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INTERNATIONAL BUSINESS NEGOTIATIONS: A COMPARISON
OF THEORY WITH THE PERCEIVED REALITY OF
AUSTRALIAN PRACTITIONERS
Max Smith
School of Commerce
The Flinders University of South Australia
GPO Box 2100
Adelaide South Australia 5001
Telephone: +61 8 82013897
Facsimile: +61 8 82012644
Email: Max.Smith@flinders.edu.au
SCHOOL OF COMMERCE
RESEARCH PAPER SERIES: 00-9
ISSN: 1441-3906
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Abstract
This exploratory study attempts to compare a number of the international business
negotiation issues identified in the literature with the perceptions of Australian
negotiation practitioners. The findings, although generally supportive of the literature,
indicate that the complexity of the issues addressed is often not captured and, therefore,
further investigation is warranted in a number of areas. Directions for further research to
address apparent weaknesses in the literature are provided.
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Introduction
Many of the issues addressed in this research attempt to elicit culturally specific
characteristics as they relate to international business negotiations. It is recognised that
these characteristics are generalisations that are not applicable to all members of these
communities. This issue was addressed by Mahoney et al (1998), who encountered a
similar dilemma when dealing with Hofstede’s (1980) cultural dimensions. As they put
it: ‘Note that these dimensions do not represent absolutes, but instead reflect tendencies
within cultures. Within any given culture, there are likely to be people at every point on
each dimension’ (Mahoney et al 1998, p. 538). As such, readers of this paper should bear
in mind that it is the tendencies within cultures that are being referred to when culturally
specific issues are raised, not behaviour universally applicable within that culture.
Literature Review
One of the seminal works on negotiating is Fisher and Ury’s (1991) ‘Getting to Yes Negotiating Agreement Without Giving In’. In this book, a product of the Harvard
Negotiation Project, the authors put forward the concept of ‘principled negotiation’,
which is described as a method that allows you to ‘obtain what you are entitled to and
still be decent’ (p. xiv). The authors, therefore, reject the use of tricks or posturing and
tend to advocate the use of win/win or integrative bargaining styles. The book is very
broad in scope, covering all manner of negotiations and attempts to bring a universal
approach to all negotiations. As such, it is not specific to international business
negotiations and is essentially acultural, in that, culturally based differences in
approaches, attitudes and principles that may impact on cross-cultural negotiations are
not considered.
In contrast to this, Salacuse (1998), after a review of the literature and interviews with
practitioners, outlined ‘ten factors in the negotiation process that seem to be influenced
by a person’s culture’ (p. 223). He further proposed that the culturally different
responses would fall on a point on a continuum between two polar extremes. Salacuse’s
ten factors and associated continuum are shown in Table 1.
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TABLE 1
The Impact of Culture on Negotiation
Negotiation Factors
Goal
Attitudes
Personal Styles
Communications
Time Sensitivity
Emotionalism
Agreement Form
Agreement Building
Team Organization
Risk Taking
Range of Cultural Responses
Contract  Relationship
Win/Lose  Win/Win
Informal  Formal
Direct  Indirect
High  Low
High  Low
Specific  General
Bottom Up  Top Down
One Leader  Consensus
High  Low
Source: Salacuse 1998, p. 223
The first factor, Negotiating Goals: Contract or Relationship, relates to the purpose or
intent of the parties to the negotiation. According to a number of authors (Chen 1993;
Martin et al 1999; Phatak & Habib 1996; Salacuse 1998; Stone 1996a) American
business negotiators, in general, have as their primary negotiating aim, the signing of a
contract between the parties. They consider such a contract a binding agreement that
outlines the roles, rights and obligations of each party. In contrast to this, negotiators
from Asian cultures are believed to have a more fluid (as opposed to watertight) view of
contracts and, therefore, place more emphasis on establishing a sustainable business
relationship rather than a contract (Chen 1993; Martin et al 1999; Paik & Tung 1999;
Stone 1996a).
This cultural difference also affects the type of contract desired by negotiators from many
non-Western cultures. Buszynski (1993), for instance, notes that many Asian cultures
eschew the ‘Western tradition of legalism’ and ‘prefer to leave things vague’ (p. 20),
which is reflected in a preference for general, less detailed, contracts. Additionally,
people from these cultures are said to have a cultural expectation that the renegotiation of
an existing contract is reasonable if conditions change or unforseen events affect the
perceived profitability of the venture. These characteristics are associated with both
Chinese (Chen 1993; Kirkbride et al 1991; Melvin 1995; Pye 1992; Stone 1996a) and
Japanese (Kotler et al 1996; March 1995; Mead 1998; Pechter 1992; Phatak & Habib
1996) negotiators, as well as other cultural groups in Asia (Salacuse 1998).
The importance of relationships when negotiating with most cultural groups in Asia is
also outlined by numerous authors (Coll 1996; Kotler et al 1996; Martin et al 1999; Mead
1998; Paik & Tung 1999; Pechter 1992; Slamet 1995). However, the nature of the
relationship receives scant attention. In relation to the People’s Republic of China
(PRC), Mead (1998) outlines the conflicting conclusions of previous scholars. Pye
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(1992), for instance, proposes that the Chinese use notions of friendship developed
during the early stages of the negotiation to gain better terms later on, while Child (1994)
concluded their attempts at friendship may be genuine. In contrast, McGuinness et al
(1991) ‘conclude that the Chinese most frequently evaluate relationships in a utilitarian
manner that reflects the value of the package’ (Mead 1998, p.243). In relation to the
Japanese, Martin et al (1999) outline the various relationship-building functions ‘where
the Japanese executives are making judgements about the others’ integrity, reliability,
commitment and humility’ (p. 67). This also tends to emphasise utility over friendship as
the aim of the relationship building process.
Engholm (1992), dealing more broadly with East-West business relationships, outlines
two possible types of relationships in the region. The first is characterised by formality,
politeness and a need-to-know level of transparency. Although there is a degree of
loyalty between parties, their respective business interests come first. However, as
Engholm (1992) explains:
The second type is a truly personalised relationship that is completely
transparent and is founded on loyalty and reciprocity. Trust between the
partners is never feigned. Few Westerners are party to this type of
relationship with Asian business people, unless they are linked to them
through family relations (p. 11).
The second factor, Win/Lose or Win/Win, is also known as distributive or integrative
bargaining respectively. In the former, the parties to the negotiation see each other’s
goals as incompatible and, therefore, believe one party can only gain at the expense of
the other, thus, putting each party in competition with the other. In the latter case,
however, the parties to the negotiation consider themselves to have compatible goals and,
therefore, assume both parties should stand to gain from the final agreement. They,
therefore, cooperate with each other to devise a mutually beneficial solution.
The latter win/win negotiating attitude is the hallmark of Fisher and Ury’s (1981)
principled negotiation, mentioned earlier, and has become a prominent feature of much
of the negotiation literature derived from the West, even when dealing with negotiators
from other cultures. So much so, that, according to Pechter (1992), ‘the low-key,
nonadversarial, win/win negotiating style’…is…’now regarded as the most effective way
for Americans to do business with people from other cultures’ (p. 46). However, Li and
Labig (1996) disagree with this assertion and argue that, in reality, parties to international
business negotiations, in particular, often ‘have both cooperative and competitive
interests that mandate a mix of both distributive and integrative tactics’ (p. 100). They
further argue that the win-win/win-lose dichotomy should be replaced by a relationship
orientation that recognises and caters for the reality of mixed motives in international
business negotiations.
From a culturally specific perspective, the Chinese are most commonly characterised as
bringing a win/lose attitude to international business negotiations (Dunung 1995;
Kirkbride et al 1991; Stone 1996b). However, Engholm (1992) and English (1996)
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broaden this to include most of the business people of Asia who are familiar with the
military tactics of Sun-Tzu’s Art of War and similar works.
A final consideration in this area is that negotiations themselves may only be appropriate
when searching for a win-win outcome. As Choi and Kelemen (1995) explain:
According to the literature, it is not always best to negotiate in the
international environment. It appears that negotiation is the appropriate
approach to doing business only when relationships are very important, the
value of exchange is high, the commitment is important, the time is
sufficient, the trust level is high and the power distribution is low. When
all of these are low or not important it is better to adopt a take it or leave it
strategy or eventually a bargaining position. Negotiation is preferred for
creating win win solutions in international situations.
(p. 14)
The third factor, Personal Style: Formal or Informal, relates to how negotiators
interact with counterparts at the table. ‘Formal negotiators insist on addressing
counterparts by their titles, avoid personal anecdotes, and refrain from asking questions
that relate to the private life of the other negotiating team’s members. Informal
negotiators, on the other hand, may start discussions on a first name basis, quickly seek
to develop a personal, friendly relationship with the other team, and (if male) may take
off his jacket and roll up his sleeves when deal making begins in earnest’ (Salacuse 1998,
p. 228).
In this regard, negotiators from Germany, Japan, China and Java are considered to have a
formal style of interaction relative to Americans (Kirkbride et al 1991; Kotler et al 1996;
Martin et al 1999; Salacuse 1998; Slamet 1994; Stone 1996a) while Buszynski (1993)
generalises this characteristic to most Asian cultures.
The fourth factor, Communications: Direct or Indirect, relates to the literature’s claims
that people from certain cultures tend to adopt direct and simple methods of
communication (eg, Germans and Americans), while people from other cultures tend to
rely on indirect, more complex, methods (eg, the French and Japanese). ‘In cultures that
rely on indirect communication, such as the Japanese, reaction to proposals may be
gained by interpreting seemingly indefinite comments, gestures, and other signs’
(Salacuse 1998, p. 230). One of the oft mentioned expressions of indirect
communications is the reluctance of most Asians to say ‘no’ directly, particularly the
Japanese, Thais, and Javanese. The notable exception in this regard being the Koreans,
who according to one study, were three times more likely to say ‘no’ as the Japanese
(Kotler et al 1996, p. 902).
The fifth factor, Time Sensitivity: High or Low, relates to cultural differences in
attitudes towards time and the length of time devoted to the negotiation itself. According
to Paik & Tung (1999), based on work carried out by Kirkbride et al (1991) and Redding
(1980), East Asians view time ‘as polychronic, non-linear, repetitive and associated with
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events; Americans, on the other hand, view time as monochronic, sequential, absolute
and prompt’ (p. 111). This view of Americans is supported by Phatak & Habib (1996)
and extended to the Germans by Salacuse (1998).
Most Asian cultures, particularly the Japanese, are renowned for the length of their
negotiations. As one interviewer responded in a recent study - ‘A meeting that might
take three days to conclude in the US will probably take two weeks in Japan’ (Paik &
Tung 1999, p. 111). The reason for this is indirectly culturally based, in that, most Asian
negotiators have a cultural preference to establish a relationship before they begin the
negotiations proper (Buszynski 1993; Kotler et al 1996; Martin et al 1999; Mead 1998;
Slamet 1995). That is, they don’t have a cultural preference for long negotiations, only
for developing a relationship. The resulting effect is exacerbated by the business culture
existing in some countries. The Japanese consensus based decision-making process
(ring-seido) and the Chinese negotiator’s need to report results at each stage to higher
(decision-making) authorities, are cases in point (Paik & Tung 1999, pp. 111-112).
