1. The document discusses cultural differences that can impact cross-cultural negotiations. It uses the example of Enron's failed Dabhol Power Project in India to illustrate how differences in negotiation style between American and Indian culture can lead to issues. 2. Cultures vary in their negotiation goals and attitudes. Some see the main goal as securing a deal, while others prioritize developing long-term relationships. Win-win outcomes may be more important to some cultures over others. 3. Factors like individualism vs collectivism, egalitarianism vs hierarchy, and views on relationships vs contracts all shape a culture's negotiation approach. Successful negotiators research these differences to understand each side's perspective.

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Negotiations Across Cultures
Introduction
In the early 90’s, Enron made the decision to be more diverse in its growth by expanding
into the emerging market of India. Negotiations started with the state government and
Maharashtra State for a $3 billion dollar 2015-megawatt power plant. A large amount of natural
gas would be needed to power the plant. This led to Qatar, serving as a joint venture partner, to
be the main source of the imported natural gas. An important objective was to secure a long-
term purchaser in order to obtain long-term debt financing and generate a good enough return to
the investors. MSEB was the only potential buyer for the deal, and signed the purchase power
agreement with Enron to officially start the Dabhol Power Project.
However, opposition to this deal rose very quickly from the public. The World Bank
refused to finance the project because of reports that indicated Maharashtra wouldn’t be able to
absorb the additional power that Dabhol had charged. In addition, many of the public felt that the
deal was hastily made without taking the time to consider the public’s well-being. A top Indian
government official in electricity was quoted saying “India had no experience in negotiating,
Enron was a savvy negotiator”1. The aggressiveness and quickness of the deal seemed very
suspicious, which brought up accusations of bribing Indian officials.
As a result of this deal, Enron went belly up before the final phase of the project finished.
This left India with a bad taste of both western expansion techniques and negotiating experience
from an aggressive American style. Indian culture tends to favor slower negotiations as a sign of
good faith and trust, while American culture usually is more forward because more time means
1 "Error in India: Generation Gaps." The Economist. N.p., 11 Jan. 2001. Web. 5 Dec. 2015.
<http://www.economist.com/node/473117>.

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more money spent. The purpose of this paper is to focus on cultural differences that occur during
negotiations, and how this affects the negotiation table.
Cultural Boundaries and Stereotypes
Each country will have a different business style of negotiations based on their culture
and values. It’s important to respect the attitudes and characteristics of another country’s culture
instead of making assumptions. For example, Japanese negotiators will usually have “silent
periods” during talks and choose indirect methods of communication, but that doesn’t mean that
all Japanese do. One prominent, long-time minister in the Japanese government was famous for
his brash “American-style” negotiating - which is not at all typical of many Americans2.
Negotiation styles won’t be one-dimensional for each country; they can vary on a wide spectrum.
Differences occur in negotiations is from both stereotypes and our own interpretations of
behaviors through our own culture. An article published by Harvard Law School said that
stereotypes are often pejorative (for example: Italians always run late), and they can lead to
distorted expectations about your counterpart’s behavior as well as potentially costly
misinterpretations3. The assumptions that one can make on the other’s behavior can be extremely
insulting and can ultimately derail any potential business relationship. It’s suggested to focus on
prototypes instead, which are general characteristics that are dynamic and could change.
2 Patton, Bruce, Roger Fisher, and William Ury. Getting to Yes. Third ed. P. 169-170.: Penguin,
n.d. Print.
3 Shonk, Katie. "How to Resolve Cultural Conflict: Overcoming Cultural Barriers at the
Negotiation Table." Program on Negotiation: Harvard Law School. Harvard University, 8 Nov.
2015. Web. 14 Dec. 2015. <http://www.pon.harvard.edu/daily/conflict-resolution/a-cross-
cultural-negotiation-example-how-to-overcome-cultural-barriers/>.

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Our interpretations of culture can cloud our judgment and even discount a person’s
individuality without being more considerate. Misunderstanding the customs and behaviors from
Japan, India, or Mexico can show how little respect is given them in business negotiation. It’s
highly recommended to question the assumptions one may have on a particular group and
perform research before drawing conclusions. It’s more important of knowing why certain
groups perform certain rituals, behaviors, or customs rather than what they perform.
It’s essential for any negotiation abroad to learn any unique cultures about the company
or the organization on the other side of the table. Just like we learned from the Enron example,
Indian negotiating tends to be slow because trust in the relationship is more valued than time.
It’s the opposite for Americans as time efficiently used over the course of negotiating because it
had a direct link to cost. These differences can create tough barriers and lead to disagreements.
It’s significant to remember to be open to learning different cultures and using it as an
opportunity to create special relationships.
Individualism and Collectivism
In 2000, a publication in the International Journal of Psychology described how culture
affects negotiations through differences on individualism and collectivism. Individualism culture
can promote autonomy while collectivism culture promotes interdependence of individuals on
social obligations. In terms of goals and accomplishments between the two, individual can be
rewarded by economic and social institutions while legal institutions protect individual rights4.
Collective will have one sacrifice the personal needs for the greater good of the community
4 Brett, Jeanne M. "Culture and Negotiation." International Journal of Psychology 35.2 (2000):
99-100. Print.

