Copyright 1998 Prentice-Hall Inc. adapted by Prof. Dr. vom Kolke 1
Chapter 5
Negotiation and Conflict Resolution
Copyright 1998 Prentice-Hall Inc. adapted by Prof. Dr. vom Kolke 4
Negotiation
The process of bargaining between two or more parties to reach a solution that is mutually acceptable
Copyright 1998 Prentice-Hall Inc. adapted by Prof. Dr. vom Kolke 5
The Negotiation Process The Goal
– Acceptable solution to all (win-win)– In some cultures, goal of negotiation is win-
lose Preparation (understanding one‘s own interests
and anticipating the other party‘s interests: objectives, needs)
Relationship-Building (get to know each other)– Different cultures have different attitudes
toward how much time and effort to spend on relationship building (e.g. America vs. Mexico)
Copyright 1998 Prentice-Hall Inc. adapted by Prof. Dr. vom Kolke 6
Information Exchange (stating an initial position followed by questions, answers, discussion)– Meaning of this stage depends on cultural
background American: beginning of „real“ negotiation Mexican: are suspicious, present little
substantive material Persuasion (try to convince their
counterparts to accept their proposals)
The Negotiation Process
Copyright 1998 Prentice-Hall Inc. adapted by Prof. Dr. vom Kolke 7
Agreement (mutually acceptable solution by making concessions to the other side)– Cultural variation how to arrive at an
agreement Americans prefer to negotiate „linear“ (one issue
at a time, concluding with binding legal contract) Russians prefer to develop final agreement
based on all items (attach less meaning to contract, see concessions as sign of weakness)
The Negotiation Process
Copyright 1998 Prentice-Hall Inc. adapted by Prof. Dr. vom Kolke 8
Negotiating Strategies
Two major types of negotiation/bargaining– Distributive negotiation (win-lose or zero-sum
negotiations)
– Integrative negotiation (win-win or positive sum negotiation)
„Technically“ every integrative negotiation is distributive as well (also the bigger pie has to be divided)
Copyright 1998 Prentice-Hall Inc. adapted by Prof. Dr. vom Kolke 9
Distributive Bargaining
Party A‘s aspiration range
Party B‘s aspiration range
Settlement range
Party A‘s target point
Party B‘s resistance point
Party A‘s resistance point
Party B‘s target point
Copyright 1998 Prentice-Hall Inc. adapted by Prof. Dr. vom Kolke 10
Strategies for distributive bargaining– Try to shift upward the other side‘s belief
(e.g. by persuasion) about one‘s own minimum (reservation value)
– Try to shift downwards the other side‘s belief of his own minimum
– Make a binding, credible, communicated commitment
– Negotiation are often settled at focal points
Negotiating Strategies
Copyright 1998 Prentice-Hall Inc. adapted by Prof. Dr. vom Kolke 11
Strategies to facilitate integrative bargaining– Emphasizing superordinate goals (goals
both parties can agree on)
– Focusing on the problem, not people (not to personalize the conflict)
– Focusing on Interests, not Demands (demands are what a person wants, interests why the person wants them)
Negotiating Strategies
Copyright 1998 Prentice-Hall Inc. adapted by Prof. Dr. vom Kolke 12
Strategies to facilitate integrative bargaining– Creating new options for joint gains
(expanding the resource pie) – Focusing on what is fair (helps to come to a
mutual agreement)
The tension between integrative and distributive bargaining can‘t be dissolved in the end
Negotiating Strategies
Copyright 1998 Prentice-Hall Inc. adapted by Prof. Dr. vom Kolke 13
Negotiator‘s Dilemma Moves to claim value drive out moves
to create value (could prevent mutually beneficial agreement)
Tom’s Choice Create Claim
John’s Choice
Create
GOOD GOOD
TERRIBLE GREAT
Claim
GREAT TERRIBLE
MEDIOCRE MEDIOCRE
Copyright 1998 Prentice-Hall Inc. adapted by Prof. Dr. vom Kolke 14
Ways out of the Dilemma Chance of cooperation through repetitive
negotiations– One time negotiation can be broken down
into many steps (e.g. separating issues, having several meetings)
– Managers as negotiators may have to deal on many company matters over a longer time (and therefore need each other‘s coop)
– Negotiators reputation (for further negotiations) may be present even in one time negotiations
Best strategy in repetitive negotiations: TIT-FOR-TAT
Copyright 1998 Prentice-Hall Inc. adapted by Prof. Dr. vom Kolke 15
Situational Factors and Negotiating Tactics
Circumstances of negotiations– Geographical Location (Home office of
one party or Neutral equidistant location )
– Implications Less expenses, better access to
information for the „home“ party (cost) pressure to the other party to come
to an agreement Room Arrangements (rectangular/
square vs. round table, competition vs. cooperation)
Copyright 1998 Prentice-Hall Inc. adapted by Prof. Dr. vom Kolke 16
Selection of Negotiators (no. of people, which ones)– Number of people reflects culture (small
american team vs. large japanese group)
– Can create advantage by overwhelming other side
– U.S. companies select negotiators on a basis of position and competence, Mexican firms on personal factors (age, gender, race) and social connections
Situational Factors and Negotiating Tactics
Copyright 1998 Prentice-Hall Inc. adapted by Prof. Dr. vom Kolke 17
Time Limits (are real of presumed deadlines in negotiations)– Cultural view of time affects negotiations
US, Swiss, Germany: time is a commodity, has to be used as efficiently as possible
Middle East, Asia: longer time perspective, extended negotiation time helps build relationship
– Time limits may be used to strenghten one‘s position (to get concessions granted)