The sixth factor, Emotionalism: High or Low, relates to the differing views between
cultures as to the appropriateness of displaying emotions, as these differing cultural
norms may be brought to the negotiating table. According to Salacuse (1998), ‘Latin
Americans show their emotions at the negotiating table, while Japanese and many other
Asians hide their feelings’ (p. 231). This is supported by Pechter (1992) who outlines an
example of a negotiation where the Japanese party was offended by the other party and
reacted by simply obfuscating and delaying a response, giving no physical indication that
they were upset. Similarly, Chen (1993) explains that the ‘public expression of anger are
considered bad manners in China’ (p. 14), but also outlines how the Chinese may feign
anger to gain concessions. This perhaps explains the ‘emotional, dictatorial style’
encountered by a number of Australian executives operating in China (Blackman 1996,
p. 27) that appears contrary to the Chinese negotiation behaviour and conflict handling
preferences expounded by Kirkbride et al (1991, p. 376).
The seventh factor, Form of Agreement: General or Specific, relates to the culturally
specific preference for the form of written agreement the contract takes. For instance,
Americans are said to ‘prefer detailed contracts that attempt to anticipate all possible
circumstances’ (Salacuse 1998, p. 232), while the Chinese, Japanese, Koreans and other
Asian peoples, such as the Overseas Chinese, prefer a contract in the form of general
principles rather than detailed rules (Chen 1993; March 1995; Martin et al 1999; Mead
1998; Paik & Tung 1999; Stone 1996a). The latter group’s preference, in large part, is
the result of their different view of what a contract is. To them the signing of a contract
is said to signify the beginning of a relationship, the details of which can be further
negotiated post contract.
The eighth factor, Building an Agreement: Bottom Up or Top Down, relates to the
culturally different processes for developing agreements. Negotiators from some cultures
are said to prefer to begin negotiations by establishing general principles that are used as
the framework upon which the contract is built. That is, they prefer a deductive or top
down process. On the other hand, negotiators from other cultures are said to prefer to
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begin negotiations by first dealing with specifics, such as price, quality, and delivery
dates; the sum total of which becomes the contract. That is, they prefer an inductive or
bottom up process. According to the literature, the French, Chinese, Koreans and, to
some extent, the Japanese, prefer a top down process while Americans prefer a bottom up
process (Chen 1993; Kirkbride et al 1991; Paik & Tung 1999; Salacuse 1998).
The ninth factor, Team Organisation: One Leader or Group Consensus, relates to the
culturally specific ways different groups organise themselves and how decisions are
made within the group. At one end of the spectrum a negotiating team may have a
supreme leader who has complete authority to decide all matters, while at the other end,
authority rests with the group and decision-making occurs through consensus. In the
latter case, the negotiating teams tend to be relatively larger than in the former case
because of the greater number of personnel involved in the decision-making process.
According to the literature, Americans have a cultural preference for the one leader/small
group combination, while the Japanese and Mainland Chinese prefer the consensus
decision-making/large team combination. For the Japanese, the decision-making is a
more pure consensus based process than the Mainland Chinese because it revolves
around the concept of nemawashi or group commitment and ring-seido or group
consultation within the firm. In Mainland China, however, a consensus-based process is
necessary because of the number of interested parties, many external to the firm, who are
involved in the final outcome. These may be Provincial and Federal bureaucrats from a
range of different departments, who are often competing with each other or hold varying
levels of power and authority relative to the deal being negotiated (Blackman 1996; Chen
1993; Kotler et al 1996; March 1995; Marten et al 1999; Mead 1998; Paik & Tung 1999;
Salacuse 1998).
The tenth factor, Risk Taking: High or Low, relates to research indicating certain
cultures are more risk averse than others (Hofstede 1980). According to Salacuse (1998),
in this regard, ‘the culture of the negotiators can affect the willingness of one side to take
"risks" in a negotiation - to divulge information, try new approaches, or tolerate
uncertainties in a proposed course of action’ and ‘the Japanese are said to be highly riskaverse in negotiations’ (p. 236). Although inherently logical, this characteristic does not
appear to be widely reported in the literature.
The way concessions are used by different international business negotiators appears to
be another cultural factor that will impact on the negotiation process. According to Mead
(1998), ‘cultures vary in terms of what concessions they might offer, and of what value’
(p. 247). There also appears to be a cultural variance as to when, during the negotiations,
the concessions are offered. For instance, the literature indicates that while American
negotiators tend ‘to make small concessions early to establish a relationship and to keep
the negotiation process moving forward smoothly’ (Phatak & Habib 1996, p. 34), ‘East
Asians prefer to make concessions towards the middle or at the end of the negotiations’
(Paik & Tung 1999, p. 113). These stereotypes are supported by Blackman (1997), Chen
(1993) and Mead (1998) who all apply this characteristic to the Chinese, while Phatak
and Habib (1996) and Martin et al (1999) outline its use by the Japanese.
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Another, apparently culturally specific area related to concessions is the initial starting
price put forward by negotiators. Within the literature, the Chinese are characterised as
setting much higher initial starting prices and positions, than negotiators from other
cultures. Blackman (1997) sees this as part of China’s ‘haggling tradition’. As she
explains, ‘the haggling formula followed is fairly standard. It begins with broad
principles and unrealistic demands, and proceeds with exaggeration of Chinese
compromises and minimisation of those yielded by the opposition…’ (p. 194). In
recognition of this, a number of authors recommend this tactic be reciprocated when
negotiating with the Chinese. That is, ‘play the game’. For instance, Kirkbride et al
(1991) ‘suggest that parties who expect to reach compromise solutions in the bargaining
process will correspondingly give themselves greater room for manoeuvre and movement
by setting higher and more extreme initial demands and offers’ (p. 376).
The apparent Japanese belief that buyers are of much greater importance than
sellers is another cultural factor that will affect negotiations. According to Graham
(1993) ‘Americans have little understanding of the Japanese practice of giving complete
deference to the needs and wishes of buyers’ (p. 128). Mead (1998) outlines how this
deference is expressed in the language used between buyer and seller in Japan, while
Martin et al (1999) explain that the nature of the relationship is similar to that existing
between father and son; with the son equating to the seller and the father equating to the
buyer. Kotler et al (1996) relate the importance of the buyer to the inordinate amount of
time salespeople spend servicing customers in Japan. However, more relevant for
international business negotiations, is March’s (1995) list of distinctive features that
affect negotiations as a consequence of the notion that the buyer or customer is ‘king’ in
Japan. These are:





She expects service and even servility as her right
In major industries, buyers expect to be feted often
The buyer views buying proposals with a cold eye. Enthusiasm on the
part of a professional buyer is virtually un-Japanese behaviour
As a matter of policy, he distrusts salesmanship and is suspicious of
sales claims
When overseas, the Japanese buyer is most likely to trust information
from other Japanese, rather than from local peoples he doesn’t know
(March 1995, p. 4)
The issue of ‘face’ also appears to be an important cultural factor for international
business negotiations, especially in Asia and particularly in China. In fact, in recent
research on commercial negotiations in the PRC ‘the importance of ‘face’ was constantly
mentioned’ (Stone 1996a, p. 137) by the experienced China trade negotiators under
interview. ‘To an American, losing face is embarrassing; to a Chinese losing face is
devastating, the ultimate disgrace. A Chinese will go to almost any length to avoid a loss
of face’ (Coll 1996, p. 480). According to Blackman (1997), ‘face refers to a person’s
reputation, the respect in which he is held by others’ (p. 17) and can impact on business
negotiations in a number of ways.
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‘If the Chinese team has lost interest in the deal, for instance, it will not come out and say
so, but will be so inflexible that the foreign side is forced to withdraw from the
negotiations, thereby enabling the Chinese team to have saved “face”’ (Chen 1993, p.
16). If a foreign negotiator loses his/her temper or contradicts or criticises someone from
the Chinese negotiating team in public, this negotiator will have offended against
Chinese ‘face’ and will almost certainly lose the deal. He/she may even find that other
potential prospects also suddenly lose interest in doing business. ‘Face may also become
an issue in negotiations when the Chinese avoid speaking openly about a sensitive
problem. They deflect the burning issue onto something else’ (Blackman 1997, p. 20).
The resulting indirect communications has the potential to create significant, if not
terminal, misunderstandings.
‘Face’ has a complexity that goes beyond these simple descriptions, however, and as the
following example shows, needs to be understood within the context of the environment
in which the Chinese or Asian parties operate.
Erroneously believing that the Chinese counterpart has equal authority, the
American, after what seems to be a suitable interval, presses for closure on
the deal, or at least for some promise of a positive outcome. Such pressure
places the negotiator in an untenable position because the fate of the deal
is out of his hands. If he makes any promises to the American he will loose
face with his colleagues should higher ups veto the deal. If he does not
respond to the American’s demands he will loose face with the American by
appearing weak and vacillating and the loss will be noted by his
colleagues. The avenue of escape is to refuse further meetings with the
American.
(Coll 1996, p. 480)
A final dimension on ‘face’ is the public context associated with it. Blackman (1997 &
1996) and Buszynski (1993), for instance, talk of preventing the loss of face and of
saving and giving face in public, indicating that different rules may apply in a private
setting. That is, the loss of face or gain of face may only be realised in a public context
and content that may be inappropriate (offends against face) in public may be less so in
private. This contention is consistent with the concept of ‘shame’ orientated cultures
associated with Chinese and other Asian societies. In such societies ‘shame refers to an
interpersonal frame in which behaviour is compared to social norms rather than to
internalized personal standards (as in “guilt” cultures)’ (Kirkbride et al. 1991, p. 369).
Another factor, outlined in the literature, affecting international business negotiations, is
difficulties in identifying the true decision-maker of the other party, especially in
Asia. In some instances, it has been reported that the decision-maker may be concealed
within the team or was subsequently found to be remote from the negotiations (Mead
1998, p. 241; Martin et al 1999, p.68). Engholm (1992), provides an example from a
Sino-Canadian negotiation, where a local Chinese who presented himself as the
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Canadian’s interpreter for the day, turned out to be the city’s ‘leading official from the
Ministry of Foreign Economic Relations and Trade’ (p. 10).
A more instructive passage, that not only indicates the difficulties identifying decisionmakers, but also the complexity of the process in China, comes from Li’s (1988)
Handbook for Chinese Negotiations.
As chief negotiator you must bear the pressure and objectives of the
leading group. This is more troublesome than the pressure of the opposite
negotiator. You must not follow the line of least resistance simply because
the leading group has a particular agenda. When there is a difference of
opinion between the negotiating team and the leadership, it is most
important to gain the support of the intermediate leading group. Once that
is obtained, write a report for the leadership which analyses and weighs all
factors and ask the leadership to write comments on it. When the
leadership sees that your opinion is based on thorough and balanced
analysis, it will, in most circumstances, take it into account.
(In Blackman 1996, p. 25)
The above passage may, in part, explain Blackman’s (1997) recommendation in a later
work to not bother identifying the decision-maker. As she explains, ‘most of the power
brokers will not be present at the negotiations. Trying to identify who in the group is
important and influential and who is not, is not a useful exercise as it is peripheral to the
Chinese decision-making process’ (p. 51).
A large percentage of international negotiation literature is devoted to outlining the
cultural mores and values of the people who live in various non-Western countries. The
implicit message is that Western negotiators should adapt to these countries’ cultural
values. Buszynski (1993), for instance, claims that negotiators ‘should try to identify the
ethnic background of the people one is dealing with and adjust one’s behaviour
accordingly’ (p. 20). Similarly, Blackman’s (1996) research indicates that ‘successful
Australian negotiators acknowledge the Chinese bargaining process and adjust their
behaviour accordingly’ (p. 25). However, very little work has been put forward on how
far a negotiator should try to adapt to the other person’s cultural values when carrying
out international negotiations, even though this would appear to be a question of crucial
importance.
