UNIVERSIDAD RICARDO PALMA

Global Business School

Subject: International Contracts and Negotiation Semester: 2012 II Groups 1,2 Teacher: Dr. Hugo Guerra Disclaim: All the readings have being taken from various sources an edited or summarized only for Educational and non commercial purposes.

READING 4 Some reaches on the international negotiation It is difficult to track the myriad starting points used by negotiators from different national settings, especially as cultures are in constant flux, and context influences behavior in multiple ways. Another complication is that much of the cross-cultural negotiation literature comes from the organizational area. While it cannot be applied wholesale to the realm of intractable conflicts, this Reading may provide some hints about approaches to negotiation in various national settings: I. Different negotiation styles There are many different negotiation styles and theories regarding them. 1.1. The win - win model is possibly the most useful and it contains the elements of most of the others. You can't successfully negotiate aggressively unless the other party capitulates. The other party can't negotiate aggressively successfully unless you capitulate. In between these two extremes that suit only one of the parties is an area the model calls win - win. It's where the parties work together to achieve mutually advantageous outcomes. 1.2. Driver Drivers are results oriented and focused on the bottom line. Drivers tend to prefer facts to feelings. They process information quickly and tend to be confident and assertive in their approach.

1.3. Aggressor Aggressors seek to win. The goal is victory, defined as maximising their outcome and outmanoeuvring or beating the other party. 1.4. Idealist Idealists seek abstract truth or justice often without regard to human factors or reality. They often have a single "truth" that dominates their thinking in spite of rational considerations that may point to the opposite. They may well be right in their "truth" but reason isn't why they hold to it. 1.5. Analytical Analyticals are methodical, fair and factual. Like the idealists, analytical negotiators also prefer facts to feelings, but Analyticals process information more slowly and have a need for accurate and detailed information to support a case. Their approach is logical and structured. 1.6. Amiable Amiables are cooperative people oriented and focused on mutual agreement. They tend to have a strong concern for relationships and so focus more on feelings and gaining trust. Their approach is steady and sincere. II. Time Orientations Two different orientations to time exist across the world: monchronic and polychronic. 2.1. Monochronic approaches to time are linear, sequential and involve focusing on one thing at a time. These approaches are most common in the European-influenced cultures of the United States, Germany, Switzerland, and Scandinavia. Japanese people also tend toward this end of the time continuum. Negotiators from monochronic cultures tend to prefer prompt beginnings and endings, schedule breaks, deal with one agenda item at a time, rely on specific, detailed, and explicit communication, prefer to talk in sequence, view lateness as devaluing or evidence of lack of respect. 2.2. Polychronic orientations to time involve simultaneous occurrences of many things and the involvement of many people. The time it takes to complete an interaction is elastic, and more important than any schedule. This

orientation is most common in Mediterranean and Latin cultures including France, Italy, Greece, and Mexico, as well as some Eastern and African cultures. Negotiators from polychronic cultures tend to start and end meetings at flexible times, take breaks when it seems appropriate, be comfortable with a high flow of information, expect to read each others' thoughts and minds, sometimes overlap talk, view start times as flexible and not take lateness personally. Another dimension of time relevant to negotiations is the focus on past, present, or future. Cultures like Iran, India, and the Far East are past-oriented. The United States, tends to be oriented to the present and the near-future. Latin America leans toward both present and past orientations. Negotiators focused on the present should be mindful that others may see the past or the distant future as part of the present. Negotiators for whom time stretches into the past or the future may need to remember that a present orientation can bring about needed change. III. Space Orientations Space orientations differ across cultures. They have to do with territory, divisions between private and public, comfortable personal distance, comfort or lack of comfort with physical touch and contact, and expectations about where and how contact will take place. In Northern European countries, personal space is much larger than in Southern European countries. For a German or a Swedish person, for example, the Italians or the Greeks get too close. An American etiquette manual advises this about personal space: "When you meet someone, don't stand too close. (Remember the angry expression, "Stay out of my face!") An uncomfortable closeness is very annoying to the other person, so keep your physical distance, or he'll have to keep backing off from you. A minimum of two feet away from the other person will do it. Certain cultures, including Mediterranean, Arab, and Latin American, are more tactile and allow more touching. Asian, indigenous American, Canadian, and U.S. cultures tend to discourage touching outside of intimate situations. Certain cultures allow cross-gender touching, including the United States, while same-gender touching is less acceptable. These rules change in Japan, where women are frequently seen holding hands, but not men. In the Mediterranean, it is common to see men holding hands or touching in public, but not women. Greeting rituals fit with these patterns, so awareness of local

norms is important for negotiators. Space also relates to comfort with eye contact and attributions related to eye contact or lack of eye contact. In United States and Canadian dominant culture settings as well as many Arab cultures, eye contact is taken as a sign of reliability and trustworthiness. In North American indigenous settings, eye contact may be seen as disrespectful and inappropriate. Similarly, in Asian settings, looking down is usually interpreted as a sign of respect. In Central America, a slight movement of the eyes may indicate embarrassment, showing respect, or disagreement. Seating arrangements for negotiations should take norms for space into account. In general, Americans tend to talk with people seated opposite them, or at an angle. For the Chinese, these arrangements may lead them to feel alienated and uneasy. They may prefer to converse while sitting side by side. There are large differences in spatial preferences according to gender, age, generation, socioeconomic class, and context. These differences vary by group, but should be considered in any exploration of space as a variable in negotiations. IV. Nonverbal Communication 4.1. Closely related to notions of space is nonverbal communication. In intercultural studies, Japanese negotiators have been observed to use the most silence, Americans a moderate amount, and Brazilians almost none at all. Touching may convey closeness in some contexts and create offense in others. For example, in Mexico, a hug may reliably communicate the development of a trusting relationship, while a German negotiator might experience a hug as inappropriately intimate. Facial gazing, or looking directly into the face of a negotiating counterpart, is more common in Brazil than the United States, and even more infrequent in Japan. V. Power Distance Geert Hofstede uses the idea of power distance to describe the degree of deference and acceptance of unequal power between people. Cultures where there is a comfort with high power distance are those where some people are considered superior to others because of their social status, gender, race, age, education, birth, personal achievements, family background or other factors. Cultures with low power distance tend to assume equality among people, and focus more on earned status than ascribed status. Generally, the more unequally wealth is distributed, the higher will be the power distance in any

national setting. According to Hofstede, national cultures with a high power distance include Arab countries, Guatemala, Malaysia, the Philippines, Mexico, Indonesia, and India. Negotiators from these countries tend to be comfortable with hierarchical structures, clear authority figures, and the right to use power with discretion. Countries with a low power distance include Austria, Denmark, Israel, New Zealand, Ireland, Sweden, Norway, Finland, Switzerland, Britain, and Germany. Negotiators from these countries tend to be comfortable with democratic structures and flat organizational hierarchies, shared authority, the right to use power only in limited circumstances and for legitimate purposes. VI. Uncertainty Avoidance Another of Hofstede's categories has to do with the way national cultures relate to uncertainty and ambiguity, and therefore, how well they may adapt to change. Generally, countries that show the most discomfort with ambiguity and uncertainty include Arab, Muslim, and traditional African countries, where high value is placed on conformity and safety, risk avoidance, and reliance on formal rules and rituals. Trust tends to be vested only in close family and friends. It may be difficult for outsider negotiators to establish relationships of confidence and trust with members of these national cultures. Hofstede identified the United States, Scandinavia, and Singapore as having a higher tolerance for uncertainty. Members of these national cultures tend to value risk-taking, problem-solving, flat organizational structures, and tolerance for ambiguity. It may be easier for outsiders to establish trusting relationships with negotiating partners in these cultural contexts. VII. Masculinity-Femininity Hofstede used the terms masculinity and femininity to refer to the degree to which a culture values assertiveness or nurturing and social support. The terms also refer to the degree to which socially prescribed roles operate for men and women. Hofstede rated countries and regions such as Japan and Latin America as preferring values of assertiveness, task-orientation, and achievement. In these cultures, there tend to be more rigid gender roles and "live to work" orientations. In countries and regions rated feminine such as Scandinavia, Thailand, and Portugal, values of cooperation, nurturing, and relationship solidarity with those less fortunate prevail, and the ethic is more one of "work to live."