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while political and economic institutions put the greater good of the collective above the rights of
the individual5. This difference reflects the basic goals that may be a priority to one, but not for
another.
Individuals tend to have more ‘self-interest goals’ that are higher of priority in
negotiation than a collectivist. For example, an individual may heavily weigh a negotiation deal
heavier on the chance of leveraging a higher commission or promotion rather than look at the
potential relationship that can be obtained. Collectivist’s goals will usually be aligned within the
groups. As these goals become transparent, it can result in mutual agreements. However, this all
depends on the group's knowledge of the goals because if it’s not communicated to all
stakeholders involved, self-interest goals may seem more important.
Egalitarianism and Hierarchy
Social structures are different across countries, companies, and groups. Some countries
like Austria, Israel, and Denmark have an egalitarian culture, which all people are equal and
deserve equal rights and opportunities. This environment tends to have people make decisions
without consulting their managers or provide infrequent updates to their managers. Also, they
will sometimes feel comfortable disagreeing with their boss.
On the opposite side, people in hierarchy environments are usually obedient because
social status implies power or influence. They frequently update their manager and will rarely
disagree with their boss. Examples of countries that inherit this type are Malaysia, Slovakia, and
most Arab countries.
5 Brett, Jeanne M. "Culture and Negotiation." International Journal of Psychology 35.2 (2000):
99-100. Print.

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These two societies differ in views towards the bases of power in negotiation settings. In
situations where agreements cannot be reached in egalitarian cultures, power is evaluated. In
addition, negotiators of this culture will even refer to BATNA less frequently as long as
negotiations are progressing. They focus preferably on issues under consideration and sharing
information on priorities and interests.
Hierarchical societies will have vertical interpersonal relationships. When one has social
status, it can dictate how people will interact with that person when others realize their status. In
some cases when the social status is known, there’s a chance that negotiating may take very little
time. If a CEO is negotiating with a low-level employee, then it’s likely the CEO will have all
leverage and the employee will concede easily. These types of negotiators will use any means of
power tied to their title to win.
Negotiation Goals and Attitudes
Different cultures will view the purpose of a negotiation differently from others.
Negotiators may strive for a goal to make the deal as a signed contract between two parties.
Other cultures will view the negotiation as an agreement, but also as potentially a great
relationship to build upon. An article in Ivey Business Journal from 2004 took a survey of 400
people from twelve different nationalities and found that 74 percent of Hispanic responders said
their goal in a negotiation was a contract, but only 33 percent of the Indian responders had a
similar view6. This difference can explain why Indian negotiators tend heavily weigh a
6 Selacuse, Jeswald. "The Top Ten Ways That Culture Can Affect Your Negotiation." Ivey
Business Journal. N.p., Oct. 2004. Web. 14 Dec. 2015.
<http://iveybusinessjournal.com/publication/negotiating-the-top-ten-ways-that-culture-can-
affect-your-negotiation/>.

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relationship to be more valuable than the contract while Hispanics want to make the deal a higher
priority.
Preliminaries of the negotiation are more than a formality in the relationship context and
should be taken seriously if one is negotiating with in an Asian nation (or any nation for that
matter). It helps to build the foundation of a good business relationship and produces trust
between the two parties. Thus, the importance of knowing how the opposite party views the
purpose of the negotiation is crucial. For instance, being on the side of the table and making
attempts to persuade relationship negotiators on the delivery of a low-cost contract may not
easily sway them. To persuade them, one would need to start from the very beginning and
discuss about the benefiting opportunity for a mutual relationship.
The attitudes of negotiators is also something that one needs to research before entering,
because that person could be looking for a win-win situation or a win-lose situation. Typically
those that look for a mutual benefit of the two parties will advocate win-win situations in order to
strengthen relationships and trust for more deals in the future. Those who negotiate only for the
benefit of themselves will try to extract as much as they can to have the best BATNA.
In the same survey, 100 percent of the Japanese responders were looking for a win-win
scenario in order for both parties to gain. Whereas only 33 percent of Hispanic responders took
the same view. We could then infer from this that when entering in negotiations with Japanese
it’s likely that the attitude will be more helpful for both parties to gain and prosper. Therefore, it
can create a working relationship built on the trust of solving problems for both sides.
Conclusion

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The exploration of negotiations across cultures has revealed a lot of information that
should always be taken into consideration whether it’s within a different country or society.
Values will influence the culture and motive for negotiation strategies and it’s up to either party
to be open to the opposite’s culture before making irrational decisions. As we saw in the earlier
example of ENRON, the styles of both sides clashed. India was accustomed to the development
of a slow negotiation for a relationship building negotiation and not to the aggressive western
style.
Our values will reflect the strategies and decisions we make at the table. However,
without knowledge of the other side’s style, beliefs, and culture, it can create more of an issue for
both negotiating parties. This doesn’t mean that when two negotiators from different cultures
will always clash in their strategies or values to end up walking away from the deal. There may
be times where they both have similar cultural values and there are no issues in the negotiation.
In any case, as businesses trend towards expansions, acquisitions, or partnerships outside
their country’s borders, negotiation strategies will need to be considerate to the values and
cultures of the other party. The wealth of information available on any society’s culture is
priceless and should be taken advantage to achieve an optimal negotiation.

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ADDITIONAL SOURCES
"Enron's Indian Negotiation Debacle." The Negotiation Experts. N.p., n.d. Web. 14 Dec. 2015.
<http://www.negotiations.com/case/negotiation-project-india/>.