CCulture and negotiation on daily life aspects

International Business
Negotiation
Principles and Practice
Culture and
Negotiation
2

Overview
• CULTURE-NEGOTIATION STUDIES
• INFLUENCE OF CULTURE
• NEGOTIATING STYLES
• NEGOTIATING CONTEXT
• COMMUNICATION MATTERS

• Negotiating bring to the table numerous culturally
derived assumptions about how negotiators should
be conducted.
• --the negotiator form “moderate ”cultures respon
d in a measured cautious way to the other side’s o
ffers and proposals.
• -- the negotiators form “extremity ”cultures
are less cautious and guarded in their respo
nse.
• ---but ,the specific roles played by negotia
tors make a great impact on interaction and
outcomess.
2.1 INTRODUCTION

• Negotiating styles are strongly influenced by cultu
re
• For international business people, an awareness o
f national cultural characteristics is important
• no single study can provide a definitive analysis of
the impact made by culture on international busine
ss negotiation
– turn out to be misleading or only partly true
– negotiators are influenced by organisational cul
ture as well as national culture
2.1 INTRODUCTION

2.2 CULTURE-NEGOTIATION STUDIES
• Macro- and micro-level studies
• Practitioner-researcher symbiosis
• Changeable cultural effects
• Imprecise terminology
• How helpful are survey findings?

2.2 CULTURE-NEGOTIATION STUDIES
• micro-level
– the behavioural perspective, focusing on ne
gotiators’ behaviour
• macro-level
– the strategic perspective, focusing on organi
sational aspects of negotiations
• Helpful analytical frameworks
– Goals
– Communication
– Persuasion
– Information
– Attributions
2.2.1 Macro- and micro-level studies

2.2.2 Practitioner-researcher symbiosis
• Managers should be careful not to uncritical
ly swallow the findings of any particular st
udy about the impact of culture on negotia
tion
• In collectivist cultures, relationship is extrem
ely important, with business deals springing fr
om the relationship rather than vice versa
• Simulated negotiation studies
– uncritically accepting the findings of such stu
dies can be a mistake on the part of negotiat
ors
2.2 CULTURE-NEGOTIATIONSTUDIES

2.2.3 Changeable cultural effects
• Collectivist negotiators are more likely than in
dividualists to be collaborative and to work to
wards an integrative agreement
• Shifting cultural values
– Cultural values and norms are not fixed, an
d sometimes can change dramatically

2.2.4 Imprecise terminology
• Understanding cultural influences on internati
onal business negotiations is an important skill
for negotiators to acquire
• advice to students of culture and negotiation is
– identify the precise research questions behind
any particular study
– explore the researchers’ underlying cultural as
sumptions rather than uncriti-cally accept the
findings of the study

2.2.5 How helpful are survey findings?

• Cultural differences
• Influence of national cultures
• How managers can use survey findings
• Influence of regional cultures
• Country similarity theory
• Influence of organisational cultures
• Organisational subcultures
• Cultural empathy
2.3 INFLUENCE OF CULTURE

2.3.1 Cultural differences
• International business negotiators come fro
m cultures that differ in power distance, u
ncertainty-avoidance, collectivism/individualis
m and other cultural measures

2.3.2 Influence of national cultures
• Hofstede’s survey found dimensions
– power distance
– uncertainty avoidance
– masculinity-femininity
– individualism-collectivism
– Confucian Dynamism/Long-term Orient
ation

• Hall (1966) identifies cultures as
– low-context (Western) cultures tend to b
e task focussed, and in inter-national busi
ness negotiations they communicate th
eir message explicitly
– high-context (collectivist) cultures, on
the other hand, communicate messages i
mplicitly (e.g. nonverbally) and focus on bu
ilding relationships
2.3.2 Influence of national cultures

2.3.3 How managers can use survey findings
• Managers can use surveys of national cultural va
lues to predict the behaviour
• and negotiating styles likely to be used in forthc
oming negotiations by foreign counterparts
• the Indonesian negotiators
– will be used to negotiating in a team enviro
nment
– will probably place much emphasis on the a
uthority of the team leader of both sides
– will be unlikely to challenge the team le
aders’ opinions, or suggestions concerning
procedural matters