Of course, it is important to remember that associations with gender vary greatly across cultures, so that elements considered masculine in one culture might be considered feminine in another. Negotiators may find it useful to consider the way gender roles play out in the cultural contexts of their negotiating partners. VIII. Skills of good negotiators

No single negotiating style is superior to any of the others. Competent, confident negotiators are typically aware of two important factors before going into a negotiation: o the style they are personally most confident using o the style their counterpart most prefers. People usually use the style they're most comfortable with. They realise that the other party's comfort zone has developed through a lifetime of interactions with others, learning what works and what doesn't work for them.

IX. Common Seek a fair process The journey is just as important as the destination. People tend to react positively when they feel they're being treated fairly. When they feel their concerns are being heard and the game rules are neutral and fairly applied, they consider the process is fair. Then they are more willing to accept and support the outcome. X. Control your own reactions Controlling your reactions is an important characteristic of a good negotiator. Take the time to cool down and resist jumping in quickly and reacting. The most natural thing to do when faced with a difficult person or situation is to react the same way. Give yourself time to think. Remain focused on identifying and discussing the real needs and interests of the other party. It can also help the other person work past their emotional issues. XI. Acknowledge feelings Identify or acknowledge feelings, both yours and the other party's. By acknowledging the other party's feelings you can help reduce their intensity and allow all parties to focus on the underlying problems or issues. All feelings are valid, no matter how strong or seemingly improper. It is how you deal with feelings that places a value on them. XII. Focus on the problem, not the person

Focus on the outcomes or objectives of the negotiation.

Detach from your feelings about the other party. Ask clarifying or probing questions to better understand and identify any problems and generate possibilities for settling them. Try to look at the situation from the other person's point of view and be careful to check assumptions you are making about their behaviour. Consider using paraphrasing to confirm perceptions and verify them for accuracy.

XIII. Use 'I' statements

Speak directly to the other party using 'I' statements such as 'I think,' 'I feel,' and 'I need.' Re-state points of agreement throughout the discussions, particularly regarding purpose and needs. Use positive body language to show support and attention and ask questions to show your understanding.

XIV. Look to interests - not positions Identify needs and underlying interests and focus on those. It isn't possible to generate options that are mutually beneficial and agreeable unless you know the other party's needs and interests. Ask yourself what is important and why. Then explore the underlying motivations - both your own and the other party's. XV. Focus on the future Skilled negotiators focus on the future benefits their relationship with the other party may hold. The objective of good negotiation is to create win-win solutions where both parties feel that their needs have been met, both now and in the future. This is the material that long term relationships are based on. READING 5

Cross-cultural Communication in Business Negotiations by Liangguang Huang English Department, Zhenjiang Watercraft College of PLA Zhenjiang - China International Journal of Economics and Finance - Vol. 2, No. 2; May 2010 Abstract tract All communication is cultural -- it draws on ways we have learned to speak and give nonverbal messages. With the implementation of the Economic Reform and Opening policies, more and more Chinese companies

do business with the foreigners. When negotiating with the delegates from different countries, cross-cultural communications play an important role. Culture differs from one another, which influences the style, the time, and the course of negotiations. If distorted, cross-cultural communications may weaken a companys position in the market, prevent it from accomplishing its objectives, and ultimately lead to failure of negotiation. 1. Introduction As business has turned more and more to an integrated world market to meet its needs, the difficulties of communicating at a global level have become increasingly widespread. Still, in an increasingly competitive world economy, it is harder for the successful business venture to conduct business exclusively within the safe confines of a single domestic business environment. With the implementation of the Economic Reform and Opening policies, Chinas national economy has made unprecedented strides in the last three decades. More and more Chinese products have forced their way into the international markets. There have been frequent and increasing business contacts and cooprations with foreign nationals. To secure a favorable position in the business world, executives have become growingly aware of the important roles of cross-cultural communications. As is commonly known, culture differs from one another. Their differences, which should be noted, can affect all entry strategy decisions, such as the choice of target country markets, the choice of a candidate product and its adaptation to foreign markets, the choice of an entry mode, the formation of a foreign marketing program and the control of entry operations, etc. All these decisions depend on cross-cultural communications of one sort of another. So, if distorted, cross-cultural communications may weaken a companys position in the market, prevent it from accomplishing its objectives, and ultimately lead to failure. 2. Cultural variables There are many cultural variables that might hinder successful business negotiations. 2.1 Greetings As the proverb goes First impressions are most lasting. The same is true for the first word that people say when they first meet before negotiation. An appropriate greeting can not only convey the message that you are serious in establishing a cordial business relationship with your foreign counterparts, but also affect their judgment, and subsequently their business decisions on you. As we all known, the cultures in the world are not entirely different, they have many general features in common, the so-called cultural universals. It is these cultural universals that enable the worlds languages to possess more or less equivalent expressions for greetings. However, there do exist great differences in the ways that people from different cultures greet each other. It is these differences that often create problems. For example, the Chinese

tend to greet each other with personal questions to show their considerations and concerns for others, but the Westerners, in their unique cultural tradition and psychology, place more value on privacy and individual liberty. They consider it decent and respectful not to nose into other peoples affairs. Thus they usually fail to sense the considerations and friendliness behind many of the Chinese question-like greetings. They may even feel disgusted or offended, especially by those inquisitive idle talks. Well begun is half done. Though good greetings dont mean half done, they do make a good start for a business contact. Their importance is self evident. 2.2 Negotiating Styles Business negotiations are not games of words. They are, in fact, fierce battles of wits and tactics. To win such a battle with foreign nationals, one needs to acquaint himself with their respective negotiating style. The Japanese, for example, think very highly of rites, being a nation deeply influenced by the traditional Chinese culture, especially by the Confucian ideas. In negotiations, they are particular about an equal or near equal membership of the other bargaining group. If not, they will either feel slighted, even insulted or have doubt in the final say of the small membership. The Japanese also have an age-long prejudice against women. If too many business females are in the other group, they will feel uneasy or annoyed. In their biased point of view, women should stay at home, nursing the kids, tending to household chores and waiting on their husbands rather than sit at the negotiation table. This male-chauvinism may be traced to the Japanese acculturation of the Chinese feudal ethical codes, to the exact here, the three cardinal guides ruler guides subjects, father guides son, husband guide wife. Another characteristic of the Japanese in negotiation is that they habitually dont give clear and straight forward answers. They may keep on saying yes, yes. However, their yes doesnt mean their acceptance to the term is offered, but rather their understanding of what is said. They keep on saying Yes only for rites sake. Still worth mentioning there is that the Japanese have more trust in personal rapport than in business contracts. This presets a sharp contrast to the Americans. So when doing business with the Japanese, you should take time and pains to establish true personal rapport and friendships. Dont count too much on contracts, they are pieces of waste paper in the eyes of the Japanese once both sides are at odds. The United States is known as a melting pot with peoples from a great variety of cultures pouring into this pot. Though the different cultures are not entirely melted in this pot, some broad generalizations can still be drawn about Americans. Americans are looked on as rugged individuals who are aggressive on the negotiation table and seek to stand out above the crowd in their business affairs. They are generally

