The Effects of Culture on Negotiations Between Danish and

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Department of Business Administration
Jonas Justesen
Student Number:
403854
BSc Business Administration and International Management
Supervisor:
Ditte Mølgaard Mathiasen
The Effects of Culture on Negotiations
Between Danish and Korean Businesspeople
Bachelor Thesis
Aarhus University, School of Business and Social Sciences
May 2013
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Abstract
The purpose of this thesis was to investigate whether culture has an effect on negotiations between
Korean and Danish businesspeople. Trade between the two countries has risen remarkably in recent
years, and a stable future business relationship between the two countries is to be expected. This
means that more and more Danish and Korean businesspeople will negotiate with each other.
In order to link theory with empirical research, a methodological framework was first established.
It was decided to approach research through a constructivist paradigm. Moreover, it was decided to
rely on qualitative research for the empirical research, more specifically a case study. The case
study revolved around the personal negotiation experiences of four businesspeople, three Danish
and one Korean. In-depth interviews were conducted with each of them in order to evaluate whether
theory was in alignment with their experiences.
The theory used in the case study is contained in a theoretical framework. This consists of theories
about culture, negotiation, and the interrelation of the two concepts. The concept of culture is
reviewed using the pioneering theories of Hofstede and Hall, with supplements of some newer work
of Adler. In general, culture is established as something measurable that varies across nations, and it
is defined as a complex whole consisting of values, behavior, and symbols inherent to a national
group.
The concept of negotiation is reviewed from a theoretical standpoint, with emphasis on negotiation
behavior and the influence of culture on this.
The empirical research showed that culture has a direct, visible, and significant effect on
negotiation behavior of Danish and Korean businesspeople. Korean negotiators were found to be
overall less confrontational, more concerned about relationship-building, and more distributive in
their negotiation behavior. Danes were found to be overall very direct in their communication and
confrontation behavior, while also being short-term oriented compared to their Korean counterparts.
It was concluded that much as theory predicted, culture has a major impact on negotiation behavior.
This was true for the behavior of Korean and Danish businesspeople in negotiations between the
two as well.
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Table of Contents
1. INTRODUCTION
6
PROBLEM STATEMENT
7
DELIMITATION
7
STRUCTURE
8
2. ACKNOWLEDGEMENTS
8
3. METHODOLOGICAL FRAMEWORK
8
PARADIGMS
9
QUALITATIVE BUSINESS RESEARCH
10
CASE STUDY RESEARCH
11
3.1 RESEARCH DESIGN
12
RESEARCH TOPIC
12
RESEARCH QUESTIONS
13
DATA COLLECTION
14
DATA ANALYSIS
14
EVALUATION
15
4. THEORETICAL FRAMEWORK
16
4.1 CULTURE
16
CULTURE DEFINED
16
EMIC AND ETIC APPROACHES
19
HOFSTEDE’S SIX DIMENSIONS OF NATIONAL CULTURE
20
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POWER DISTANCE (PDI)
21
INDIVIDUALISM VS. COLLECTIVISM (IDV)
22
MASCULINITY VS. FEMININITY (MAS)
24
UNCERTAINTY AVOIDANCE (UAI)
24
LONG-TERM VS. SHORT-TERM ORIENTATION (LTO)
25
INDULGENCE VS. RESTRAINT (IVR)
26
CRITIQUE OF HOFSTEDE’S DIMENSIONS
27
HALL’S DIMENSIONS OF CULTURE
28
HIGH AND LOW CONTEXT
28
MONOCHRONIC AND POLYCHRONIC TIME
30
CULTURE IN INTERNATIONAL BUSINESS NEGOTIATIONS
31
4.2 NEGOTIATION THEORY
32
THE NATURE OF NEGOTIATION
32
NEGOTIATION FUNDAMENTALS
33
DISTRIBUTIVE AND INTEGRATIVE NEGOTIATION
34
THE INFLUENCE OF CULTURE ON NEGOTIATION
35
5. COMPARING DANES AND KOREANS
36
CULTURAL VALUES
37
COMMUNICATION BEHAVIOR
38
NEGOTIATION STYLES
38
6. EMPIRICAL RESULTS
39
THE INTERVIEWS
39
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CONFRONTATION, RESPECT, AND HIERARCHY
41
RELATIONSHIP-BUILDING
42
INFORMATION SHARING
44
INFLUENCE
44
REFLECTIONS
45
7. CONCLUSION
45
LIMITATIONS
47
IDEAS FOR FUTURE RESEARCH
47
8. REFERENCES
48
9. APPENDIX
50
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1.
Introduction
South Korea, officially Republic of Korea, and Denmark established their first diplomatic relations
in 1959 (http://sydkorea.um.dk/en/ 2013). The two countries did however share an important
relationship already before that year. When the North Korean communist forces attacked South
Korea in June, 1950, Denmark provided humanitarian aid to the allied forces in South Korea in the
form of the hospital ship MS Jutlandia. The ship was since made famous to all Danes in 1986, when
Danish singer Kim Larsen wrote a hit song praising the ship’s efforts in the war. The help has not
been forgotten by South Korea either, and an exhibit honoring the ship and its crew can be found in
the War Memorial of Korea in Seoul today. Since the hardships of the Korean War in 1950s, the
Republic of Korea has had an amazing development. It had in fact become the world’s 15th largest
economy by 2012, despite having a lower income per capita than that of Ghana only 60 years
earlier (Jeon, 2008). And even though its communist brother to the north, whom it is technically
still at war with, has gathered most of the media’s attention in recent time, South Korea has become
more and more popular in the West, including in Denmark. In fact, exports from Denmark to Korea
have risen by more than 50 percent in the last ten years, and South Korea is today the third largest
market in Asia for Danish exports (Regeringen, 2012). In 2011, the EU and South Korea entered
into a free trade agreement, and since then the Danish government has realized the major potential
of the Korean market, making it an official government goal to increase exports of goods and
services to Korea, as well as to attract Korean direct investments in Denmark.
As it shall be seen in this thesis, the extent of culture reaches far into international business, and it
is especially important when international businesspeople negotiate. Danish and Korean
businesspeople are no exception to this, and with the increased Danish-Korean business relations of
today, it seems likely that more and more companies from both countries will encounter cultural
differences when dealing with each other. It might very well prove essential, how individuals from
these companies manage cultural differences, when a deal needs to be negotiated, or a dispute needs
to be resolved. This thesis will therefore aim at gaining insights into the effects of cultural
differences in business negotiations between Danes and Koreans. The importance of cultural
awareness when negotiating across cultures can simply not be overstated, as Adler (2008) puts it,
“effective cross-cultural negotiation is one of the most important global business skills a manager
can possess” (p. 226).
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Problem Statement
This thesis will attempt to offer insights into the cross-cultural aspect of Danish-Korean business
negotiations with the overall problem statement:
How does culture affect negotiations between Korean and Danish businesspeople?
The motivation for choosing to study business negotiations between Danes and Koreans stems from
an exchange semester I recently concluded (2012) in Seoul, South Korea. The country, culture, and
the people immediately fascinated me, and being a Danish national as well as a business student this
naturally sparked my interest in Danish-Korean business relations. Moreover, some of my longtime favorite fields within business administration have been negotiation theory and international
management.
Delimitation
There are several important delimitations to be made for this thesis. First and foremost, culture will
be defined rather narrowly as national culture. As the authors I use agree, culture is indeed a
complex phenomenon that exists on many levels. Reducing the concept to national culture is rather
simplistic, but it has its advantages when for instance the goal is to study its relation to international
business negotiations.
Negotiation theory is without a doubt also a multifaceted matter, and some simplifications of for
instance the definition of negotiation have been made.
In regards to methodology and the empirical study, I have limited my focus to a few unique
individuals’ experiences with negotiations between Danes and Koreans. This of course makes it
difficult to generalize the findings to a broader business perspective, however, as I shall comment
on later, the aim of qualitative research is not generalization of findings, but understanding of them.
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Structure
This thesis is structured into three overall parts. First, a methodological framework for the entire
research process is established. Second, a theoretical framework is constructed in order to review
important concepts of culture and negotiation, and to guide the empirical research. Lastly, the
empirical findings will be presented and discussed.
2.
Acknowledgements
I would like to thank all the people involved in my work with this thesis.
First and foremost my supervisor Ditte Mølgaard Mathiasen, for her guidance and advise
throughout the writing process.
I would like to thank Morten Bryde Hansen of Lundbeck for his participation in my interview. As
he is currently residing in Singapore, the interview was done over Skype at a rather late and
inconvenient time for him due to the time difference with Denmark. I am much grateful that he took
the time to talk with me.
I would also like to thank Lau Diderichsen of FOSS Analytical for his participation in an interview.
FOSS and Lau Diderichsen were so kind as to invite me to their Danish headquarters for the
interview.
I would also like to thank René Fich Jespersen of Alfa Laval Aalborg and Mr. Myeong Do Lee of
Alfa Laval Korea for their participation in two interviews. I was so fortunate as to be invited to Alfa
Laval Aalborg’s headquarters in Aalborg when both René Fich Jespersen and Mr. M. D. Lee were
there and had the time to talk with me.
3.
