BA225

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Essentials of
Negotiation
Part 03: Negotiation
Relationships
Chapter 11: International and
Cross-Cultural Negotiation
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What Makes International Negotiation Different?
There are two contexts with an influence on international negotiations.
• The environmental context including environmental forces that neither
negotiator controls that influence the negotiation.
• The immediate context includes factors over which negotiators appear
to have some control.
• Understanding factors in both contexts is important to understanding
the complexity of international negotiation processes and outcomes.
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Environmental Context—Political and Legal Pluralism
Firms conducting business in different countries are working with different
legal and political systems.
• There may be 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.
Political considerations may enhance or detract from the conduct of
business negotiation in various countries at different times.
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Environmental Context—International Economics
The exchange value of international currencies naturally fluctuates, and
this factor must be considered when negotiating in different countries.
The risk is typically greater for the party who must pay in the other
country’s currency.
• The less stable the currency, the greater the risk for both parties.
Any change in value of a currency (upward or downward) can
significantly affect the value of the deal for both parties.
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Environmental Context—Foreign Governments and
Bureaucracies
Countries differ in the extent to which the government regulates industries
and organizations.
• Firms in the U.S. 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.
In general, business negotiations in the U.S.
occur without government approval.
• The parties decide whether to engage in an
agreement based on business reasons alone.
• In contrast, the governments of many
countries supervise imports and joint ventures.
Political
considerations may
influence
negotiations more
heavily than
legitimate business
reasons.
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Environmental Context—Instability
North America is relatively stable.
• But instability takes many forms.
• A lack of resources that Americans commonly expect during
business negotiations (paper, electricity, computers).
• Shortages of other goods and services (food, reliable
transportation, potable water).
• Political instability (coups, sudden shifts in government policy,
major currency revaluation).
Negotiators facing unstable circumstances should include clauses in their
contracts allowing for easy cancellation or neutral arbitration and consider
purchasing insurance to guarantee contract provisions.
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Environmental Context—Ideology
Negotiators in the U.S. generally share a common ideology about the
benefits of individualism and capitalism and believe in the following.
• Individual rights.
• The superiority of private investment.
• The importance of making a profit in business.
Negotiators from other countries may not share
this ideology.
• Negotiators from China or France may stress
group rights over individual rights.
• They may stress public investment over
private investment.
• They may have different views on earning and
sharing profit.
Ideological clashes
increase
communication
challenges.
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Environmental Context—Culture
Culture’s critical role will be discussed later, here are some highlights.
• People from different cultures appear to negotiate differently.
• Different cultures may interpret the negotiation process differently.
• People in some cultures approach negotiations deductively.
• Whereas people from other cultures are more inductive.
• In some cultures, parties negotiate substantive issues while
considering the relationship to be more or less incidental.
• In other cultures, the relationship is the main focus of the negotiation, and
the issues are more or less incidental.
• Preference for conflict resolutions models varies across cultures.
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Environmental Context—External Stakeholders
External stakeholders are the various people and organizations that have
an interest or stake in the outcome of the negotiations.
• Business associations.
• Labor unions.
• Embassies.
• Industry associations, among others.
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Immediate Context—Relative Bargaining Power
Joint ventures have been studied, and relative power has been viewed as
the amount of equity each side is willing to invest in the new venture.
• Presuming the party who invests more equity has more power and
more influence on the negotiation process and outcome.
• Some research suggests that relative power appears to be due to
management control of the project, heavily influenced by negotiating.
Several factors influence relative power.
• Special access to markets.
• Distribution systems.
• Management of government relations.
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Immediate Context—Levels of Conflict
The level of conflict and type of interdependence between the parties will
influence the negotiation process and outcome.
• High-conflict situations, or conflicts that are ethnically, identity, or
geographically based, will be more difficult to resolve.
• Also important is the extent to which negotiators frame the negotiation
differently or conceptualize what the negotiation concerns.
• This varies across cultures.
• How negotiators respond to conflict also varies by culture.
• Diplomatic “back-channel” negotiations conducted in secret may help
resolve high conflict situations, but success is not guaranteed.
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Immediate Context—Relationships and Desired Outcomes
The relationships among principal negotiators before negotiations impact
the negotiation process and outcome.
• Negotiators are part of the larger relationship between two parties.