considered straightforward, get-to-the-point business people. They are frank, light-hearted, confident, and risky in their pursuit of material gains. They value time, efficiency and laws very much. But they dont care very much for formality, rituals, and social rules. They are impressive for their package deal manners on the negotiation table. They are frankly expressive and like to crack jokes, sometimes to the extent of appearing disrespectful to the other group. All these character traits and business styles of the Americans are the natural results of a young nation, a great variety of cultures and a universal language. The Russians are good at playing tricks in business negotiations. They will always try to bring down a proposed price, be it ever so low. They will try to persuade you to let off the price for a good reputation. They like to play cat and mouse with you, saying that your rival is proposing a much lower price and that your offer is in no way acceptable. They may even get to their feet and turn away from the table. However, you neednt take it to heart. They will come back, for sure. If they can get what they desire at a lower price elsewhere, they will not waste their tongue with you. The Arabs are a typically religious group. Most of them tend to be stubborn and stiff, suspicious and conservative. In business negotiations, they usually take things in a leisurely manner and are often deliberately mystifying. They are good at bargaining. When they dont want to accept a proposed price, they simply pay no attention to it. They may even, in times of real need, bring the negotiation to an abrupt halt or break their previous promises by the excuse that it is the holy order of Allah. The wealthy Arab businessmen are usually friendly and hospitable. They may rise from the negotiation table to greet a friend or commonly unacceptable in many other cultures. But the Arabs think that they should be friendly to all their guests. Any other countries also have their respective culture. If you want to negotiate successfully with the members from these countries, you must show your respect to their culture. 2.3 Attitudes to time The perception of time is also culturally patterned. Thus, wide differences exist in peoples views of time all over the world. The Americans, typical of Western cultures in general and industrialized societies in particular, view time as unilinear, so activities need be scheduled. They view time as valuable, as a commodity, a thing that can be saved, spent, or wasted. They budget their time as they budget their money. Hence their saying Time is money. They value promptness and deplore the waste and passing of time. They dont like to be kept waiting. They would often rush into a business and their impatience is often exploited, esp. by the Japanese. As an oriental nation, deeply influenced by Confucian ideas, the Japanese

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place a high value on rites and the establishment of personal rapport before really getting down to business. They usually dont grudge the time it might take them to do so. In business negotiations they will keep on saying yes, yea instead of a straight for word no to the proposals or terms they dont want to accept. Their view of time is much more flexible than that of the Americans. The Russians are one of the nations that regard time as the cheapest of commodities and an inexhaustible resource. Bureaucratism and a dilatory style of work prevail in Russia. Russian business people habitually dont rush into a business negotiation unless they are in urgent need of what is offered. In the Middle East, the Arabs typically lack a strict sense of time. The punctual Americans who insist on the meeting of deadlines will surely be left waiting. However, once a business person is finally invited into the Middle Easterners office, the interview will last as long as necessary to transact the business, even though the next visitor may be kept waiting for what might seem an interminable time. The Chinese look upon time as elastic, which can be stretched or contracted depending on the circumstances. Punctuality is not important, long delays are sometimes necessary before taking action. As the Chinese saying goes Think twice before you act, although it might take them too long to think twice. 2.4 Meanings of numbers The numbers are mysteriously bound up with lucks. The number 3 enjoys both praise and abuse alike. In Monaco, people like this number very much because they believe it will bring them prosperity. The Hong Kong people like this number, too, because in Cantonese, 3 is homophonic with promotion. But the Europeans generally consider it ominous. 4 is commonly disliked by people in Japan, Hong Kong and China, because it means death. In Southeast Asian countries, most people like the number 6, which means smoothness and success. Islamites are almost partial for 7, because they regard it as a holy whole number, for Allah, after having created the world in the first 6 days, took arrest on the 7th. But in Singapore, it is a negative number. In China, people have partiality for 8, which means rich. The westerners dislike the date 13 of any month, the day they think will bring misfortune. If it happens to be Friday, which is called Black Friday and will bring greater misfortune in their eyes, they avoid doing anything important. Nor do they like the number 13. An example may help illustrate the importance of the number. An airline opened a new route in Hong Kong a few years ago. They numbered their planes 858 and 859. To their great surprise, many passengers would rather other airlines when they learned the number of the plane they were to travel by. The company learned later

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that it were the numbers that mattered. In Cantonese, 58 means not rich, while 859 means rich but not long. After changing the numbers to 888 and 889, the company found that the passengers all preferred these two lucky numbers. 2.5 Gift-giving customs Both parties may present gifts each other before or after negotiation, so customs concerning gift-giving are extremely important to understand. In some cultures, gifts are expected, and failure to present them is considered an insult, whereas in other cultures, offering a gift is considered offensive. Gift-giving is an important part of doing business in Japan. Exchanging gifts symbolizes the depth and strength of a business relationship to the Japanese. Gifts are usually exchanged at the first meeting. When presented with a gift, companies are expected to respond by doing the same in return. In sharp contrast, gifts are rarely exchanged in Germany and are usually not appropriate, while in Belgium or the U.K., gift-giving is not a normal practice, although flowers are a suitable gift if invited to someones home. Likewise, the Chinese gift-giving customs differ from those of the Englishspeaking people. In China, when visiting someone, you should take the gift, whether wrapped or not. When you give it to the host upon leaving, he would say No and decline it before accepting, try to persuade visitor not to bring anything next time. It is impolite to open the gift before the guest or appear happy. Usually, the host will give something in return immediately. But in the English-speaking countries, your well-wrapped gift should give to the host just after arriving, the host accepts it by saying thanks, and tries to convince you that he like the gift very much. With happiness, he opens the gift and pay compliment. There are also various taboos in gift-giving customs. For instance, no gifts of food should be given to the Moslems during the month of Ramadan. No gifts of dolls will be accepted by the Arabs all through the year, because they should not cherish any other idols except Allah in their hearts. Do not repeat the gifts to the same Japanese except whiskey. Do not give gifts of the same face value to the Japanese managing director and driver alike, the former will consider it an insult. Do not present gift of clock to people in China. None of the Chinese like green hat, which means "cuckold son". 2.6 Significance of Gestures The body is a powerful communication device. People around the world use body movements or gestures to convey specific messages. For example, locking ankles means anxious and tense, clenching fist means under stress, touching nose with index finger means that someone doesnt like what he is hearing, rubbing hands together means anticipating something good is about to happen, etc. These are common gestures used in every country.

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The countries sometimes use the same gestures, but they often have very different meanings, to which should be paid attention in negotiations. The American symbol for OK or Everything is right is made by forming a circle with the thumb and index finger. In other cultures it may mean zero, as in France, money, as in Japan, or be a sign of vulgarity, as in Brazil. The familiar V for a victory symbol may be an insulting sign in most Europe. The familiar nodding of heads up and down indicates agreement or Yes. In China, Japan and some other parts of the world, this motion may mean simply that the person hear what is said. In Bulgaria a nod means No, and aside-toaside shake of the head means Yes. The Chinese like to touch a childs head to show affection, but in Arab countries and Thailand, it is offensive, as the head is considered most sacred. These examples of gestures are only a few of many that could be cited. To a business person, when negotiating with the members from other countries, carelessness could make the difference between a sale and no sale, between a commission and no commission, between the success and failure. 3. Cross-Cultural Communication Strategies The key to effective cross-cultural communication in business negotiation is knowledge. First, it is essential that people understand the potential problems of cross-cultural communication, and make a conscious effort to overcome these problems. Second, it is important to assume that ones efforts will not always be successful, and adjust ones behavior appropriately. It is also important to respect the negotiators and their culture. For example, one should always assume that there is a significant possibility that cultural differences are causing communication problems, and be willing to be patient and forgiving, rather than hostile and aggressive, if problems develop. One should respond slowly and carefully in cross-cultural exchanges, not jumping to the conclusion that you know what is being thought and said. The suggestion for heated conflicts is to stop, listen, and think, or to put it "go to the balcony" when the situation gets tense. By this it means withdraw from the situation, step back, and reflect on what is going on before you act. This helps in cross cultural communication as well. When things seem to be going badly, stop or slow down and think. What could be going on here? Is it possible I misinterpreted what they said, or they misinterpreted me? Often misinterpretation is the source of the problem. Active listening can sometimes be used to check this outby repeating what one thinks he or she heard, one can confirm that one understands the communication accurately. If words are used differently between languages or cultural groups, however, even active listening can overlook misunderstandings.