Methodological Framework
In order to examine the negotiation behavior of Korean and Danish businesspeople in negotiations
between the two, a methodological framework needs to be established. Methodology is sometimes
referred to as the philosophy of methods, and according to Silverman (2005) methodologies can be
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defined broadly as quantitative or qualitative, or narrowly as e.g. case study or grounded theory (in
Eriksson & Kovalainen, 2008). The aim of methodology is to say how we can produce practical and
valid knowledge about an issue (Eriksson & Kovalainen, 2008). The purpose of a methodological
framework is therefore always to describe how a chosen problem can be studied (Eriksson &
Kovalainen, 2008).
The methodological framework of this study includes a brief presentation of the philosophical
concept of paradigm, an introduction to qualitative research and case study research, and finally
the research design for the empirical research I conducted. The empirical part of the thesis is based
on a case study, which is primarily qualitative in its methodological nature, although not
exclusively.
Paradigms
The natural scientist Kuhn (1970) originally developed the concept of paradigm specifically for the
natural sciences (in Eriksson & Kovalainen, 2008). He defined a paradigm as “the set of practices
that define a scientific discipline during a particular period of time” (in Eriksson & Kovalainen,
2008, p. 16). Even though Kuhn did not think paradigms could exist in the social sciences, the term
is widely used in these today, including in business research (Eriksson & Kovalainen, 2008). Within
the social sciences, the term paradigm has come to be defined as “a world view or a belief system
that guides researchers in their work” (Guba & Lincoln, 1994 in Eriksson & Kovalainen, 2008, p.
16). According to Eriksson & Kovalainen (2008), a paradigm aims to answer the question of what
“methodological models that relate to a scientific discipline during a particular period of time” (p.
13). Guba and Lincoln (1994) identified four major paradigms that frame research in the social
sciences: positivism, postpositivism, critical theory, and constructivism (in Eriksson & Kovalainen,
2008).
Positivism is based on the belief that scientific knowledge is created through the verification of
hypotheses (Guba & Lincoln, 2005).
Postpositivism relies on the falsification of hypotheses to produce scientific knowledge (Guba &
Lincoln, 2005).
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Critical theory holds that knowledge is produced through the inquiry into contradictions in existing
theory, and that the aim of science is to criticize and transform prevailing theories (Guba & Lincoln,
2005).
Finally, the paradigm of constructivism is based on the belief that knowledge is produced when
science investigates how individuals construct and make sense of their world (Guba & Lincoln,
2005). According to constructivists the aim of science is to create an understanding of the world
rather than explanations of it (Guba & Lincoln, 2005).
Guba & Lincoln (2005) argue that all of the four paradigms compete to be the dominant paradigm
of choice in qualitative research (in Eriksson & Kovalainen, 2008). Whichever paradigm a business
researcher relies on will determine how they direct their research (Eriksson & Kovalainen, 2008). In
this thesis I shall choose to work from the constructivist paradigm, which focuses on the individual,
and challenges the idea that universal claims about the world can be made (Eriksson & Kovalainen,
2008). The consequence of working through the contructivist paradigm will be the assumption that
the foundation of all scientific knowledge in the social sciences is the understanding of human
actions (Eriksson & Kovalainen, 2008). Due to this assumption I have emphasized and directed my
attention to interpretation of the actions of Danish and Korean businesspeople when they negotiate
across each others’ cultures, i.e. how they act and why. In order to study this I have chosen a
qualitative research approach.
Qualitative Business Research
Within the social sciences, including business research, quantitative research dominates most
scientific work (Eriksson & Kovalainen, 2008). For this reason, qualitative research is often
described in contrast to quantitative. Quantitative research deals with the explanation of things,
hypothesis-testing, and statistical analysis (Eriksson & Kovalainen, 2008). Qualitative research on
the other hand deals with interpretation and understanding of things (Eriksson & Kovalainen, 2008).
In practice, quantitative research in the social sciences focuses on explaining a small number of
common characteristics across many research subjects in order to prove general validity (Hansen &
Andersen, 2000). Qualitative research on the other hand aims at a detailed and holistic analysis of a
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small number of research subjects and their many characteristics, and disregards general validity
(Hansen & Andersen, 2000). Although qualitative research has been regarded inferior to
quantitative by business scholars, Eriksson & Kovalainen (2008) argue that qualitative research can
indeed produce valid knowledge for the business field, and that it should be regarded as neither
superior nor inferior to quantitative research. Silverman (2005) has pointed out that a limitation to
quantitative research is that it cannot adequately explain the social and cultural construction of its
own statistical variables (in Eriksson & Kovalainen, 2008). For example, it is arguably a difficult if
not impossible task to statistically explain and quantify the phenomena of culture, albeit this has
certainly not discouraged scholars from doing so (Hofstede, 1997).
Eriksson & Kovalainen (2008) argue that “qualitative business research gives a researcher an
opportunity to focus on the complexity of business-related phenomena in their contexts” (p.3). They
add that it can also “provide a critical and reflexive view about the social world of business and its
core processes” (p. 3). I have chosen the qualitative research approach for the abovementioned
reasons. I believe that with the time and resources available to me, I can best study the negotiation
behavior of Korean and Danish businesspeople by looking at a few research subjects, and then try
to understand their experiences by comparing them with what literature and theory says about
culture and negotiation. The overall aim of my empirical research will therefore be to gain insight
into the real-life behavior of Korean and Danish businesspeople when the two negotiate with each
other. This will be done through a case study.
Case Study Research
Eriksson & Kovalainen (2008) define a case study as:
“A mostly qualitative research approach which studies one or several cases (people,
organizations, processes) holistically and in their social, economic and cultural
contexts” (p. 303).
They further note that case studies are very popular in business research because of their ability to
present complex business issues in an accessible and down-to-earth format (Eriksson & Kovalainen,
2008). Yin (2003) defines a case study as “an empirical inquiry that investigates a contemporary
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phenomenon within its real-life context” (p. 13). He further argues that case study research is an
appropriate approach to “how” and “why” research questions.
Stoecker (1991) works with two ways of doing case study research: intensive and extensive (in
Eriksson & Kovalainen, 2008). Intensive case study designs focus on understanding as much as
possible from a single or a few cases, while extensive designs focus on comparing several cases
(Eriksson & Kovalainen, 2008).
I have chosen to conduct my empirical research through an intensive case study. The focus will be
on relating theoretical concepts with my empirical investigations. It is important to remember that
the aim of intensive case studies is not to produce knowledge that can be generalized to other
contexts, but instead to understand and explore the unique case (Eriksson & Kovalainen, 2008).
3.1
Research Design
The following paragraphs will present the overall plan for my empirical research. It is in essence an
overview of the choices I have made regarding what to study, how to study it, and how to evaluate
it.
Research Topic
According to Eriksson & Kovalainen (2008), the most important thing when choosing a research
topic is “researchability”, meaning whether or not it is possible to research the chosen topic. They
argue that the most straightforward way to determine this is to look at the existing literature about
the topic. I have defined my research topic both broadly and narrowly. In the broad perspective this
thesis is about cross-cultural negotiation. More specifically, or narrowly defined, the research topic
is business negotiations between Danes and Koreans.
The term cross-cultural negotiation is the product of the two topics culture and negotiation. As a
research topic, culture stems from anthropology (Tylor, 1871), while negotiation theory is its own
topic. Negotiation occurs in almost all aspects of social life, and negotiation theory is therefore
present within many fields, such as political science, law, and business studies (Lewicki et al.,
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2010). In this thesis I have focused on both negotiation and culture from a business perspective in
order to effectively narrow down the otherwise very wide topics.
There is a good amount of literature about culture that can be used in a business perspective. I have
found the works of Hofstede (1997; 2010), Hall (1990), and Adler (2008) to be the most useful.
These authors all have in common that they have made efforts to dimensionalize and conceptualize
culture, which makes the topic more accessible to scholars who want to use culture in relation with
some other topic. Moreover, their work has made it possible to categorize and distinguish national
culture from each other, which is essential when examining the cultural differences of Danes and
Koreans.
As for negotiation theory, in connection with business studies, I have chosen to rely on the works
of Lewicki et al. (2010), Fisher et al. (1992), Thompson (2009), and Brett (2001). These works have
in common that they introduce negotiation theory in an easy and understandable way, making them
fit to work with for the novice negotiator. They also contain advanced elements of negotiation
theory, and put that theory into different contexts as well as practical perspectives.
For the topic of cross-cultural negotiation all of the abovementioned authors are reused, and the
work of Tan & Lim (2004) is added. All of the used literature aims at briefly describing culture and
its impact on international negotiations, which fits the purpose of this thesis.
In order to briefly profile Danes and Koreans from a more practical view, the works of Lewis
(2006) and Katz (2007) have been used. Lewis has in his work made a reference guide to the
cultural characteristics of over 70 major countries in the world based on in-depth analyses of each
country, including Denmark and Korea. Katz has in his work, based on years of international
experience, made a reference guide to the negotiation principles and tactics of more than 50
countries, including Denmark and Korea.
Research Questions
Research questions define the issues one wishes to explore more precisely, and they are paramount
as they drive the entire research project, including the choice of methods and theoretical frame
(Eriksson & Kovalainen, 2008). I have chosen the following overall research question to explore
the matters of my interest:
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
How does culture affect negotiations between Korean and Danish
businesspeople?
To answer this overall question I have found it necessary to first answer several sub-questions:

How do Danish and Korean businesspeople experience negotiating with each
other?

How do the negotiation behaviors of Danish and Korean businesspeople
compare with each other in negotiations between the two?
Data Collection
The primary data source for answering the research questions above was four qualitative interviews.
