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.
Learning Objectives
1.
What makes international negotiations different?
2.
Conceptualizing culture and negotiation.
3.
The influence of culture on negotiation from a
managerial perspective.
4.
The influence of culture on negotiation from a research
perspective.
5.
Culturally responsive negotiation strategies.
International negotiations are
much more complex than domestic negotiations but challenge the negotiators to
understand the science of negotiation while developing their artistry.
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 learned behavior.
1. The
first approach to understanding the effects of culture concentrates on
documenting the systematic negotiation behavior of people in different
cultures.
2. Rather
than focusing on why members of a given culture behave in certain ways, the
pragmatic, nuts-and-bolts approach concentrates on creating a catalogue of
behaviors that the foreign negotiator should expect when entering a host
culture (Janosik, 1987).
B. Culture
as shared values.
1. The
second 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.
C. Culture
as dialectic.
1. The
third 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.
D. Culture
in context.
1. Proponents
of the fourth approach to using culture to understand negotiations across
borders recognize all behavior may be understood at many different levels
simultaneously, and a social behavior as complex as negotiation is determined
by many different factors, one of which is culture.
2. Tinsley, Brett,
Shapiro, and Okumura (2004) proposed cultural complexity theory in which they suggest that cultural
values will have a direct effect on negotiations in some circumstances and a moderated
effect in others.
3. The
culture-in-context models are becoming more and more complex in order to
explain nuanced
differences in cross-cultural negotiations, thus are becoming less useful for
practitioners.
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. Effects
of culture on 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) Research has
found that negotiators in collectivist cultures are more likely to reach
integrative outcomes than negotiators in individualist cultures (Lituchy, 1997;
Arunachalam, Wall, and Chan, 1998).
b) Brett, Adair,
Lempereur, Okumura, Shihkirev, Tinsley, and Lytle (1998) compared intracultural
negotiators in six different cultures (France, Russia, Japan, Hong Kong,
Brazil, United States) and found differences in joint gains achieved.
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 cross-cultural
negotiations yield poorer outcomes than intracultural negotiations.
B.
Effects of culture on negotiation process and
information exchange.
1.
Graham and his colleagues found significant
differences in the negotiation strategies and tactics in the cultures they
studied (also see Graham, Evenko, and Rajan, 1992).
2.
Cai (1998) demonstrated how individualism/collectivism
influenced negotiation planning: Negotiators from a more collectivist culture (Taiwan ) spent more time planning for long-term
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, Brett, Barsness, and Lytle (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) suggest 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 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 what makes international and cross-cultural negotiation different. Phatak
and Habib (1996) suggest that both the environmental and the immediate context
have important effects on international negotiations. We focused on Salacuse's
description of the environmental factors that influence international
negotiations: (1) political and legal
pluralism, (2) international economics, (3) foreign governments and
bureaucracies, (4) instability, (5) ideology, (6) culture, and (7) external
stakeholders. Phatak and Habib's five
immediate context factors were examined next: (1) relative bargaining power,
(2) levels of conflict, (3) relationship between negotiators, (4) desired
outcomes, and (5) immediate stakeholders. 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.
Next we discussed
how to conceptualize culture. Robert Janosik (1987) suggests that researchers
and practitioners of negotiation use culture in at least four different ways:
(1) culture as learned behavior, (2) culture as shared values, (3) culture as
dialectics, and (4) culture in context. We then examined two perspectives on
how cultural differences can influence negotiations. From the managerial
perspective, 10 ways were outlined where culture can influence negotiation: (1)
the definition of negotiation, (2) the negotiation opportunity, (3) the
selection of negotiators, (4) protocol, (5) communication, (6) time
sensitivity, (7) risk propensity, (8) groups versus individuals, (9) the nature
of agreements, and (10) emotionalism. From the research perspective, we
examined the effect of culture on negotiation outcomes, negotiation process,
and negotiator ethics.
The chapter concluded with a discussion of how to manage
cultural differences in negotiation. 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.