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Often intermediaries who are familiar with both cultures can be helpful in cross-cultural communication situations. They can translate both the substance and the manner of what is said. For instance, they can tone down strong statements that would be considered appropriate in one culture but not in another, before they are given to people from a culture that does not talk together in such a strong way. They can also adjust the timing of what is said and done. Some cultures move quickly to the point; others talk about other things long enough to establish rapport or a relationship with the other person. If discussion on the primary topic begins too soon, the group that needs a "warm up" first will feel uncomfortable. A mediator or intermediary who understands this can explain the problem, and make appropriate procedural adjustments. 4. Conclusion Each of the variables discussed in this module are much more complex and difficult undertaking than it is possible to convey. Any cultural ignorance or carelessness on the part of the executive might lead to communication blunder and negotiation failure. References
Culbro R.D.and P. Herbig. (1998). Cultural differences International Journal of Value-Based Management. David A. Victor. Cross-cultural / International Communication. http://www.referenceforbusiness.com/encyclopedia/Cos-Des/Cross-Cultural-InternationalCommunication.html. Michelle LeBaron. Cross-Cultural Communication. http://www.beyondintractability.org/essay/cross-cultural_communication/ (July 2003). Wang, Honggeng (2005), The Business Negotiation. Beijing: The Capital Economy and Commence University Press. Zhu, Wenjun. (1994). The Research of Modern English Language and Culture. Beijing Language Institute Press in International Negotiating.

READING 6

Cross-Cultural Communication and Negotiation

by Hooper, Christopher (section I, II (intro), II-c, III-a, III-b, IV, V) Pesantez, Maria (section III-c) Rizvi, Syed (section II-a-b) Published at Vermont Law School - 2005

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Introduction More than ever Americans are expanding into the global markets, whether it is an individual trying to buy a rug while on vacation or a business seeking to form a joint venture in a new market. The commonality for all those who travel abroad is that some form of negotiation will be prevalent. This paper examines how cultural differences play a role in the outcomes of negotiations using Western culture as a basis for comparison. It begins by explaining what negotiation is, how it is carried out and describes different types and forms of negotiation. Next, the paper examines the cultural aspects of individualism vs. collectivism, egalitarianism vs. hierarchy, and high vs. lowcontext communication as well as the effect of culture and the contextual effect of role on the different forms of negotiation. The importance of information in the negotiating process is also discussed. It explains how communication styles and cultural differences can lead to unfavorable outcomes and how the opportunity for trade-offs in the negotiation process can be missed. Our intentions are for the reader to gain some insight into the dynamic world of cross-cultural negotiation. Negotiation To help you appreciate how culture can affect negotiation some elements of negotiation based on Western theory need to be explained. One element is direct confrontation. When the majority of Westerners think of negotiation they think of it as a direct confrontation. Other elements include the types of negotiations, either transactional (with buyers and sellers) or dispute resolutions. These types of negotiations can have two possible agreement outcomes (distributive, integrative) or a stalemate. In addition we will explain how power, information and persuasion are used in different forms of negotiations. Ultimately, when a negotiator has information concerning the others relative power, they can make tactical decisions regarding when to walk away, when to seek more concessions or when to accept an offer. We will show how cultures differ when it comes to the basis of power in negotiation, information sharing and the degree to which information is seen as significant to negotiation. The Western View: Direct Confrontation Negotiation involves direct confrontation, either face-to-face, or electronic, of principles and or their agent (Brett, 2000: 98). Face-to-face negotiations foster rapport and offer fewer opportunities for misunderstanding when body language, facial expressions, and cultural attitudes are foreign to the other party. If both parties are already familiar with each other or if tensions are already high, then negotiating by phone or email may be the best choice. In many cultures, negotiations are handled through indirect methods. With indirect methods, third parties can be agents who represent one side or the

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other. Third parties can also become a neutral who tries to mediate an agreement between both sides. Finally, third parties have also been known to act as go-betweens, where they facilitate information exchanges between the parties (Brett, 2000: 98). Types of Negotiations: Transactional and Dispute Resolution Negotiation may be divided into two types: transactional resolution (with buyers and sellers) or dispute resolutions. Both types of negotiations dance around the various goals of each party, which seem to be mismatched or irreconcilable. In spite of the fact that goals are estimated to be incompatible, the negotiators involved in the transaction attempt to figure out if they can get a better deal with the current negotiation, or if they should look to reach another deal elsewhere with alternate buyers or sellers. Dispute resolution, which is sometime called conflict resolution, suggest there is already an interference with goal achievement. The purpose of these negotiations is to figure out what can be done about this interference. A dispute, another term for conflict, is a rejected claim that shows the incompatibility of goals. A major difference between transactional and dispute resolution is the degree to which the negotiators bring emotion to the table. Transactional negotiators use either positive emotions and/or emotional irrationality to influence outcomes. However, when conflict is the primary reason for the negotiation, negative emotions precede the negotiation and will occur in and between all cultures (Brett, 2000: 98). Forms of Negotiation: Distributive and Integrative The result of a transactional or conflict resolution negotiation may be a purely distributive agreement or an integrative agreement, or an impasse (Brett, 2000: 98). Distributive agreements are the result of a distributive negotiating situation where negotiators divide a fixed set of resources and the negotiation usually turns into a competitive rivalry (Lewicki, Saunders, Barry & Minton, 2004: 59). This splitting up of the resources can be equal or unequal (Brett, 2000: 98). Distributive bargaining can be beneficial when the other party is insignificant and the negotiator wants to maximize the value of a single deal (Lewicki et al., 2004: 60). Integrative agreements are the result of integrative negotiation situationswhich involve expanding the pie or bringing new issues to the negotiation in order to enhance a set of resources (Brett, 2000: 98; Lewicki et al., 2004: 105). By expanding the resources negotiators can create integrative situations. Because most negotiation situations present opportunities to expand a set of resources, by bringing additional issues into the bargaining mix or by dividing a lone issue into several parts, few negotiations are strictly win/lose situations (Brett, 2000: 98). In this type of bargaining the parties concentrate on what they have in common rather than their discrepancies, information and ideas are exchanged more openly, and the parties focus more on their issues and interests rather than their positions (Lewicki et al., 2004: 95). It becomes possible to figure out how each party values the issues in the negotiation. When an issue is very important to one party but not valued highly by the other party, there is the possibility of a trade-off on that particular issue. There is also the possibility of discovering