The major advantages of interviews are that they are an efficient and practical way of collecting
data, while also providing a way to see peoples’ experiences from their point of view (Eriksson &
Kovalainen, 2008). The interviews were guided and semi-structured and based on mostly open
questions. In this kind of interview the collected data is somewhat systematic, while the interview is
informal and pleasant, which I found to be an advantage (Eriksson & Kovalainen, 2008).
I chose to approach the interviews from what Silverman (2005) calls an “emotionalist” approach
(in Eriksson & Kovalainen, 2008). This means that I regarded the interviews as a pathway to the
interviewees’ authentic experiences (Eriksson & Kovalainen, 2008).
The interviews were recorded and are in the appendix. For the analysis of the data I have translated
and transcribed the excerpts from the interviews that I found most important.
Data Analysis
Yin (2003) proposes three general strategies for analyzing empirical data in case studies: relying on
theoretical propositions, thinking about rival explanations, and developing a case description.
The first strategy is the most preferred among case study researchers. It suggests that a researcher
is guided in his analysis by the theoretical propositions that already exist within the research topic.
The second strategy is to construct and test rival explanations for what is observed in the empirical
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data, a strategy which is most useful when theoretical propositions are scarce within the chosen
research topic. The final strategy is to develop a description of the case study evidence, but this
strategy is mostly regarded as a less preferred alternative.
I have chosen to use the first strategy, which means relying on theoretical propositions. I will
therefore aim at gathering theoretical concepts from pre-existing literature and try to relate these to
my empirical findings.
Yin (2003) also works with four different analytic techniques for studying empirical data in singecase studies: pattern matching, explanation building, time-series analysis, and logic models.
I have chosen the first technique since Yin (2003) argues that this is one of the most desirable
techniques in case study research. The technique includes finding patterns in the collected data and
then comparing these to theoretical propositions. I shall in my analysis therefore mainly attempt to
locate behavior of Korean and Danish negotiators that could be described by cross-cultural
negotiation theory.
Evaluation
Overall, Eriksson & Kovalainen (2008) write that a case must be unique, unusual, or of general
interest, in order to be significant. They add that a case study should also always be either
theoretically or practically relevant.
For case studies, Yin (2003) proposes four validity parameters: construct validity, internal validity,
external validity, and reliability. To ensure construct validity, a researcher must multiple sources of
evidence. I have done this by selecting four different people to interview. Ensuring internal validity
is done through the chosen analytic technique, in my case pattern matching. To establish external
validity in a single-case study, a researcher must compare his results to generally accepted theory.
The theoretical framework of this thesis will work to ensure as much external validity as possible.
Finally, to ensure reliability a researcher must demonstrate that the data collection procedures of the
case study can be repeated with the same results. I have aimed to ensure reliability by providing
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information about my data collection procedures in this research design, and by recording the
interviews I conducted so that others can review them.
The case study will be presented in its entirety after the theoretical framework has been accounted
for.
4.
Theoretical Framework
Having established the methodological framework, the following sections will cover the theories
that have been deemed important to understand the concepts of culture and negotiation.
4.1
Culture
In order to adequately try to understand how culture is connected with negotiation, it is a necessity
to first review the phenomenon of culture: what it comprises, how it varies, and why it is important
to business negotiators.
Culture Defined
Literature about culture originates from the science of anthropology, and anthropologists have
defined the phenomenon in numerous ways (Adler, 2008). Culture has in fact been defined so many
times, that the anthropologists Kroeber and Kluckhohn (1952) identified more than 100 different
definitions of the term (in Adler, 2008). Based on these, they came up with one of the most
comprehensive and generally accepted definitions of culture:
“Culture consists of patterns, explicit and implicit, of and for behavior acquired and
transmitted by symbols, constituting the distinct achievement of human groups,
including their embodiment in artifacts; the essential core of culture consists of
traditional (i.e., historically derived and selected) ideas and especially their attached
values; culture system may, on the one hand, be considered as products of actions, on
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the other, as conditioning elements of future action” (Kroeber & Kluckhohn, 1952 in
Adler, 2008, p. 18).
One of the first and most widely cited definitions of culture, was provided by the English
anthropologist Tylor, who defined it as “that complex whole which includes knowledge, belief, art,
morals, law, custom, and any other capabilities and habits acquired by man as a member of society
” (1871, p. 1). Hall (1990) remarked, that culture could be likened to “a giant, extraordinary
complex, subtle computer” (p. 3). Brett (2001) called it “the unique character of a social group” (p.
6). And Fisher (1980) emphasized, that culture is something learned through socialization (in Tan &
Lim, 2002). From the many definitions of the concept, Adler (2008) sums up, that culture is
something which is shared by all or almost all members of a given social group, something passed
on from older to younger members of a group, and something that shapes peoples perception of the
world. Adler (2008) adds, that generally speaking, people can be said to be of different cultures if
their ways of life as a group are significantly different. In addition, Adler (2008) offers a general
model of how culture influences behavior, and how this behavior feeds back to culture. The model
can be seen below (adapted from Adler, 2008, p. 19)
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In the model, individuals express culture through the values they hold about life and the world.
Values are, according to Adler (2008), what is explicitly and implicitly desirable to an individual or
a group. These values affect their attitude about what behavior is considered appropriate in any
given situation. In the end, the continuous behavior of individuals and groups influence society’s
culture, and so the cycle continues. It almost goes without saying, that culture also affects how
people do business across the world.
In the business world, managers have adopted the definition of culture offered by the Dutch
researcher Hofstede (1980), who described it as “the software of the mind” (in Adler, 2008, p. 19).
Hofstede (1997) stresses, that culture is something that is learned, not inherited. In addition, he
asserts that culture is something distinct from human nature on one side, and individual personality
on the other, as illustrated below (adapted from Hofstede, 1997, p. 6).
In the figure, human nature is something every human has in common, as opposed to the
individual’s personality, which is unique. In between is culture, something specific to a group. And
according to Hofstede (1997), the cultural differences between groups manifest themselves on
different levels, as illustrated by his onion model below (adapted from Hofstede, 1997, p. 9).
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In the model, symbols, heroes, and rituals are what Hofstede (1997) calls practices. These are the
manifestations of culture that are visible to the outside observer, even though their cultural meaning
is invisible and derived only from how the insiders interpret these practices. The core of culture is
formed by values. According to Hofstede (1997), values are, in the cultural sense, broad tendencies
within a social group to prefer certain states of affairs to others. Values are invisible however, and
scholars can merely try to infer these from observing how people act in given situations, or by
asking people about their values e.g. through written questionnaires (Hofstede, 1997). The choice
between making observations in the field and making questionnaires is connected to the two main
approaches of how to study culture: the emic and etic approach.
Emic and Etic Approaches
Pike (1954, in Lu 2012) first put forward the distinction between the emic and etic approaches. It
was originally developed in order to enable researchers to compare cultures based on field data, and
it has since been regularly discussed in cross-cultural literature (Lu, 2012). The etic approach aims
at isolating components of culture and testing hypotheses related to these, thereby finding universal
human traits that vary across cultures (Lu, 2012). In other words, etic researchers assume that by
looking at generalizable phenomena one can compare cultures (Lu, 2012). Emic researchers on the
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other hand, assume that the optimal way to understand a culture is to view it as a complex
integrated system, not always comparable to other cultures (Lu, 2012). Emic research tries to
identify phenomena that are specific to a culture, and thereby understand the culture as one of its
members does, i.e. understand the culture from within (Lu, 2012). In cross-cultural research, emic
researchers closely examine one culture at a time by studying its insiders, while etic researchers
compare several cultures at once (Lu, 2012). In international business, it is argued that etic
approaches are suitable for comparing cultures, although emic approaches are needed to verify and
give perspective to the results (Lu, 2012). It has been common within etic approaches to try to
measure culture, although this is a debated topic and a continuous challenge for researchers (Lu,
2012).
This thesis will present the theories of culture by Hall (1990) and Hofstede (1997) respectively,
which are derived from the etic, or “outside”, view of culture. These theories have a bipolar
paradigm in common, meaning they view culture as consisting of a set of finite measurable
dimensions. The choice of these theories was made in order to provide a solid outside view of how
the Korean and Danish culture compares.
With the establishment of the concept of culture in place, the following paragraphs will present
theories of how national cultures vary.
Hofstede’s Six Dimensions of National Culture
Hofstede analyzed a large database of employee value scores collected by the multinational firm
IBM between 1967 and 1973, with data from more than 70 countries (Hofstede, 1997). The study
was at the time one of the most comprehensive studies of how values in the workplace are
influenced by culture, and many subsequent studies have later contributed to the analysis (Hofstede,
1997; 2010). Hofstede (1997) found that the values that distinguished countries from each other
could be grouped statistically into four clusters. These four groups became his original dimensions
of national culture, and were as follows: Power Distance, Individualism vs. Collectivism,
Masculinity vs. Femininity, and Uncertainty Avoidance (Hofstede, 1997). In 1991, a fifth
dimension was added to the study. The dimension was named Long-Term Orientation and was
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based on Confucian dynamism (Hofstede, 1997). In 2010, yet another dimension was added: the
Indulgence vs. Restraint dimension, expressing how a society’s social norms allow for indulgence
of the individual (Hofstede, 2010).
Hofstede’s research was an attempt to measure culture empirically. A country obtains a score in
each dimension (from 1 to 100), but the score in itself is relative, i.e. meaningless if not compared
to another country’s score in the same dimension (Hofstede, 1997; 2010). Other than modeling
cultural differences between countries, the research also showed interesting correlations between
the dimensions and other data. For instance, individualism proved to be correlated with national
wealth, and long-term orientation with school results in international comparison (Hofstede, 1997;
2010). In terms of business negotiations, Brett (2001) found that Hofstede’s Individualism vs.