2.3.4 Influence of regional cultures
• generalisations about regional cultures are va
guer and easier to challenge than general
isations about national cultures

2.3.5 Country similarity theory
• A wide range of national and regional styles an
d preferences come into play in international b
usiness negotiations
• The implication is that the negotiating characte
ristics and preferences of a group of countries
in a given geographical area are likely to be ve
ry similar with regard to business negotiations,
provided that the countries in the group resem
ble each other in many other ways

2.3.6 Influence of organisational cultures
• Differences of organisational culture affect the
process and interactions of international busin
ess
• Organisational culture is the pattern of shared
behaviours, values and beliefs that provide a fo
undation of understanding of the organisatio
nal functioning processes and norms which
direct employee behaviour
• International business negotiations are affect
ed as much by differences of organisational
culture as by national cultural differences

2.3.7 Organisational subcultures
• Large organisations contain many subcultures
• Subcultures exist at different levels and in diffe
rent parts of the organisation

2.3.8 Cultural empathy
• When international business negotiations are
complicated by clashing national and organis
ational cultures, successful outcomes are
more likely when the negotiators demonstra
te cultural empathy
• Cultural empathy is a general skill or attitude t
hat helps a person feel as a person from anot
her culture feels

• Cultural variations
• Linear and circular styles
• High-involvement style
• Deferential style
• “Moderate” and “extremity” styles
• Other commonly used styles
• How culture influences reactions to proposals
• Decision-making styles
2.4 NEGOTIATING STYLES

2.4.1 Cultural variations
• Culture influences the negotiation styles used in i
nternational business negotiations
• Negotiating style is strongly influenced by culture
• (1)American example:individualism,competitive
• (2)Indian example:contending,high-power distan
ce,rigidly stick to the position,expect other side t
o concede.

– negotiators from high power-distance societi
es have been found to feel comfortable in for
mal negotiations where protocols are observed
and where most of the discussion that takes pl
ace is between the most senior managers on b
oth sides of the table
– the style adopted by negotiators from low un
certainty-avoidance cultures is to use factua
l arguments to convince their opponents, whil
e negotiators from high uncertainty-avoidance
cultures often use emotional appeals

– Japanese negotiators strongly expected the
general agreement reached ,But British negotia
tors least preferred that.
– Japanese negotiators used much indirect communic
ation in negotiation,while Americans used a very low p
ercentage of such communication.
– Brazilians showed emotion consistently, whereas ger
mans rarely expressed emotions.

2.4.2 Linear and circular styles
– Asian negotiators deal with negotiating issue
simultaneously rather than sequentially
– Western negotiators usually emphasis on str
ucture and sequence.
–Western people tend to split a negotiation int
o serveral smaller tasks(prices,quantities,paym
ent terms,etc.)and deal with these small tasks
separately so that the final agreement is the su
m of the smaller agreements.

2.4.2 Linear and circular styles
– Chinese negotiations held in Cantonese ten
d to have a circular pattern with no distinct ph
ases, and apparently random contributions by
the participants. While the negotiators, followi
ng culturally derived norms, attend to the big
ger picture first, and then discuss smaller issu
es
– Western negotiators usually do the opposite,
moving from discussing details to general pri
nciples or conclusions

2.4.3 High-involvement style
• Russians, Italians, Greeks and Spaniards usuall
y use a high-involvement style in meetings – a
style which is often seen as aggressive and pu
shy by other cultural groups because of freque
nt interruptions and conversational overlaps

2.4.3 High-involvement style
• Asian countries tend to use a high-considerate
ness style(being considerate of others,taking fe
wer turns,not imposing one’s own opinions)
• So,American negotiators with the enthusiastic i
nvovement style may take priority while they ne
gotiate with Asians.

2.4.4 Deferential style
• Most Asians are concerned to show deference
or respect in their interactions with others
• In business negotiations, many Asian negotiat
ors, who tend to defer to and side with high-st
atus, powerful individuals in a negotiation, suc
h as leaders of national delegations, and to av
oid disagreeing with them

2.4.4 Deferential style
• Japanese people are sensitive to difference in
social status.
• The party with lesser status often averts his ey
es during negotiation in difference to the other
party’s superior status.
• Chinese are equally status conscious and insis
t on negotiating with counterparts of the same
or high hierarchical level.

