CHAPTER 10CHAPTER 10

International and International and Cross-Cultural NegotiationCross-Cultural Negotiation

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.

Environmental context

• Political and legal pluralism

• International economics

• Foreign governments and bureaucracies

• Instability

• Ideology

• Culture

• External stakeholder

Immediate context

• Relative bargaining power

• Levels of conflict

• Relationship between negotiators

• Desired outcomes

• Immediate stakeholders

1 What makes IB different? (see Phatak and Habib’s (1996) model)

Environmental context

Immediate context

Negotiation process and

outcomes

Relative bargaining power of negotiators and nature of dependence

Immediate stakeholders

Desired outcome of negotiationsRelationship between

negotiators before and during negotiation

Levels of conflict underlying potential negotiations

Legal pluralism

Political pluralism

Currency fluctuations and foreign exchange

Foreign Govt and bureaucracy Instability and change

Ideological differences

Cultural differences

External context

FIGURE 10.1 The contexts of IBs

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 contacts that allow easy cancellation or neutral arbitration, and consider purchasing insurance policies to guarantee contract provisions.

Ideology Ideological clashes are manifested at the most f

undamental 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 intere

st 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 vulner

able. (see Mayer,1992)

• e.g. Phatak and Habib’s (1996) model is a good device f

or guiding our thinking about IB, significantly, multiple

factors operating in magnitude over time, and the simult

aneous, 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 negoti

ation within that culture.

Geert Hofstede (1980a, 1980b,1989,1991)’s cultural dime

nsions in international business: Individualism/Collectivi

sm; power Distance; career Success/Quality of Life; Unce

rtainty 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 o

f the negotiation are ambiguous or shifting.

Shalom schwarz’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

Self-directionuniversalism

Benevolence

conformity Tradition

security

Power

Achievement

Hedonism

Simulation

Openness to changeSelf-transcendence

Conservation

Self-enhancement

Figure10.2 Schwartz’s 10 cultural Values, p.288

2.3 Culture as Dialectic

Janosik (1987) recognizes that all cultures contain dime

nsions or tensions that are called dialectics.

Its advantage over the culture-as-shared-values appr

oach lies in that it can explain variations within culture

s, suggestive of the need to appreciate the richness of th

e 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 Perspective

Table 10.2 summarizes 10 different ways that culture ca

n influence negotiation. (p.291)

(TBCed)

Table 10.2 Ten Ways That Culture Can Influence Negotiation

Negotiation Factors Range of Cultural Responses

Definition of negotiation Contract Relationship

Negotiation opportunity

Selection of negotiations

Protocol

Communication

Time sensitivity

Risk propensity

Groups versus individuals

Nature of agreements

Emotionalism

Distributive

Experts

Informal

Direct

High

High

Collectivism

Specific

High

Integrative

Trust associates

Formal

Indirect

Low

Low

Individualism

General

Low

3.2 Research perspective

A conceptual model of where culture may influence neg

otiation has been developed by Jeanne Brett(2001).(see

Figure 10.3, p.295)

His model identifies how the culture of both negotiator

s can influence the setting of priorities and strategies, th

e identification of the potential for integrative agreemen

t, and the pattern of interaction between negotiation.

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.

Figure 10.3 How Culture Affects Negotiation

Interests and priorities

Culture Anegotiator

Strategies

Potential for Integrativeagreement

Type of agreement

Pattern of interaction

Interestsand

priorities

Culture Bnegotiator

Strategies

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:

• 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”