Situational Factors and Negotiating Tactics
Copyright 1998 Prentice-Hall Inc. adapted by Prof. Dr. vom Kolke 18
Verbal tactics (to influence the outcome of a negotiation)– Asking more questions– Making fewer commitments before final
agreement stage– Increasing the amount of initial request
Initial Offer (tactic influenced by culture)– Extreme initial offers from Chinese/ Russian
negotiators– More „realistic“ offers from US or European
negotiators (closer to their bottomline)– Japanese don‘t like extreme offers (called
„banana sales approach“)
Situational Factors and Negotiating Tactics
Copyright 1998 Prentice-Hall Inc. adapted by Prof. Dr. vom Kolke 19
Situational Factors and Negotiating Tactics
Other Verbal Negotiating Behaviors – Normative Appeals– Commitments– Self-Disclosure– Questions– Commands
– Promises– Threats– Recommendations– Warnings– Rewards– Punishments
Copyright 1998 Prentice-Hall Inc. adapted by Prof. Dr. vom Kolke 20
Nonverbal Tactics (challenge to cross-cultural negotiations)– Silence
normal part of conversation for Japanese, uncomfortable situation for Americans (e.g. silence interpreted as rejection)
Can be used strategically (to get concessions)
Conversational Overlaps (more than one person speaks)– usual to Brasilians, inappropriate to
Americans/ Japanese
Situational Factors and Negotiating Tactics
Copyright 1998 Prentice-Hall Inc. adapted by Prof. Dr. vom Kolke 21
Facial Gazing (Americans love to have eye contact, Japanese don‘t)
Touching– Only handshake for Americans and
Japanese– Body touching for Brazilian or Mexican to
deepen relationship/confidence
Situational Factors and Negotiating Tactics
Copyright 1998 Prentice-Hall Inc. adapted by Prof. Dr. vom Kolke 22
How Culture Influences Conflict Resolution
Negotiation is a means to resolve conflict (begin with different positions, move to an agreement)
Low- and high-context cultures perceive conflicts different– Low-context (LC) cultures see conflict as
instrumental oriented (issues are separated from people)
– High-context (HC) cultures see conflicts expressive (issues are not separated from people)
Copyright 1998 Prentice-Hall Inc. adapted by Prof. Dr. vom Kolke 23
Consequence – LC cultures: public disagreement is
acceptable (people have conflict and still friendly relationship)
– HC cultures: open disagreement/ public confrontation are highly insulting (parties „lose face“)
Why develop conflicts in the two cultures?– LC culture is individualistic with less specified
ways of appropriate behavior (conflict arises if one violates the other‘s expectations)
How Culture Influences Conflict Resolution
Copyright 1998 Prentice-Hall Inc. adapted by Prof. Dr. vom Kolke 24
Why develop conflicts in the two cultures?– HC culture is group-oriented with more
specific rules of behavior (conflict arises if one violates cultural expectations)
Different attitudes toward conflict– In LC culture people are action-oriented
(direct, confrontational response to conflict, quick resolution)
– In HC culture people try to avoid confrontation (indirect, inactive approach avoiding/ ignoring conflict)
How Culture Influences Conflict Resolution
Copyright 1998 Prentice-Hall Inc. adapted by Prof. Dr. vom Kolke 25
Styles to handle conflicts– LC cultures take an intellectual view to
conflict (use logic to make an argument, factual-inductive or axiomatic- deductive style)
– HC cultures take an emotional point of view (use flowery speech to make emotional appeal and diffuse conflict, affective-intuitive style)
How Culture Influences Conflict Resolution
Copyright 1998 Prentice-Hall Inc. adapted by Prof. Dr. vom Kolke 26
View to conflict affects cultures approaches to negotiation– HC cultures
Negotiators try to behave harmonious on the surface
Differences in opinions are expressed less directly, real feelings through implicit language and nonverbal means
„Persona“ of the negotiator is integrated into how negotiations are handled (e.g. not to lose one‘s face)
How Approach to Conflict Influences Negotiation
Copyright 1998 Prentice-Hall Inc. adapted by Prof. Dr. vom Kolke 27
View to conflict affects cultures approaches to negotiation– LC cultures
Negotiators are open and direct They are action oriented and see negotiations
as problem-solving process Clear difference between the negotiator as
„Persona“ and how well he/she performs in a negotiating situation (e.g. „to lose one‘s face“ plays far less a role)
How Approach to Conflict Influences Negotiation
Copyright 1998 Prentice-Hall Inc. adapted by Prof. Dr. vom Kolke 28
Becoming a Better Cross-Cultural Negotiator
Understand your negotiating partner (basic understanding of values, attitudes and typical behaviors)
Consider situational specifics (e.g. what experience does your counterpart have with your culture?)
Decide how to handle actual negotiation (Studies show: moderate adaptation of native behavior produces better results than no adaptation or trying to behave as a native)
Copyright 1998 Prentice-Hall Inc. adapted by Prof. Dr. vom Kolke 29
Convergence or Divergence?
Greater knowledge and understanding of culture
If moderate adaptation proves effective
Ingrained cultural patterns of behavior
Perception that own culture negotiates effectively
Copyright 1998 Prentice-Hall Inc. adapted by Prof. Dr. vom Kolke 30
Implications for Managers
Cross-cultural negotiations important part of international manager’s job
Improve negotiating outcomes by understanding dynamics of negotiation process and influence of culture
Moderate adaptation may be most effective