Collectivism dimension might affect negotiators’ confrontational and motivational behaviors.
Power Distance (PDI)
The first dimension, PDI, expresses the degree to which less powerful people in a society accept
and expect an unequal power distribution (Hofstede, 1997). The dimension captures how a society
handles inequality among its people. For example, people in low power distance societies strive to
equalize power distribution and demand justification for inequality (Hofstede, 1997). In a high
power distance society, people accept hierarchy and do not need justification for their place in
society (Hofstede, 1997). It is in other words inequality described from the bottom of society, and it
is something transferred to children from parents and other elders (Hofstede, 2010).
Below are the scores for Denmark and South Korea in the PDI dimension. All scores used in this
thesis have been obtained from his and his co-author’s book Cultures and Organizations (2010).
Power Distance (PDI)
Denmark
18
South Korea
60
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With a score of 18, Denmark is one of the lowest scoring countries in this dimension. According to
Hofstede (1997), this means several things: equality is highly valued, decentralization is popular,
small income differentials in society, privileges and status symbols are frowned upon, a large
middle class, and powerful people try to look less powerful than they are. Hofstede (1997; 2010)
remarks that as a small power distance culture, Denmark has: high employee autonomy, a belief in
independency, equal rights, accessible superiors, and managers who facilitate and empower their
subordinates. Furthermore, respect is something earned by proving your expertise, workplaces have
informal atmospheres, and communication is on a first name basis (Hofstede, 1997; 2010).
Turning to Korea, a score of 60 makes it a high power distance society relative to Denmark.
Compared to Denmark, Korean culture can be said to: desire and expect inequality, prefer
centralization, have large income differentials in society, expect and pursue privileges and status
symbols, have a small middle class, and have powerful people who try to look as impressive as
possible (Hofstede, 1997). In addition, Korea has a hierarchical society. This is reflected in
organizations, where subordinates expect to be told what to do by their superiors (Hofstede, 1997;
2010).
The difference between Danish and Korean culture in this dimension could potentially pose several
problems when businesspeople from each culture negotiate with each other. A Danish negotiator
might be unaware of the importance of formality in Korean culture, and inadvertently offend his
Korean opponent by being too informal. Conversely, a Dane might easily feel uncomfortable if a
negotiation is very formal all the way through.
Individualism vs. Collectivism (IDV)
The IDV dimension rates a country on a scale ranging from individualistic to collectivistic. In other
words, it describes whether people in a country define their self-image in terms of “I” or “we”.
Individualism can be defined as the preference for a society where the ties between individuals are
loose, i.e. in which individuals are expected to take care of themselves and their direct family only
(Hofstede, 1997). A highly individualistic culture is one where: individual interests prevail over
collective interests, identity is based on the individual, and task prevails over relationship
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(Hofstede, 1997). Collectivism refers to a society’s preference for a tightly knit social culture,
where individuals can expect their group-members to look after them in exchange for absolute
loyalty (Hofstede, 1997). In a highly collectivist culture it can be expected that: collective interests
prevail over individual interests, identity is based on the social network one belongs to, and
relationship prevails over task (Hofstede, 1997).
Below are the scores for Denmark and Korea in this dimension.
Individualism (IDV)
Denmark
74
South Korea
18
The score of Denmark suggests that Danish culture is highly individualistic compared to Korean
culture. According to Hofstede (2010), Danes are relatively easy to do business with. Furthermore,
Danes avoid small talk, are very direct when communicating, and do not feel the need to establish
relationships before doing business with others (Hofstede, 2010).
A score of 18 indicates that South Korea is a very collectivist society. This means long-term
commitment to family and extended family, and loyalty over most other societal rules (Hofstede,
2010). Also very importantly, offence will lead to shame and loss of face, a serious matter in
Korean and other Asian cultures (Hofstede, 2010).
Korean and Danish are on opposite ends in this dimension. The difference in culture may affect
business negotiations, especially in terms of relationship building. While Danes are comfortable
with doing business without first creating a relationship with someone, this is not something
Koreans are likely to be easy with.
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Masculinity vs. Femininity (MAS)
The MAS dimension measures masculinity in a society. By masculinity, Hofstede (1997) means a
society’s preference for heroism, achievement, assertiveness, and material rewards for success. A
feminine society is one that prefers cooperation, modesty, caring for the weak, and quality of life is
valued (Hofstede, 1997). Quite often masculine societies are competitive and performance-oriented,
while feminine societies are consensus-oriented welfare societies (Hofstede, 1997).
As it can be seen below, Denmark has a score of 16, making it a feminine society. This means that
in Danish culture managers are expected to be supportive to employees, equality and solidarity is
valued, and quality in one’s working life is strived for (Hofstede, 2010). According to Hofstede
(2010), conflicts are resolved through compromise and negotiation, and Danes are keen on long
discussions to reach consensus.
Masculinity (MAS)
Denmark
16
South Korea
39
Korea too is a feminine society (Hofstede, 1997; 2010). Overall, this should mean that Korean and
Danish culture share the same values in this dimension, albeit Korean culture is more masculine in
comparison. In relation to business negotiations, both Danes and Koreans should, according to
Hofstede (1997), be expected to display modesty, sympathy, and solidarity.
Uncertainty Avoidance (UAI)
A country’s score in the UAI dimension is an expression of the degree to which its people feel
uncomfortable with uncertainty and ambiguity (Hofstede, 1997). As Hofstede (2010) says, the
dimension reflects whether a culture tries to control the future or just lets it happen. Strong AUI
cultures value rules, like being busy, and they are intolerant of unorthodox behavior (Hofstede,
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1997). Weak UAI cultures on the other hand, have a more relaxed attitude, value practice over
principles, and adhere to tolerance and moderation (Hofstede, 1997).
Uncertainty Avoidance (UAI)
Denmark
23
South Korea
85
As it can be seen above, Danish culture has low uncertainty avoidance. Danes do not need a lot of
structure or predictability in their work life (Hofstede, 2010). In Danish culture plans can change
suddenly without causing discomfort, curiosity is encouraged, and it is acceptable to say “I do not
know” (Hofstede, 2010). South Korea however, is one of the most uncertainty avoiding countries in
the world (Hofstede, 2010). In Korean culture rigid codes are prevalent and time is money
(Hofstede, 2010). Hard work, precision, and punctuality are the norms, and security is important to
the individual (Hofstede, 2010).
The difference between Korean and Danish culture in this dimension is very conspicuous. In a
business negotiation setting, this could cause unintentional problems. A Danish negotiator who
admits uncertainty about a particular matter, might be considered weak or incompetent by his
Korean opponent, even though the Dane thinks it is okay to not have knowledge of this matter. A
Korean might feel very uncomfortable if the schedule is revised last minute when visiting a Danish
company to negotiate business.
Long-Term vs. Short-Term Orientation (LTO)
The LTO dimension measures a culture’s search for virtue (Hofstede, 1997). Short-term oriented
cultures are strongly concerned with establishing absolute truths, unconcerned with saving and
investing, have great respect for traditions, and value quick results (Hofstede, 1997). In long-term
oriented cultures people believe truth depends on context and time, saving and investing is
important, traditions are amendable, and slow results are the desired outcome of perseverance
(Hofstede, 1997).
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As it can be seen below, Danish and Korean culture once again differ from each other.
Long-Term Orientation (LTO)
Denmark
46
South Korea
75
Danish culture is according to this score a short-term oriented culture, although it is very close to
the middle. Because of its short-term culture, Danish organizations prioritize abstract rationality,
and analytical thinking, they believe in one right way to do things, and they focus on the now rather
than the past (Hofstede, 2010). Korean culture is in contrast one of the most long-term oriented
cultures (Hofstede, 1997). Historically, Koreans have no concern for one true deity, and rather they
live their lives guided by virtues and good examples (Hofstede, 2010). Korean corporate culture
does not focus on the here and now, but rather the future of the company and society at large
(Hofstede, 2010).
The difference in orientation between Danes and Koreans could prove troublesome in business
negotiations. It is possible that Danes would expect some issues to be dealt with quickly, while
Koreans had expected more time to deal with the same matter. Also, Danes might not give much
thought to what will happen after negotiations have been concluded, while Koreans could be
expected to be very concerned with the future relationship.
Indulgence vs. Restraint (IVR)
The last and newest of Hofstede’s dimensions measures indulgence versus restraint in a culture. An
indulgent society allows relatively free satisfaction of basic and natural human needs, while a
restrained society suppresses these and regulates them by strict social norms (Hofstede, 2010).
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Below are the scores for Korea and Denmark in the IVR dimension.
Indulgence (IVR)
Denmark
70
South Korea
29
As it can be seen, according to Hofstede (2010), Denmark is a rather indulgent society compared to
Korea. This means that Danes believe leisure and freedom of speech is important, and that sexual
norms are quite lenient (Hofstede, 2010). On the other hand, Koreans attribute lower importance to
leisure, and freedom of speech is not a primary concern (Hofstede, 2010). Korean society will also
have strict sexual norms compared to Danish society (Hofstede, 2010).
Danish and Korean culture differ quite a lot in this last dimension, but whether or not this could
impact business negotiations between Koreans and Danes is difficult to predict. Overall, it should
be expected that Danes are less reserved than Koreans. This could potentially mean that a Dane
much easier offends a Korean than the other way around.
