TUNGHAI UNIVERSITYDepartment of International Business - Taichung

International andCross-Cultural Negotiation

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What Makes International Negotiations Different?

Two overall contexts have an influence on international negotiations:– Environmental context

• Includes environmental forces that neither negotiator controls that influence the negotiation

– Immediate context• Includes factors over which negotiators appear to

have some control

Environmental Context

• Political and legal– taxes, labor law

• International economics

– Currency• Foreign

governments and bureaucracies

– regulation

• Instability– Power, supply, revolts

• Ideology– Freedom, democracy

• Culture– values

• External stakeholders

– Govt., community, assoc.

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Factors that make international negotiations more challenging than domestic negotiations include:

Non Controllable

Immediate Context

“Factors over which the negotiators have influence and some measure of control”

– Relative bargaining power (equity)– Relationship between negotiators– Desired outcomes (goals)– Immediate stakeholders (who)

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More Controllable

How Do We Explain International Negotiation

Outcomes?International negotiations can be much

more complicated

– The challenge is to:1. Understand the multiple influences of several

factors that drive cultural behavior2. Update this understanding regularly as

circumstances change

We are going to look at these influences today...

What is Culture?

• Class Comments…

• “Culture is a set of shared and enduring meanings, values, and beliefs that characterize national, ethnic, and other groups and orient their behavior”

Faure & Sjostedt, p.366Dr. Robert T. Moran, Thunderbird

• “The way we do things around here”

Elements of Culture

• Behavior: – words and actions

• Attitudes:– how we feel about our

actions

• Norms:– Rules to be followed in

specific situations; Based on Values

• Values:– Prioritized issues, beliefs.

High to low value.

Conceptualizing Culture and Negotiation

• Culture as learned behavior– A set of behaviors the foreign negotiator should

expect, understand.

• Culture as shared values– Understanding central values and norms…

Discussion Example:

• What is the better way to choose a person to lead your new group?A. The group members should meet,

nominate persons, vote, and choose the person with the majority, even if several people are against the winner.

B. All members of the group should meet and discuss candidates until almost everybody agrees on the same person.

Results: Hampden-Turner, 1993

• Japanese: 84.4= B Singapore= 39.4=B• USA: 37.7=B

What is the better way to choose a person to lead your new group?

A. The group members should meet, nominate persons, vote, and choose the person with the majority, even if several people are against the winner.

B. All members of the group should meet and discuss candidates until almost everybody agrees on the same person.

Questions?

Theoretical Model: Hofstede

Hofstede’s Dimensionsof Culture

• Individualism/collectivism• Power distance• Masculinity/femininity• Uncertainty avoidance

• Long Term Orientation

• Original 1967-1973 IBM study of 40 countries, extended to 74.

• Cultures Consequences, , 1980, 2001

• Cultures and Organizations, 2004

http://www.geert-hofstede.com/

Individualism/Collectivism

Definition: the extent to which the society is concerned about individuals vs. the group

– Individualistic societies may be more likely to swap negotiators, using whatever short-term criteria seem appropriate

– Collectivistic societies focus on relationships and will stay with the same negotiator for years

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Power Distance

Definition: “The extent to which the less powerful members of organizations and institutions (like the family) accept and expect that power is distributed unequally” (aka hierarchically)

• Cultures with stronger power distance will be more likely to have decision-making concentrated at the top of the culture.

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Masculinity/Femininity

Definition: “the extent cultures hold values that are traditionally perceived as masculine or feminine”

• Influences negotiation by increasing the competitiveness when negotiators from masculine cultures meet

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Uncertainty Avoidance

Definition: “Indicates to what extent a culture programs its members to feel either uncomfortable or comfortable in unstructured situations”

• Negotiators from high uncertainty avoidance cultures are less comfortable with ambiguous situations--want more certainty on details, etc.

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An Example of Taiwan and the US

• PDI: Expect/Accept that power is unequally distributed• IDV: Self orientation versus Group (collective) orient.• MAS: Assertiveness (we are expected to act stronger)• UAI: Tolerance for Ambiguity, Unknown Future• LTO: Long Term Orientation (Patience, Wisdom)

Hofstede’s Cultures Ranking in the Top 10

Conceptualizing Cultureand Negotiation

• Culture as dialectic: Not always True.– All cultures contain dimensions or tensions that

are called dialectics• Example: Judeo-Christian parables “too many cooks

spoil the broth” and “two heads are better than one” offer conflicting guidance

• This can explain variations within cultures

• Culture in context: A blend.– No human behavior is determined by a single

cause– All behavior may be understood at many

different levels simultaneously

Questions?