Mead (1998) asks exactly this question and refers to the experimental work carried out by
Francis (1991) that indicated moderate adaptation by Asians in the United States was
more effective than substantial adaptation. He also refers to an example of a culturally
literate American who does not disclose or utilise this (ie, no adaptation) to the Southeast
Asians he is dealing with in order to gain strategic advantage. As such, although the
question is asked, it is not really answered. The experiment, although useful, cannot be
extrapolated to all negotiations, just as the example cannot be generalised. English
(1996) partly addresses this question by arguing against complete adaptation when
negotiating with people from other cultures. As he explains, ‘Asian people do not expect
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or want Australians to perform a pseudo-Asian role play - it results in caricature, and
therefore tends to affront and embarrass. The best approach is to know and meet the
standards of politeness required in the particular Asian setting’ (p. 54).
However, a more sophisticated approach to the appropriate level of adaptation is
presented by Weiss (1994a) who contends that the old adage ‘when in Rome, do as the
Romans do’ is no longer appropriate to international negotiators operating in today’s
global economy. Instead he proposes eight possible culturally responsive strategies, the
choice of which depends on the degree of familiarity the negotiator has with his
counterpart’s culture, and conversely, the degree of familiarity the counterpart has with
the negotiator’s culture. As such, the appropriate level of adaptation, prima facie,
becomes a function of two variables. This is shown graphically in Figure 1.
FIGURE 1
Culturally Responsive Strategies and their Feasibility
High
Induce counterpart to
Follow one’s own script
Counterpart’s
Familiarity
With
Negotiator’s
Culture
Improvise and approach
[Effect Symphony]
Adapt to the counterpart’s script
[Coordinate adjustment of both parties]
Employ agent or adviser
[Involve mediator]
Embrace the
counterpart’s script
Low
Low
Negotiator’s Familiarity with
Counterpart’s Culture
High
[Brackets indicate a joint strategy, which requires deliberate consultation with counterpart. At each level of familiarity,
a negotiator can consider feasible the strategies designated at that level and any lower level]
Source: Weiss 1994a, p. 54
However, Weiss (1994b) recognised that this framework is essentially one-dimensional
in that it only relates to ‘the negotiator’s and counterpart’s familiarity with each other’s
cultures’ (Weiss 1994a, p. 60). This is what Weiss (1994b) calls feasibility. To be
appropriate, the feasible strategy needs to be considered in relation to ‘its fit with the
counterpart’s likely approach and therefore its capacity to lead to coherent interaction, its
appropriateness to the relationship and circumstances at hand, and its acceptability in
light of the manager’s values’ (Weiss 1994b, p. 85).
In light of this added complexity, Weiss (1994b) presents the following five steps for
selecting a culturally responsive strategy (which impacts on the appropriate level of
adaptation).
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1
2
3
4
5
Reflect on your culture’s negotiation script.
Learn the negotiation script of the counterpart’s culture.
Consider the relationship and circumstances.
Predict and influence the counterpart’s approach.
Choose your strategy.
(Weiss 1994b, p. 86)
Weiss (1994b) goes on to outline these steps in considerable detail, even providing a
matrix to determine the degree of complementarity between each party’s strategy.
However, for the purposes of this paper it is sufficient to note that Step 3 brings a number
of other contextual issues into the degree of adaptation appropriate. For instance, buyers
and sellers act differently in the same market, prior relationships will influence a
negotiation and the appropriate level of adaptation, as will the balance of power between
parties. Following Weiss’ (1994a, 1994b) culturally responsive strategies proposal then,
means that the appropriate level of adaptation is a function of the negotiation strategy
adopted, which in turn is a function of the cultural understandings of the negotiators
involved and a number of contextual factors surrounding the negotiation.
Methodology
The research findings presented in this paper are based on twenty in-depth interviews,
typically lasting over an hour, all conducted by the author, with experienced, Australianbased, international business negotiators. All but one of the interviews took place over
the telephone and participants were provided with the research instrument prior to the
interview’s commencement. The interview process was semi-structured in nature and
designed to elicit open-ended responses to each issue. This was considered appropriate
due to the complexity of the negotiating factors, the exploratory nature of the research
and the richness of data necessary to discover and discuss other relevant issues and to
draw out useful examples for the purposes of this study.
The taped recording of interviews were transcribed into Word documents and then
responses to each question were ‘cut and paste’ into stand-alone documents, representing
the cumulative response to each issue. During the analysis of each issue, any passages of
discussion that related to a different question or new issue were tagged and referred to
later when the relevant issue was being analysed. This ensured that relevant data that
inevitably fell outside the structure of the research instrument was still captured for
analysis.
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Participant Profile
All the informants were associated with Export Access, a program jointly sponsored by
the Australian government and industry that is designed to help Australian small to
medium enterprises (SMEs) find a market for their products overseas. Generally known
as Project Managers, the individuals concerned act as consultants to inexperienced SMEs
attempting to access international markets. In most cases, this includes involvement in
the resulting negotiations between the Australian SME and the overseas party. Table 2
provides a summary profile of participants.
TABLE 2
Summary Profile of Participants
Experience
(Years)
Nationalities
Negotiated with
Industries Dealt
with
Type of
Negotiations
Average
16.7
Range
3 to 35
Most Common
International Business Negotiations
6
1 to 54
3-4
1 to 6
Asian, followed by US, European, MiddleEastern, South American and African nations
Mining, agricultural commodities, manufactured
goods
Export Contracts, Joint Ventures, Licensing
Agreements and Distribution Agreements
In addition, the vast majority of the participants come from private industry and have
significant experience in international business and the negotiations inherent to such
work. Of the twenty people interviewed, only two did not indicate relevant nongovernment exposure, and these two, both of whom had come up through the ranks of
Austrade, had either been directly involved in government to government trade
negotiations or had been an involved observer of these and private international trade
negotiations. Also, only three had received any formal training in negotiations and, of
these, one was only a two-day course. Thus, most had relied on mentors and experience
to develop their negotiating expertise.
Results
Negotiating Goals (contract or relationship)
Based on their experience in the region all informants agreed that, in general, Asian
negotiators’ primary focus is to develop a relationship with the other party rather
than to come away from the negotiations with a signed contract. As one informant
put it: ‘From my experience it doesn’t matter how good your product is or how well
15
priced it is, the relationship comes first’. Similarly, all of the eleven informants who
mentioned having dealt with the Americans agreed that, in general, their primary
aim is to obtain a signature on a contract that binds the two parties together in a
deal.
A number of informants proposed that the Asian focus on relationships is a function of
their long-term perspective relative to Western businesses. That is, in general, Asian
businesses were perceived to be looking for longer-term profits and consequently
searched for business partners who were not only trustworthy and honourable, but also
willing to commit themselves for the long-term. Under such a scenario, relationships
obviously become very important. As one informant explained: ‘Asians know if the
people can’t get on, they’re not going to have a long-term business, and that’s what
they’re really looking for’.
Seven informants agreed that the various social exercises associated with relationship
building in Asia were still important. However, two participants commented that
karaoke is becoming rarer, and one of these claimed that the incidence of these events is
often conditional on an existing relationship. That is, invitations to social events and
exchanging of gifts and the like are only likely to occur or be expected after the
relationship has been established, not as a way of initially establishing the relationship.
Additionally, contextual factors such as the size of the company (MNC or SME) and
regional variations also impacted on the response. The issue that received most
consensus in this area, was that of gift-giving. It was generally agreed that this is a
cultural expectation in most of Asia that needs to be handled carefully as a maintenance
mechanism for established relationships.
The nature of the relationships being sought after by Asian negotiators was also a feature
of the discussions. Specifically, are they seeking a genuine personal friendship with a
degree of bonding, affection and perhaps entertainment value, or is it something else or a
combination of both? The fifteen informants who addressed this area considered the
relationship sought after by Asian negotiators to be more about developing trust and
mutual obligation between parties, than about developing mutual affection. This is not to
say that friendship cannot develop, only that it is not a necessary prerequisite to doing
business. It was considered essential, however, that the Asian party not dislike the other
party, in which case the relationship would not last.
Negotiating Attitudes (win/lose or win/win)
This issue did not enjoy the same level of consensus evident in the prior question, as the
responses were inconsistent or in conflict on a number of levels. For instance, five of the
respondents did not believe that the differing approaches negotiators bring to the
negotiation process are culturally based. These informants basically believed that
everybody, regardless of cultural background, would prefer to come out ahead of the
other party in business negotiations and the approach they bring to the negotiations is a
16
factor of either their personality or their relative position of power. As one informant
expressed it:
I think it’s more a case that, if you have power in a negotiating situation,
you’re going to win and the other person is likely to lose out a bit. Still win
in the sense that they get the contract, but not so much to the extent that they
wish to win perhaps, but I don’t think Americans or Australians go into a
negotiation going - well, I want the other person to get a good deal too. I
mean I’m sorry, I just don’t buy that.
Of the fifteen who did believe that negotiating attitudes were culturally based, there was
little consensus on which attitude was applicable to the various cultural groups. For
example, while three informants believed US negotiators generally bring an integrative
bargaining (win/win) approach to the negotiation table, six others disagreed, instead
expressing the view that American negotiators generally bring a distributive bargaining
(win/lose) approach to negotiations. One of the informants in the latter camp explained
that, in his experience, while American negotiators promote a win/win scenario on the
surface, they are, in fact, after a win/lose result. They do this by providing a ‘sales pitch’
that highlights how much the other side will benefit from the deal without explaining
how much they themselves stand to gain. Experiences with the Overseas Chinese was
also apparently mixed with three informants believing they bring a win/lose attitude to
the negotiations while another four contended they have a win/win attitude.
Specific responses to the Japanese were very thin. One informant believed that they
bring a win/lose approach to negotiations, but that this might depend on the nature of the
negotiations. Specifically, whether the agreement being sought relates to a one-off
transaction or an ongoing association. On the other hand, another informant who has
spent considerable time in Japan, believed the Japanese definitely do not have a win/lose
attitude. A third informant presented a more complex, middle of the road, position.
The Japanese tend to have a mixture of win/lose - win/win in that they are
much more honourable in negotiation, because they genuinely want a longterm relationship. So in that sense it’s win/win. But in the sense of pricing
it’s win/lose. They want to win, and they want the supplier to lose. But in
terms of negotiating or longevity of the contract or the arrangement, they’re
really looking for a win/win situation.
For the Mainland Chinese, however, there was a degree of consensus. Of the fifteen
remaining informants, eleven believed the Mainland Chinese brought a win/lose attitude
to the negotiating table. Although one of these believed this attitude could be
ameliorated over time…’they may start tough, but after a period of time, even their
toughness is up for negotiation.’ No one claimed the Mainland Chinese bring a win/win
attitude to negotiations. A possible explanation for this apparent attitude was proffered
by one informant who contended Mainland China’s years of isolation has left its business
culture in a ‘timewarp’. He has apparently experienced similar attitudes among business
17
people from other nations who have recently joined the global community such as South
Africa and Cuba.
Negotiators Personal Styles (formal or informal)
Responses from informants to this issue generally support the literature. Only one
informant did not believe that Asians, in general, have a more formal style and although a
few informants noted that Americans could be formal throughout negotiations, the eight
informants who discussed US negotiators agreed that, in general, they have a very
informal style. As one informant noted: ‘I find Americans very very informal in their
approach and joking about and generally loud with a slap here and a slap there and a big
bang on the table and all those things. They try and create a very cordial atmosphere,
which is totally the opposite in what you’ll find in Asian cultures’.