Critique of Hofstede’s Dimensions
As Hofstede’s work has been dealt much attention in this thesis, it seems necessary to introduce
some of the criticism of his work as well. Although Hofstede’s work on culture is some of the most
cited in history, there is still much critique of the validity of his work (Jones, 2007). As Jones
(2007) says, Hofstede’s work has had major implications across many academic disciplines,
including international business, but it has at the same time been highly controversial.
First of, there has much been criticism of the relevance of questionnaire surveys when measuring
cultural differences (Jones, 2007). Secondly, and perhaps most popularly, there has been abundant
criticism of how Hofstede’s study assumes that every nation has a homogeneous population who
share but only one culture (Jones, 2007). Thirdly, many scholars have argued that the use of only
one multinational company cannot possibly provide valid information about the culture of entire
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countries (Jones, 2007). Finally, researchers have argued that Hofstede’s results are outdated, has
too few dimensions to adequately explain cultural differences, and lacks statistical integrity because
of a low number of survey respondents (Jones, 2007).
Despite the criticism of Hofstede’s work, just as many scholars have found his work to be
groundbreaking, rigorous, relevant, and relatively accurate when replicated (Jones, 2007).
Hall’s Dimensions of Culture
Hall (1990) wrote, that culture is communication, that is to say cultural differences become visible
when people communicate. The nature of cultural communication however, is much more complex
than ordinary spoken or written messages (Hall, 1990). In fact, Hall (1990) called culture a silent
language, which most people convey without even being conscious of it. When people
communicate, Hall (1990) found there are three factors that vary with a person’s culture: Context,
Time, and Space. However, for this thesis only the dimensions of time and context have been found
relevant. Like Hofstede’s, Hall’s dimensions are bipolar, showing cultural differences as being
within a continuum of two extremes.
High and Low Context
Hall (1990) defines context as “the information that surrounds an event” (p. 6). According to Hall
(1990), when individuals communicate, the intended meaning of their messages are either free of
context, highly contextual, or somewhere in between. How contextual an individual’s
communication is, depends on his or her culture (Hall, 1990).
In high-context cultures communication is largely implicit, and most of the information needed to
understand a message is already possessed by the receiver (Hall, 1990). In other words, highcontext cultures have many “unwritten rules”, and much is taken for granted when people
communicate. Communication in low-context cultures is quite the opposite. In these, the
information needed to understand a message is mostly contained in what is explicitly communicated
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(Hall, 1990). Put another way, in low-context cultures very little is taken for granted, and
communication is often simple and clear.
Cultures that have extensive information networks across family, friends, colleagues, and clients,
are high-context (Hall, 1990). People from these cultures keep themselves informed about
everything in their networks, and therefore they do not need much information to understand each
other when they communicate (Hall, 1990). Conversely, people from low-context cultures separate
their personal relationships, their work, and many other parts of their lives from each other (Hall,
1990). Because of this, people from these cultures need to convey a lot of detailed information
whenever they interact (Hall, 1990).
Below is a figure showing different cultures in Hall’s low to high-context continuum (based on
Hall, 1990; Copeland & Griggs, 1985; Kim et al., 1998).
As it can be seen, according to Hall’s dimension, Denmark is a low-context culture while Korea is a
high-context culture. Danish and Korean cultures are in fact on opposite extremes when it comes to
the level of context surrounding their communication. This could very well pose several problems
when individuals from each culture negotiate with each other. For instance, a Korean might become
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irritated and even offended if a Dane insists on giving him information he does not need (Hall,
1990). Conversely, a Dane might become confused if a Korean does not provide enough
information (Hall, 1990). A Korean will probably feel that his intelligence has been insulted if a
Dane continuously tells him things that are usually taken for granted among Koreans. As a result, a
Korean might feel talked down to by a Dane, without this even being the Danes intention. A Dane
might on the other hand be unable to read between the lines of a Korean’s messages, and thereby
misunderstand his intentions.
Interestingly, it becomes very obvious that Korean culture is high-context when one takes a closer
look at the Korean language, known as Hangul. The Korean language has several different
politeness levels, which are used depending on the age, gender, and social status of whomever you
are talking to. Politeness levels are expressed by different vocabulary and by adding different
suffixes to the end of sentences, but the level of politeness inherent in Korean is often lost when
translated to e.g. English or Danish. Another example is the common Korean greeting ‘어디 가?’
which means, ‘Where are you going?’. However, the literal translation would be ‘Where going?’, as
Koreans assume it to be obvious who the message is directed to when there are only two people
speaking together.
Monochronic and Polychronic Time
Hall (1990) argues that there are many systems of time in the world, but only two that are important
for international business: monochronic and polychronic time. Monochronic time means doing only
one thing at a time (Hall, 1990). Polychronic time means being occupied with many things at once
(Hall, 1990). Hall (1990) compares the two time systems with oil and water, implying that a culture
is either monochronic or polychronic.
In monochronic cultures people perceive time as linear, stretching from the past into the present
and future (Hall, 1990). The adherence to doing one thing at a time means that schedules and plans
are very important in these cultures, and unlikely to be changed once first decided on (Hall, 1990).
Monochronic cultures view time as something tangible, something that can be spent, wasted, and
saved, and as a result people from these cultures do not like to be interrupted (Hall, 1990). Hall
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(1990) remarks that monochronic cultures often are low-context, while polychronic cultures tend to
be high-context.
In polychronic cultures people are greatly involved in many things at once, and more attention is
paid to human interaction than to schedules (Hall, 1990). This might mean that people are unlikely
to break up even a casual conversation before its natural conclusion, even though they are late for
an appointment somewhere else (Hall, 1990). While people in monochronic societies have many
short-term relationships, people from polychronic cultures have strong tendencies to build lifelong
relationships (Hall, 1990).
Denmark is a monochronic society as is the rest of Scandinavia (Onkvisit & Shaw, 2004). Korea is
on the other hand a polychronic society, like many other East Asian cultures (Onkvisit & Shaw,
2004). In business negotiations, this could mean that a Dane is likely to insist on taking one matter
at a time, while a Korean would be used to dealing with many things at once. Moreover, a Korean
would probably become uneasy if he feels that his Danish negotiation opponent is more focused on
getting a deal than building a lasting business relationship. Lastly, a Korean might be late for a
negotiation with a Dane and think nothing of it, much to the annoyance of the Dane however.
Culture in International Business Negotiations
As global business is becoming the dominant form of business, it is inevitable that cross-cultural
business relationships will become increasingly important. A pivotal aspect of all
interorganizational relationships, including cross-cultural ones, is negotiating (Adler, 2008). In fact,
Carnevale and Pruitt (1992) argued that cultural differences in negotiation would become more
important as a consequence of globalization (in Tan & Lim, 2002). And in general, research within
negotiation and culture has been growing since the 1990s, underlining the growing importance for
international business managers’ awareness of the topic (Tan & Lim, 2002; Adler, 2008). It can
easily be argued that culture is a primary determinant of the strategies and tactics individuals use in
international business negotiations (Tan & Lim, 2002). Lastly, Adler (2008) writes that to succeed
in international business negotiations, businesspeople need to know how to communicate with, but
also influence, people from other cultures.
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4.2
Negotiation Theory
To understand how culture is involved in negotiations between Korean and Danish businesspeople,
one needs to understand the fundamentals of negotiation theory. It is important to know why people
negotiate in the first place, how they negotiate, and what exactly constitutes a negotiation situation.
Lastly, the subject of cross-cultural negotiation will be covered.
The Nature of Negotiation
“Like it or not, you are a negotiator… Everyone negotiates something every day” (Fisher et al.,
1991, p. xiii). Basically, every person has to negotiate at some point in their life, be it in business,
politics, or in everyday family life (Fisher et al., 1991). According to Thompson (2009), “anytime
you cannot achieve your objectives without the cooperation of others, you are negotiating” (p. 2).
Essentially, negotiation is a means for people to get what they want from others (Fisher et al.,
1991). It is a tool for communication and influence, and it applies for individuals as well as
companies (Thompson, 2009). Lewicki et al. (2010) emphasize that negotiation is a “complex social
process” (p. 3). In this thesis, I shall use Thompson’s (2009) definition of negotiation, as I find it to
adequately describe the concept:
“Negotiation is an interpersonal decision making process necessary whenever we
cannot achieve our objectives single-handedly” (p. 2).
Brett (2001) argues that people negotiate for three reasons: to make deals, to make decisions, and to
resolve disputes. She adds that all negotiations occur because the involved parties perceive
themselves as being interdependent, but having incompatible goals. Lewicki et al. (2010) found that
there are six characteristics common for all negotiation situations. First, negotiation involves two or
more parties, i.e. negotiation takes place between individuals, within groups, or between groups.
Second, a negotiation situation arises from a conflict, meaning that the parties involved have
different needs and desires. Third, the parties negotiating do so by choice, meaning that negotiation
is a voluntary process. Fourth, people expect a “give-and-take” process when they negotiate, i.e.
people expect the outcome of negotiation to be a compromise. Fifth, people would rather negotiate
than fight, meaning people prefer searching for agreement to involving third parties in conflicts.
And finally, any negotiation has both tangible and intangible factors. Tangibles are issues such as
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price and terms of agreement, while intangibles are psychological factors such as the need to “win”
or the need to protect one’s reputation.