• History between the parties influences current negotiations, just as the
current negotiation will influence any future negotiations.
Desired Outcomes.
Tangible and intangible factors play a large role in determining the
outcomes of international negotiations.
• Countries often use international negotiations to achieve both
domestic and international political goals.
• Ongoing tension can exist between a party’s short-term objectives for
current negotiations and its influence on their long-term relations.
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Immediate Context—Immediate Stakeholders
The immediate stakeholders in the negotiation include the negotiators
themselves as well as the people they directly represent.
• Such as managers, employers, or boards of directors.
Stakeholders can influence negotiators in many ways.
• Negotiator skills, abilities, and experience can impact the process and
outcome of international negotiations.
• Personal motivations of the principal negotiators and other immediate
stakeholders can influence the negotiation process and outcomes.
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Conceptualizing Culture and Negotiation
There are many different meanings of the concept of culture, but all
definitions share two important aspects.
• First, culture is a group-level phenomenon.
• That means that a defined group of people share beliefs, values,
and behavioral expectations.
• Second, cultural beliefs, values, and behavioral expectations are
learned and passed on to new members of the group.
Culture can be conceptualized in international negotiation in four ways.
• As learned behavior.
• As shared values.
• As dialectic.
• And in context.
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Culture as Learned Behavior
This approach concentrates on creating a catalogue of behaviors that the
foreign negotiator should expect when entering a host culture.
Many books and articles provide lists of dos and don’ts.
• For instance, Chinese negotiators begin negotiations with a search
for broad principles and building a relationship.
• This is followed by assessment of boundaries of the relationship.
• A decision about an agreement will eventually be made and form
the foundation for further concessions and modifications.
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Culture as Shared Values
Hofstede’s Model of Cultural Dimensions.
Individualism/Collectivism.
• Short-term criteria versus long-term relationships.
Power Distance.
• Low power distance distributes decision-making, while high power
distance seeks approval from those higher up.
Masculinity/Femininity
• Competitive versus empathy.
Uncertainty Avoidance.
• Low uncertainty avoiders adapt to change, others adapt less so.
A drawback of this model is that all studied participants came from one
company, were mostly male, and highly educated.
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Culture as Dialectic
A dialectic is a tension illustrated by two common parables: “too many
cooks spoil the broth” and “two heads are better than one.”
• This approach reminds you that not every person from the same
culture share the same values.
• It does not provide simple advice for behaving in a negotiation.
Recent work examines negotiation metaphors.
• In the U.S. negotiation is sport.
• In Japan, negotiation is ie (traditional
household).
The greater the difference in cultural negotiation
metaphors, the more likely there will be
misunderstanding, and less profitable outcomes.
Negotiators with
stronger
understanding of
the negotiation
metaphor within a
culture are more
likely to succeed in
negotiations.
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Culture in Context
Proponents of this approach recognize human behavior is not determined
by a single cause.
• All behavior may be understood at many levels simultaneously.
• Negotiation is determined by many factors, one of which is culture.
The cultural complexity theory suggests that cultural values have a direct
effect on negotiations at times and a moderate effect at other times.
• France has both monarchical and democratic traditions, both of which
can influence negotiation behavior depending on the context.
One group of researchers noted the unwieldy number of constructs used
to explore cross-culture differences in negotiation.
• They proposed a model that integrates negotiation strategy, trust,
cultural tightness-looseness and mindset (holistic vs analytic).
• Their model is an excellent example of studying culture in context.
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The Influence of Culture on Negotiation: Managerial
Perspectives
Access the text alternative for this image.
Sources: Based on Foster (1992); Hendon and Hendon (1990); Moran and Stripp (1991); and Salacuse (1998). 19
Table 11.2 summarizes 10 different ways that culture can influence
negotiations.

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Managerial Perspectives—Definition and Opportunity
The fundamental definition of negotiation, what is negotiable, and what
occurs when we negotiate can differ greatly across cultures.
• Americans tend to view negotiating as a competitive process of offers
and counteroffers.
• While the Japanese tend to view the negotiation as an opportunity for
information-sharing.
Culture influences the way negotiators perceive an opportunity as
distributive versus integrative.
• Negotiators in North America are predisposed to perceive negotiation
as distributive.
• This is not the case outside North America.