The exception mentioned above could well relate to the frame of reference used to rank
Asian negotiators. While most of the informants appeared to compare Asian negotiators
with Australian or US negotiators, this informant may have used European negotiators,
those he found most formal, as his frame of reference. As he explained: ‘The Japanese
are fairly formal for the first couple of meetings till they get to know you, and I think the
Europeans are very formal, and most probably that formality lasts a little bit longer than
with another culture’.
Within Asia, the Japanese were consistently rated the most formal, followed by the
Mainland Chinese. In addition, two interesting variations arose out of the discussion.
One was that although the Chinese were considered to generally be formal negotiators,
they still began negotiations in a manner consistent with an informal negotiator. ‘The
first half an hour will be the first discussion which is basically about family and friends,
children, all that sort of thing, which is really ice-breaking and developing a relationship,
but relatively informal, but they still call [you] by [your] surnames.’
The other issue came from informants experienced in Southeast Asia, who, although
expressing the view that negotiators from this region are generally more formal than
Australian or US negotiators, also noted that the business dress code is more relaxed in
this part of Asia relative to countries such as Japan.
Places like the Philippines, no, it’s more informal. Indonesia, Malaysia,
during the hotter months a suit and tie, you can do away with the tie and
the coat and just have your pants and the white shirt. It can be short
sleeved.
This contention however, should perhaps be tempered by another theme raised by a
number of informants. That is, that the initial stages of negotiations will be very formal
no matter where you are. Accordingly, a formal dress code would appear universally
appropriate for the start of negotiations and the subsequent move to a less formal basis
will be dependent on the cues emanating from the other party.
18
It always goes down better if you can, at least in the initial stages, retain a
fairly high degree of formality; even with Americans. Americans tend to be
far more relaxed than anyone else. But right throughout Europe and Asia,
and even in India, and places like even Bangladesh. If you go in there with a
suit and tie it sort of holds a certain amount of respect.
Communications (direct or indirect)
The response from informants to this issue exhibited a relatively high degree of
consensus that essentially supports the literature. Of the twenty informants interviewed,
seventeen had experienced some form of indirect communications in their dealings with
negotiators from Asia. Two of the remaining informants provided ambiguous responses
while the final informant claimed not to have encountered such a phenomenon. The
latter speculated that this might relate to the level of relationship developed between the
two parties.
Among those who had encountered ‘indirect’ communications during their business
negotiations in Asia, the Japanese were mentioned most frequently and generally ranked
the highest users of this method. According to the informants’ experience, negotiators
from other nations in the region are generally less indirect than the Japanese, but still
much more indirect than the average American or German negotiator. Besides Japan,
informants had encountered this communication style in the Philippines, Thailand,
Malaysia, Indonesia, India, China, Singapore and Hong Kong. Negotiators from the
relatively Westernised states of Singapore and Hong Kong were perceived as generally
more direct than their Southeast Asian neighbours.
Most informants cited numerous examples of Asian negotiators’ indirect
communications. An instructive passage that illustrates the oft mentioned Asian
reluctance to say ‘no’ came from one informant who was trying to arrange a visit for her
clients to a number of executive chefs in Singapore, two weeks before Chinese New
Year.
The critical question was: Is this an appropriate time for us to visit? The
answer came back: Well, it is less than ideal, but acceptable. That really
worried me. It really worried me because it just does not sound right. What
she was really saying was ‘no’. That’s what she was saying, but she said:
Less than ideal, but we can manage or something to that effect. This really
concerned me so I then made other enquiries through other sources and
what I found out was that all the executive chefs all take one or two weeks
off just before Chinese New Year because the Chinese New Year is so busy
for them. It’s their only chance of getting a bit of a break. Now what she
should have said was: No, this is an unacceptable time because the people
you want to see will not be here. But she said: It’s less than ideal.
19
Two unsolicited themes that emerged out of the responses in relation to Asian indirect
communications were : 1. the perception that culture was responsible for the indirect
style and 2. the importance of correctly interpreting body language when dealing with
this style. Six informants expressed the view that the indirect communications style is a
function of the communication style prevalent within the societies these negotiators come
from and relates to the issue of ‘face’ and a preferred avoidance of conflict. As one
informant noted:
I think that it’s not so much a negotiating tactic as an in-built cultural
phenomena or cultural way that they do things in that they’ve always been
brought up to be sort of indirect and to not cause offence by sort of saying
‘no’ or upsetting people.
Finally, nine of the respondents referred to the increased emphasis that needs to be
applied to body language or non-verbal behaviour when dealing with indirect
communicators. Indicative of the response is the following passage:
Yes, body language is something that’s important. I’ve experienced what I
thought was going to be a very positive outcome but I haven’t read the body
language properly. And it’s all yes, yes, yes, I can see that this product will
fit into this market, and yes, I can see that money can be made out of this,
but what they’re not saying is: It’s not for me. And you’ve really got to
read that in a lot of Asian cultures, I guess even with the Arabs too.
Sensitivity to Time (meeting deadlines)
The wide variation in experience with different countries meant that the individual
country responses to this issue were often small in number. Having said that, there was
consensus of significant numbers for a handful of countries. The cultural stereotypes of
the Germans and Latin Americans, were supported. The six informants who had dealt
with the Germans agreed they were very punctual, while the four who had dealt with
Latin Americans agreed they were rarely, if ever, on time. Other nations to enjoy a
consensus were the Japanese (7), Americans (2), and Taiwanese (2), who were all
considered punctual, while the Indonesians (6), Indians (3), and Filipinos (2) were all
considered quite the opposite. The Malaysians were also ranked with the latter group by
six informants, however one informant sub-ranked them between the Singaporeans and
Indonesians. The Singaporeans themselves received a mixed response with four
informants claiming they were punctual, while two others claimed otherwise. Perhaps
surprisingly, the Mainland Chinese did not feature strongly in the responses. One
informant claimed that they were very good, while another ranked them between the
Japanese and Malaysians.
20
Time Devoted to Negotiations
In general, the responses to this issue supported the literature. For instance, of the twenty
informants, fifteen indicated the Japanese were generally slow negotiators. Of the five
remaining informants, three did not mention the Japanese because they hadn’t dealt with
them; another, who had lived and worked in Japan, had experienced both slow and fast
negotiations with the Japanese and the final informant indicated the stereotype was out of
date. That is, he believed the differences outlined in the literature were probably
appropriate 20 years ago, inferring there has been a degree of convergence since then.
Three main reasons were outlined for this apparent slowness of the Japanese. One was
the need for relationship building mentioned earlier. Another was the organisational
decision-making process of Japanese firms. Finally, and related to this, was the Japanese
insistence on copious amounts of detail. In addition, however, three informants referred
to the use of deliberate delays as a tactical tool to extract concessions and one other
informant believed the non-Japanese side’s lack of understanding of the Japanese side’s
perspective contributes to the slowness of negotiations.
Of the ten informants who mentioned the Americans, nine agreed that they were
generally quick to negotiate. However, one other informant (supported by two others in
relation to negotiations in general) believed that the issue is contextual not cultural. That
is, it depends on the type of deal being made. ‘All deals take a different amount of time
to negotiate.’ Furthermore, his experience was that for most items, negotiations with
Americans are as long as anyone else.
The remaining countries covered by informants included most of Southeast Asia, China
and the Arab states, all of who were classified as slow negotiators. These nationalities
however, were not considered as slow as the Japanese and the primary reason for their
slowness was the necessity to develop relationships. Unlike the Japanese, the decisionmaking process was not considered protracted in these countries and no mention was
made of requests for excessive amounts of detail. Indicative of this is the following
response:
In Southeast Asia, in general, it’s not so much the length of the time of the
negotiation itself, but the fact that you seldom do a deal in one negotiation
session. An Australian company doing business in Southeast Asia, the first
visit is really just to meet you. If you’re serious, you come back a second
time, which means you really want to do business. Often it will take three
visits, three lots of negotiations, before you actually get the deal done.
Emotionalism (high or low)
The responses to this issue were very supportive of the literature in relation to the
Japanese and other Asian negotiators. Seventeen of the twenty informants agreed that
these negotiators generally hide their feelings during negotiations and the vast majority
21
had never encountered emotional displays of any sort from Asian negotiators. Of the
remaining three informants, one had experienced Mainland Chinese walking out of a
negotiation in anger, another did not mention Asian negotiators, while the response from
the remaining informant was too ambiguous to be useful.
A theme that emerged from discussions was that these negotiators do become emotional
under certain circumstances, they just don’t display these emotions in public. In a private
setting, the degree of emotionalism encountered by these informants was much higher.
One informant who, in the past, led an Australian delegation in government to
government negotiations with a major Asian nation provided a demonstrative example of
this. The Australian translator, while explaining to the Asian delegation how to invest in
Australia, misrepresented a number of words. So instead of providing a translation to the
delegation that would be interpreted as: they would need to go to a local Australian
Embassy or Trade Commission office and would need to do this and would need to do
that; he/she provided a translation that was interpreted as must do this and must do that.
After the meeting, the … Vice Minister came over to me and spoke in perfect
English and told me that the … Vice Minister does not appreciate being told
what he must do by a translator…and that the [Asians] didn’t appreciate
being told they must do this and they must do that. But this guy showed no
anger or anything at the table, but afterwards, outside privately with me,
and in perfect English, he said this is not good enough.
The responses relating to non-Asian countries were also generally supportive of the
literature, but not numerically significant. Latin Americans were considered more likely
to show emotions at the negotiating table by one informant as were Indians and Arabs.
Two informants also put Mediterraneans into this category.
Form of Agreement (general or specific)
The response from informants to this issue generally supported the literature. Fifteen
informants claimed to have experienced the Asian preference for more general contracts
and only one informant claimed he had never come across it. Of the remaining four, one
believed she did not have sufficient experience to comment, while the other three talked
about countries outside of Asia. The following quote, from an informant who worked for
a Japanese company for some time, illustrates the differing perspective towards written
agreements many Asian companies apparently have, relative to the West:
It’s definitely true. I’ve seen it quite a number of times now. We used to
have our own inhouse lawyer at the Japanese company where I was, and he
and I, well actually I, even made up some agreements in some cases and the
lawyer would ratify those, and we’d go to the Japanese, sometimes even our
own parent company based in Tokyo, with the agreement for them to sign-off
on. And they would say: Do we, do we really need this? Do we really need
all this stuff, you know this is ridiculous. All we’re talking about here is this
22
and this you know. Why can’t we just have, you know, something simple?
And it would often go from a complex and fairly concise document to
something along the lines of an MOU, which was much more general, much
sort of broader in terms of providing a general overview. A general scope
for discussion, as a paper, sort of thing, not a legal document. So they really
do not like these complex, precise documents that lock them in. And I think
that the Western idea [of] anticipating every circumstance in a legal
document puts them at a bit of a disadvantage as well, because it reduces the
avenues for negotiation later on. It locks them in at the beginning when you
know from that point on they might discover other information or something
else might change that could allow them to negotiate something else. It’s
rather like a living-breathing thing that goes on like a relationship.
This passage is also of value because its latter section brings up two of the related themes
that emerged from the responses. The first of these is the issue of renegotiation of a
signed contract. Eight mentioned this issue during discussions, explaining how they had
encountered a different attitude to what a contract meant in Asia, relative to the West.
Instead of being a fixed unchangeable standing agreement, a contract in Asia was said to
be considered relatively flexible and is more a symbolic recognition of the relationship
that has been established rather than a legal document. The second theme relates to the
relationship building process mentioned earlier. A number of informants linked the
relatively greater emphasis on relationships to the relatively smaller emphasis on legal
issues. Almost as if one is a substitute for the other. This highlights another
characteristic mentioned by six participants, that being, Asians’ general aversion to
litigation. In this regard, Asian companies in general were said to resort to the courts as
an absolute last resort, much preferring to sort out disputes in-house, if at all possible.