Research Implications

The Influence of Culture on Negotiation: Research Perspectives

• Negotiation process– Culture has been found to have significant

effects on the negotiation process, including:• How negotiators plan• The offers made during negotiation• The communication process• How information is shared during negotiation

• Effects of culture on negotiator cognition– Accountability to a constituency influenced

negotiators from individualistic and collectivistic cultures differently

The Influence of Culture on Negotiation: Research Perspectives

negotiator ethics

– Differences exist in the tolerance of different negotiation tactics in different cultures

– Negotiators who trusted the other party were less likely to use questionable negotiation tactics

conflict resolution

– Within collectivistic countries, disagreements are resolved based on rules

– In individualistic countries, conflicts tend to be resolved through personal experience and training

Impact of Culture on Negotiation, P. 368

Appendix 1: Tactics

How Does It Impact Negotiation?

• Culture is highly diverse, and present in every country or social grouping.

• We cannot become expert in every culture, but we can understand common negotiating elements… Salacuse, 1991, p.371

• How many countries do we work with regularly, how long does it take top become good at understanding those cultures?

Culturally Responsive Negotiation Strategies

• When choosing a strategy, negotiators should:

– Be aware of their own and the other party’s culture in general

– Understand the specific factors in the current relationship

– Predict or try to influence the other party’s approach

• Strategies are arranged based on the level of familiarity (low, moderate, high) that a negotiator has with the other party’s culture

Culturally Responsive Negotiation Planning

• When planning a cross cultural negotiation, managers should understand:

1. Their own biases, strengths, and weaknesses;

2. The other negotiator as an individual;

3. The other negotiator’s cultural context.

Culturally Responsive Negotiation Strategies

• When choosing a strategy, negotiators should:

1. Be aware of their own and the other party’s culture in general

2. Understand the specific factors in the current relationship

3. Predict or try to influence the other party’s approach

Strategies are developed based on the level of familiarity (low, moderate, high) that a negotiator has with the other party’s culture.

Stephen Weiss’ Cross Cultural Negotiation Tactics

Three Strategy Choices:

• Based on your previous cultural knowledge:

– Low familiarity– Medium Familiarity– High Familiarity

1) Low Familiarity Tactics

1. Employ agents or advisers (unilateral strategy)– Useful for negotiators who have little

awareness of the other party’s culture

2. Bring in a mediator (joint strategy)– Encourages one side or the other to

adopt one culture’s approaches or mediator’s culture approach

3. Induce the other party to use your approach (joint strategy)– The other party may

become irritated or be insulted

Moderate & High Familiarity

2) Medium Familiarity

1. Adapt to the other negotiator’s approach (unilateral strategy) – Involves making conscious

changes to your approach so it is more appealing to the other party

2. Coordinate adjustment (joint strategy)– Involves both parties making

mutual adjustments to find a common process for negotiation

3) High Familiarity

1. Embrace the other negotiator’s approach (uni.)– Adopting completely the

approach of the other negotiator (negotiator needs to completely bilingual and bicultural)

2. Improvise an approach (joint)– Crafts an approach that is

specifically tailored to the negotiation situation, other party, and circumstances

3. Effect symphony (joint)– The parties create a new

approach that may include aspects of either

Summary

We should avoid over-simplification

• Common advice: When in Rome, act as the Romans do”– In other words, be aware

of the differences and consider them when they negotiate.

• Many simplify the statement to mean:

• “be sensitive to other cultures and modify one’s own strategy to be consistent with theirs”.

1. You cant’ learn and modify your approach in one week. month or year….

2. Acting like them does not guarantee a better result… (they may try the same)

3. People expect to negotiate differently with foreigners naturally. This may not help.

4. Best research shows us that “moderate adaption” is most effective strategy.

That’s Dangerous!

Final Thoughts..

• “too many cooks spoil the broth”

• “two heads are better than one”

Negotiation results are based on many dimensions: environment, values, process…

We have to plan for each specific negotiation situation differently, there is no “one size fits all”.