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issues that are valuable and beneficial to both parties, thereby increasing the chances for mutual gain (Brett, 2000: 98). Most negotiators employ distributive bargaining methods because they do not realize there is potential for integrative negotiation. The integrative potential is squandered by negotiator judgment errors in which negotiators believe all negotiations entail a fixed pie where the goal is to get as much pie as possible, creating a win/lose exchange (Drake, 2001: 319). These fixed-sum errors lead to a distributive negotiation style where negotiators have faith in the mythical fixed pie belief and do not consider the possibility of integrative agreements (Lewicki et al., 2004: 59, 125). Instead, they assume everyone will prioritize the issues equally, forcing negotiators to compete on each issue for the maximum profit. In this case, the parties fight for the limited resources without thinking about how they could mutually profit (Drake, 2001: 319). Furthermore, because they do not see the potential for integration they even suppress attempts for mutually beneficial settlements and trade-offs (Lewicki et al., 2004: 125). Implementing integrative techniques, however, can be very favorable to both parties (Brett, 2000: 98). When negotiators gather information about the other sides priorities, they increase the chance of making higher profits. All it takes for joint profits to improve is for one side to share information (Drake, 2001: 319). Bringing new issues to the bargaining table helps prevent the negotiation from reaching a stalemate and also helps to ensure that all of the resources are utilized, and nothing is left on the table (Brett, 2000: 98). Power is the ability to make the other party concede. The party with the best alternative to a negotiated agreement (BATNA) is the more powerful (Brett, 2000: 98). In transactional bargaining, the degree to which one party is economically reliant on the other results in power based on economics. When a negotiator knows their own BATNA and the BATNA of the other party, they can effectively decide what to do in the negotiation. They can decide when it is appropriate to leave the negotiation without agreeing, when to demand more from their opponent, and when to agree on the terms of the negotiation (Brett, 2000: 98). Parties with a more appealing BATNA can set higher goals for themselves, can demand more from their adversary, and thus have more power in the negotiation. The negotiator with the desirable BATNA should communicate this to their opponent in order to take advantage of the benefits of having the better alternative (Lewicki et al., 2004: 132). There are two types of information that are important in negotiation: Information about the other parties power and information about their interest, or the motive for their positions. Information about power and interest are essential to both types of negotiations because interest must be known to construct integrative negotiation and integrative negotiation always contains distributive bargaining (Brett, 2000: 98). Gathering information is tricky because power is a psychological representation of ones strength during a negotiation. Besides, all perceptions tend to be biased. A negotiator might think they have more power than they

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do or they might be influenced by the persuasiveness of the other sides argument. Sometimes negotiators are even influenced by the role (i.e. buyer vs. seller) or other contextual variables. Perceptions of power may be influenced by factors such as persuasion, ingratiation, substantiation, and appeals to sympathy (Brett, 2000: 98-99). Resource creation, along with the negotiators ability to identify tradeoffs and mutually beneficial options, are at the heart of integrative negotiation. In order to recognize the possibility of an integrative agreement, negotiators must know their own as well as their opponents interests and priorities. Information about priorities leads to an understanding of what is important and what is not. Information about interests reveals the importance of an issue. The elimination of judgment errors and the promotion of communication help to reveal these interests and needs (Brett, 2000: 99). When unlike interests are revealed, the parties can negotiate an exchange based each partys priority issues. When common interests are revealed, both parties benefit. In order to obtain information, parties can share information with each other about preferences, priorities and interest or they can use the trial and error approach where multiple proposals are offered throughout the negotiations in order to slowly discover the relevant information to facilitate an integrative agreement (Drake, 2001: 319). Cultures are not the same in regards to information sharing. Negotiators from separate cultures differ as to what information they deem important and they also differ in the processes and methods used to share information. Some cultures use a direct approach when sharing information about interest and priorities, while other culture use an indirect approach and some do not share information at all (Brett, 2000: 99). Culture Culture is the most important variable affecting international negotiations and the values and norms that are encompassed by culture can affect negotiations (International negotiating, 2005). Cultural values establish what members perceive as important, while cultural norms outline what is considered proper and improper behavior. Together, cultural values and norms influence how one perceives situations and how one reacts to the behavior of others. The cultural values of individualism versus collectivism, egalitarianism versus hierarchy and direct vs. indirect communications are relevant to norms and negotiation strategies. Individualism vs. Collectivism Individualism vs. collectivism is a continuum that suggests the degree to which different societies regard the individual as independent or as dependent in relation to their social groups (Stevens & Greer, 1995: 47). In individualistic cultures, norms/customs and institutions champion the self-sufficiency of the individual. There are protections for individual rights and individual accomplishments are rewarded through economic and social channels.

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Workers from the United States, Australia, and Great Britain are individualistic because they value time for personal life, challenging work, feelings of accomplishment, and individual recognition for a job well done (Drake, 2001: 320). The things that individuals from these countries value tend to breed competitive attitudes along with the need and appreciation for competition. In collective cultures norms/customs and institutions advocate the mutual dependence of individuals. Their characters are the result of in-group associations to family members and workmates. Personal needs are not as important as the needs of the in-group and legal institutions stress the greater good of the whole as superior to the rights of individuals (Drake, 2001: 320). Individual sacrifices for the group are rewarded and groups are rewarded through economic and social channels (Brett, 2000: 99). Collectivistic societies encourage teamwork and harmony along with an integration of needs to strengthen and preserve relationships (Drake, 2001: 320). People from collectivistic societies prefer to work in groups as opposed to by themselves (International negotiating, 2005). The way a culture socializes an individual determines their perceptions of themselves, and the way they interact with others. In-groups consist of people from ones own culture and out-groups consist of those that are not (Brett, 2000: 99). With collective cultures, in-group membership is mutually dependent with self identity and in individualistic culture; self identity is related to other factors outside the in-group membership. Collectivists relate more effectively with their in-groups, and are more sensitive to the needs of others when compared to individualists (Erez & Early, 2001: 78-79). Collectivists are also more aware of distinctions between in/out groups than individualist are (Brett, 2000: 99). Individualism vs. collectivism is said to indicate a cultures core preferences and priorities concerning goals (Erez & Early, 2001: 77). This is important for negotiators because goals direct behavior and goals are also basic motivators. For collectivists, it is important to seek win-win outcomes whereas individualists tend to treat all negotiations as win-lose (International negotiating, 2005). This is because individualist, out of self interest, strive for higher personal goals and therefore tend to decline lesssuitable agreements in hopes of attaining more suitable ones (Brett, 2000: 99; Erez & Early, 2001: 77). Individualistic negotiators, when compared to collectivistic negotiators, tend to make more extreme offers and spend more time planning short-term goals. Collectivistic negotiators tend to plan more for long term goals than individualists (Lewicki et al., 2004: 213). It has been shown that individualists are more pragmatic because they do not usually change their behavior in relation to whom they are negotiating with, unless confronted with a stalemate. Collectivists are known to alter their

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negotiating style from cooperative to competitive when confronted with individualists. Nevertheless, even though collectivists are competitive, they still remain sensitive to the others outcome. On the other hand, as long as things are looking good for them, the individualist is not concerned with the outcome of the other party (Brett, 2000: 99). When comparing negotiators from an individualistic culture (U.S.) with those of a highly collectivistic culture like Japan, it has been demonstrated that self interest is a factor that affects the level of joint gains. Because American negotiators are from an individualistic culture, they focus on their self interest more than the collectivistic Japanese who emphasized social obligations. Interestingly, when negotiators are both from individualistic cultures the self interest focused parties are able to mutually achieve high goals (Brett & Okumura, 1998: 507). However when self-interest is mismatched, one negotiators goals are more easily met than the others (Brett & Okumura, 1998: 507). A negotiator who is driven by selfinterest may not be willing to continue the negotiation once their goals have been satisfied, and the negotiation could end too early to accomplish joint gains (Brett & Okumura, 1998: 507). Approach and avoidance motivation is another behavioral aspect that is relative to cultural values and goals. Approach motivation is caused by an encouraging experience or possibility and avoidance motivation is caused by a less than encouraging event or likelihood. Consequently, approach goals cause one to seek a positive outcome whereas avoidance goals involve someone trying to avoid a negative the outcome. For instance, a person with an approach goal would say do well in your race whereas the person who has avoidance goals would say do not do poorly in your race (Elliot, Chirkou, Kim & Sheldon, 2001: 505). Because people from individualistic cultures seek to be recognized from others by personal accomplishment, they are drawn to encouraging information and they concentrate on gaining characteristics that establish their uniqueness (Elliot et al., 2001: 505). This is in contrast to collectivists whose emphasis on fitting in foster a bias toward negative information and a focus on eliminating negative characteristics that helps one avoid relational discord or group disruption (Elliot et al., 2001: 505). What this means is that those from individualistic and collectivistic cultures seem to differ in whether they promote approach versus avoidance motivation. Collectivists seem more pessimistic, fearful of failure and have a greater tendency to be self-critical as opposed to individualists (Elliot et al., 2001: 505).. Experiences with individualistic cultures such as the United States and collectivists cultures like South Korea and Russia show that in the United States, attainment of positive outcomes is emphasized and valued, whereas in South Korea and Russia, avoiding negative outcome is emphasized and