The responses also provided support for the contention that Americans ‘prefer detailed
contracts that attempt to anticipate all possible circumstances’. Twelve of the informants
claimed they had experienced this preference while two others claimed they had not,
even though they had had some dealings with the Americans. The following passage
from an informant who was previously employed by a large US multi-national
corporation while it was attempting to establish a joint venture in Japan is useful to the
former position:
If you look at a Japanese contract, it will be one page, whereas, an
American contract will be fifty pages. It was very clear because they would
fly out their lawyers from St Louis regularly to go over the detail of these
contracts and the number of changes that would go on. The Americans most
certainly detail all possible contingencies.
Building an Agreement (bottom-up or top-down)
Responses to this question provided limited support for the theory presented in the
literature. Although five informants agreed that American negotiators generally prefer a
23
bottom-up process, six other informants believed there is no culturally specific
preferences and that the process adopted is either contextual, individually based or a
combination of both. Furthermore, the experience of five informants was that the
negotiating processes they had encountered were not mutually exclusive according to the
top-down/bottom-up dichotomy. Instead, most negotiating processes were a combination
of both. In addition, three of the responses were ambiguous in that they were basically
acultural in nature.
Team Organisation (one leader or group consensus)
This issue attracted a degree of consensus from respondents that generally supports the
literature. In general, informants had experienced relatively large Japanese negotiating
teams (8) and a consensus based decision-making process within these companies (10).
However, a number of informants were quick to point out that this does not mean they do
not have a supreme leader. The inference being that the consensus decision-making style
should not be interpreted as a completely democratic process. The following passage
from an informant who spent a number of years in Japan working for a Japanese
company provides a useful insight into the operation of the consensus decision-making
system:
For the most part, it is true that a lot of [Japanese] companies do work on
the “everyone’s got to agree and let’s talk it over with twenty people
before we make a decision [principle]”. The only misleading fact about
that though, is that often [with] consensus decision-making, people think
that everyone actually gets to say what the decision is going to be, and
that’s actually not true. Often there’s essentially a decision that’s been
made by [say] a section leader…He thinks it’s a good idea, but it will go
around everybody, but everybody knows that he thinks it’s a good idea
and they’re going to agree with it because he thinks it’s a good idea…It’s
consensus decision-making, but there is a certain element there of
someone taking the leadership. It’s just not acknowledged as taking
leadership.
The five informants who had experience with Mainland Chinese negotiating teams,
predominantly State Owned Enterprises (SOEs), indicated that the Chinese tended to
have large numbers on the opposite side of the table. However, there generally was a
visible leader or ‘boss’ amongst the team members. This though, did not necessarily
mean he had final say on all decisions. It may well be necessary for him to seek higher
authority or final approval from someone else not party to the negotiations. In other
cases, it was reported, the person with top authority may be present at the negotiations
but not disclose his presence until the deal is all but done, acting the silent observer prior
to that. The Mainland Chinese decision-making process experienced by informants was,
therefore, more authoritarian than that encountered with the Japanese, even though there
appeared to be a degree of consensus type discussion carried out between a number of
interested Chinese parties.
24
Informants’ experience with Overseas Chinese businesses was different again. The size
of the negotiating team was generally considered to be much smaller than the Japanese or
Mainland Chinese (6). As one informant explained, the Overseas ‘Chinese would only
have maybe a director, financial person, [and] technical person. They don’t take people
off from work to do other things.’ In addition, the decision-making process, although
similar to the Mainland Chinese, was differentiated in degree due to the structural
characteristics associated with most Overseas Chinese firms. The patriarchal nature of
these firms meant that the ultimate decision-maker was readily identified as the owner of
the business, even though, in a typical situation, the owner’s son may be leading the
negotiations. Given that the interested parties to the negotiation are generally less than in
the Mainland Chinese SOE situation, the consensus based discussion was generally
confined to immediate family members with the patriarch giving final assent or
otherwise. Accordingly, the experience outlined by informants indicates that the degree
of consensus based discussion is generally less than that experienced with Mainland
Chinese negotiation teams and the relative autonomy of the ultimate decision-maker is
higher.
There was no dissension to the majority view on the characteristics of various
nationalities’ negotiating teams and decision-making process, save one. This informant
believed these characteristics were dependent on company structure rather than the
culture of the company’s employees. That is, the issue should be regarded as contextual
rather than cultural. Such a contention may well be worth further investigation.
Risk Taking (high or low)
The response from informants to this issue provided a degree of consensus punctuated by
some notable exceptions. Eleven informants considered the Japanese to have a relatively
high level of aversion to risk and three reported a similar aversion from the Mainland
Chinese. Seven believed the Overseas Chinese were less risk averse than the Japanese
and were willing to take a calculated risk if the returns were high enough. Three
informants believed Americans were the least risk averse of all the preceding
nationalities.
In the Japanese case, three other informants dissented, expressing the view that the
perceived conservatism of the Japanese was in fact just that, a perception, and the reality
was something else. One of them explained that the strict adherence to specifications by
the Japanese is often misinterpreted as conservatism. Another informant expressed the
view that the Japanese are simply more thorough in working to eliminate as much risk as
possible. The final dissenter (for want of a better word) believed that Japanese history
argues against the case for them being risk averse. Her argument was essentially that the
Japanese need a reason to take risks or try new approaches before going down that path.
Once convinced of the benefits of going in a certain direction, they will take on the risk
associated with this course of action.
25
Waiting until the Eleventh Hour to Extract Concessions
Of the twenty informants responding to this question, fifteen had experienced this
phenomenon during cross-cultural negotiations, three had not and two were not sure or
did not know. Eleven informants claimed they had experienced it with the Japanese, three
with the Mainland Chinese, two with the Arabs and three with Asians in general. Seven
also mentioned having experienced it with the Overseas Chinese, however, another
informant claimed this group did not behave this way. Of those who had experienced it,
the following quote is typical of the response:
I think again, with Asians we don’t see what’s going on behind scenes. I
think they will be quite actively discussing an arrangement prior to the
deadline. But in terms of you getting communications from them and things
like that, yes it is rather the death knock. And I think what they try and do is,
even if it’s subconsciously, is try to panic you into making a decision in
terms of whatever you’ll ask them. I have experienced those sorts of
situations.
Having said this, three of the informants were not sure the phenomenon was consciously
used as a tactic. Two of these postulated that the phenomenon may arise due to
organisational issues and problems generating consensus rather than result from some
premeditated plan. In contrast to this, three others believed this phenomenon is a tactic
that is utilised by everyone and is, therefore, not culturally specific, ‘just good
negotiating’. It is also worth noting here that of the three informants who had never
experienced this phenomenon or tactic, one explained that this was due to the fact that he
‘never ever set deadlines for conclusion of negotiations’. This appears to be an important
point, closely related to the counter-tactic suggested or utilised by informants who had
encountered this phenomenon in the past. A common theme in this regard, consistent
with the literature, was to avoid disclosing schedule details and departure plans to the
opposite negotiating team. One informant even claimed to have misrepresented his
departure date so that the negotiations were actually carried out faster than he had
originally scheduled.
Initial Starting Price
Informant’s responses to this question brought a relatively high degree of consensus that
essentially supports the literature. Seventeen of the twenty had definitely experienced
Chinese negotiators bringing a very high initial starting price to business negotiations.
Of the three remaining, one informant’s response was ambiguous towards the Chinese,
another claimed ‘he couldn’t answer that’, while the final informant had not encountered
such behaviour from the Chinese.
26
The experience of the seventeen informants indicates that the mainland Chinese were
generally more likely to adopt this tactic than Overseas Chinese, although some notable
exceptions were cited. Three respondents experienced with Arab negotiators also
indicated they had a preference for putting forward a high initial starting point relative to
Western negotiators. One informant had also experienced this with Indian negotiators.
In contrast to this, four informants believed the Japanese did not start with a relatively
high initial starting price and no informant related having experienced anything to the
contrary.
A common theme that arose out of the discussions was that the nationalities who adopt
this approach are those that have a ‘haggling tradition’ within their societies. Thus, the
Chinese, Arabs, and Indians, whose daily purchases often involve price bargaining, will
be more likely to utilise this approach than the Japanese who generally shop within a
fixed price environment, much like Australia. Within haggling societies a cultural
expectation of price flexibility appears to be prevalent and a degree of enjoyment can be
associated with the haggling process.
We tend to be very direct in terms of this is the best we can do, whereas, in
Asia, they probably allow a margin for negotiation because they like
bargaining, that’s part of the culture, to bargain. You don’t get a good deal
if you don’t bargain. And you’d find Asians, or particularly I know some
Indian friends who come here, they sometimes don’t enjoy shopping because
you can’t bargain.
The cultural expectation of price flexibility can have serious consequences for companies
from non-haggling societies who do not understand or recognise this expectation. As one
informant explained:
I’ve seen relationships collapse straight away from Australian companies
that have not been aware that the prices put forward by the Chinese have
been open for negotiation and, therefore, the Australians have said ‘no’ on
their first period of communication and the thing’s just stopped. They
haven’t invited themselves into the negotiation. They basically said: No, we
can’t do it, end of story, and therefore, the Asians have said: Okay, they’re
not even interested in negotiating.
Not surprisingly, the solution advocated by the majority of informants is to ‘play the
game’. As one informant explained:
I tell people: In my experience you are going to have to drop the prices two
or three times, so you’ve got to start high as well, in just about anywhere in
Asia, so that you’ve got a point to negotiate down [from] because part of the
negotiation is the bargaining. And if you come in at your bottom price and
say this is my only price, this is my best price and we can’t go any lower,
you don’t have their respect to start with and they don’t feel they’ve got an
advantage by negotiating with you. It might be a terrific price but they don’t
27
feel they’ve achieved their objective of getting a better deal if they can’t get
you to lower that price.
Buyer More Important than Seller in Japan
The response from informants to this issue was basically polarised providing little
consensus to support or reject the literature. Of the twenty informants, eight claimed
they had encountered a stronger attitude of buyer importance from the Japanese, while
another eight claimed they had not. The remaining informants believed they did not have
the necessary experience to comment. Of those who believed they had not encountered a
stronger attitude from the Japanese, the majority (6) claimed the buyer was in a superior
position no matter where you operated. That is, this attitude is universal rather than
culturally specific and in their experience the Japanese did not hold this attitude any
stronger than anyone else did. ‘He who holds the chequebook is king’ and it doesn’t
matter if the chequebook is Japanese or Mexican.
Of those who supported the literature, the following quote is representative of their
comments:
Yes. This is definitely true. I actually say to Australians that are going over
to Japan that they’ve got to remember that they’re not in a position of
power. That, as far as the Japanese are concerned, they’re the ones with
power. They’re the ones that are doing the favour, if you like, to the
Australian company, by buying their product.
Interestingly, there was not even consensus on this issue among the informants who had
lived and worked in Japan for some time. Although two of these had views very much in
accordance with the above quote, another of these expressed the view that the relative
hierarchical ranking of the companies involved in the negotiations determines who is in
the superior position during these negotiations.
The Importance of ‘Face’
The responses to this issue generally provided support for the literature. Seventeen
informants claimed ‘face’ was very important when negotiating in Asia, the response
from two others was ambiguous, as they didn’t adequately address this part of the
question, while the final respondent did not have enough experience to confidently
answer the question. No one considered face an unimportant issue when carrying out
cross-cultural negotiations. Having said this, two of the seventeen informants who
believed ‘face’ is very important, also believed it is just as important here in Australia.