Negotiation Fundamentals
Another thing all negotiations have in common is that preparation is key. As Thompson (2009) puts
it, “The most important questions a negotiator needs to ask of himself or herself at the outset of
negotiation are ‘What do I want?’ and ‘What are my alternatives?’” (p. 13). The first question lets
a negotiator define his or her target outcome in a negotiation, while the second helps identifying
when to walk away from it.
Any negotiator needs to determine his or her best alternative to a negotiated agreement, commonly
referred to as one’s BATNA (Thompson, 2009). Without defining a BATNA, a negotiator has no
way of knowing what is in his or her best interest, and might therefore reach a deal or agreement
that is worse than another readily available alternative. Moreover, a negotiator’s BATNA is his or
her power when negotiating, and it has a crucial impact on the outcome of the negotiation
(Thompson, 2009).
Not knowing one’s target can result in either asking for too little in negotiation, leaving a feeling of
regret if the other party immediately grants this, or asking for too much and scaring off or insulting
the other party (Thompson, 2009).
Fundamental to how a person negotiates is his or her interests, priorities, and strategies (Brett,
2001). Interests are a person’s needs and wants in a negotiation. Priorities are a reflection of how a
person values his or her interests relative to each other. A negotiation strategy is the set of behaviors
a negotiator chooses to use in order to achieve his or her goals. When people are interdependent but
perceive that they have incompatible goals, the result is conflict (Lewicki et al., 2010). Pruitt et al.
(1994) argue that the strategies negotiators use to solve conflicts are determined by two independent
concerns: concern about own outcomes and concern about other’s outcomes (in Lewicki et al.,
2010). According to this dual concerns model, a negotiator with a weak concern for the other
party’s outcome and a strong concern for his or her own outcome will employ a contending
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strategy. A negotiator who has strong concern for own as well as other’s outcome will employ a
problem solving strategy.
Negotiators employing the contending strategy will pursue own interests strongly while showing
little concern for the other party’s concerns (Lewicki et al., 2010). This strategy involves an active
effort to persuade the other party to yield, also known as distributive negotiation.
A problem solving strategy is one where the negotiator actively tries to maximize the joint outcome
of the situation rather than just his or her own (Lewicki et al., 2010). This process is called
integrative negotiation.
Distributive and Integrative Negotiation
Distributive negotiation occurs when people approach a negotiation from a win-lose viewpoint.
They will see it as a zero-sum situation where one party’s gain is the other party’s loss (Lewicki et
al., 2010). The resources are perceived as a “fixed pie”, and people will try to get as much as
possible from this pie (Lewicki et al., 2010). They will employ strategies and tactics with the
purpose of claiming value (Lewicki et al., 2010).
Integrative negotiation is the result of people approaching a negotiation believing it to be a win-win
situation. They will see it as a non-zero-sum situation where all parties can achieve their goals and
objectives (Lewicki et al., 2010). In such situations people believe there to be a possibility of
“expanding the pie” of resources through cooperation (Lewicki et al., 2010). In integrative
bargaining the purpose is therefore to create value (Lewicki et al., 2010).
Whether a situation is in fact distributive or integrative is always difficult to tell, and Lewicki et al.
(2010) argue that most negotiation problems in fact are a combination of both, and therefore require
both value claiming and value creating processes. Brett (2001) concurs by saying, “there may be
opportunities to create value in even the simplest of negotiations” (p. 3). Thompson (2009)
emphasizes that integrative agreements are indeed preferable, but a successful negotiator should
never forget to claim resources. Thompson (2009) further adds that building trust should be just as
important as creating and claiming value when negotiating.
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The Influence of Culture on Negotiation
When culture enters the negotiation process it becomes increasingly complicated (Lewicki et al.,
2010). According to Brett (2001) people always bring culture to the negotiation table in shape of
their interests, priorities, and strategies.
Culture affects the interests and priorities of negotiators, and the fit between these is what generates
potential for integrative agreements (Brett, 2001). Culture also affects the strategic behavior that
negotiators bring to the table, more specifically their ways of dealing with confrontation, their
motivation, and their ways of using information and influence (Brett, 2001).
Brett (2001) found that the way people prefer to confront others in negotiations ranges from direct
to indirect. The preference for direct or indirect verbal interaction is in other words dependent on
the negotiator’s culture. The same can be said for information sharing, which is also either direct or
indirect depending on the negotiator’s culture. Furthermore, Brett (2001) argues that different
interests motivate people across cultures. Some people are mostly motivated by self-interests, some
by other interests, and some by collective interests. The way negotiators try to influence each other
depends on culture as well (Brett, 2001). Some people prefer to use power in order to persuade their
opponent to yield when negotiating, while others prefer to appeal to the importance of equality,
needs, and social status.
Brett (2001) has linked the abovementioned negotiation behaviors with some of the cultural
dimensions proposed by Hofstede and Hall.
First of, Hofstede’s IDV dimension was found to influence negotiators’ motivation and
confrontation behavior (Brett, 2001). Direct confrontation is preferred in individualistic societies
such as Denmark, while such behavior is considered to signal a lack of respect in collectivist
societies such as Korea. Here an indirect approach is believed to be relationship preserving. In
addition, individualist cultures emphasize self-interests, while collectivist cultures emphasize
collective interests.
Secondly, Hofstede’s PDI dimension was suggested to influence both confrontational and influence
behaviors of negotiators (Brett, 2001). Negotiators from high power distance societies such as
Korea are likely to avoid direct confrontation because this behavior signals lack of respect for social
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status. People from these cultures honor the norm of not challenging higher-status members of
society in negotiations. Moreover, negotiators from low power distance societies such as Denmark
derive their power in a negotiation from the strength of their BATNA. In a high power distance
society such as Korea negotiators derive their power from their social status.
Finally, Hall’s dimension of high and low context was found to influence confrontation and
information behavior (Brett, 2001). Not surprisingly, high context cultures are largely adherent to
indirect confrontation and information sharing, while low context cultures prefer direct approaches.
Lewicki et al. (2010) suggest that culture influences negotiation in several ways as well. Culture
does for instance influence the fundamental definition of negotiation, i.e. what is negotiable. Some
cultures see the goal of a negotiation as a contract while others see a relationship. Culture also has
an influence on whether people see negotiation as being fundamentally distributive or integrative.
Whether a country’s negotiation protocol is formal or informal is also a matter of culture. Finally,
culture is said to influence the extent to which people display emotion in negotiations.
Thompson (2009) identified several reasons as to why negotiations are more difficult when a crossculture element is present. First of, negotiators experience more difficulty in expanding the pie
when they negotiate across cultures. Secondly, ethnocentrism is a problem in cross-cultural
negotiations. Ethnocentrism is the act of evaluating other cultures negatively compared to one’s
own. Finally, a negotiator might inadvertently offend his opponent if he or she is unaware of issues
that are sacred or taboo in the opponent’s culture.
To overcome the obstacles of intercultural negotiations, Thompson (2009) suggests that negotiators
display empathy, sociability, openness, tolerance, patience, and interest in other cultures. Brett
(2001) adds that skilled cross-cultural negotiator will proceed slowly and carefully in negotiations.
5.
Comparing Danes and Koreans
In a more practical effort to compare the negotiation behavior of Danes and Koreans, a brief
comparison of the two countries follows below. Lewis (2006) and Katz (2007) found that Danes
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and Koreans are quite different in terms of their cultural values, communication behavior, and
negotiation styles.
Cultural Values
Danish people value egalitarianism, tolerance, social justice, and honesty. Bragging is frowned
upon, and Danes perceive status based on qualification, results, and competence. The Danes are
often described as more communicative, easy-going, and international than their Nordic neighbors.
The Danish business-style is relatively laid-back, and humor is important in order for Danes to feel
comfortable. Business relationships are often seen as only moderately important, although Danes
are usually cautious and reserved in first-time business meetings. Relationships are valued however,
and once sufficient trust has been established, Danes will go a long way for their business partners
in order to show loyalty and respect. Danes are timely without being so obsessively, and they value
their spare time a great deal. Finally, Danes admire individuals who possess initiative, knowledge,
and expertise.
Turning to Korean culture, it is first and foremost strongly influenced by Confucianism. Koreans
value a vertical societal structure, protection of inner feelings, respect, toughness, tenacity, and
collectivism. Lack of respect is frowned upon, and status, influence, and power are important.
These intangibles are decided by family name, wealth, education, and occupation. An important
concept in Korean culture is kibun, which roughly translates into a person’s “face” or “inner
feelings”. Sensitivity to kibun is paramount in Korean society, and to be aware of it is to respect and
maintain social balance and correct behavior. Korean business relationships exist more between
groups and individuals than between companies themselves, and personal networks are therefore
essential. Moreover, business relationships require long-term commitment in Korea. Koreans are
relatively punctual, and they rarely waste time. Finally, Koreans admire people who are respectful,
persistent, and sociable.
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Communication Behavior
Danes are in general very blunt, but frequently employ sarcasm and irony when they communicate.
They are good listeners and rarely interrupt others. Communication is very direct, and too much
sugarcoating and diplomacy can confuse or even annoy a Dane. Danes expect people to tell the
truth without being abrasive. Also, Danish people are particularly fond of anecdotes and humor.
Danes like to charm people and be charmed. They accept cynicism when discussing business, and
they stick to facts and reason in their arguments. Body language is not used a whole lot, and
physical contact is kept to handshaking when meeting and saying goodbye. Lastly, communication
in Denmark is largely horizontal, and Danes do not feel a need to respect hierarchy in
conversations.
