Chapter 11
International
and Cross-Cultural Negotiation
Overview
In this chapter,
we first discuss some of the factors that make international negotiation
different, including both the environmental context (macropolitical factors)
and the immediate context (microstrategic factors). We then turn to a
discussion of the most frequently studied aspect of international negotiation:
the effect of culture, be it national, regional, or organizational. We discuss
how culture has been conceptualized, and discuss four approaches to culture
used by academics and practitioners. Next we examine the influence of culture
on negotiations, discussing this from managerial and research perspectives. The
chapter concludes with a discussion of culturally responsive strategies
available to the international negotiator. Boxes throughout the chapter present
examples of factors to think about when negotiating with people from other
cultures.
Learning Objectives
1.
What makes international negotiations different?
2.
Conceptualizing culture and negotiation.
3.
The influence of culture on negotiation from managerial
perspectives.
4.
The influence of culture on negotiation from research
perspectives.
5.
Culturally responsive negotiation strategies.
I.
What Makes
International Negotiations Different?
A. Environmental
Context
1. Political
and Legal Pluralism
a. Implications
for the taxes that an organization pays, the labor codes or standards that it
must meet, and the different codes of contract law and standards of
enforcement.
b. Political
considerations may enhance or detract from the conduct of business negotiation
in various countries at different times.
2. International
Economics
a. According
to Salacuse (1998), the risk is typically greater for the party who must pay in
the other country’s currency.
b. Any
change in value of a currency (upward or downward) can significantly affect the
value of the deal for both parties.
3. Foreign
Governments and Bureaucracies
a. Firms
in the United States
are relatively free from government intervention, although some industries are more
heavily regulated than others (e.g. power generation, defense) and some states
have tougher environmental regulations than others.
4. Instability
a. Instability
may take many forms, including:
(1) A
lack of resources that Americans commonly expect during business negotiations
(paper, electricity, computers);
(2) Shortages
of other goods and services (food, reliable transportation, potable water);
(3) Political
instability (coups, sudden shifts in government policy, major currency
revaluation).
5. Ideology
a. According
to Salacuse (1988), Americans believe strongly in:
(1) Individual
rights.
(2) The
superiority of private investment.
(3) The
importance of making a profit in business.
6. Culture
a. According
to Salacuse (1998), people in some cultures approach negotiations deductively
(they move from the general to the specific) whereas people from other cultures
are more inductive (they settle on a series of specific issues that become the
area of general agreement).
7. External
stakeholders
a. Phatak
and Habib defined stakeholders to include:
(1) Business
associations
(2) Labor
unions
(3) Embassies
(4) Industry
associations
B. Immediate
context
1. Relative
bargaining power
a. Joint
ventures have been the subject of a great deal of research on cross-border
negotiations, and relative power has frequently been operationalized as the
amount of equity (financial and other investment) that each side is willing to
invest in the new venture (see Yan and Gray, 1994 for a review).
b. The presumption
is that the party who invests more equity has more
power in the negotiation and therefore will have more influence on the
negotiation process and
outcome.
2. Levels
of conflict
a. High-conflict
situations, or conflicts that are ethnically, identity, or geographically
based, will be more difficult to resolve.
3. Relationship
between negotiators
a. Negotiators
are part of the larger relationship between two parties.
4. Desired
outcomes
a. Tangible
and intangible factors will play a large role in determining the outcomes of
cross-borders negotiations.
5. Immediate
stakeholders
a. Immediate
stakeholder negotiations include:
(1) Managers
(2) Employers
(3) Boards
of directors (Phatak and Habib, 1996).
b. Skills,
abilities, and international experience of the negotiators themselves clearly
can have a large impact on the process and outcome of cross-border
negotiations.
II.
Conceptualizing
Culture and Negotiation
A. Culture
as shared values
1. One
important approach concentrates on understanding the central values and norms
of a culture and then building a model for how these norms and values influence
negotiations within that culture (see Faure, 1999; Sebenuis, 2002a).
2. Geert Hofstede
(1980a, 1980b, 1989, 1991) conducted an extensive program of research on cultural
dimensions in international business. Four dimensions could be used to describe the important
differences among the cultures in the study: individualism/collectivism, power
distance, career success-quality of life, and uncertainty avoidance.
a. Individualism/Collectivism
(1) This dimension
describes the extent to which a society is organized around
individuals or the group.
(2) Individualistic
societies encourage
their young to be independent and to look after themselves.
(3) Collectivistic
societies
integrate individuals into cohesive groups that take responsibility for the
welfare of
each individual.
b. Power distance
(1) The power distance
dimension describes “the extent to which the less powerful members
of organizations and institutions (like the family) accept and expect that
power
is distributed unequally” (Hofstede, 1989).
