CHAPTER 10 International and Cross-Cultural Negotiation

1. CHAPTER 10 International and Cross-Cultural Negotiation

2. IntroductionWe discuss this chapter by the following manner :First we discuss some of the factors that make international negotiation different. Then we turn to a discussion of the most frequent studied aspect of international negotiation. Next we examine the influence of culture on negotiations . We conclude this chapter with a discussion of cultural responsive strategies available to the international negotiator.

3. The titles • What Makes International Negotiation Different? • Conceptualizing Culture and Negotiation. • The Influence of Culture on Negotiation. (both the managerial perspectives and the research perspectives ) • Culturally Responsive Negotiation Strategies.

4. Environmental context Political and legal pluralism International economics Foreign governments and bureaucracies Instability Ideology Culture External stakeholder Immediate context •Relative bargaining power Levels of conflict Relationship between negotiators Desired outcomes Immediate stakeholders 1、What makes international negotiation different?

5. Environmental context FIGURE 16.1 The context of international negotiations Immediate context Legal pluralism Political pluralism External context Relative bargaining power of negotiators and nature of dependence Levels of conflict underlying potential negotiations Immediate stakeholders Negotiation process and outcomes Cultural differences Currency fluctuations and foreign exchange Desired outcome of negotiations Relationship between negotiators before and during negotiation Foreign Govt and bureaucracy Ideological differences Instability and change

6. Environmental context • Political and legal pluralism： Taxes that an organization pays Labor codes or standards Different codes of contract law and standards of enforcement Political consideration... • International economics The exchange value of international currencies naturally fluctuates Any change in the value of currency

7. Environmental context • Foreign governments The extent to the government regulates industries and organizations • Instability Lack of resource that American commonly expect during business negotiation (paper,electricity,computers); shortage of other goods and service (food, reliable transportation potable water); and political instability (coups, sudden shifts in government policy, major currency revaluations )

8. Environmental contextSalacuse (1988) suggests that negotiators facing unstable circumstance should include clauses in their contacts that allow easy cancellation or neutral arbitration, and consider purchasing insurance policies to guarantee contract provisions.• IdeologyIndividualism and capitalism Americans believe strongly in individual rights, the superiority of private investment, and the importance of making a profit in business. Negotiators from other countries do not share this ideology.

9. Environmental context • Culture People from different cultures appear to negotiate differently, behaving differently, and may also interpret the fundamental processes of negotiations differently——deductive or inductive • External stakeholders The various people and organizations that have an interest or stake in the outcome of the negotiation（by Phatak and Habib,1996）.Include business associations, labor unions ,embassies, and industry associations ,among others.

10. Immediate context • Relative bargaining power Some of factors may influence the relative bargaining power :The amount of venture (financial and other investment) ;The management control of the project; The special access to markets; distribution systems or managing government relations • Levels of conflict The level of conflict and type of interdependence between the parties to a cross-cultural negotiation will influence the negotiation process and outcome. Those based on ethnicity ,identity or geography are more difficult to resolve

11. Immediate context • Relationship between negotiators The history of relations between the parties will influence the current negotiation, just as the current negotiation will become part of any future negotiations between the parties . • Desired outcomes Some tangible and intangible factors play a large role in determining the outcomes of international negotiations.

12. Immediate context • Immediate stakeholders It contains the negotiators themselves and the people they directly represent, such as their managers ,employers and boards of directors. (Phatak and Habib,1996)

13. How do we explain international negotiation outcomes? • As we discussed in figure16.1,(the models from Phatak and Habib). One-variable arguments cannot explain conflicting international negotiation outcomes.(Mayer1992) • The negotiation processes and outcomes are influenced by many factors, and that the influence of these factors can change in magnitude over time. The challenge for every international negotiator is to understand the simultaneous, multiple influences of several factors on the negotiation process and outcome and to update this understanding regularly as circumstance change.

14. 2. Conceptualizing culture and negotiation Four ways to conceptualizing culture in international negotiation: -Culture as Learned Behavior -Culture as Shared Value -Culture as Dialectic -Culture in Context

15. _Culture as Learned Behavior This approach to understanding the effect of culture documents the systematic negotiation behavior of people in different cultures. It concentrates on creating a catalog of behavior at foreign negotiators should expect when entering a host culture

16. _Culture as Shared Value This approach to conceptualizing culture concentrates on understanding central values and norm and then building a model for how these norms and values influence negotiation within that culture . Geert Hofstede (1980a, 1980b,1989,1991) conducted an extensive program of research on cultural dimensions in international business and suggested that four dimensions could be used to describe the important differences

17. among the cultures :•Individualism/Collectivism;• Power Distance ;• Career Success/Quality of Life;• Uncertainty Avoidance;

18. Individualism/Collectivism; Individualisticsocieties encourage their young to be independent and to look after themselves. Collectivistic societies integrate individuals into cohesive groups that take responsibility for the welfare of each individual. Hofstede suggest that focus on relationships in collectivist societies plays a critical role in negotiations, contrast this with individualistic societies, in which negotiators are considered interchangeable, and competency is an important consideration when choosing a negotiation.

19. Power Distance The power distance dimension describes “the extent to which the less powerful members of organization and institutions accept and expect that power is distributed unequally.” According to Hofstede ,cultures with greater power distance will be more likely to concentrate decision making at top, and all important decisions will have to be finalized by the leader..