Koreans love conversation and are energetic in their communication style. They listen courteously
and are keen to ask follow-up questions. Overall communication is indirect, and Koreans are adept
at understanding subtle clues and nonverbal messages. Koreans will usually avoid saying “no” in
order to preserve a harmonious conversation. In general, Koreans are careful to show concern for
face and hierarchy in conversation. They are often described as very friendly and humorous. Like
with Danes, body gestures and physical contact is quite restricted.
Negotiation Styles
Danes tend to view negotiation as a problem-solving process. They are primarily interested in
cooperation and mutual compromise in negotiations. Therefore, Danes expect reciprocation of trust
and concessions. Generally, Danes expect negotiations to be a rather swift affair, and they prefer to
take one thing at a time. Danish people like to negotiate in a straightforward and honest matter, and
frown upon deceptive negotiation tactics. Danes also shy away from aggressive negotiation tactics,
but they will almost certainly engage in confrontation if challenged. Lastly, Danes tend to separate
personal relationships from negotiation issues.
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Koreans often negotiate from a distributive viewpoint, and attention is always paid to who has the
most situational power. When negotiating, Koreans often use relationships as leverage, and longterm cooperation is highly valued. In general, Koreans are very competitive negotiators. They are
not afraid to be tough and adversarial, as they do not except either party to take anything personally.
Koreans take their time to gather and discuss information before bargaining, but information is not
shared freely, as doing so is perceived to be foolish. Koreans view negotiation as a process that
takes considerable time. Finally, they employ a wide amount of negotiation tactics. This means that
deception and pressure techniques are frequent and expected, although nothing personal is meant by
this behavior.
6.
Empirical Results
On the basis of the established methodological and theoretical framework, the following paragraphs
will present the results from the empirical study I have carried out. First of, an overview of the four
interviews is provided. Then, the main patterns from the interviews will be presented and compared
to relevant concepts from the theoretical framework. Finally, I will briefly reflect upon the results of
my empirical analysis.
The Interviews
The first interview I conducted was with Danish national Morten Bryde Hansen of Lundbeck.
Lundbeck is a global pharmaceutical company working with brain diseases. Morten Bryde Hansen
has worked for Lundbeck for 25 years. He has a Master of Science in Economics from Copenhagen
University, and has among other things worked as a Finance Director for Lundbeck in the UK.
Today he is the Area Vice President of Sales and Marketing for South East Asia, Australia, and the
Middle East. He has over 10 years of experience doing business with Koreans, and currently resides
in Singapore. The interview was conducted via the videoconferencing application Skype. In the
appendix, the interview-file has been named Interview with Morten Bryde Hansen.
Lundbeck has a subsidiary that takes care of most of its operations in Korea. Morten Bryde Hansen
is in Korea when the subsidiary is negotiating very large new orders, and when he needs to
negotiate budgets, salary raises, and the like within the subsidiary.
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The second interview was with Danish national Lau Diderichsen of FOSS Analytical. FOSS
develops and produces analytical instruments to improve the quality of products in the agricultural,
food, chemical, and pharmaceutical industries. Lau Diderichsen has a Master in Agronomy and has
worked in industries such as the packaging, biotech, and marine industries. He has only been with
FOSS for about one and a half years. Today he is the Senior Vice President of Sales and Marketing
in Europe, Asia, and the Pacific. He has over 25 years of experience working with and in Korea.
FOSS has a subsidiary in Korea which takes care of most of its business activities there, and Lau
Diderichsen is mostly there to sign specifically large orders. The interview-file for this interview is
named Interview with Lau Diderichsen in the appendix. The interview was conducted in Hillerød,
Denmark, at FOSS’ headquarters.
The third interview I conducted was with Danish national René Fich Jespersen of Alfa Laval
Aalborg. Alfa Laval Aalborg is part of the Swedish Alfa Laval Group, and it is a leading supplier
and service provider of marine boilers to the marine sector. René Fich Jespersen is today the
General Manager of New Boiler Sales worldwide. He is Mechanical Engineer and has extensive
international experience in sales and contract negotiation within the marine industry. He currently
visits Korea about four times a year, and is mostly there to negotiate large orders and perform sales
training of employees. Alfa Laval has a Korean subsidiary that takes care of most of its business
there. The interview is in the appendix under the name Interview with René Fich Jespersen. The
interview was conducted in Alfa Laval Aalborg’s headquarters in Aalborg, Denmark.
The final interview was with Korean national Myeong Do Lee of Alfa Laval Korea, the Korean
subsidiary of Alfa Laval. Myeong Do Lee is a Mechanical Engineer of Pusan National University
and works as a Sales Manager today. He has previously worked as a Sales Engineer for Hyundai
Heavy Industries, the world’s biggest shipbuilding company. He has worked for Alfa Laval since
2004, and has visited Denmark a total of four times. He has extensive experience negotiating sales
in Korea within the marine industry. The interview with Myeong Do Lee is in the appendix under
the name Interview with Myeong Do Lee. This interview was also conducted at Alfa Laval
Aalborg’s headquarters in Aalborg, Denmark.
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Confrontation, Respect, and Hierarchy
According to Brett (2001), Danes should be expected to prefer direct confrontation is needed,
because of the individualistic and low-context nature of Danish culture. On the other hand, Koreans
should be indirect in their confrontation approach, in order to save face and preserve harmonious
relationship.
According to Morten Bryde Hansen, this effort to avoid confrontation goes a long way. As he says,
“They are very friendly, even when they are very angry”. In general, he finds Koreans to be very
attentive to formalities, politeness, and respect. Arguably, this sort of behavior is rooted in the
Korean preference for avoiding direct confrontation. Attentiveness to these basic social facets often
serves as a means of means of preserving a un-confrontational environment. Morten Bryde Hansen
adds, “It has to go very wrong before they become angry”, which is in accordance to what Katz
(2007) says about Koreans not taking things personally in negotiations. Morten Bryde Hansen has
in fact never experienced a Korean who lost his temper in a negotiation. From his experience with
negotiating with Koreans he stresses how important it is to “show respective behavior”, showing
that he is very aware of the Korean sensitivity to confrontation, although he as a Dane presumably
prefers direct confrontation if necessary. To him, it seems that Korean society is permeated with
respect. Consequently, it is uncommon for Koreans to engage in confrontational behavior, as this is
seen as disrespectful.
On the issue of confrontation, Lau Diderichsen emphasizes, “Do not give them an upfront ‘no’!”
He advises that one instead uses a phrase like “We will look into that”. The reason for this behavior,
which is certainly a way of circumventing confrontation, is according to him because “Concern for
face is very important”. He adds that this sort of behavior is even more important when a Korean
has colleagues or superiors present, as confrontation in such a situation would harm his sense of
face even more. From his rhetoric, it seems that as a Dane he is very aware of the Korean
preference for non-confrontation, something that suggests that this sort of behavior is not as
common for Danes. He also adds, in regard to how a Dane feels about confrontation, “If you
honestly cannot do what they ask of you, you might as well say it right away, in a nice manner of
course”. Lau Diderichsen also suggests that in case of a deadlock, you schedule a future meeting to
discuss things once again.
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René Fich Jespersen has surprisingly had several encounters with Koreans who were not afraid of
confrontation. “I have had negotiations where Korean lawyers have threatened to hold me
personally responsible if I said something wrong”. His experiences suggest that although Koreans
are in favor of non-confrontation, they will surely engage in direct confrontation if they believe they
are in their right to do so. He does add however, “Compared to anyone, you will not get a Korean to
say ‘no’”. So he too has experienced the Korean preference for indirect confrontation. He is
furthermore very aware of the Danish tendency to be straightforward when negotiating, as he says,
“We say things very directly.” “It can give misunderstandings, but also problems, that we Danes
often come and say things as we think they are”. He has even had concrete experiences where the
Danish direct confrontational behavior resulted in a deadlock that lasted for a whole month in
negotiations with Koreans. The reason for this deadlock was a Danish negotiator who had
inadvertently upset the Korean party by pointing out a mistake that they had made. Referring back
to his experiences with confrontation when negotiating with Koreans, he remarks that if it finally
comes to confrontation, “We know in Korea there is no mercy”.
Myeong Do Lee has observed, that if a Danish colleague say ‘no’ in a negotiation with Koreans
partners, they will often make an effort to continue the negotiation, something they would never do
if he said ‘no’. This behavior could be an expression of Korean businesspeople being aware of the
fact that a Dane is saying ‘no’ because this is perfectly acceptable in his culture.
Respect is connected to hierarchy. Morten Bryde Hansen remarks, “There is much respect for
hierarchy… it is very embedded in their culture, so you need to be aware of that of course ”. In the
way he talks about the importance of hierarchy in Korea, it also become visible that hierarchy is
perhaps not as important in Denmark, which is in accordance with the theory of Hofstede (2010).
René Fich Jespersen concurs, saying, “Their hierarchy is extremely important…. What their title is,
the symbols that surround you, your car…” His reference to status symbols is interesting, as
according to Hofstede (2010) these are frowned upon in Danish culture.
Relationship-Building
Lewicki et al. (2010) proposed that some cultures view the outcomes of negotiation differently, i.e.
as either a deal or a relationship.