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valued. Collectivists tend to be more neurotic, introverted, more afraid of failure, and more anxious socially than are individualists. Collectivists also use more avoidance-based coping strategies than individualists. In the United States, where the cultural value is individualistic, the realization of positive conclusions is stressed and respected. The South Koreans and Russians tend to have a more cautious approach because they do not want to lose. Therefore, collectivists are more likely to cooperate in negotiations where they stand to lose. Individualists, like the Americans, are quite happy to leave a negotiation if it does not result in a profitable deal for them (Eliot et al., 2001: 509, 510). It is also important to recognize that in collectivistic cultures, people value relationships and social networks far greater than in individualistic cultures. People from collectivistic cultures are expected to support group members and help sustain one another (Stevens & Greer, 1995: 47). To collectivists, relationships with groups are more long-term, permanent and important than to the individualists (Erez & Early, 2001: 90). People from individualistic cultures, on the other hand, tend to be self sustaining and rarely extend their responsibility for others beyond their own families (Stevens & Greer, 1995: 47). In addition, substituting contacts after a deal has been made can sometimes lead to the collapse of the agreement (International negotiating, 2005). In individualistic societies, negotiators are interchangeable because the focus is on competency as opposed to relationships (Lewicki et al., 2004: 212). Mexico is much farther on the scale toward collectivism than the U.S. Not surprisingly, Mexicans place relationships as an important aspect to business success and they are loyal to those they have formed a personal relationship with. They tend to do business with those whom they have developed a personal relationship with as opposed to those who can offer them a better deal. Consequently, this is the same for the collectivistic Asians and Arabs who are more interested in finding out about you, youre future plans and your relationships (International negotiating, 2005). This is in stark contrast to the more individualistic Americans who tend to seek the best deal, regardless of who they get it from. Mexican executives will allow their personal feelings about the other party influence their decision making. At certain levels of negotiation, a criterion such as cost does become important. However, the importance of relationships will continue to be a more prominent trait in Mexican than with American decision makers (Stevens & Greer, 1995: 47). As we have stated, collectivism has a group orientation; therefore, U.S. counterparts are slower to adapt to groups projects than Mexicans. Mexicans exhibit genuine team spirit and a willingness to help everyone in the group while promoting higher levels of inter-group communication. This seems to imply that Mexicans will be quicker and better able to adapt to group negotiations than their American counterparts (Stevens & Greer, 1995: 47).

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Furthermore, in Mexico, there is even a movement among businesses to promote a group based structure for the organization. There are hints that the direction is moving toward self directed work groups. Some Mexican companies, for example, have based employee compensation on team performance (Stevens & Greer, 1995: 47). Based on the above information, it appears that American negotiators should be well prepared to foster informal as well as formal relations with people from collectivistic societies. Knowing that collectivistic cultures thrive in group-winwin situations can lead to positive integrative decisions (Stevens & Greer, 1995: 47). Egalitarian vs. Hierarchy Hierarchy versus egalitarianism is a cultural value that suggests how power is identified in a culture (Brett & Okumura, 1998: 497). Egalitarianism versus hierarchy can also be thought of as a continuum that communicates the degree to which a cultures social structure is flat or the degree to which it is categorized into ranks (Brett, 2000: 100). Social structures within hierarchical cultures attribute social status to social power (Erez & Early, 2001: 53-54). In hierarchy cultures, from Asia to Africa or the Middle East, respect is demanded by those in senior positions (International negotiating, 2005). Those higher up on the social ladder are given authority and advantage, whereas those lower on the social scale are duty-bound to submit to social superiors and abide by their request (Erez & Early, 2001: 53-54). However, these high-status members in a hierarchy culture are obligated to look out for the needs of the lower status members. In addition, members of hierarchical society expect to deal with their peers and it is important to match eagles with eagles (International negotiating, 2005). Cultures that are more egalitarian do not have the same obligations to their lower status members that high-status members of more hierarchical focused cultures do. This is because, even though there are social status distinctions, the social boundaries of the egalitarian society are fluctuating, making ones superior status subject to change (Brett, 2000: 100). Conflict between different status groups in hierarchical cultures becomes incompatible to the social structure where the norm is for lower status members not to challenge the directives of social superiors. For this reason, negotiators can assume that conflict between members of different statuses will be less frequent in hierarchical cultures as opposed to egalitarian cultures. In a hierarchal society, if two members of the same social class are at odds, they will defer the conflict to a superior rather than have a direct confrontation. This happens because hierarchical societies count with rules that facilitate interaction among members through the routing of conflict that reaches superiors (Brett, 2000: 100). The decision by the high status third party reinforces their authority without necessarily conferring differentiated status on the contestans as would be the

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case in a negotiation in which one party won and the other lost (Brett, 2000: 100). Conflict between different status groups in hierarchical cultures can also be unnerving to social structures, but the egalitarian culture empowers conflicting members to work the conflict out themselves. When resolving conflict, egalitarian cultures will encourage direct face-to-face negotiations, mediation, and/or group decision making (Brett, 2000: 100). During the process of conflict resolution the egalitarians may not distribute resources equally, but differentiated status associated with successful claiming in one negotiation may not translate into permanent changes in social status (Brett, 2000: 100). This is because there are few ways in egalitarian societies for establishing precedent and social status can change with the next negotiation (Brett, 2000: 100). Thus, social status in egalitarian societies does not automatically transfer over to negotiating power (Brett & Okumura, 1998: 497). When interacting socially, egalitarians expect the encounter to be equal whereas those from hierarchical cultures do not (Brett & Okumura, 1998: 497). Power is related to ones status in a hierarchical culture and this status is not going to change from one negotiation to another. Hence, we can consider power in hierarchical cultures as fixed (Menger, 1999: 1). Negotiators can assume that social status as a source of power will be more important for those in hierarchical cultures than in egalitarian ones (Brett & Okumura, 1998: 497). During transactional negotiations, egalitarian cultures rarely use BATNA as a source of power, unless things are not progressing toward an agreement because they would rather concentrate on the issues, priorities and interest relevant to the current negotiations. On the other hand, cultures that are more hierarchical tend to use all forms of power in negotiation, whether it is status, BATNA, and/or persuasion (Brett, 2000: 100). Americans are more inclined toward egalitarian traits, while Japanese are more hierarchical (Brett & Okumura, 1998: 506). It is understood that the Japanese, more than the Americans, pay more attention to power in regards to their preparation (Menger, 1999: 2). When they recognize distributive tactics, they followed distributive norms more forcefully than the U.S negotiators. The Japanese, when compared to the Americans, tend to rate role and company as more important factors to negotiation (Brett & Okumura, 1998: 506). Japanese do not see BATNA as power like the Americans do and this difference may add to a lower level of joint gains for the cross-cultural negotiators (Menger, 1999: 2). Japanese tend to view BATNA as a point to reach for in negotiations rather than a starting point to begin negotiations (Brett & Okumura, 1998: 506). This suggests that BATNA served as a low anchor for some Japanese negotiating interculturaly, and therefore, contributed premature closure of discussions of options and the relatively low level of joint gains in the intercultural negotiations as compared with the intracultural negotiations (Brett & Okumura, 1998: 506). High vs. Low-Context Communication