2.4.5 “Moderate” and “extremity” styles
• Managers from “moderate” cultures express t
heir opinions cautiously, and respond in a mea
sured, cautious way to the other side’s of
fers and proposals
• Managers from “extremity” cultures, on the ot
her hand, tend to be far less cautious and gua
rded in their responses

2.4.6 Other commonly used styles
• Collaborative
• Competitive
• Accommodating
• Compromising
• Avoiding

• Collaborative
• Negotiators enjoy help others solve the prob
lems and create options to lead to mutual g
ain.
• Competitive
• Negotiators have strong instincts for all asp
ects of negotiation and are often strategic.t
hey often ignore and overlook the importanc
e of relationship in negotiation.
•

• Accommodating
• Concerning with building and maintaining bus
iness relationships.to be sensitive to the emot
ional states and body language of the other p
arty.
• Compromising
• To be eager to close the deal and rush the ne
gotiation,make concessions too quickly.

• avoiding
• Dislike the negotiation situation,they are perci
eved as tactful and diplomatic. They tend to
defer to others as a way of avoiding confront
ation

2.4.7 How culture influences reactions to pr
oposals
• The way in which negotiators react to proposals
may also be culturally influenced
• For eample:
• Western negotiators react positively to pr
oposals that bring innovation and change
.
• Chinese negotiators react negatively to pr
oposals which may bring risk of causing j
obless or social instability.

2.4.8 Decision-making styles
• In theory,negotiation is a systematic and orderl
y process leading to rational decision and agre
ement.
• In pactice,the process is overridden by the infl
uence of clure.
•

• Western negotiators adopted the logical seque
ntial approach to make decision.
• ___American like to arrive at decisions quickly
and at the table
• Asian negotiators apply to circular,holistic appr
oach to make dicision.
• ___Japanese take a long time to make decisio
n ,because it involves a large number of peopl
e and many group meetings before and after n
egotiations

• In high power-distance countries with hierarch
ical organisational structures, many key decisi
ons are made by top-level managers or officia
ls, such as mayors or governors.
• In these countries ,the negotiating decision ne
ed to approved by high-level officals or CEO

• American are notoriously casual about protoco
ls relating to terms of address,dress,business
card,behavior at social events.
. But in France and Germany,formal protocols a
re mandated and obligatory.
For example: address should conform to the re
gulation of using last names and titles instead of
first names.

• Culture and context
• Cultural distance
• Integration mechanisms
2.5 NEGOTIATING CONTEXT

2.5.1 Culture and context
• International business negotiations never take
place in a vacuum: they are always situated in
a particular social context in which the negotia
tions are embedded and with which culture int
eracts
• Negotiating behaviour and styles, learned and
accepted in a particular country and cultural c
ontext, may be unacceptable and ineffective in
a different cultural context

2.5.1 Culture and context
• For example:
• In the US,teams outperform sole negotiators in
buyin/selling negotiations
• In Asia,some time,team context would amplify
a concern with harmony and lead teams to ne
gotiate sub-optimal outcomes.

2.5.2 Cultural distance
• Cultural distance is an important contextual fact
or which influences the interaction and outcome
s of international business negotiation.
• Cultural distance is used to assess the extent to which t
he business values and practices in countries differ from
each other.
• In practice ,negotiators may fail to agree on the nature o
f the situation which they are negotiating.
• _____maintain a relationship VS agree how profits and re
sponsibilities to be distributed.

• In negotiation,when there is cultural distance be
tween parties,the complexity and ambiguity of I
BN are great.
• The index of cultural distances is based on the deviation
from each of Hofsted’s national cltural scales(PD.,UV,MF
,IC).
• Also this index has been used to examine the impact of
national culture difference on IJV and cross-border acqu
ision outcomes.
• ----finantial performance,return on equity,sales growt
h,managenment turnover

• Cultural distance in IJVs and acquisitions
– cultural distance increases the probability of a multi
national enterprise (MNE) choosing joint ventures ov
er acquisition since cultural distance can reduce an
acquisition’s performance by increasing the costs of
integration
• In acquision,cultural difference may lead to the
acquirer overpay for a foreign companydue to in
adequate understanding of local and regional m
akets
• In IJV,the conflict within IJV regarding norms an
d routines for new product,organasional design,
management styles ,bottom-lines results.