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Managerial Perspectives—Selection and Protocol
Criteria used to select who will participate differs across cultures and can
include the following.
• Knowledge of the subject matter being negotiated.
• Seniority or even family connections.
• Gender, age, experience, or status.
Different cultures weigh the criteria to select negotiators differently.
Cultures differ in the degree to which protocol, or the formality of the
relations between the two negotiating parties, is important.
• American culture is among the least formal in the world.
• Familiar communication; first names are used, titles are ignored.
• In formal countries, not using the proper title is considered rude.
• Business cards are important in the Pacific Rim countries and they
have their own protocol for presenting the cards.
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Managerial Perspectives—Communication and Time
Sensitivity
Cultures influence how people communicate, verbally and nonverbally.
• Differences in body language across cultures make some behavior
highly insulting in one culture and innocuous in another.
• Placing your feet on the desk in the U.S. signals power, while in
Thailand, it is considered very insulting.
• To avoid offending, the international negotiator needs to observe
cultural rules of communication carefully.
Culture determines what time means and how it affects negotiation.
• In the U.S., people respect time by being on time, being sensitive to
not wasting time, and believing that “faster” is better than “slower.”
• Other cultures have different views of time—especially in hot climates.
• Arab-speaking cultures focus on event-time than clock-time.
• In China and Latin America, time is unimportant and negotiations
focus on the task, no matter how much time it takes.
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Managerial Perspectives—Risk Propensity and Groups
versus Individuals
Cultures vary in the extent to which they are willing to take risks.
• Negotiators in risk-oriented cultures will be more willing to move early
on a deal and will generally take more chances.
• Those in risk-avoiding cultures are more likely to seek further
information and take a wait-and-see stance.
• Americans fall on the risk-taking end of the continuum, as do some
Asian cultures, while some European cultures are conservative.
Cultures differ over whether they emphasize the individual or the group.
• The United States is very much an individual-oriented culture, where
being independent and assertive is valued and praised.
• Group-oriented cultures, in contrast, favor the superiority of the group
and see individual needs as second to the group’s needs.
• Group-oriented cultures value fitting in and reward team players.
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Managerial Perspectives—Nature of Agreements and
Emotionalism
Culture has an important effect both on concluding agreements and on
what form the negotiated agreement takes.
• In the U.S., agreements are typically based on logic, are often
formalized, and enforced through the legal system.
• In other cultures, obtaining the deal may be based on who you are
rather than on what you can do.
Culture may influence the extent to which negotiators display emotions.
• Emotions may be used as tactics, or they may be a natural response
to positive and negative circumstances during the negotiation.
• While personality likely plays a role in the expression of emotions,
there also appears to be considerable cultural differences.
• The rules that govern general emotional displays in a culture are likely
to be present during negotiation.
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The Influence of Culture on Negotiation: Research
Perspectives
The last 20 years has seen an increase in research on cross-cultural
negotiation, and has studied the following topics.
• The influence of culture on negotiation outcomes.
• Negotiation process and information exchange.
• Negotiator cognition.
• Negotiator ethics and tactics.
• Conflict resolution.
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Effects of Culture on Negotiation Outcomes
Research uses two approaches when looking at how culture influences
negotiation outcomes.
• Intracultural studies compare outcomes of the same simulation.
• Negotiators from different cultures negotiating with others from their
own culture.
• Cross-cultural studies compare intracultural and cross-cultural outcomes.
• Negotiating with people from the same culture, comparing outcomes
to negotiating with people from other cultures.
A simple intracultural buyer-seller negotiation simulation was used with
negotiators from several cultures.
• Findings show no difference in profit levels obtained by negotiators in
different cultures—U.S. with Japan, China, Canada, Brazil and Mexico.
• Negotiators in collectivist cultures are more likely to reach integrative
outcomes than negotiators in individualist cultures.
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Effects of Culture on Negotiation Outcomes
Research Results
Richer simulations identified differences in outcomes by culture.
• But likely due to differences in process across cultures.
The second approach compares intracultural and cross-cultural
outcomes.
• Cross-cultural negotiations result in poorer outcomes.
• At least some of the time.
• In addition, some differences were found in the cross-cultural
negotiation process.
Research suggests culture affects negotiation outcomes.
• Though it may not be directly.