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High versus low-context communication refers to the amount of direct or indirect communication a specific culture uses for its internal dialogue. In high-context cultures, a large part of the message is conveyed in the context or background of the dialogue, while little information is actually being said. The speaker relies on the receiver to have certain pre-existing knowledge about the topic, as the gist of the communication is inferred as opposed to being directly decipherable. On the other hand, in low-context cultures, information is explicitly transmitted through clear and precise messages (Erez & Early, 2001: 129). High versus low-context communication directly affects the way in which negotiators bargain. The amount and quality of information each party has when entering a negotiation essentially determines the extent to which a negotiation can be integrative (Brett, 2000: 101). Integrative negotiation requires clear and accurate communication [] and the other negotiators must understand the communication. (Lewicki et al., 2004: 117). Sharing priorities and interests along with heuristic trial-and-error searches represent two information exchange methods that generate integrative agreements. Sharing priorities and preferences is a direct communication approach mainly used by cultures with low-context communication. Issues are communicated in a question-and-answer fashion, as both negotiating parties learn the other partys priorities, what issues are mutually beneficial, and which issues are purely distributive. Conversely, high-context communication cultures incline towards the heuristic trial-anderror search. This information sharing technique involves trading proposals throughout all phases of a negotiation. If a proposal is rejected by the other party and they offer their own, the exchange of information about each partys priorities and preferences is inevitable (Brett, 2000: 101). Cultures using direct communication methods are as capable of reaching integrative agreements as cultures using indirect communication techniques (Brett, 2000: 101). To contrast Japan and US, for example, it is known that Japanese intra-cultural negotiators, using indirect communications, and US intra-cultural negotiators, using direct communications, reached similarly efficient agreements (Brett, 2000: 102). In contrast, when Japanese negotiators faced bargaining with U.S. personnel, the outcomes were not as optimal (Brett, 2000: 102). The Japanese, a high-context communication culture, understood the interests of the US party, while the US negotiators, a low-context culture, were not able to understand the Japanese priorities, even when the Japanese negotiators changed their normal style of indirect approach of information sharing to a direct approach used widely by the Americans in their negotiations. (Brett, 2000: 102). In fact, even a successful change in approach of information sharing during negotiations does not imply or suggest a superior outcome. (Lewicki et al., 2004: 218). In direct and indirect forms of communication, not only are information-sharing

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methods different, but information-gathering procedures can be dissimilar as well. US negotiators share information in order to obtain similar data, while indirect communicators like the Japanese, tend to conceal valuable information (Brett & Okumura, 1998: 499). There are several reasons attributable to Japaneses tendency to give unclear, ambiguous and incomplete answers. One reason is that Japanese subjects dont expect the first answer to be thorough and clear. Secondly, it could be they are unwilling to admit the lack of a witty answer. A third reason is that their straight forwardness depends on the level of agreement of the listener with the answer (Working with Japan, 2005). Japanese subjects prefer persistent questioning as their information-gathering method (Lewis, 2003: 405). According to Japanese cultural values, it is necessary to ask repeated questions about a topic in order to receive detailed information. Another reason why the Japanese are inclined to use persistent questioning as an information-gathering method is to avoid misunderstandings and to confirm that each all members of the other team agree with all the parts of the answer (Working with Japan, 2005). When high and low-context cultures meet at the bargaining table, the communication differences may present difficulties during negotiations. Highcontext cultures do not put as much weight on explicit verbal communication, and for them, direct communication may be seen as a crude way of communicating, signifying no concern or respect for the other partys position (Working with Japan, 2005). For Japanese people, for example, nonverbal behavior and context are as important as direct communication, and they can be extremely indirect when expressing a negative response. The Japanese may see conveying a direct denial as unreasonably offensive and harsh (Working with Japan, 2005). Adversely, westerners consider good negotiators to be people with strong verbal skills, adept in the art of argument or debate and good at communicating directly and explicitly (Working with Japan, 2005). These differences in communication styles could be overwhelming when not taken into consideration during negotiations. Since indirect communication cultures rely on contextual information-sharing practices, the use of informal channels is a common way to exchange valuable information (Working with Japan, 2005). An informal and private setting, [...] is the preferred context for disclosing more complete information, asking more direct questions, clarifying feelings, and testing the water for possible concessions (Working with Japan, 2005). Given that informal settings are preferred for disclosing more complete information, there is the possibility that the information previously received in a formal business meeting is altered at least slightly. For low-context communication subjects, this variation of information may be perceived as deceitful conduct, while for indirect communicators the openness and clarity of the information has to be in congruence with the setting of the negotiation (Working with Japan, 2005). Culture and Context in Negotiation

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As we have shown there are important cross-cultural differences in negotiating. Next, we emphasize that culture alone is not sufficient to account for the actions of negotiators interacting across borders. The contextual effect of role and the preconceptions about bargaining are just as influential as culture. By explaining what theorists describe as Culture as Shared Values, we will briefly reintroduce (and hopefully reinforce) previous concepts regarding individualism vs. collectivism. Then we wrap it up by introducing the Culture in Context theory. Culture as Shared Values Geert Hofstede is one of the most cited intercultural researchers (Erez & Early, 2001: 82). He defines culture as the shared values and beliefs held by members of a group, and is considered the most comprehensive and extensive program of research on cultural dimensions in international business. (Lewicki et al., 2004: 210). The Culture as Shared Values theory draws heavily from evaluating the American style of negotiating with the techniques used by negotiators in Mexico, Japan, Korea, Russia or China. The differences are thought to spring from contrasting cultural values that are represented by individualism and collectivism, especially when comparing between distributive and integrative approaches (Drake, 2001: 321). To briefly recap, the Culture as Shared Values is based on what we have described earlier: that collectivism will lead negotiators to engage in more integrative and less distributive bargaining. Cultures that are more collective will have negotiations that are less inclined to view negotiations as competitive and less likely to fall into the mythical fixed pie belief. This is because collectivists regard success byhow well the group does. Culture as Shared Values also concludes that cultures on the collective side of the continuum should lead them toward greater information exchange (Drake, 2001: 321). Even though the Culture as Shared Values approach highlights the differences between national negotiating styles, critics of the Culture as Shared Value argue that we cannot assume that intracultural and intercultural negotiating behaviors are similar (Drake, 2001: 321). American negotiators need to be aware that, at times, North Americans are more satisfied, Japanese more attracted to opponents, Franco-Canadians more cooperative, and Anglo-Canadians slower to settle in intercultural, as compared to intracultural, negotiations. (Drake, 2001: 321). In addition, intercultural negotiations seem to produce inferior results with joint gains, mutual understanding and the recognition of compatible issues when compared to intracultural negotiations. In intercultural settings negotiators are less likely to seek partner involvement and information seeking is less intimate than in intracultural settings (Drake, 2001: 321). Culture in Context The theory, Culture in Context, covers the variations mentioned in the