20. Cultures with lower power distance are more likely to spread the decision making throughout the organization, and while leaders are respected, it is also possible to question their decisions.

21. Career Success/Quality of Life According to Hosstede(1989), this dimension influences negotiation by increasing the competitiveness when negotiators from career success cultures meet; negotiators from quality of life cultures are more likely t have empathy for the other party and to seek compromise.

22. Uncertainty Avoidance This dimension indicates to what extent a culture programs its members to feel either uncomfortable or comfortable in unstructured situations. Negotiators from high uncertainty avoidance cultures are less comfortable with ambiguous and are more likely to seek stable rules and procedures when they are negotiate.

23. Negotiators from low uncertainty avoidance cultures are likely to adapt to quickly changing situations and will be less uncomfortable when the rules of the negotiation are ambiguous or shifting.

24. Shalom schwarz’s 10 cultural values He concentrates on identifying motivational goal underlying cultural values and found 10 values. These 10 values may conflict or be compatible with each other. He also proposed that the 10 values may be represented in two bipolar dimensions: Openness to change /conservatism self-transcendence/ self-enhancement

25. FIGURE 10.2 Schwartz’s 10 cultural Values Self-transcendence Openness To change Self-direction universalism Benevolence Simulation conformity Tradition Hedonism security Achievement Conservation Self-enhancement Power

26. _ Culture as Dialectic Janosik (1987) recognizes that all cultures contain dimensions or tensions that are called dialectics. This approach has advantage over the culture-as-shares-values approach because it can explain variations within cultures.

27. -Culture in Context Tinsley,Brett,Shapiro, and Okumura(2004) proposed cultural complexity theory in which they suggest that cultural values will have a direct effect on negotiations in some circumstances and a moderated effect in others. Values are proposed to have a direct when they have strong effects across several different contexts, whereas values that have a moderated effect are those that have different contextual instigators in the culture.

28. 3.The Influence of Culture on Negotiation. (both the managerial and the research perspectives ) FIRST: The managerial Perspective Cultural differences have been suggested to influence negotiation in several different ways. Table 10.2 summarizes 10 different ways that culture can influence negotiations.

29. TABLE 10.2Ten Ways That Culture Can Influence Negotiation Negotiation FactorsRange of Cultural Responses Contract Relationship Definition of negotiation Negotiation opportunity Distributive Integrative Experts Trust associates Selection of negotiations Informal Formal Protocol Indirect Direct Communication High Low Time sensitivity High Low Risk propensity Collectivism Individualism Groups versus individuals General Specific Nature of agreements Emotionalism High Low

30. SECOND: Research perspective A conceptual model of where culture may influence negotiation has been developed by Jeanne Brett(2001).(see Figure 10.3) His model identifies how the culture of both negotiators can influence the setting of priorities and strategies, the identification of the potential for integrative agreement, and the pattern of interaction between negotiation .

31. Brett suggests that cultural values should have strong effect on negotiation interests and priorities , while cultural norms will influence negotiation strategies and the pattern of interaction between negotiators will also be influenced by the psychological processes of negotiators ,and culture has an influence on these processes.

32. FIGURE 10.3 How Culture Affects Negotiation Interests and priorities Potential for Integrative agreement Interests and priorities Type of agreement Culture B negotiator Culture A negotiator Strategies Pattern of interaction Strategies

33. 4.Culturally Responsive Negotiation Strategies Negotiators should be aware of the effects of cultural differences on negotiation and to take them into account when they negotiate. Stephen Weiss(1994) has proposed a useful way of thinking about the options we have when negotiating with someone from another culture. Weiss’s culturally responsive strategies may be arranges into three groups, based on the level of familiarity (low, moderate, high) that negotiator has with the other party’s culture.

34. Low familiarity Employ Agents or Advisers (Unilateral Strategy) This relationship may range from having the other party conduct the negotiations under supervision (agent) to receiving regular or occasional advice during the negotiation Bring in a Mediator (Joint Strategy) Interpreters will often play this role, providing both parties with more information than the mere translation of words. Mediators may encourage one side or the other to adopt one culture’s approaches or a third culture approach.

35. Moderate Familiarity Adapt to the Other Negotiator’s Approach (Unilateral Strategy) This strategy involves negotiators making conscious changes to their approach so that it is more appealing to the other party. Rather than trying to act like the other party, negotiators using this strategy maintain a firm grasp on their own approach but make modification to help relations with the other person .

36. Coordinate Adjustment (Joint Strategy) This strategy involves both parties making mutual adjustments to find a common process for negotiation. Using this strategy requires a moderate amount of knowledge about the other party’s culture and at least some facility with his or her language.

37. High Familiarity Embrace the Other Negotiator’s Approach (Unilateral Strategy) This strategy involves adopting completely the approach of the other negotiator, the negotiator need to be completely bilingual and bicultural. Improvise an Approach (Joint Strategy) To use this approach, both parties to the negotiation need to have high familiarity with the other party’s culture and a strong understanding of the individual characteristics of the other negotiator.

38. Effect Symphony (Joint Strategy) This strategy allows negotiators to create a new approach that may include aspects of either home culture or adopt practices from a third culture.