Cross-Cultural or International Negotiations

What makes cross-cultural or international negotiations different?

Culture is the unique character of a social group; shared values and norms that set it apart from other groups. It concerns economic, social, political, and religious institutions. It also concerns the unique products produced by these groups. Cultural institutions preserve and promote cultures ideologies. Culture influences mental models, behavior, and cause-and-effect relationships. Avoid the temptation to think of culture and diversity as a single dimension. A contextual approach to culture as a learned behavior concentrates on creating a catalogue of behaviors that the foreign negotiator should expect when entering a host culture (Janosik, 1987). A pragmatic approach to culture attempts to understand negotiation focuses on why members of a culture behave in an given manner. The culture-as-shared-value 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). This perspective provides explanations for why cross-cultural negotiations are difficult and have a tendency to break down.

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.

• Individualism/collectivism – This dimension describes the extent to which a society is organized around individuals or the group. Individualistic societies encourage their young to be independent and to look after themselves. Collectivistic societies integrate individuals into cohesive groups that take responsibility for the welfare of each individual. The implications for negotiation is an effect upon: social networks, cooperation between negotiators, in-group favoritism; social loafing (a form of motivation loss in which people in a group fail to contribute as much or work as hard as they would if they worked independently) versus social striving (a form of motivation in which people are concerned for the welfare of the group), individual emotion and inner experience; dispositionalism (the tendency to ascribe the cause of a persons behavior to their character or underlying personality traits) versus situationalism (the tendency to ascribe the cause of a persons behavior to external factors and forces that are beyond a persons control), preferences for dispute resolution (such as bargaining, mediation, adversarial and inquisitorial adjudication). An important procedural effect is that of power distance.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). 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. A notably different effect is on the individuals perception of career success/quality of life. Cultures promoting career success were characterized by the acquisition of money and things, and not caring for others, the quality of life, or people. Cultures promoting quality of life were characterized by concern for relationships and nurturing. Lastly, an individual versus collectivist society may have alternate view of uncertainty avoidance. Uncertainty avoidance indicates to what extent a culture programs its members to feel either uncomfortable or comfortable in unstructured situations.

• Culture as Dialects – This approach posits that among their different values, all cultures contain dimensions or tensions that are called dialectics. Janosik (1987). This approach has advantages over the culture-as-shared-values approach because it can explain variations within cultures. 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.

• Culture in Context – This approach 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. 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. 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. This approach identifies two contexts, Environmental Contexts and Immediate Contexts, that make inter-cultural negotiation unique. Examples of environmental context include:

• • Political and legal pluralism – Simply put, this involves multiple political and legal systems. 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.

• • International economics – Most notably, Currency Value. According to Salacuse (1998), the risk is typically greater for the party who must pay in the other countrys currency. Any change in value of a currency (upward or downward) can significantly affect the value of the deal for both parties.

• • Foreign governments and bureaucracies – Government intervention with private business. 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.

• • Instability – Instability may take many forms, such as: 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).

• • Ideology – Differences in Ideology. According to Salacuse (1988), Americans believe strongly in individual rights; the superiority of private investment; and the importance of making a profit in business.

• • Culture – Indoctrinated tendencies regarding negotiation. 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).

• • External stakeholders – Diverse Organizations with Interests and Inputs. Phatak and Habib defined stakeholders to include business associations, labor unions, embassies, and industry associations.

Examples of immediate context include:

• • Relative Bargaining Power – This generally concerns a single negotiation. 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). 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.

• • Levels of Conflict – High-conflict situations, or conflicts that are ethnically, identity, or geographically based, will be more difficult to resolve.

• • Relationship between Negotiators – Negotiators are part of the larger relationship between two parties.

• • Desired Outcomes – Tangible and intangible factors will play a large role in determining the outcomes of cross-borders negotiations.

• • Immediate Stakeholders – Immediate stakeholder negotiations include, managers, employers, and boards of directors (Phatak and Habib, 1996). Skills, abilities, and international experience of the negotiators themselves clearly can have a large impact on the process and outcome of cross-border negotiations.

What is the influence of culture on the negotiation process?

The effect of culture on negotiation can be categorized into intercultural and cross-cultural and can be compared along cultural characteristics. Intracultural negotiation refers to negotiations within ones own culture. Cross-cultural negotiation concerns negotiation between individuals from different cultures. Examples of cultural characteristics include collectivist versus individualistic cultures. Research has found, however, that negotiators in collectivist cultures are more likely to reach integrative outcomes than negotiators in individualist cultures. (Lituchy, 1997; Arunachalam, Wall, and Chan, 1998). 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. For example, 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. Cross-cultural negotiations will result in poorer outcomes compared to intracultural negotiations, at least some of the time.

The following aspects of differing cultures affect the negotiation process:

• Definition of Negotiation – 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).

• Negotiation opportunity – 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.

• Selection of negotiators – Different cultures weigh the criteria to select negotiators differently, leading to varying expectations about what is appropriate in different types of negotiations.

• Protocol – Cultures differ in the degree to which protocol, or the formality of the relations between the two negotiating parties, is important.

• Communication – Cultures influence how people communicate, both verbally and nonverbally, directly and indirectly, and through the body language used. Direct communication is targeted directly at the other party, such as words spoken or written communications. Indirect communication uses third parties, situational signals, or other indirect means of communication. The implications of a method of communication for negotiation regards the ability to transmit information necessary to reach integrative agreements and any dispute resolution preferences. 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). Cai (1998) demonstrated how individualism/collectivism influenced negotiation planning toward long-term and short-term goals. 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. 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.