That is, they didn’t see any significant difference in the level of importance between
Asians and Australians. They did however, see cultural differences in what issues ‘gave
face’ or caused one to ‘lose face’. ‘They call it "face", we call it embarrassment. Certain
things trigger it differently.’
28
Among the informants who believed ‘face’ is more important in Asia than in Australia, a
number outlined instances of how causing the other party to ‘lose face’ can be terminal to
the negotiations. Australians, in general, were believed to view actions that cause them
offence less seriously than their Asian counterparts. When asked about ‘face’ in Asia,
one informant responded:
Well, I think it’s absolutely essential in Asia. I think we’ve got a bit of it in
us ourselves here in Australia because if we were doing a deal and I said: I
don’t like you or something, you wouldn’t deal with me. But we don’t use
that word. We haven’t singled that out as a characteristic of the human
being. But that’s an important thing in business. Whereas, I think the
Asians have. The Asians don’t want to embarrass you at all, and I’m going
back because they don’t like the conflict. But to us, I can embarrass you
today, punch you in the nose, but we’ll shake hands tomorrow and say sorry
and then have another beer the next day. I think that situation is impossible
in Asia, and that’s across all those Asian cultures.
A number of important supplementary themes emerged out of discussions on this
question. Most of them relating to the communication of contentious issues that have the
potential to cause the other party to ‘lose face’. For example, how is non-performance or
incompetence communicated between parties? The common response to this sub-issue
was that such matters should be dealt with in private. The consensus of those who dealt
with this issue (10) was that while it is generally not advisable to broach issues that may
cause someone in the other party to lose face in public, it is usually possible to do so in a
one-to-one situation without the presence of peers, juniors or senior staff. Thus, the issue
of ‘face’ has a contextual aspect, in that, the communication mechanism considered
necessary and appropriate in the public arena may be less so in a private setting. Another
example of this public/private dichotomy, also related to face, is the differing forms of
address appropriate in these two environments. A number of informants reported
addressing their opposite party as Mr… when in public, as a sign of respect, even though
they simply used his/her given name when in private.
Finally, the style of communicating such information was also considered important. For
example, a number of informants mentioned the necessity for an escape clause to be
provided for the other party. For example: ‘It was partially my fault because I…’
Another recommended approach is not to emphasise who was at fault and instead focus
on solving the problem together.
We say: You’re wrong! You did this and that was the wrong thing to do.
Well you can’t really say that to the Asians. You’ve got to say: We have a
problem. Share the risk, share the problem. We need to work out a
resolution to this.
29
Difficulties Identifying the True Decision Maker
The responses to this issue were essentially polarised. Ten informants claimed they had
not knowingly been in negotiations where they didn’t know who the decision-maker was,
nine claimed they had, and one claimed that, at least in Japan and Korea, there is no
single decision-maker, therefore, the identify of ‘the decision-maker’ is irrelevant, if not
impossible to determine.
The fact that the first group was able to identify the decision-maker of the other party
should not be interpreted as having been freely provided with the information. This was
rarely the case and informants were forced to utilise their skills and experience to
determine who was the key person in the other party.
Reading non-verbal
communications was considered important here. For instance, with the Chinese, ‘when
they introduce, they always introduce the head person first. And it’s very much a
pecking order of where people are and where people sit, depending on who the decisionmakers are, who the important people are, and they all sort of look up to that person’.
The older people present at these negotiations were considered prime suspects by a
number of informants and social functions were considered excellent venues to discover
this information. ‘When you’re out they [the other party] relax just like everyone else. If
you’re at a function, that’s when you ask and that’s when you find out [who the real
decision-maker is].’
In many cases, informants from the first group conceded that the decision-maker was not
present at negotiations, however, this did not mean they did not know who the decisionmaker was. ‘I’ve been at negotiations where the key person hasn’t been on the other
side, but you always know that.’ This occurred most often with the Japanese and the
Overseas Chinese. In the former case, Japanese business culture apparently leads
Japanese firms to provide relatively junior managers at initial negotiations, while in the
latter case, the fact that number one son or another family member can speak fluent
English, dictates that they will negotiate on behalf of the patriarch, who besides being
owner of the company, generally has relatively poorer English language skills.
Another facility to help identify decision-makers put forward by one informant is the prenegotiation introduction. As he put it:
In just about all Asian communities you have to be introduced…So by the
time you get to a negotiating point of view you’ve had at least one meeting.
You know who you’re talking to. You don’t sort of rock-up for negotiations
first up, never seen this guy before in my life, want to sell him two container
loads worth of lobster. So there’s been some sort of introduction, some sort
of prelim before the negotiation starts.
Of the responses from the second group, that is, those that have had difficulty identifying
the decision-maker, the following passage is instructive:
30
[With the mainland] Chinese, you’ve got one person in charge. I’ve found
this with the state owned companies. He’s the ultimate decision-maker.
What might happen in a meeting, you might be there for forty minutes and he
may not say a word. He’ll let the others do the talking and you’ll have
fourteen people scribbling down notes, but then towards the end of it he’ll
say a couple of words or ask a few questions, and then bang, that meeting
will be finished. So I think he’s just basically observing and he’s taught
them to ask the questions and he just listens and takes it all in and at the end
of it throws his questions in.
Cultural Sensitivity (How far to adapt)
This question generated a high degree of consensus from informants. All informants
believed it is appropriate to show some degree of cultural sensitivity when carrying out
cross-cultural international business negotiations, the central theme being, not to cause
serious offence. From a seller’s perspective, the consequences of offending through
cultural insensitivity are generally lost sales. Informants outlined a number of examples
of businesspeople, with high quality products, losing the deal because they weren’t
willing to provide the level of respect considered appropriate by members of the other
party, particularly the Japanese. That is, they lost the deal because of the person rather
than the product.
There was also a high degree of consensus apparent in the responses to the issue in one
area of how far it is appropriate to adapt. All of the eighteen informants who directly
responded to this aspect of the issue, indicated that it is not necessary, or indeed
appropriate, to be culturally subservient when carrying out international business
negotiations. That is, although when in Rome, it may be appropriate to do as the Romans
do; this does not mean you should try to become Roman. In fact, a number of informants
believed that not only is it not necessary to adapt fully to the other party’s cultural mores,
but also that doing so may put the Australian party at a disadvantage.
If you try and go too far down the track of trying to adapt to their way,
you’re losing what our advantage is in terms of negotiation. So you’ve got
to be aware of the different cultural characteristics of different people
you’re negotiating. You’ve got to do your homework. But if you try so hard
that you don’t offend in every way, you’re at a disadvantage because you’re
not thinking only of how to do business.
Although informants, perhaps understandably, were not able to be specific on how far it
is appropriate to adapt…it’s more an art than a science...and…it would be different from
circumstance to circumstance and individual to individual...some general guidelines did
emerge. Firstly, and most obviously, it is important not to offend the other party. This
apparently involves more than just avoiding culturally offensive actions such as using
your left hand to eat with in many Arab countries. It also involves preserving face and
31
demonstrating respect for the other party.
politeness and good manners.
The latter involving a high degree of
The second guideline to emerge was ‘be yourself’. That is, don’t try to completely
emulate the other party culturally…’I think the most important thing is that you still be
yourself, but with respect to the way other people live.’ The rationale behind this
contention, supported by a number of informants, is that the other party want to
understand what type of person you are, as an Australian…’Reading all
these...academic…books about don’t do this and don’t do that, it’s absolutely rubbish,
because what they want to see, especially in Asia, is who are you. That’s what they’re
trying to find out.’
Two other themes to emerge from the discussion that impact on the level of adaptation
were the relative position of power between the two parties and the issues of
convergence. In the former case a clear distinction was drawn between the buyer and
seller. The buyer was considered to generally be in a superior position to the seller and,
therefore, able to dispense with the necessity to adapt to the other party’s culture,
although they generally will adapt to some degree…’If we’re the buyer, follow my rules.
If we’re the seller, okay you’ve got to give ground’…and…’the buyer’s the one with the
cheque book, so they’re the one’s at the end of the day who are going to call the shots.’
However, informants expressed a different view in situations where a relatively equal
balance of power exists between the two parties, such as joint venture or distribution
agreements. In this case, it was considered appropriate that each party should be
adapting equally with the other.
Cross-cultural negotiations, as far as I’m concerned, is two cultures meeting
halfway. No one is subservient to the other one’s culture, which comes down
to your face.
and
There’s no rules in international negotiation that says, we as Australians,
throw our culture out the window. I believe there is a halfway point and if
you’re going to have a relationship developing with a company they should
also have the ability to respect some of your traditions. Eventually,
sometimes during the course of a negotiation, I get to tell them: If I have
another meal I’m going to scream.
The issue of convergence is dealt with at the end of this paper. Suffice to say, however,
convergence, as it relates to the level of cultural sensitivity adopted, is an important issue
because it deals with the growing awareness of business people from disparate cultures of
the behavioural norms of others.
There is a certain level of civility or behaviour, which is becoming pretty
common I’d say across every nationality these days. Yes, there’s an
understanding from the Japanese and Chinese, the Malays, whatever, that
32
we have different ways of behaving to them. And there’s a certain
acceptance, or compromise if you like, that we’re not going to do everything
the way that they would do it.
A final theme to emerge from discussions on this issue is that ‘when in Rome’ was
considered a two-way street by many informants. That is, it was considered appropriate
that visiting negotiators adapt to Australian business cultural practices rather than expect
the same environment they are familiar with at home…’I think one of the reasons they
come out here is to experience part of the Australian culture and so as long as we’re not
offensive to those people or any person, then we can be as Australian as we like.’
A number of the informants who addressed this issue also outlined examples of cultural
adaptation by visiting Asians. As one of them pointed out, the majority of these visitors
will speak English. Therefore, they’ve already made a massive step, they’ve moved out
of their language into yours. Another related how negotiations carried out here in
Australia were noticeably less formal than those carried out in Japan, even though they
were dealing with the same people. In fact, another informant who previously worked
for a Japanese company in Japan, had provided schooling for Japanese who were due to
visit Australia, on what to expect when they got here and how best to operate in this
environment.
Other Negotiating Styles or Tactics
The majority of informants could not think of any other tactics or styles peculiar to a
specific nationality or cultural group that they had not already mentioned. Having said
this, one informant outlined the importance of relationship building in Central America
where apparently shared after-hours entertainment is also important to success. Another
outlined the unnecessary use of translators by many Asian negotiators as a tactic to gain
thinking-time and to surreptitiously eavesdrop on the other party’s in-house
conversations. While another referred to the Japanese tactic of using silences during
negotiations to draw out additional responses and information from the other side. The
first point is more a style or negotiating characteristic rather than a tactic, and relates to
the first discussion issue of the paper. The latter two points, however, would appear to
fall into the tactics category as they seem to be attempts to gain some sort of advantage
over the other party.
Different Answers in a Dispute Situation
Informant’s responses to this issue were divided, approximately evenly, into three forms.
Those who believed their approach to the negotiations would be much the same in a
dispute situation (8), those who believed it would be different (6), and those who didn’t
know or were ambiguous in their discussion (6). Representative of those in the first
group is the following quote from an informant who claimed that the resolution of
disputes builds relationships because:
33
In a respectful way you’ve explained why you’re standing on your dig and
that you’re not prepared to move, and they themselves too, they believe in
the same way that they’re right. And when you start to dissect the whole
thing down, I’ve never gone to litigation because no one wins in litigation.