• Ideological distance
– Ideological distance, a component of cultural dista
nce, can act as a powerful barrier during internationa
l business negotiations, especially if the companies
are from countries which are distant from each other
in many other ways, including language, religion and
level of economic development.
–For example :different beliefs about basic human ri
ghts.
–Prepare how to deal with any ideological clashes an
d how to present their proposals in a way that is ideo
logically acceptable to the other side.

2.5.3 Integration mechanisms
• During international merger negotiations, an int
egration campaign aimed at minimising cultur
al differences between the partners in an IJV o
r an acquisi-tion often needs to be discussed
and agreed
• -----in the case of international M&A,a well-designed intergrati
on process is essential for capturing the anticipated synergies of
merger.
• -----integration efforts including informal coordination mechani
sms such as :short-term visits,joint training programmes,task for
ce and committees.

• Cultural influence
• “Noise” in negotiations
• Nonverbal communication
• Choosing an interpreter
2.6 COMMUNICATION MATTERS

2.6.1 Cultural influence
• Communicative behaviours learned and accepte
d in one culture may be totally unacceptable in a
nother cultural setting
• For example :
• Japanese discomfort at the aggressive staring o
f the American partners.
• Americans think the reaction of Japanese that s
omething must be wrong because of japanese a
voiding eye contact.(In the us,eye averting is se
en as a sign of caginess or deception)

2.6.1 Cultural influence
• Graham (1985) studied the communication o
f negotiators from various countries, and note
d that
– Japanese: made promises and rarely made threats. They used
“no” and “you” infrequently, and avoided facial gazing.
– Russians: often maintained silence for long periods durin
g a negotiation. They asked many questions (only the Chinese
asked more).
– Brazil: used many commands and much facial gazing. They of
ten touched one another on the arm during the negotiation.
– French: used an aggressive negotiating style with a high perce
ntage of threats and warnings. They used interruptions and facia
l gazing.
– Chinese: asked many questions. Nearly three-quarters of
statements by Chinese negotiators were information-exchange
tactics.

2.6.2 “Noise” in negotiations
• In international business negotiations, cultural di
stance affects communication by introducing “n
oise” – misunderstandings, misinterpretations a
nd psychological discomfort – which causes the
parties to be unsure about each other
• When negotiations are held in culturally dist
ant countries, typical problems that arise includ
e
– the inability to understand the local decision-makin
g process
– the lack of understanding role of the government’s
role, and the status of business in the local communi
ty

2.6.3 Nonverbal communication
• negotiators may use nonverbal signals to
assert their dominance and increase psych
ological pressure on the opponent
• For example :
• Canadian negotiators use seemingly inoffensi
ve,relaxed posture as powerful signal to oppo
nents.
• Chinese negotiators made use of forward-lea
ning,paper spreading space occupation to de
clare the dominance.
• Many nonverbal behaviours are cultural pr
oducts, and therefore liable to be misunder
stood

2.6.3 Nonverbal communication
Many nonverbal behaviors are cultural produc
ts, and therefore liable to be misunderstood.
• For example :silence is typical behavior that is
culturally influenced.
• Periods of silence make western people feel u
ncomfortable. Asian people have no problem
with silence.
• Chinese apologising by bowing and smiling m
ay be seen by western as a sign of insincerity
and untrust-worthiness. Ok sign

2.6.4 Choosing an interpreter
• Interpreters should ideally have the same cult
ural background as one of the negotiation tea
ms,together with an excellent knowledge of th
e other team’s culture value and practice

• professional interpreters should be capable of
clean up cross-cultural misunderstandings by
providing appropriate explanations.
• managers should choose their own interpre
ters.
• It’s important to brief the interpreter on the ba
ckground of the negotiation(the company invo
lved,the nature of business,desired outcome
s.)

•
• negotiators to beware of interpreters who try t
o take control of negotiations or slant them in
a particular way
• Need to brief interpreters
• Interpreters need a good understanding of ne
gotiating procedure and vocabulary as well as
understanding commonly used technocal ter
minology for the suject being discussed.

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