(2) Cultures with low
power distance are more likely to spread the decision making throughout the
organization, and while leaders are respected, it is also possible to
question their decisions.
c. Career
success/quality of life
(1) Cultures
promoting career
success were characterized by “the acquisition of money and things, and not
caring for
others, the quality of life, or people.”
(2) Cultures
promoting quality of life were characterized by concern for
relationships and nurturing.
d. Uncertainty
avoidance
(1) Uncertainty
avoidance “indicates to what extent a culture programs its members to
feel either uncomfortable or comfortable in unstructured situations.”
e. The
culture-as-shared-value perspective provides explanations for why
cross-cultural negotiations are difficult and have a tendency to
break down.
B. Culture
as dialectic
1. Another
important approach to using culture to understand global negotiation identified
by Janosik (1987) recognizes that, among their different values, all cultures
contain dimensions or tensions that are called dialectics.
2. According to
Janosik (1987), the culture-as-dialectic approach has advantages over
the culture-as-shared-values approach because it can explain variations within cultures.
3. Recent
theoretical work by Gelfand and McCusker (2002) provides a similar way to
examine
the effects of culture on negotiation but through examining cultural metaphors rather than
dialectics. Cultural negotiation metaphors help people understand
things that happen in negotiation and “make sense” of them.
III. The
Influence of Culture on Negotiation: Managerial Perspectives
A. Definition of
negotiation
1. The fundamental
definition of negotiation, what is negotiable, and what occurs when we negotiate can differ greatly across cultures (see
Ohanyan, 1999; Yook and Albert, 1998).
B. Negotiation
opportunity
1. Cross-cultural
negotiations will be influenced by the extent that negotiators in different cultures have fundamental agreement or
disagreement about whether or not the situation is distributive or integrative.
C. Selection
of negotiators
1. Different
cultures weigh the criteria to select negotiators differently,
leading to varying expectations about what is appropriate in different types of
negotiations.
D. Protocol
1. Cultures differ
in the degree to which protocol, or the formality of the relations between
the
two negotiating parties, is important.
E. Communication
1. Cultures
influence how people communicate, both verbally and nonverbally. There are
also
differences in body language across cultures.
F. Time
Sensitivity
1. Other cultures
have quite different views about time.
2. The opportunity
for misunderstandings because of different perceptions of time is great during
cross-cultural negotiations.
G. Risk propensity
1. Negotiators in
risk-oriented
cultures will be more willing to move early on a deal and will generally take
more
chances.
2. Those in
risk-avoiding cultures are more likely to seek further information and take a
wait-and-see stance.
H. Groups versus
individuals
1. The United States
2. Group-oriented
cultures, in contrast, favor the superiority of the group and see
individual needs as second to the group’s needs.
I. Nature
of agreements
1. Cultural
differences in how to close an agreement and what exactly that
agreement means can lead to confusion and misunderstandings.
J. Emotionalism
1. Culture appears
to influence the extent to which negotiators display emotions (Salacuse,
1998).
These emotions may be used as tactics, or they may be a natural response to
positive and
negative circumstances during the negotiation (see Kumar, 2004).
IV. The
Influence of Culture on Negotiation: Research Perspectives
A. Negotiation
outcomes
1. Researchers
initially explored the fundamental question of how culture influences
negotiation outcomes. Two approaches were taken to explore this
question.
a.
Intracultural - researchers compared the outcomes of
the same simulated negotiation with negotiators from several different cultures who
only negotiated with other negotiators from their own culture.
b.
Cross-cultural - researchers investigated this by comparing negotiation
outcomes when negotiators negotiated with people from the same culture with
outcomes when they negotiated with people from other cultures.
2.
Research has found, however, that negotiators in
collectivist cultures are more likely to reach integrative outcomes than
negotiators in individualist cultures.
a.
Brett, Adair, Lempereur, Okumura, Shihkirev, Tinsley,
and Lytle (1998) compared intracultural negotiators in six different cultures (France , Russia ,
Japan , Hong
Kong , Brazil , United States
3.
The other approach to exploring cultural effects on
negotiation outcomes compared the negotiation outcomes of intracultural and
cross cultural negotiations.
a.
Cross-cultural negotiations will result in poorer outcomes
compared to intracultural negotiations, at least some of the time.
4.
Research suggests that culture does have an effect on
negotiation outcomes, although it may not be direct, and it likely has an
influence through differences in the negotiation process in different cultures.
5.
There is some evidence that crosscultural negotiations
yield poorer outcomes than intracultural negotiations.
B.
Negotiation process
1.
Graham and his colleagues found significant
differences in the negotiation strategies and tactics in the cultures they
studied.
2.
Cai (1998) demonstrated how individualism/collectivism
influenced negotiation planning: Negotiators from a more collectivist culture (Taiwan ) spent more time planning for longterm
goals, while negotiators from a more individualistic culture (the United States
3.
Adair, Brett, Lempereur, Okumura, Shikhiriv, Tinsley,
and Lytle (2004) found considerable difference in direct information sharing,
with negotiators from the United
States U.S.
a.
direct information exchange
b.
indirect information exchange
4.