But when you sit down and rationalise, get rid of all the emotion out of the
thing and rationalise, you can actually come to a point where maybe I was
sixty percent responsible, he was forty percent, so an amount was paid that
satisfies both.
In contrast to this, the following passage is probably typical of those who believed their
approach would be different:
In dispute resolution, negotiations would take a different approach.
Dishonesty and scepticism are immediately put up as a barrier on the basis
of the only outcome that can be resolved is a win-lose. When there is a
dispute we all tend to think there’s going to be a win-lose or a lose-win.
There can’t be a win-win.
Convergence of Negotiating Styles
Informant’s responses to this issue revealed a high degree of consensus. Seventeen
informants claimed to have noticed convergence of negotiating styles during their period
of involvement in international business negotiations. The majority of these (12)
mentioned the younger generation as the catalyst for change, while a significant number
(6) also mentioned the effects of globalisation and the relative degree of convergence as a
contributing factor. The younger generation referred to were generally considered to be
well educated, often at an overseas institution and, therefore, had significantly greater
exposure to the workings of Western societies than their parents. They also generally
possessed much greater English language skills. Having said this, it was also noted that
although this generation adopted a more Western style of negotiating, they still retained
much of their cultural heritage and could not be said to be Western type negotiators. The
following passages are representative of the responses:
[There has been convergence] especially where the management is new,
young. There you would find a bit of a mix and it will look a lot more
familiar. But inherently you’ll find some aspects of them still that they
haven’t changed because of their cultural background…So culturally they
are still very strong but you would find a level of Western negotiation styles
now creeping in.
and
You’ve got a lot of Asians; for example, trained in Australia or who go to the
States or go to America. They’re much more on side with the country they
34
study in and it does help sales with that country if they finish up in business.
And the cultural convergence, I think, is more than any other way
[enhanced] if they study overseas.
An interesting response from one informant, relative to the younger generation of Asian
negotiators, is that this new generation sometimes utilise both styles depending on what
works best in any given situation. Their exposure to the West has, therefore, provided
them with additional skills rather than a simple tendency to conform to Western norms.
Sometimes it’s an ambush. Straight up. If I had their repertoire I’d be using
it too. And some of them do it very, very, well and they’ll change their
horses halfway through.
The awareness aspect of this contention is supported by one of the informants who had
not noticed a convergence in styles. Instead, this informant had noticed an increased
awareness of other nationality’s styles. As he explained:
What I’d say is a greater understanding of where people are coming from
across the board. But I don’t know there’s necessarily a convergence in
negotiation styles. People still negotiate the way they negotiate. I haven’t
noticed Chinese becoming any more direct, for instance.
Of the remaining informants, one believed she had not been involved in international
negotiations long enough to comment, while the other had not noticed any convergence
during his four years of experience.
Discussion
Although the Asian preference for a relationship over a contract was supported by the
results, the cultural basis of this preference was questioned by those informants who
linked relationship building to a long-term business perspective. If their assertion is
valid, the relationship preference would appear to have contextual factors associated with
it that add complexity to the simple cultural orientation argument portrayed in the
literature. For instance, the appropriate depth of a relationship between two contracting
parties would presumably vary significantly if the parties were negotiating a one-off sale
of goods compared to a distribution agreement. In the latter case, the long-term
commitment associated with the agreement and the difficulties that would be encountered
changing distributors if things go wrong, mean that a good working relationship is
essential. One astute informant proposed that in the former case only a salesman is
needed, while in the latter, a marketer is called for. As he put it:
‘No matter who you are, if it’s just a commodity to fill an order at this
time, the relationship’s not part of it. It’s basically quality, price and
capacity to deliver’.
35
However, in the latter case:
‘You set a marketing approach where you do build a relationship because
you have to be doubly sure from your point of view that you’re appointing
the right distributor’.
Although they approach the issue from different angles, this proposition is consistent
with Choi and Kelemen’s (1995) contention on when it is appropriate to negotiate.
The responses from informants were also generally supportive of Engholm’s (1992)
description of the first type of relationship sought after by Asian negotiators, in which
business comes first and the level of transparency is on a need-to-know basis. The
implication of this is that relationship strategies that demonstrate a level of cultural
rapport and communicate and reinforce an image of dependability and trustworthiness
are superior to those that attempt to primarily foster friendship and affection. Although
the latter may come in time, it would appear this is not the prime focus of the Asian
relationship building process. Instead, this process appears to be more a means to gain
the information necessary to assess the ‘business-worthiness’ of a potential long-term
partner and to provide reassurance on the status and commitment of each party once the
relationship has been established. According to informants, an important part of the
reinforcement of the post-established relationship is the practice of gift giving. At initial
meetings then, relationship building and the social events inherent in the process help
provide the necessary background information needed to assess each other and build
mutual trust. While subsequent meetings maintain and enhance the trust that has already
been developed.
The responses to the issue of Negotiating Attitude (win/lose or win/win) are generally
supportive of the literature relative to the Mainland Chinese who, as outlined earlier, are
said to have a tendency to bring a win/lose or distributive bargaining attitude to
negotiations. As Pye (1992) noted while carrying out a study on business negotiations in
the Peoples Republic of China (PRC):
Businessmen were generally of the opinion that the Chinese believe
someone is always a loser in extensive horse-trading. Repeatedly they told
of their difficulties in convincing the Chinese that the quids and quos would
actually balance out, and that both parties would benefit equally from the
agreement. They found the Chinese highly suspicious that they were being
outwitted and they seemed comfortable only when their own benefits were
manifestly great.
(Pye 1992, p. 81)
This has significant implications for foreign negotiators doing business in Mainland
China, particularly those brought up in the ‘win-win school’ of negotiations. Developing
strategies to deal with such an attitude may involve a change of assumptions and a level
of preparation substantially higher than that necessary for negotiations elsewhere.
36
For other nationalities, there was no consensus on culturally based characteristics. There
was no support, for instance, for the American use of the win/win, integrative bargaining
practice advocated by Fisher & Ury (1991) that Pechter (1992) claims has become the
norm. In fact, of those dealing with US negotiators, twice as many believed they were
more likely to bring a win/lose attitude to negotiations than those who believed they
would bring a win/win attitude. The reported observations about US and Japanese
negotiators, may, however, be consistent with the approach advocated by Li & Labig
(1996) who argue that the reality of international business negotiations is that a mix of
distributive and integrative tactics is often appropriate and that relationship building can
maintain positive relationships even under distributive bargaining circumstances. This is
also consistent with Graham’s (1993) findings, whose laboratory simulations
demonstrated that not only did Japanese ‘buyers’ achieve the highest individual profits of
any nationality through their negotiations, but also that the joint profits of both the
Japanese buyer and seller was the highest and the individual profits of the Japanese seller
was among the highest. That is, even though they negotiated “harder”, ‘Japanese buyers
apparently “took care of” their respective sellers’ (Graham 1993, p.125).
Responses to Negotiators Personal Styles (formal or informal); Communications (direct
or indirect); Sensitivity to Time (meeting deadlines); Time Devoted to Negotiations;
Emotionalism (high or low); Form of Agreement (general or specific); Risk Taking (high
or low) were essentially consistent with the literature. However, an interesting theme that
arose from analysis of the responses was that in many cases it was possible to rank Asian
negotiators by country or cultural background. For instance, on the issue of
Communications (direct or indirect), although Asians, in general, were considered to be
more indirect than Americans; within Asia, the degree of divergence from the Americans
varies among nations. The Japanese were considered the most indirect, followed by the
Mainland Chinese and then Southeast Asians, except for Singaporeans and Hong Kong
Chinese who were considered the least indirect. This pattern seemed to hold for a
number of the issues mentioned above and can be related to Graham’s (1993)
experimental work. In his study, Graham (1993) found significant differences between
the Japanese, Koreans, Chinese and Taiwanese in terms of their use of facial gazing,
silent periods and the words “yes” and “no” during negotiations; and it was the Japanese
who were furthermost away from the usage levels observed of negotiators from the
United States.
Informants’ responses also indicate organisational culture, rather than underlying culture,
is responsible for the slowness of negotiations with the Japanese and Mainland Chinese
relative to other nationalities in the region. According to informants, besides the
necessity for relationship building common in the region, negotiations with the Japanese
and Mainland Chinese are slowed down by organisational issues, such as, firm structure
and their respective consensus based decision-making styles of management. If these
observations are valid, then for most of Asia, once the relationship has been established,
further business dealings should be relatively expedient. However, in the case of the
Japanese and Mainland Chinese, this is likely to be less so, due to their differing
organisational culture. This is not to say that once a relationship is established it will
look after itself. It was apparent from responses from a number of informants that
37
relationships need to be nurtured, maintained and reinforced. That is, they should be
viewed as intangible assets of significant value to the company. If the above contention
is valid, then any changes to the organisational culture of these respective countries that
bring them more in line with Western management structures and systems, should be
accompanied by a reduction in the time necessary to complete negotiations.
Although the team organisation and decision-making processes in various Asian
countries, as described by informants, was consistent with the literature; the contention by
one of the informants that the noted characteristics were dependent on structure rather
than culture may well need further consideration. The differences between the Overseas
Chinese and Mainland Chinese on this issue, for instance, would appear to be more
structurally based than cultural. Although the structure of a firm is no doubt influenced
by the prevailing culture of it’s operatives, it is also influenced by a host of environmental
factors that may necessitate doing things differently. Thus, it may well be that
environmental factors, rather than cultural factors, have greater impact on this issue.
The culturally specific stereotypes presented in the literature relating to the issue of how
an agreement is built, bottom-up or top-down, were not supported by responses from
informants. Given that the responses were either polarised or mixed, the usefulness of
responses is limited. Having said this, the fact that the majority of informants did not
believe the ‘building an agreement’ issue was culturally specific in nature or that the
dichotomy presented (ie, bottom-up or top-down) was accurate, tends to question the
validity of the literature in this area.
The responses to the issues: ‘waiting till the eleventh hour to extract concessions’ and the
importance of ‘face’ were essentially consistent with the literature. Responses to the latter
and other issues such as ‘emotionalism’, were also consistent with the contextual aspects
associated with ‘face’ noted in Blackman’s (1997 & 1996) and Buszynski’s (1993) work.
That is, there was support for a public versus private dichotomy, where what cannot be
said or expressed in an emotional way in public, due to the effects it may have on
someone’s ‘face’, may be able to be dealt with in a private setting. Thus, the
public/private context of negotiations and discussion in Asia would appear to be
extremely important. This in turn supports the wisdom of engaging in after hour’s social
functions. Not only can it be used for building or reinforcing the relationship and
obtaining information, it can also be the venue for dealing with difficult issues that may
have face-losing implications if raised in public. On the other hand, positive issues that
have face-giving potential should be raised in public, as they would provide little benefit
to the recipient if delivered in a private setting.
Informants’ responses to the issue of ‘high initial starting price’ were also consistent with
the literature. That is, the Chinese and others from societies with a ‘haggling tradition’
were observed to generally put forward a very high initial price or position and the
necessity to ‘play the game’ was supported. However, the obvious dilemma associated
with this strategy is that a company’s initial quote may appear uncompetitive relative to
another company who is not ‘playing the game’. This may mean the initial company is
discarded as a viable option before they have the opportunity to negotiate. In response to
this, a number of informants outlined how research can solve this dilemma. By finding
38
out what competitors are offering initially, a company can keep itself in the ‘hunt’. Not
simply in terms of price, but also in terms of quality, delivery terms and the numerous
other variables that go into a ‘deal’. This means that research also needs to be directed at
the buyer organisation itself so that the seller can ‘find out where they are coming from’.
