CHAPTER 10
International and
Cross-Cultural Negotiation
Statements about culture: agree or disagree?
1. When in Rome, do as the Romans do.
2. Cultural stereotypes are a dangerous thing.
3. Business is business all over the world – cultural
awareness is not that important.
Outline
1. What Makes International Negotiation Different?
2. Conceptualizing Culture and Negotiation.
3. The Influence of Culture on Negotiation. (both the
managerial perspectives and the research
perspectives )
4. Culturally Responsive Negotiation Strategies.
1 What makes IB different?
(see Phatak and Habib’s (1996) model)
Environmental context
Immediate context
•
Political and legal
pluralism
• Relative bargaining
•
International economics
• Levels of conflict
•
Foreign governments and
bureaucracies
• Relationship between
negotiators
•
Instability
• Desired outcomes
•
Ideology
•
Culture
• Immediate
stakeholders
•
External stakeholder
power
Environmental
context
FIGURE 10.1 The contexts of IBs
Immediate
context
Legal pluralism
Political
pluralism
External context
Relative bargaining
power of negotiators and
nature of dependence
Levels of conflict
Immediate stakeholders
underlying potential Negotiation
negotiations
process and
Cultural
outcomes
differences
Currency
Desired
fluctuations and
outcome of
Relationship between
foreign
negotiations
negotiators before and
exchange
during negotiation
Foreign Govt
and
bureaucracy
Ideological differences
Instability and change
1.1 Environmental context
• Political and legal pluralism
Taxes that an organization pays; Labor codes or
standards
Different codes of contract law and standards of
enforcement
Political consideration...
• International economics The exchange value of
international currencies naturally fluctuates
• Foreign governments The extent to the government
regulates industries and organizations.
1.1 Environmental context
• Instability
Lack of resource during business negotiation (paper,
electricity, computers); shortage of other goods and
service (food, reliable transportation, potable water); and
political instability (coups, sudden shifts in government
policy, major currency revaluations )
Salacuse (1988) suggests that negotiators facing unstable
circumstance should include clauses in their contracts that
allow easy cancellation or neutral arbitration, and
consider purchasing insurance policies to guarantee
contract provisions.
Ideology Ideological clashes are manifested at the most
fundamental levels about what is being negotiated.
Culture (see Box 10.1, Cross-cultural negotiations within
the United States, p.277)
Deductive or inductive (Salacuse 1988)?
Substantive or relational frame?
Cultural preference of conflict resolution models
External stakeholders
Inclusive of business associations, labor unions, embassies,
and industry associations, among others, that have an
interest or stake in the outcome of the negotiation.
1.2 Immediate context
• Relative bargaining power
Some contributing factors: The amount of venture
(financial and other investment); The management
control of the project; The special access to markets;
distribution systems or managing government relations.
• Levels of conflict
Conflict/interdependence
Conflict due to ethnicity, identity or geography are more
difficult to resolve.
1.2 Immediate context
Relationship between negotiators
The history of relations (New or old) and the quality of
relationship (good or bad).
Desired outcomes
Some tangible and intangible factors (e.g. the Paris Peace
Talks)
long-term objectives and short long-term objectives
Immediate stakeholders
The negotiators themselves and the people they directly
represent, such as their managers, employers and boards
of directors.
1.3 How do we explain IB outcomes?
• No doubt that simple, one-variable arguments are
vulnerable. (see Mayer,1992)
• e.g. Phatak and Habib’s (1996) model is a good device
for guiding our thinking about IB, significantly,
multiple factors operating in magnitude over time, and
the simultaneous, multiple influences of several factors.
2. Conceptualizing culture and negotiation
Four ways to conceptualize culture in IB:
1. Culture as Learned Behavior
2. Culture as Shared Value
3. Culture as Dialectic
4. Culture in Context
2.1 Culture as Learned Behavior
This approach to understanding the effect of culture
documents the systematic negotiation behavior of
people in different cultures. It concentrates on
creating a catalog of behavior at foreign negotiators
should expect when entering a host culture.
2.2 Culture as Shared Value
Understanding central values and norm and then building
a model for how these norms and values influence
negotiation within that culture.
Geert Hofstede (1980a, 1980b,1989,1991)’s cultural
dimensions in international business:
Individualism/Collectivism; power Distance; career
Success/Quality of Life; Uncertainty Avoidance; e.g.
Negotiators from low uncertainty avoidance cultures are
likely to adapt to quickly changing situations and will be
less uncomfortable when the rules of the negotiation are
ambiguous or shifting.
Shalom Schwartz’s 10 cultural values
He concentrates on identifying motivational goal
underlying cultural values and found 10 values. These
10 values may conflict or be compatible with each other.
He also proposed that the 10 values may be represented in
two bipolar dimensions:
Openness to change/conservatism
self-transcendence/self-enhancement
Figure10.2 Schwartz’s 10 cultural Values, p.288
Self-transcendence
Openness to change
Self-direction
universalism
Benevolence
Simulation
conformity
Hedonism
Tradition
security
Achievement
Conservation
Self-enhancement
Power
2.3 Culture as Dialectic
Janosik (1987) recognizes that all cultures contain
dimensions or tensions that are called dialectics.