Adair (2003) found that culture led to different
communication patterns in intracultural negotiations, with negotiators from
low-context cultures tending to use direct communication while negotiators from
high-context cultures used more indirect communication.
5.
The Rosette et al. (2004) study suggests that culture
has an effect on the process of e-mail negotiations, which in turn appears to
influence negotiation outcomes.
C.
Effects of culture on negotiator cognition
1.
Researchers are working to understand how culture
influences the way that negotiators process information during negotiation and
how this in turn influences negotiation processes and outcomes
a.
Gelfand and Realo (1999) found that accountability to
a constituent influenced negotiators from individualistic and collectivistic
cultures differently.
b.
Gelfand, Nishii, Holcombe, Dyer, Ohbuchi, and Fukuno
(2001) suggests that there are some universal ways of framing conflict (e.g.,
compromise-win) but there are also significant culturally specific ways.
2.
Another way to explore the influence of culture on
negotiator cognition is to examine the extent to which well-known cognitive
effects identified in Western cultures occur in other cultures.
3.
Gelfand and Christakopoulou (1999) found that
negotiators from an individualistic culture (the United States
D.
Effects of culture on negotiator ethics and tactics
1. Researchers have recently turned their
attention to examining ethics and negotiation tactics in cross-cultural
negotiations by exploring the broad question of whether negotiators in
different cultures have the same ethical evaluation of negotiation tactics.
V. Culturally Responsive Negotiation Strategies
A.
Several factors suggest that negotiators should not make large modifications to their approach when negotiating cross-culturally, however:
1.
Negotiators may not be able to modify their approach
effectively. It takes years to understand another culture deeply, and
negotiators typically do not have the time necessary to gain this understanding before beginning a negotiation.
2.
Even if negotiators can modify their approach
effectively, it does not mean that this will
translate automatically into a better negotiation outcome.
3.
Research suggests that negotiators may naturally
negotiate differently when they are with
people from their own culture than when they are with people from other
cultures (Adler and Graham, 1989;
Natlandsmyr and Rognes, 1995).
4.
Research by Francis (1991) suggests that moderate adaptation
may be more effective than “acting
as the Romans do.”
B.
Recent research findings have provided some specific
advice about how to negotiate cross-culturally.
Rubin and Sander (1991) suggests that during preparation, negotiators should concentrate on understanding
three things:
1.
Their own biases, strengths, and weaknesses;
2.
The other negotiator as an individual;
3.
The other negotiator’s cultural context.
C.
Weiss’s (1994) culturally responsive strategies may be arranged into three groups, based on
the level of familiarity (low,
moderate, high) that a negotiator has with the other party’s culture. Within each group there are some strategies that the negotiator may use individually
(unilateral strategies) and others
that involve the participation of the other party ( joint strategies).
1.
Low familiarity
a.
Employ agents or advisers (unilateral strategy).
b.
Bring in a mediator (joint strategy).
c.
Induce the other party to use your approach
(joint strategy).
2.
Moderate familiarity
a.
Adapt to the other party’s approach (unilateral
strategy).
b.
Coordinate adjustment (joint strategy).
3.
High familiarity
a.
Embrace the other negotiator’s approach
(unilateral strategy).
b.
Improvise an approach (joint strategy).
c.
Effect symphony (joint strategy).
Summary
This chapter
examined various aspects of a growing field of negotiation that explores the
complexities of international and cross-cultural negotiation. The chapter began
with a discussion of some of the factors that make international negotiations
different.
Phatak and Habib
(1996) suggest that both the environmental and the immediate context have
important effects on international negotiations. Models such as Phatak and Habib’s
(1996) are very good devices for guiding our thinking about global
negotiations.
External
stakeholders are another environmental factor included in this chapter—from
Phatak and Habib (1996). Phatak and Habib’s five immediate context factors were
discussed. Each of these environmental
and immediate context factors acts to make international negotiations more
difficult, and effective international negotiators need to understand how to
manage them.
We concluded this
section of the chapter with a discussion of how to make sense of international
negotiation outcomes in light of the multiple factors that can simultaneously
influence them.
Research suggests
that researchers and practitioners of negotiation use culture in at least two
different ways: (1) culture as shared values, and (2) culture as dialectics.
This chapter concluded with a discussion of how to manage
cultural differences when negotiating across borders. Weiss presents eight different culturally
responsive strategies that negotiators can use with a negotiator from a
different culture. Some of these
strategies may be used individually, whereas others are used jointly with the
other negotiator. Weiss indicates that
one critical aspect of choosing the correct strategy for a given negotiation is
the degree of familiarity (low, moderate, or high) that a negotiator has with
the other culture. However, even those
with high familiarity with another culture are faced with a daunting task if
they want to modify their strategy completely when they deal with the other
culture.