That is, identify the non-price-related issues and address these so that the buyer will want
a closer look at you. A number of other informants believed that everyone, except new
players, will ‘play the game’ and that these new players will find negotiations extremely
difficult because ‘at the end of the day, they’re never going to accept his first price’.
Thus, negotiations will be tense, the new player will be considered inflexible by his/her
Chinese counterpart, and the relationship necessary for success will not develop.
Although there may be some validity to these assertions, it is important to note that as
with most cultural issues, their universal applicability within a cultural group is unlikely
and contextual issues often play an important role in proceedings (Mahoney et al 1998,
p.538). The following passage is a good example of a company who ‘played the game’
and lost because of it. When asked about the dilemma of ‘playing the game’ one
informant replied as follows:
That is a possibility and I know of one Australian company who lost about a
hundred million ringgit contract in Malaysia because of that. They were
told in the pre-tender briefing that it would be first and final bids, but they
were in with a Japanese group and the Japanese group stressed to them this
is just what they say to every tender opening. Really, the tender price is
where we start negotiating from, so your tender price has got to be high
enough to allow you negotiating space below it. So the Australian company
went in with that and found that they were undercut largely by an American
company that got the contract. They went back and said: ‘Hey, but we can
do better than the American company by five million dollars’. And they were
told: ‘No, no, we said first and final bids and that’s it…we told you that at
the briefing’. The Australian company said: ‘Oh, but that’s what everyone
says in the briefings in Malaysia, but it’s not true’. In this case it was. So
you can be caught.
Accurately determining when and when not to ‘play the game’ would, therefore, appear to
be a vitally important task for the international business negotiator.
Although the ‘buyer being more important than the seller in Japan’ characteristic was not
supported by the responses, this may be a result of inherent differences between
Australian and American international business negotiators’ perspective on this issue. It
may well be, for instance, that Australian’s (in general) already give a relatively high
degree of deference to buyers and, therefore, view this as a universal norm. Such a
contention may be supported by Graham’s (1993) research. Using laboratory simulations,
Graham (1993) provides empirical support for the contention that Japanese sellers give
the highest level of deference to buyers. However, he also discovered that ‘rank and the
associated deference given buyers is also important (albeit not as important) in South
Korea, Hong Kong, the United Kingdom, English-speaking Canada, and Mexico’
39
(Graham 1993, p. 128). In fact, the figures determined for the United Kingdom in this
regard are nearly five times higher than those of the United States. Given Australia’s
historical background, it is reasonable to postulate that Australia may be closer to the
United Kingdom and English-speaking Canada in this regard, than to the United States.
Although the responses to the issue of difficulties identifying the true decision-maker
were essentially polarised, they do, in fact, support Mead’s (1998) contention in this area.
This is the case, because even those informants who have always been able to identify
the true decision-maker, whether present at the negotiations or not, had to work much
harder to do so than they would in most Western business environments. Therefore,
even in their experience, it was indeed difficult to identify the true decision-maker.
Interestingly, one informant did support Blackman’s (1997) recommendation not to
bother attempting to identify the decision-maker as, in his experience, there is no single
overriding decision-maker. However, instead of China, as in Blackman’s (1997) case,
this informant was referring to Japan and South Korea. Once again, there may well be
structural and contextual issues, rather than cultural issues at play here. For instance, for
those situations where the other party has a relatively large number of interested parties
associated with the negotiation, be it because of the nature of the deal itself or because of
the structure of the company, it may well be impossible to identify the one true decisionmaker. However, if the situation was reversed, for example, a simple buyer/seller
transaction with a small Overseas Chinese firm, then the one true decision-maker would,
in all likelihood, exist and be possible to identify (even though he/she may be absent
from the negotiations).
The responses from informants as to ‘how far it is appropriate to adapt’ during
international business negotiations were generally supportive of the limited literature
available on this issue. The guidelines of being culturally sensitive enough to behave in
a way that wont offend the other party, while at the same time ‘being yourself’, are
consistent with English’s (1996) recommendations. Similarly, the recognition that
contextual issues, such as, the relative position of power between the two parties, will
affect the appropriate degree of adaptation is consistent with Weiss’ (1994b) framework.
Having said this, informants’ responses did not indicate that the more sophisticated
aspects of Weiss’ (1994a, 1994b) framework are considered when deciding on the
appropriate level of adaptation. For instance, each party’s relative familiarity with each
other’s culture did not appear to be a basis for a decision on this issue. However, it is
possible that some of these factors are considered inherently by informants without
recognition of such, in line with the claim that the determination of the appropriate level
of adaptation is ‘more an art than a science’.
An unsolicited issue that emerged from informants’ responses was the importance of
status in Asia. Status was mentioned in relation to a number of issues. For example, it
was mentioned in relation to ‘buyer more important than the seller in Japan’, where it was
postulated that the position of power goes to the company with higher status. It was also
mentioned in relation to the importance of ‘face’, where gaining ‘face’ was linked to the
relative position in Asian society an individual will occupy. Again, it was mentioned in
relation to relationship building, where some informants contended that a significant part
40
of the information being sought by the Asian team is related to ascertaining where the
company fits, within its industry hierarchy. In fact, one informant claimed that
Australia’s relatively low status in the international business world means that
‘Australians have to be twice as good as anyone else at [demonstrating our competence]
because we’ve got no reputation’. Interestingly, the latter situation was reported to be in
stark contrast to the situation facing many American companies. Informants reported a
number of instances where American negotiators, even as sellers in Japan, carried out
negotiations with very little adaptation apparent, as if they held the position of power.
Apparently, the Americans ‘get away with it’ due to their country’s overall size and
importance in the region. That is, their apparent status gives them a position of power,
even when they are selling.
Status is also reputedly important at the personal level, therefore, increasing its
significance during the relationship building process.
Asians want to know so much more about you so that they see where you fit
in and whether you fit with them in terms of your background…[that’s why
they] ask so many more questions that you would never ask another
Australian…Once they know the answers they don’t ask anymore. But they
really need to fit you into the Australian social scale…They’ve got this real
need to know at the beginning of a relationship.
The Japanese use of periods of silence during negotiations, mentioned in the ‘other
negotiating styles or tactics’ section, was perceived by the informants who put this issue
forward, as a tactic to draw out additional responses and information from the other side.
This is consistent with Graham’s (1993) laboratory research in this area. During a
simulation between two Japanese negotiators, the negotiator given the role of ‘buyer’
remained silent for long periods of time after a certain price was put forward by the
seller. When questioned about the incident during a video playback, he responded:
‘That price satisfied me, so I just say okay… but I try to get more high
profit. I was thinking, silence rather than shaking hands.’
(Graham 1993, p. 132)
Furthermore, of the ten cultures investigated, only the Russians used silent periods more
often than the Japanese, leading Graham (1993) to conclude that for the Japanese, ‘silence
was used consciously as a bargaining tactic’ (Graham 1993, p. 133).
Finally, the convergence of negotiating styles appears to be both a reality and an issue of
considerable importance. Although a number of informants felt international
negotiations were made easier by the increased understanding between negotiating parties
that convergence induces, it is interesting to note that most informants also mentioned
that the underlying cultural characteristics of each party will still remain. This is
consistent with the two components of culture described by Ball & McCulloch (1999),
namely, ‘surface culture (fads, styles, food, etc) and deep culture (attitudes, beliefs,
values)’. Given that ‘less than 15 percent of a region’s culture is visible’ (Ball &
41
McCulloch 1999, p. 258), it may well be that the degree of cultural change associated
with convergence is cosmetic. This would mean that although the procedures for
carrying out negotiations may converge, the underlying logic and tactics associated with
a particular culture will remain in place.
Limitations of the Study
As would be expected with most exploratory studies, the results outlined are only
indicative of what appears to be the case; they should not be interpreted as a definitive
description of reality or a prescription on how to carry out international business
negotiations. The sample size (N=20), although adequate for an exploratory study,
provides obvious limitations to the ability to generalise the findings. In addition,
although the informants would appear to be eminently qualified for this research, most
had extensive experience or expertise with only a few nationalities or cultures.
Generally, they may have dealt with a large number of other nationalities, but their main
focus or cultural expertise lay with only a limited number of countries. As such, it could
be argued that in many cases, an informant’s response was more valid in some areas than
others. A weighting system that recognised the area of expertise of each informant may
have ameliorated this problem. Finally, it is again worth noting that the cultural
characteristics and stereotypes presented here are only observed tendencies within a
cultural group, not the universal behaviour of members within that cultural group.
Directions for Further Research
As mentioned, the small sample size and exploratory nature of this research militate
against conclusive findings. Having said this, although there was no consensus-based
repudiation of any of the issues addressed, the responses, nevertheless, appear to question
the validity of the ‘building an agreement (bottom-up or top-down)’ dichotomy. They
also indicate that many of the issues, as presented in the literature, although not incorrect,
may not be addressed adequately enough to explain the real complexity of the situation.
That is, only part of the story is being told. As such, in order to gain a more
comprehensive understanding of the issues addressed, the findings indicate that further
research may be warranted in the areas listed in Table 4.
42
TABLE 4
Summary of Directions for Further Research
Investigate
or Validate
Investigate
Research Issue
Contextual aspects of Asian relationship
preference. Is the relationship preference a
function of the depth of business sought?
Justification
Cultural assumptions may be
challenged. The appropriate
approach may be a function of the
type of business transaction.
Validate
Nature of the relationship sought is utility
Affects the most appropriate
based, albeit at a personal level.
relationship strategy to adopt.
Validate
Integrative negotiating attitude is not
May challenge appropriateness
prevalent with US and Japanese
and value of a purely integrative
international business negotiators.
bargaining approach.
Investigate
Negotiating attitudes of other nationalities. Help determine whether Li &
Are they distributive, integrative or a
Labig’s (1996) simultaneous
combination of both?
attitude contention is valid.
Validate and Ranking of Asian nations in relation to
May provide a frame of reference
investigate
their relative distance from the US on
for international negotiations in
business negotiating factors/issues.
Asia.
Investigate
The role of organisational culture in
Convergence of organisational
slowing down negotiations in Japan and
cultures may lead to faster
China.
negotiations.
Investigate
Contextual aspects of the team organisation Cultural assumptions may be
and decision-making processes in Asia.
challenged.
Validate
The agreement building process (bottom up Not supported by study.
or top down)
Validate and The public versus private context of ‘face’
Greater understanding provides
investigate
for more effective
in ‘shame’ cultures.
communications.
Investigate
‘Playing the game’ when dealing with high Bad judgement either way can
initial starting positions of negotiators from lead to a loss of business.
haggling traditions.
Validate and Buyer/Seller relationships in regard to
Greater understanding provides
investigate
status and expected deference across
for more effective negotiation
nationalities. Use Graham’s (1993) model strategies.
on additional countries?
Investigate
Important area of negotiations not
Test Weiss’ (1994) framework as a
adequately dealt with in the
decision tool on ‘how far to adapt’ during
literature.
international negotiations.
Validate
The importance of status, at all levels
Findings may affect the type of
(national, industry, personal), in Asian
information communicated to the
cultures. Is it more important in some
Asian party during the
cultures than in others?
relationship-building phase.
Investigate
Apparent status afforded to American
May be an important comparative
43
Investigate
negotiators.
Depth of convergence of negotiation styles.
Are they deep and long lasting or only
cosmetic?
negotiating advantage?
Will affect assumptions and
strategies appropriate to the
negotiations.
Given the importance of international business negotiations in today’s, and tomorrow’s,
international trade and investment environment, it is likely the greater understanding
resulting from investigations into the issues listed above will be valuable to academics
and practitioners alike.
44
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