• Time Sensitivity – Other cultures have quite different views about time. The opportunity for misunderstandings because of different perceptions of time is great during cross-cultural negotiations.

• Risk propensity – 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.

• Groups versus individuals – 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 groups needs.

• Nature of agreements – Cultural differences in how to close an agreement and what exactly that agreement means can lead to confusion and misunderstandings.

• Emotionalism – 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).

• Cognition – What are the effects of culture on negotiator cognition.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. Gelfand and Realo (1999) found that accountability to a constituent influenced negotiators from individualistic and collectivistic cultures differently. 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. 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. Gelfand and Christakopoulou (1999) found that negotiators from an individualistic culture (the United States) were more susceptible to fixed-pie errors than were negotiators from a more collectivist culture.

• Ethics and Tactics – Effects of culture on negotiator ethics and tactics. 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.

Key constraints or challenges in negotiation attributable to culture include:

• Expanding and dividing the pie – The objective of an integrative negotiation is to expand the pie by creating greater total value in the negotiation. Culture influences can interrupt this objective through any number of methods. Dividing the pie concert apportioning value to individual negotiations. Procedural and cognitive aspects of differing cultures can thwart this necessary aspect of a successful negotiation.
• Sacred values– Issues that are deemed by the decision maker as ones that cannot be compromised, traded off, or even questioned. Trade-offs – Exchanges that are made between parties; in negotiation, one party gives up something less valuable to him or herself in return for something more valuable, and vice versa.
• Biased punctuation of conflict – The tendency for people to interpret interactions with their adversaries as offensive and their own behavior as defensive.
• Ethnocentrism – The universal strong liking of ones own group and the simultaneous negative evaluation of out-groups.
• Affiliation bias – Bias that occurs when people evaluate a persons actions on the basis of their group connections, rather than on the merits of the behavior itself.
• Faulty perceptions of conciliation and coercion
• Naverealism – The human tendency to believe that we see the world around us objectively, and that people who disagree with us must be uninformed, irrational, or biased.
  
• Western Canon debate – Argument that the body of scholarship is biased because the traditional main focus of academic studies of Western Culture and history has only been on works produced by European men.
  
• Fundamental attribution error – Error that occurs when people attribute the behavior of others to underlying dispositions or character and discount the role of situational factors.

What are some culturally- responsive negotiation strategies?

Negotiators must take into consideration cultural aspects when developing a negotiation strategy and employing tactics. Effectively modifying ones approach, however, can be difficult. 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. Even if negotiators can modify their approach effectively, it does not mean that this will translate automatically into a better negotiation outcome. Research by Francis (1991) suggests that moderate adaptation may be more effective than acting as the Romans do. 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:

• Their own biases, strengths, and weaknesses.
• The other negotiator as an individual.
• The other negotiators cultural context.

Weisss (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 partys 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).

• Low cultural familiarity – In a low-familiarity context, the following tactics have proven effective:
  • Employ agents or advisers (unilateral strategy).
  • Bring in a mediator (joint strategy).
  • Induce the other party to use your approach (joint strategy).

• Moderate cultural familiarity – In a moderate-familiarity context, the following tactics have proven effective:
  • Adapt to the other partys approach (unilateral strategy).
  • Coordinate adjustment (joint strategy).

• High cultural familiarity – In a high-familiarity context, the following tactics have proven effective:
  • Embrace the other negotiators approach (unilateral strategy).
  • Improvise an approach (joint strategy).
  • Effect symphony (joint strategy).

The following personal factors tend to predict success in intercultural negotiation and should be considered when selecting an intercultural negotiation strategy.

• Conceptual complexity – People who are conceptually complex show less social distance to different others. This also tends to relate to a general interest in and appreciation for other cultures. This corresponds closely with flexibility, patience, and cultural sensitivity and tolerance.

• Categorization – People who use broad categories adjust to new environments better than do narrow categorizers.

• Empathy – This entails the ability to appreciate the position and influences on the other party. That is, it is a general openness to different points of view

• Sociability – This regards a disposition or willingness to engage with others beyond the context of the immediate negotiation or task.

• Stereotypes – A tendency to be critical and not readily accept stereotypes are show to increase effectiveness.

• Task orientation – Focusing on a task can have differing effects on inter-cultural negotiations. It can help individuals avoid biases or heuristics that can harm communication objective. Conversely, it can cause individuals to fail to recognize and adjust for the cultural aspects affecting the negotiation. Generally, task orientation is most effective when it accompanies a willingness to be collaborative to resolve conflict.

When effectuating a negotiation strategy, seek to understand the other partys culture. Find out how to show respect in the other culture. Identify cultural nuances, such as perception of personal relationships, physical interaction, and time or deadlines. Anticipate and seek to identify strategies and tactics that may cause misunderstandings due to cultural differences. For example, recognizing that some cultures may not share your view of what constitutes power. You should also attempt to analyze cultural differences to identify differences in values that afford the opportunity to expand the pie. Avoid attribution errors, which is the tendency to ascribe someones behavior or the occurrence of an event to the wrong cause. Some actions and decisions of the counter party will be reflective of cultural norms; however, you need to be conscious that some decisions and actions in a negotiation are subjective and not related to cultural tendencies.