Its advantage over the culture-as-shared-values
approach lies in that it can explain variations within
cultures, suggestive of the need to appreciate the
richness of the cultures in which negotiators will be
operating.
2.4 Culture in Context
Tinsley, Brett, Shapiro, and Okumura(2004) proposed
cultural complexity theory in which they suggest that
cultural values will have a direct effect on negotiations
in some circumstances and a moderated effect in others.
The increased complexity of such models ironically
suggests its dwindling usefulness; however, their
strength is in forging a deeper understanding of how
cross-cultural negotiations work and using that
understanding to prepare and engage more effectively in
IB.
3.The Influence of Culture on Negotiation
3.1 The Managerial Perspectives
Table 10.2 summarizes 10 different ways that culture
can influence negotiation. (p.291)
(TBCed)
Table 10.2 Ten Ways That Culture Can Influence
Negotiation(p.291)
Negotiation Factors
Range of Cultural Responses
Contract
Definition of negotiation
Negotiation opportunity
Distributive
Selection of negotiators
Experts
Protocol
Communication
Time sensitivity
Risk propensity
Groups versus individuals
Nature of agreements
Emotionalism
Informal
Relationship
Integrative
Trust associates
Formal
Direct
Indirect
High
Low
High
Low
Collectivism
Specific
High
Individualism
General
Low
3.2 Research Perspectives
A conceptual model of where culture may influence
negotiation has been developed by Jeanne Brett
(2001)(see Figure 10.3, p.295)
His model identifies how the culture of both
negotiators can influence the setting of priorities and
strategies, the identification of the potential for
integrative agreement, and the pattern of interaction
between negotiators.
Figure 10.3 How Culture Affects Negotiation (p.295)
Interests and
priorities
Potential for
Integrative
agreement
Interests
and
priorities
Culture A
negotiator
Type of
agreement
Culture B
negotiator
Strategies
Pattern of
interaction
Strategies
Brett (2001)(see Figure 10.3)
Brett suggests that cultural values should have strong
effect on negotiation interests and priorities, while
cultural norms will influence negotiation strategies
and the pattern of interaction between negotiators will
also be influenced by the psychological processes of
negotiators, and culture has an influence on these
processes.
4. Culturally Responsive Negotiation Strategies
Negotiators should be aware of the effects of cultural
differences on negotiation and to take them into account
when they negotiate.
Stephen Weiss(1994)’s culturally responsive strategies
based on the level of familiarity (low, moderate, high)
that negotiator has with the other party’s culture.
4.1 Low familiarity
Employ Agents or Advisers (Unilateral Strategy)
This relationship may range from having the other
party conduct the negotiations under supervision
(agent) to receiving regular or occasional advice
during the negotiation
Bring in a Mediator (Joint Strategy)
Interpreters will often play this role, providing both
parties with more information than the mere
translation of words. Mediators may encourage one
side or the other to adopt one culture’s approaches or
a third culture approach.
4.2 Moderate Familiarity
Adapt to the Other’s Approach (Unilateral Strategy)
Negotiators make conscious changes in their approach so
that it is more appealing to TOS. Rather than trying to act
like TOS, they maintain a firm grasp on their own
approach but make modification to help relations with
TOS
Coordinate Adjustment (Joint Strategy)
Both parties make mutual adjustments to find a common
process for negotiation, which requires a moderate
amount of knowledge about TOS’s culture and at least
some facility with his or her language.
4.3 High Familiarity
Embrace the Other’s Approach (Unilateral Strategy)
The negotiator, necessarily bilingual and bicultural, adopts
completely the approach of the other negotiator.
Improvise an Approach (Joint Strategy)
Both need to have high familiarity with TOS’ culture and a
strong understanding of the individual characteristics of
TOS.
Effect Symphony (Joint Strategy)
This strategy allows negotiators to create a new approach
that may include aspects of either home culture or adopt
practices from a third culture.
Chapter summary
A growing field of exploring the complexities of IB
Negotiation
• Phatak and Habib(1996)’s model of contributing factors
to IB negotiation: both environmental and immediate
context
• Models of how to understand culture, e.g. Robert
Janosik(1987)’s, and how cultural differences to influence
negotiations: 10 ways from the practitioner perspective
and the effect of culture on negotiation outcomes and
process, negotiator cognition and ethics, and conflict
resolution.
• Stephen Weiss’s 8 different culturally responsive
strategies
Assignment
Reading Task:
Gesteland, R. R. (2002). Cross-Cultural Business Behavior.
Copenhagen: Copenhagen Business School Press. (5e,available)
• Francis, June N.P. When In Rome? The Effects of Cultural
Adaptation On Intercultural Business Negotiations, Journal of
International Business Studies, 1991, V. 22, Iss. 3
•
Tinsley, C. H., Curhan, Jenifer J., Kwak, Ro Sung, Adopting a
Dual Lens Approach for Examining the Dilemma of Differences
in International Business Negotiations, International Negotiation
4: 5–22, 1999.
•
Debate at the course site
“All you got to do is act naturally” VS “When in Rome, do as
Romans do”