’ and Russians’ ne­

gotiation behavior in the fram ework o f H ofstede’s cultural dimensions.

Negotiations are a means for entrepreneurial com m unication and as such they are influenced by the partners’ cultural backgrounds. Estonians were interview ed about their view s on G erm ans’ and R ussians’ behavior during negotiations. The results show that some perceptions are consis­

tent with H ofstede’s findings, w hile there are differences as well. Our findings, along with other issues, bring up im plications for entrepreneurs and three aspects are discussed. Lim ited experience and the perception o f differences may lead to generation o f stereotypes am ong entrepre­

neurs. Therefore, education and thorough investigation would be benefi­

cial for acquiring efficient negotiation behavior. Entrepreneurs can sus­

tain the integration o f the Russian population in Estonia if they are more inform ed about their partners’ cultural characteristics.

Introduction

Entrepreneurship is a sensitive area in respect o f culture. Culture can be said to permeate entrepreneurial motivation as well as communication. W hile the former focuses on the issues that apply

to people who are interested in devoting themselves to entrepre­

neurial activities, the latter touches the areas affecting how entre­

preneurs are able to execute their ideas. This chapter addresses communication and its cultural issues because social and geo­

graphical m obility are important aspects o f entrepreneurial be­

havior. More specifically, we will single out one particular kind of business com munication - negotiations - for the subsequent analysis.

The manner how participants in negotiations treat each other is very much influenced by their cultural background which pro­

vides them with an understanding o f their partner’s role from various perspectives. Therefore, the cultural approach to negotia­

tions may reveal some general issues for business people. It is an important aspect to be mentioned in connection with Estonia, where the practice o f international negotiations is about 15 years old. Estonian business people have already gained some first-hand experience o f international negotiations, w hich can be analyzed in order to understand some culture-specific features and draw some implications.

Estonia and its social and economic history have been influenced by many countries and cultures, among which Germany and Rus­

sia occupy a special position. Additionally, Estonia has been strongly influenced by different other cultures. For example, dis­

tinguishing between political, economic and cultural spaces o f in­

fluence, Vihalemm (1997) indicates which countries have dom i­

nated the societal space o f Estonia in different periods. In 1918—

1940, Estonia’s political space was influenced by Germany and Russia, its economic space by Germany and G reat Britain, and its cultural space by Germany, Finland, and Sweden. After World War II, Estonia was part o f the Soviet Union, which left its im­

print on all the three dimensions. This circumstance has generated interesting aspects for analyzing the cultural impacts on many activities by means o f H ofstede’s framework.

196 Estonians’ views on G erm ans’ and R ussians’

Culture can be characterized by the following four dimensions (Hofstede, 2001). Power distance reveals to w hat extent power and hierarchical relations are considered to be essential for a par­

ticular culture. Uncertainty avoidance explains w hether tense and vague situations are tolerated or avoided and to what extent. The individualism-collectivism dim ension shows w hether the interests o f an individual or a group are more important. The fourth dimen­

sion is masculinity-femininity, which shows to what extent culture is dom inated by such masculine values as orientation towards achievem ent and competition.

In the light o f the abovem entioned aspects, the aim o f this article is to draw im plications for entrepreneurs by way o f studying Estonians’ views on G erm ans’ and R ussians’ negotiation behavior using H ofstede’s fram ework o f cultural dimensions.

The introduction o f this paper is divided into two main sections, the first one describing the main concepts o f the study - negotia­

tions and culture - as well as their potential interrelationship from an entrepreneurial perspective. The second section summarizes German, Russian and Estonian cultural characteristics according to H ofstede’s cultural dimensions, exem plifying the rationale of the empirical approach used in our research. The third section of the paper presents an empirical analysis, which is based on the interviews conducted with Estonian business people who have copious experience with representatives o f the German and Rus­

sian cultures. Finally, some im plications are drawn for the entre­

preneurial perspective.

The role of negotiations for entrepreneurs and the impact of the cultural context on negotiations

The role o f negotiations is often underestim ated by entrepreneurs;

instead they tend to have an attitude towards negotiations as something that one has to get quickly over with. But as the scope o f enterprise rapidly increases, the necessity for communication

between entrepreneurs also grows. And if good results are wanted, one must also understand the role o f negotiations. It is important to have a systematic negotiating process to prevent hasty decisions that in the future may have no impact. That pre­

supposes thorough knowledge o f the negotiation partner, a well- planned negotiating process and explicitly expressed purposes.

Entrepreneurs lack information about how to conduct constructive negotiations; the topic is not well developed yet. For example, Baker (2004) introduced these issues when characterizing the started discussion for providing a theoretical background to rock and roll entrepreneurship and organizational communication.

Due to the globalization o f econom y and enterprises, understand­

ing the role o f negotiations is getting more difficult. An important factor that comes into play is culture, and understanding cultural differences makes the negotiating process rather complicated. In the course o f cross-cultural negotiations, different beliefs, relig­

ions, social expectations and backgrounds bounce together. It means that conflicts and misunderstandings are easy to occur, which in turn may lead to critical situations or even failure o f the negotiations. Hawley and Hamilton (1996) have shown that in a multicultural world it may frequently happen that entrepreneurs find themselves in the role o f a negotiator between the contradic­

tory values o f their own cultural system and those o f the dominant world.

Culture plays an essential role in negotiations; this is especially important in international business when East and W est meet at the negotiating table (Adair, 2003). Information processing is one of the reasons for different understandings o f the negotiation process. W eber and Hesee (1998) have shown that people’s differing perception is one o f the factors that lead to cultural dif­

ferences in the situation o f risky decision making. Usunier (1991) also underlines the role o f cultural differences in business nego­

tiations by analyzing perception time.

198 E stonians’ view s on G erm ans’ and Russians’. effects, but also their skilful utilization in o n e’s advantage.

PREFERENCES INTEGRATIVE

Figure 1. A model o f inter-cultural negotiations (Brett, 2000, modified).

Sometimes the participants in negotiations are partially coopera­

tive or protagonists, seeking to optimize their own gains. Studying the patterns o f understanding one’s partners’ cultural background is particularly relevant when investigating negotiations, because culture affects the way people communicate. Entrepreneurs usu­

ally act on the basis o f intuition (see, for example, Greenbank, 2000), which has shown that the role o f the cognitive aspects o f entrepreneurial behavior is substantial. For example, Allison, Chell and Hayes (2000) suggest that those ow ner-m anagers who are, in practice, successful in identifying and exploiting the op­

portunities for growth and capital accumulation (i.e., successful entrepreneurs) are more intuitive in their cognitive style than the general population o f managers. We position our study into this context and aim to get some elements o f understanding with respect to negotiations from the Estonian perspective, because everyday practices and interaction are sometimes influenced by intuitively created stereotypes.

Russian, German and Estonian cultural characteristics in Hofstede’s framework

Russia is one o f the most im portant countries in the w orld’s po­

litical and economic life because it has enormous natural re­

courses as well as educated population. This vast country has attracted many investors and has changed a lot during the last decade, though many partners have experienced significant cul­

tural unfitness when cooperating with Russians (Fey and Denison, 1998; 2003; Fey and N ordahl, 1999). As a m atter o f fact, Russian entrepreneurial activities are greatly influenced by personal rela­

tionships. Puffer (1994) and Kets de Vries (2001) also note that friendship affects R ussians’ business dealings: “W hile Americans and northern Europeans are more task- than relationship-oriented, Russians need to develop relationships in order to successfully accomplish tasks.” (Kets de Vries, 2001).