Organizational structure and form

Organizational structure is often divided into flat structure and conical structure. Under the flat structure, the management range is larger, with fewer levels, and the subordinates have higher degrees of freedom; while under the cone structure, the management range is smaller, with more levels, and a pyramid-shaped structure. The stronger and more rigid the organizational hierarchy, the more difficult formal information communication and feedback, the more developed informal information (rumors, gossip) channels, and the higher the credibility.

The organizational structure in Asia is task-oriented, with a partial cone structure. Formal information communication and feedback are difficult, and the results may not be the same every time. While the European organization is result-oriented, flat structure, fixed process, boasts higher degree of freedom of subordinates, and more formal results are received.

Power distance refers to the degree to which people in a country accept the unfair distribution of power in institutions and organizations.

The power distance in Asian organizations is higher, and experience and qualifications are better than knowledge. The oldest person in the negotiation team is usually the most important person. Age and party affiliation are very important for determining the level of the workplace. Moreover, the Asian Chamber of Commerce not only dispatched organizing personnel but also government personnel. The members of the Asian front-line negotiating team usually only have limited decision-making power to make decisions.

The power distance in Europe is relatively low. The society emphasizes fairness and opportunity. Therefore, European organizations can make faster decisions, and people far from the center of power have stronger decision-making capabilities. In the process of negotiation and communication between the two parties, they need to pay attention to the difference in power distance in different contexts.

Management characteristics

The differences in the organizational structure and power distance between the two parties have led to differences in corresponding management and operational characteristics.

Because of the Asian mission-oriented organizational structure and the high power distance, the management characteristic is that their subordinates are highly obedient. Therefore, in the negotiation, there will be constant changes in personnel and exchanges of report with superiors.

Asian organizations are also more flexible and changeable. Asians always have parallel options before making the final decision, and after the decision is formed, the possibility of any change is still not ruled out during the implementation process. The turbulent environment in Asia also determines their low expectations for expected results and their strong tolerance for unexpected results. As a result, they tend to prepare for the worst and require the West to ensure that they are fully aware of unexpected results.

Western management is characterized by a strong system and continuous planning, which also leads to problems that when they face emergencies, the mechanism is slow to respond, and their tolerance for unexpected results is relatively low.

Operating characteristics

The structure and morphological characteristics of the organization also affect the behavioral characteristics in the organization. The organization usually affects decision-makers’ action, because making decisions in the organization requires people to screen, process, interpret and evaluate the information in the organization to determine their availability and importance.

Common rational misunderstandings in decision-making by both parties

In the decision-making process of both Asia and Europe, they are prone to make a certain degree of rational misunderstanding in their decision-making behavior.

As far as European organizations are concerned, they tend to be overconfident, and their attitudes based on facts are too optimistic, while Asian organizations also have rational misunderstandings of verification bias and risk aversion. The verification bias is that Asian organizations are more inclined to recognize information that is consistent with past experience, and such selective cognition makes China’s decision-making not objective to a certain extent. And Asians also tend to avoid risks and uncertainties. They prefer certain things and have accumulated anxiety about fuzzy things.

Because experience tells them that there is a probability of accidents, and their degree of uncertainty avoidance is very high, they are always inclined to plan for the worst. Although it is more costly to provide such preparations, it can increase revenue through speed output.

Differences in moral standards between the two parties in decision-making

Regarding the ethical standards in decision-making, different national cultures have different views on fairness and benefits. In Western culture, their “fair play” advocates procedural fairness, that is, individuals exercise unbiased rules to make benefits and losses fair. But their ideal of “fair play” of five-to-five points does not have such a concept in many cultures.

In Asian societies, people admire fairness in results. In their eyes, specific rules and clauses are only relative. Their fairness often depends on whether the interests of the majority of the group are satisfied. Therefore, in the decision-making process of the Asian side, it will also pursue the balance of the relationship between related things. Moreover, Asian ‘s competitive culture makes them believe that the goal of negotiations is to win, and they are in a state of benefit and favor. Therefore, they believe that enterprises in richer and more technologically advanced countries should give more preferential treatment.

To make the negotiation results of the Asia-Europe Bilateral Chamber of Commerce consistent and harmonious, the best way is to take into account the differences in bilateral organizations. If both sides have compromised to some extent by giving up existing cognition and focusing on the ultimate goal, the success of the negotiation can more easily to be obtained.

By: Demi Zhang