GSBS6009 Cross Cultural Management

1. GSBS6009 Cross Cultural Management Lecture 10 Cross Cultural Negotiation and Decision Making 2 Negotiating Internationally Lecturer: Asif Iqbal Course Coordinator: Dr. Karen Tian

2. Learning Objectives • Explore the nature of negotiating: Western and non-Western perspectives • Understand facets of negotiation in an international business • Identify issue of strategy adaptation when negotiating with counterparts from other cultures • Conduct Hinchinbrook Island Negotiations

3. International Negotiation:Art and Science International negotiations are much more complex than domestic negotiations. They challenge the negotiators to understand the science of negotiation while developing their artistry. • The science of negotiation provides research evidence to support broad trends that often, but not always, occur during negotiation. • The art of negotiation is deciding which strategy to apply when, and choosing which models and perspectives to apply to increase cross-cultural understanding.

4. What Makes International Negotiations Different? Two overall contexts have an influence on international negotiations: • Environmental context • Includes environmental forces that neither negotiator controls that influence the negotiation • Immediate context • Includes factors over which negotiators appear to have some control

5. Environmental Context Factors that make international negotiations more challenging than domestic negotiations include: • Political and legal pluralism • International economics • Foreign governments and bureaucracies • Instability • Ideology • Culture • External stakeholders

6. Immediate Context “Factors over which the negotiators have influence and some measure of control”: • Relative bargaining power • Levels of conflict • Relationship between negotiators • Desired outcomes • Immediate stakeholders

7. The Contexts ofInternational Negotiations

8. How Do We Explain International Negotiation Outcomes? International negotiations can be much more complicated • Simple arguments cannot explain conflicting international negotiation outcomes • The challenge is to: • Understand the multiple influences of several factors on the negotiation process • Update this understanding regularly as circumstances change

9. The nature of negotiation (1) The ‘Western’ approach: • Negotiating is a problem-solving exercise • Tactics and strategies can be applied universally • Implicit is the assumption that the participants in negotiations share similar approaches, attitudes and principles • Focus is on what happens between parties • Two types of negotiation strategy predominate: • the distributive (win–lose) • the integrative (win–win strategy)

10. The nature of negotiation (2) In an international context: • The assumptions and expectations of the west may not be shared • Even if behaviour displayed by both parties is similar in nature, it may reflect different motives • The very act of negotiating can be a concept, which is fundamentally alien to other cultures, e.g. for Japanese negotiators

11. Key facets of negotiation Table 15.1 Facets of negotiation Source:Usunier, 2003 (adapted)

12. The US sees the deal as the main objective of any negotiation Very focussed bottom-line approach For the Chinese, a negotiation is just part of developing a life-long relationship Need to establish a good rapport before talking of a deal Cross-cultural negotiation in practice: The USA and China (1) Interpersonal orientation: fundamental opposition Americans might feel that the wish by their Chinese counterparts to establish friendship is one way to get a better deal later on in the negotiation(s).

13. Clear hierarchy in US team Deference shown, even if the language used informal The boss will probably be given much leeway – already discussed with HQ Risk-taking seen as inherent to getting the best deal possible Often difficult to know who the Chinese team leader is The consensus-building process occurs also within the Chinese team (parties both from within as well as outside company) Will resist pressure from the American side until all Chinese parties satisfied Any risk-taking must be carefully orchestrated Cross-cultural negotiation in practice: The USA and China (2) Power orientation

14. Cross-cultural negotiation in practice: the USA and China (3) Underlying concept of negotiation Negotiation strategies: Both US approaches (win–win & win–lose) should lead to a definitive contract to which both sides are expected to adhere. The Chinese finds it difficult to take this linear approach. For them, the negotiation is just one of many encounters. The principle is to build a business partnership. Strategic time-frame: For the Chinese a deal made at the end of a negotiation remains negotiable in the long term. Agreements are based on trust and goodwill. This can be frustrating for Americans since for them time is of the essence – and a deal’s a deal!

15. US negotiators concerned with specifics, the information which allows them to pursue their way of negotiating Need to gain a clearer idea of the other party’s concerns and interests to establish or modify their goals Ready to give a lot of information if this is part of an exchange For the Chinese, gaining trust + confidence is more important than facts and figures May not have information asked for (possible face loss). However, collection of information is becoming more systematic NB: younger managers more in tune with western behaviour norms Cross-cultural negotiation in practice: The USA and China (4) Style of negotiation

16. For US negotiators, a detailed contract is the ideal conclusion to a negotiation: signed, sealed and delivered In the final phase detailed points are hammered out: Implementation Legal aspects Chinese tend to avoid legalistic details Prefer short contracts that show commitment to project A contract is only a formal moment in development of a relationship Further negotiations will happen using the goodwill and friendship established Cross-cultural negotiation in practice: The USA and China (5) Outcome orientations

17. Cross-cultural negotiation in practice: The USA and China (6) • The Chinese and American negotiators therefore face innumerable potential difficulties • The opposition in expectations and attitudes is clear, the expected frustrations and irritations evident • How can both sides resolve this dilemma? One possible way to deal with apparently conflicting cultural values is to use Weiss’s strategic framework

18. Background to Weiss’ framework When in Rome, do as the Romans do? • To what extent should a negotiator adapt to the cultural values of the other party. Are international negotiators expected to adapt totally? • This is a simplistic approach • It does not account for the dominant role of one or the other partner • Is it ever possible to ‘do as’ the Romans? • It wrongly assumes that a ‘Roman’ will always act as a Roman with a non-Roman in Rome!

19. Cultural approach of negotiating • Stephen Weiss (1994) considers a ‘one-size-fits-all’ approach to be inappropriate • Weiss proposes instead a range of strategies which are • culturally responsive • reflect the skills of the individuals involved • take account of the circumstances in which they are working

20. Negotiation as communicative event • One basic aim in any communicative event: to make sense of the interaction • In negotiations this means that the least both parties must be able to do is (Weiss, 1994): • recognize each other’s ideas and the types of behaviour evident • detect common and differing standpoints as well as changes made to these during the negotiating process • ensure that communication is maintained as the negotiation proceeds

21. Negotiating process • The knowledge and skills required to perform crucial acts of communication are often limited • Weiss’ framework required strategies: • make sense of the negotiating process as best they can • use their own attributes • (where necessary) use the skills of others

22. Weiss’ strategic framework Figure 15.1 Strategic frame for negotiating Source: Weiss (1994a, Figure 2, p. 54‘Culturally responsive strategies and their feasibility’)

23. Which strategies to use? The strategy which is: • the most feasible, i.e. the extent to which it will fit with the counterpart’s possible approach • the most appropriate in terms of the relationship and circumstances surrounding the interaction • the most acceptable in terms of the manager’s own values

24. Choosing the strategy Choosing the strategy therefore involves: • considerable reflection on one’s own culture as well as careful investigation into the counterpart’s culture • both parties considering their relationship as individuals as well as members of different cultures

25. The five steps The five steps which Weiss proposes for selecting a negotiating strategy take account of these complexities • Reflect on your culture’s negotiation script • Learn the negotiation script of the counterpart’s culture • Consider the relationship and circumstances • Predict and influence the counterpart’s approach • Choose your strategy

26. Conclusion Cultural differences in international negotiations: One key facet of negotiating: what do participants consider important in the negotiating process? • Is it basically seen as a question of problem- solving? • Is it seen as just one aspect of beginning or continuing a harmonious, mutually beneficial relationship?