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preceding subsection. The Culture in Context theory treats negotiators not as passive representatives of culture, but as regulators of a complex negotiation system (Drake, 2001: 321). Basically, this view says that contextual factors (personality, age, prior relationship and experiences, organization culture, etc.) affect a negotiators style as much as the culture they are from. The contextual factor that we will focus our attention on is role, which is defined as a set of rights, obligations, and normative expectations attached to social positions.(Drake, 2001: 322). For example, the role of buyer or seller influenced the relation between final gains and initial offer. Conservative opening offers represented superior gains for buyers, while particularly low or high initial offers signified smaller profits. For sellers, opening offers appeared to be positively related to closing profits (Drake, 2001: 322). In intercultural negotiations it has been shown that buyerseller roles can predict face-work strategies more accurately than culture. For instance, cultural collectivism is overwhelmingly connected to information gathering and integrative offers, but only for sellers (Drake, 2001: 322). Interestingly, experienced negotiators are aware of the differences attributed to buyer-seller roles. Russian, Chinese and Japanese tend to agree that role is an important identifier in determining ones outcome, whereas Americans often do not recognize role as a factor. In the culturally individualistic U.S. and in the collectivistic cultures of Japan, Korea, and Mexico; buyers regularly receive higher profits compared to sellers (Drake, 2001: 322). Some attribute this to power differences: Sellers may perceive greater dependence on buyers than the reverse. That is, sellers may perceive the need to contract with a given buyer, and as many buyers as possible, to obtain profits. In contrast, buyers may perceive that if a profitable agreement is not possible with a given seller, then a number of alternatives sellers (some of whom may offer better prices) are available (Drake, 2001: 322). These divergent perceptions can appear to make integrative bargaining more suited to a seller and distributive bargaining appear more attractive to a buyer. This suggests that difference in integrative and distributive bargaining preferences may have to do more with contextual factors as opposed to cultural factors like collectivism / individualism (Drake, 2001: 322). There are variances in the linkages individualism-collectivism have to how a negotiator preconceives competitiveness in negotiation. At times, negotiators are more significantly influenced by their bargaining role and their partners behavior than where their culture lies on the individualistic collectivism continuum. Sometimes collectivism is not negatively related to predicted competition because age and maturity tend to reduce competitive perceptions and gender roles may increase competitive perceptions of males when dealing with the opposite sex. This seems to refute the Culture as Shared Values hypothesis that collectivism alone would be predictors of anticipated competition. At times, buyers and sellers do not seem to differ in anticipating competition. Individualism-collectivism is known to be an indicator of mythical fixed pie beliefs, but sometimes buyer-

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seller roles are more of a predictor of mythical fixed pie beliefs. Buyers begin negotiations with almost double the mythical fixed pie beliefs of sellers regardless of whether they were from collectivistic or individualistic cultures. Furthermore, the fixed pie belief between buyer-seller tends to become equal after the first five minutes of the negotiation process. For this reason, it cannot be said that collectivism is positively related to information exchange because the mythical fixed pie belief tends to suppress information exchange. In fact some say negotiators for individualistic or collectivistic cultures are equal in asking for and giving information but only differ in the timing and placement (Drake, 2001: 330-331). Buyers and sellers reveal different outcomes according to the exchange of information (Drake, 2001: 339). Buyers capitalize on information that corrects their mythical fixed pie beliefs, but sellers use information to reinforce their zero-sum notions (Drake, 2001: 339). So it seems that buyers are more inclined to use mythical fixed pie beliefs as opposed to sellers. However, as information is exchanged, buyers are more likely to reduce their mythical fixed pie beliefs. In conclusion, cultural differences like individualism vs. collectivism and role differences both contribute to distributive and integrative negotiation patterns (Drake, 2001: 339). Summary It is known that cultural values create differences in negotiating norms. Therefore, it is helpful to know and understand the connection between the culture and the negotiation strategies of the other party. Western culture concerns itself primarily with the needs and goals of the individual. Autonomy is highly regarded and protected in society. Unlike collectivism, self identity is not dependent on the characteristics of a larger group. As we have explained, members of an individualistic society tend to set higher personal goals in the negotiation process. They also have a tendency to reject less favorable outcomes in the negotiation process. These outcomes may indeed be acceptable, however the search will continue until a solution is found that most suits the individuals needs. Members of a collectivist society base their identity on the characteristics of the group to which they belong. We have stated that members of a collectivist society are more sensitive to the needs of others and they approach the negotiation process with the needs of the group in mind. When members of this group negotiate, they are most cooperative when negotiating with members of a like group. They tend to become more competitive when negotiating with those of different groups. We also discussed egalitarianism vs. hierarchy. In hierarchal societies social status implies power. Having a hierarchal structure reduces conflict by providing a norm and people do not normally venture outside the norm. As a positive, members of a hierarchal society are required to look out for those that are socially inferior to them, which is quite the opposite in an egalitarian

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society. Egalitarianism encourages resolution of conflict on ones own personal and social boundaries are permeable. In the negotiation process, information is highly valued and communication style plays a major role in the outcome of intercultural communication. As we explained high context communication in which meaning is inferred and relies on preexisting knowledge can cause conflict when met with the needs of lowcontext communication that requires clear and precise detail. Important information may not be exchanged and an optimal solution may not be reached. The Culture as Shared Values theory is based on the differences between cultures and their values and how it results in different negotiating techniques especially between individualistic and collectivistic cultures. Collectivistic cultures tend to be more integrative, less competitive, and have greater information exchange. There are, however, deviations from the norm, and culture does not necessarily determine how one will go about negotiating. The Culture in Context theory treats culture as but one element in a complexity of negotiator behavior. Sometimes, differences in integrative and distributive bargaining preferences may have to do more with contextual factors as opposed to where one is on the individual-collective continuum. It has been shown that integrative bargaining is more beneficial to sellers and distributive bargaining is more beneficial to buyers. In addition, individualism-collectivism is not necessarily the only link to how a negotiator preconceives competitiveness in negotiation. Although individualism-collectivism is known as an indicator of mythical fixed pie beliefs: Buyer-seller roles can sometimes be a better predictor of mythical fixed pie beliefs. We would like to conclude with the assurance that despite cultural differences, optimal results in the negation process can still be achieved. There are three key elements for success: parties to a negotiation must value the sharing of information, there must be a means to search for information, and finally, both parties in the negotiation process must be willing to search for the information. When exercising these three key factors, both parties should be able to walk away with acceptable outcomes. References
Brett, J. M., & Okumura, T. 1998. Inter-and intracultural negotiation: U.S. and Japanese negotiators. Academy of Management Journal, 41(5): 495-510. Brett, J. M. 2000. Culture and Negotiation. International Journal of Psychology, 35 (2): 97104. Drake, L.E. through an 2001. The culture-negotiation link: Integrative and distributive bargaining

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intercultural communication lens. Human Communication Research, 27 (3): 317-349. Elliot, A.J., Chirkou, V.I., Kim, Y., & Sheldon, K.M. 2001. A cross-cultural analysis of avoidance (relative to approach) personal goals. Psychological Science, 12 (6): 505-510. Erez, M., & Early, C.P. 1993. Culture, self-identity, and work. Oxford, NY: Oxford University Press. International Negotiating, 2005. Video shown in class. Lewicki, J.R., & Saunders, D.M., & Barry, B., & Minton, M.W. 2004. Essentials of negotiation. New York, NY: McGraw-Hill/Irwin. Lewis, R.D. Publishing. 1999. When cultures collide. Clerkenwell London, UK: Nicholas Brealey

Menger, R. 1999. Japanese and American negotiators: Overcoming cultural barriers to understanding. Academy of Management Executive, 13 (4): 100-102. Stevens, G. K., & Greer, C. R. 1995. Doing business in Mexico: Understanding cultural differences. Organizational Dynamics, 24 (1): 39-55.

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