• And may be due to differences in the negotiation process in different
cultures.
There is some evidence that cross-cultural negotiations yield poorer
outcomes than intracultural negotiations.
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Effects of Culture on Negotiation Process and Information
Exchange
One group of studies led to several conclusions.
• In American negotiations, higher profits were associated with making
opponents feel uncomfortable.
• While in Japanese negotiations, higher profits were associated with
making opponents feel comfortable.
• Brazilian negotiators using powerful, deceptive strategies received
higher outcomes than American negotiators using the same methods.
• Gathering information was negatively related to profits attained by
Mexican and French-Canadian negotiators.
• While the same strategies were unrelated to profits among
American negotiators.
• Chinese and U.S. negotiators used different communication patterns.
• Chinese negotiators asked more questions, said “no” less often,
and interrupted each other more frequently than Americans.
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Effects of Culture on Negotiation Process and Information
Exchange—Further Research
Additional findings.
• Collectivist negotiators focus on long-term goals, and make less
extreme offers than individualistic negotiators.
• U.S. negotiators were most likely to use direct information exchange,
while Japanese negotiators use indirect information exchange.
• Negotiators from culturally similar countries were more likely to share
information than negotiators from less culturally similar countries.
• Both U.S. and Japanese intracultural negotiations reached higher joint
gains than cross-cultural negotiations—but they achieved it differently.
• Low-context cultures have negotiators using direct communication
compared to indirect from negotiators in high-context cultures.
• Aggressive opening offers give Hong Kong negotiators an advantage
when using email to conduct negotiations.
• German negotiators used more integrative tactics than Chinese
negotiators when negotiating intraculturally.
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Effects of Culture on Negotiator Cognition
Accountability to a constituent influenced negotiators from individualistic
and collectivistic cultures differently.
• Individualists grew competitive, collectivists became more cooperative.
When comparing collectivist and individualist on the same conflict.
• Collectivists saw conflict as compromise, both used different frames.
Chinese negotiators used more competitive tactics than Americans, but
likely due to their view of the negotiation as a competitive situation.
When researching cognitive effects of culture in negotiation.
• Individualists were susceptible to fixed-pie errors than collectivists.
• The self-serving bias was stronger in individualists than collectivists.
• Collectivists were less prone to making attribution errors during
negotiation than were individualistic negotiators.
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Effects of Culture on Negotiator Ethics and Tactics
One study investigated perceptions of Lewicki and Robinson’s negotiation
tactics with negotiators from six different cultures.
• Japanese negotiators were more intolerant of misrepresentation.
Brazilians and Americans scored similarly to Lewicki and Robinson’s ethics
questionnaire.
• Americans said they were more likely to use the tactics than Brazilians.
From the SINS questionnaire, Chinese negotiators were more likely to use
ethically questionable tactics than American negotiators.
The use and interpretation of apologies may be influenced by culture.
• Individualists’ apologies assign blame, collectivists’ express remorse.
• Collectivists were more likely to accept an apology for an integrity
violation than were individualists.
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Culturally Responsive Negotiation Strategies
Several factors suggest that negotiators should not make large
modifications to their approach when negotiating cross-culturally.
• First, negotiators may not be able to modify their approach effectively.
• Second, it does not mean that this will translate automatically into a
better negotiation outcome.
• Moderate adaptation may be more effective.
Moderate adaptation may be more
effective than “acting as the Romans do.”
• Negotiators from a familiar culture
making moderate adaptations to
American ways.
• Were perceived more positively than
negotiators making no changes or
large adaptations.
Negotiators should
understand three things.
• Their own biases,
strengths, and
weaknesses.
• The other negotiator as
an individual.
• The other negotiator’s
cultural context.
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Weiss’s Culturally Responsive Strategies
Low Familiarity.
• Employ agents or advisers (unilateral strategy).
• Bring in a mediator (joint strategy).
• Induce the other party to use your approach (joint strategy).
Moderate Familiarity.
• Adapt to the other party’s approach (unilateral strategy).
• Coordinate adjustment (joint strategy).
High Familiarity.
• Embrace the other negotiator’s approach (unilateral strategy).
• Improvise an approach (joint strategy).
• Effect symphony (joint strategy).
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© McGraw-Hill Education. All rights reserved. Authorized only for instructor use in the classroom.
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