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In regards to relationship-building, Morten Bryde Hansen remarks, “In their rhetoric, they
emphasize more than Danish companies how happy they are about working together, how
important your company is for their company, the long-term relationship, and how they are sure
that we will work together for many years.” Lau Diderichsen shares the same view, adding, “My
experience in Korea is that you have to build a relationship to a director or someone like that… and
that will take a number of visits to do”. When asked about how one builds such a relationship, he
says, “Entertainment is a big part of the Korean culture”, and he has found that one needs to
commit to extensive social arrangements outside of the negotiation table. “Without that you will
rarely get very far”, he adds. Lau Diderichsen mentions that he has found it to be very important to
build trust when negotiating with Koreans. He remarks that not having established a relationship
can cause one to lose a deal, “Sometimes, you just do not have the personal relations with the
person in charge or the network, and then you will be too late”. And even when you have
established a relationship, Koreans will still honor other relationships if they value these more so
than yours, as he says, “What will happen is that he will take your offer and show it to the guy who
already has the personal relations and ask if he can match your offer… and then you are out”. Lau
Diderichsen is however fond of the Korean emphasis on relationships, “I like that you establish
these personal relationships with people you do business with, because then you will have some sort
of loyalty bond”. Generally, he does have a caveat for Westerners doing business in Korea, “It is not
a place where you can just come in with the right product and the best price and assume that they
will buy it”, referring to the importance of relationships.
René Fich Jespersen pays attention to ways of strengthening and utilizing personal relationships
with Koreans in negotation, “Then you have to know if you can help him a little bit… on the
personal level… When you concede, you can easily feel if they are grateful for having positive news
to bring back. And this means a lot more to Koreans… compared to Danes”.
Myeong Do Lee underlines the importance of personal relationships when negotiating Koreans,
saying, “Korean people respect relations… Same college, same university. And same home town”.
He remarks that relationship-building is in fact so important, that he at times spends more time
socializing and networking than talking business, “Actually our official work will only take a few
hours”.
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Information Sharing
According to Brett (2001), a high-context culture such as Korea can be expected to share
information indirectly in negotiations. Conversely, a low-context culture such as Denmark prefers a
direct approach to information sharing.
Lau Diderichsen has found Koreans to handle agendas differently than Danes, “To my experience,
they rarely follow a clearly organized agenda, like we are used to doing… We like a structured
angle on things”. He even says, “To us, they can seem a bit unstructured. They think in a different
way than we do”. This suggests that Koreans are indeed a polychronic people, and that this shows in
negotiations. Moreover, it shows that Danes are conversely monochronic. Lau Diderichsen
continues, “I think that Koreans… like to go in many directions at once. And it is important to
focus… and try to boil it down to the essence”. This is however not always easy, and he has
experienced on more than one occasion that he felt like he had a deal, only to find out that his
Korean partners did not think so.
Morten Bryde Hansen has experienced some of the same behavior in his negotiations with
Koreans, saying, In the end, you never really know what is going to happen”.
Myeong Do Lee said about information, “Knowing, is my power and my tool for negotiation”. This
way of thinking illustrates how Koreans emphasize the importance of information in negotiations,
and why they are therefore not likely to share it directly.
Influence
Brett (2001) suggests that individuals from high power distance societies such as Korea emphasize
and derive power from social status when they negotiate. This sort of behavior should be rather
infrequent with Danish negotiators.
René Fich Jespersen is very aware of the role of power when negotiating with Koreans, especially
when negotiating with big companies, “Sometimes, because you are the smallest party… you will
have to concede, because of the power they have qua their size”. On a note back to the importance
of relationships, he adds, “When we refuse to concede, it harms our relationship with that
particular shipyard”. In the toughest of negotiation situations, René Fich Jespersen has experienced
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the Korean emphasis of power first-handedly, “It will be typical for the big Korean shipyards, in
tense cases, that they bring out the big guns and try to pressure you. Really use the power they have
because of their size… They will use everything. Future orders, threats of arbitration… the whole
arsenal…”
Myeong Do Lee has unique insights to the Korean way of using power in negotiations, and he
explains that some of the biggest companies refuse to close deals with anyone but the top
executives of the partner company, “Some of the big companies like Hyundai and Samsung… do not
want to make a final negotiation with the middle leader, they would like to talk to the responsible
leader”. He remarks that the big shipbuilding companies exert their power even to their customers,
“They make a powerful negotiation with the ship-owner as well”. And he can understand why they
do so, “Power means how to make the frame of the negotiation, so it is quite important”. The
significance of power is readily shown in Korean business life as well, by for instance letting people
wait even though you are ready for the scheduled meeting, “He makes us wait for a while… half an
hour. It is a way of taming the seller”. On a final note, Myeong Do Lee explains how there is a
constant search for valuable information to translate into power in negotiations among Koreans, “I
try to find any gap or any mistakes and utilize this for negotiation… and the ship-owner has same
philosophy…”
Reflections
Being a somewhat inexperienced interviewer, I had difficulties with formulating questions that
investigated concrete negotiation techniques and tactics of the interviewees. Overall, a more
structured interview guide with more concrete questions would arguably have improved the range
and usability of responses I received in the interviews. Lastly, transcription and a rigorous coding
scheme of the interviews would have provided a clear-cut data mass for pattern finding. This would
however have required the use of much time, which I did not have at the time of the interviews.
7.
Conclusion
The purpose of this thesis has been to gain insights into how culture affects negotiations between
Danish and Korean businesspeople. Moreover I have tried to investigate how Danish and Korean
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businesspeople experience negotiating with each other, while also examining their respective
negotiation behavior.
In the theoretical framework I found that Brett (2001) has argued that culture affects negotiation
behavior within information sharing, confrontation, interests, and influence. Of Hofstede’s cultural
dimensions, Brett (2001) found that the IDV and PDI dimensions directly affected the negotiation
behavior of individuals. She found the same to be true for Hall’s dimension of high and low
context.
Lewicki et al. (2010) also argued that culture directly influences negotiations, for instance in the
fundamental view of negotiations as either distributive or integrative, and as either a means of
getting a contract or a relationship.
Lewis (2006) and Katz (2007) found that in practice Danes view negotiation as integrative, while
Koreans view it as distributive. Moreover, they found that Danes are reluctant to use deceptive
tactics in negotiations, while Koreans frequently employ these.
I have found in my empirical research that Danes and Koreans do indeed treat confrontation and
information sharing in negotiations differently. From the Danish perspective, I found that Danes are
accustomed to direct communication and confrontation when they negotiate. They are however
aware that such behavior is not the custom in Korea. In Korea, it is important to avoid direct
confrontation unless it absolutely cannot be avoided, and information sharing is rather indirect.
From the Korean perspective, I found that Koreans avoid confrontational behavior in order to avoid
the loss of face, and that relationship-building is paramount in business as well as negotiations.
Koreans notice that Danes are more direct in their overall negotiation approach, but they are
prepared for this and accustomed to it through their international experience. The differences in
confrontation and communication behaviors have however caused problems for Danish
businesspeople in Korea. An example hereof was the concrete experience of one Danish
businessman who observed how taboo behavior resulted in a deadlock in negotiation with a Korean
company. I did however also find that Koreans could engage in aggressive and confrontational
behavior, even though theory predicts that this is rare.
I found that power is essential to the Korean negotiator. Both the Danes and the Korean I
interviewed could tell me much about how vital power is when influencing the other party in Korea.
Not only are Koreans always aware of who is the more powerful player in a negotiation, they will
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actively utilize this in order to make the other party yield. This sort of behavior is likely the result of
a Korean distributive negotiation mindset. I found that Danes are indeed prone to integrative
negotiation behavior, although they can certainly play the distributive game too. That Koreans are
not afraid of using deceptive tactics was also confirmed, and this is something that Danes need to
adapt to.
In conclusion to the problem statement, I found culture to have a direct, significant, and visible
effect on negotiations between Korean and Danish businesspeople. Most notably, Danish
negotiators are overall more direct, confrontational, and short-term oriented than their Korean
counterparts. Korean negotiators also value relationship-building, power, and long-term
commitment to a greater extent than their Danish counterparts. Overall, I found both Korean and
Danish negotiators to be skillful and mindful of cultural differences. And it seems that many Danish
and Korean businesspeople have already established trustful long-term relationships.
Limitations
This thesis has first and foremost been limited by the time available for it. Secondly, much attention
should be drawn to the simplifications of culture. The complexity of culture can hardly be
summarized into quantifiable dimensions, although this is indeed very useful. Also, the validity of
the empirical results is disputable. The case study only included four participants, and only a single
interview was conducted with each participant, which is obviously not enough to generalize Korean
and Danish negotiation behavior. In order to increase validity of the empirical results, more sources
of empirical data should be used. It would also be beneficial to include both qualitative and
quantitative research methods, as discussed next.
Ideas for Future Research
If one were to gain a more nuanced and methodical insight into the effect of cultural differences on
negotiation behavior of Korean and Danish businesspeople, a combination of several qualitative and
quantitative methods would be advisable. Preferably, a researcher should be able to directly observe
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one or more negotiations between Korean and Danish businesspeople, and then thoroughly analyze
these observations. These should then be verified by a quantitative study. A researcher could for
instance perform a survey among Danish and Korean businesspeople asking questions about the
cultural values, priorities, tactics, etc. they prefer. This way one has a chance of obtaining more
certainty about the results, as using different methods will effectively triangulates these.
8.
References
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9.
Appendix
Submitted with the thesis is a USB storage device containing the interview-files:
Interview with Morten Bryde Hansen.m4a
Interview with Lau Diderichsen.m4a
Interview with René Fich Jespersen.m4a
Interview with Myeong Do Lee.m4a
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