1. Cross-Cultural Negotiation
Chapter 5:
Cross-Cultural Negotiation
and Decision Making
Ninth
Edition
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© 2010 Pearson Prentice Hall

2. Chapter Learning Goals
To become familiar with the role of negotiation in implementing a firm’s strategy, and the various stakeholders who must be considered
To learn the stages of the negotiation process and how to prepare for cross- cultural business negotiations
To gain insight into the various types of negotiating styles around the world
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3. Chapter Learning Goals
To recognize that managing negotiation requires learning about the culturally based behavioral differences, values, and agendas of the negotiating parties and how to build trust for successful negotiations
To learn the complexities of negotiating with the Chinese
To appreciate the variables in the decision- making process and understand the influence of culture on decision making
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4. Opening Profile: Facebook’s Continued Negotiations in China
Facebook has more than 1.4 billion active users as of 2015; if it were a country, it would be the world’s third most populous country
However, Facebook is banned in China for six years as of 2015, although many go around the restrictions
China has substantial legal and regulatory complexities that have prevented entry
If Facebook fails to manage global operations successfully, business may suffer
Facebook is profiting by advertising for Chinese businesses in spite of the blockage of its primary activity
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5. Chapter Learning Goals
To become familiar with the role of negotiation in implementing a firm’s strategy, and the various stakeholders who must be considered
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6. Negotiations by Global Managers
Specific plans for strategies and for continuing operations
May also be faced with negotiating with government-owned companies
Managers must prepare; operational details must be negotiated: staffing, raw materials, repatriating profits, etc
Decision-making processes are key
As illustrated in the opening profile, global mangers negotiate with parties in other countries to make specific plans for strategies and for continuing operations. While the complexities of cross-cultural negotiations among firms around the world present challenge enough, managers may also be faced with negotiating with government-owned companies. Google’s negotiation with Chinese government, as another example, ended in a compromise that to enter the Chinese market the company had to obey China’s censorship laws and agree to purge its search results of any websites disapproved of by the Chinese government.
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7. Negotiation
The process of discussion by which two or more parties aim for mutually acceptable agreement
The ability to negotiate effectively is viewed as one of the most important skills managers can have. Difficult at the best of times, negotiation becomes even more complex and challenging when it takes place between people of different cultural values, lifestyles, expectations, languages, and problem-solving techniques. For example, cultural differences in negotiation may concern the extent to which parties emphasize the task over relationships, spend time in preparation, rely on general principles rather than specific issues, and engage many or few people in the process.
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8. Important Differences
Amount and type of preparation
Tasks vs. interpersonal relationships
General principles vs. specific issues
Number of people present and their influence
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9. Stakeholders in Cross-Cultural Negotiation
An additional problem is that there is often a greater number of stakeholders involved in international negotiations.
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10. Chapter Learning Goals
To learn the stages of the negotiation process and how to prepare for cross-cultural business negotiations
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11. The Negotiation Process
Negotiations generally proceed in five stages: preparation, relationship building, exchanging task-related information, persuasion, and concessions and agreement. In reality, these stages may overlap and negotiators may temporarily revert back to a previous stage.
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12. Negotiations generally proceed in five stages: preparation, relationship building, exchanging task-related information, persuasion, and concessions and agreement. In reality, these stages may overlap and negotiators may temporarily revert back to a previous stage.
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13. Stage One: Preparation
Develop profile of counterparts.
Find out likely demands, team composition, and counterpart authority.
Choose a negotiation site.
British/French Chunnel
negotiations
The importance of careful preparation for cross-cultural negotiations cannot be overstated. To the extent that time permits, a distinct advantage can be gained if negotiators familiarize themselves with the entire context and background of their counterparts (no matter where the meetings will take place) in addition to the specific subjects to be negotiated.
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14. The importance of careful preparation for cross-cultural negotiations cannot be overstated. To the extent that time permits, a distinct advantage can be gained if negotiators familiarize themselves with the entire context and background of their counterparts (no matter where the meetings will take place) in addition to the specific subjects to be negotiated.
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15. Stage Two: Relationship Building
Getting to know one’s contacts
and building mutual trust
Non-task sounding
Use an intermediary.
“I have come as a mediator…”
The process of relationship building is usually regarded with more significance in other countries than it is in the US—where negotiators typically want to get down to business as quickly as possible.
In many countries, personal commitment, rather than the legal system, form the basis of contract enforcement. Relationship building may entail social events, tours, ceremonies, and non-task sounding—general polite conversation and informal communication before the meeting.
It usually is recommended that managers new to a given scenario use an intermediary—someone who already has the trust of the foreign managers and, thus, acts as a “relationship bridge.”
In Getting to Yes, Fisher and Ury provide a good example of the importance of relationship-building and preparation. When UN Secretary General Kurt Waldheim arrived in Tehran to negotiate the hostage situation in 1980, he stated, “I have come as a mediator to work out a compromise.” His statement essentially translates in Persian as, “I have come as a meddler to make you surrender your principles.”
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16. The process of relationship building is usually regarded with more significance in other countries than it is in the US—where negotiators typically want to get down to business as quickly as possible.
In many countries, personal commitment, rather than the legal system, form the basis of contract enforcement. Relationship building may entail social events, tours, ceremonies, and non-task sounding—general polite conversation and informal communication before the meeting.
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17. It usually is recommended that managers new to a given scenario use an intermediary—someone who already has the trust of the foreign managers and, thus, acts as a “relationship bridge.”
In Getting to Yes, Fisher and Ury provide a good example of the importance of relationship-building and preparation. When UN Secretary General Kurt Waldheim arrived in Tehran to negotiate the hostage situation in 1980, he stated, “I have come as a mediator to work out a compromise.” His statement essentially translates in Persian as, “I have come as a meddler to make you surrender your principles.”
Copyright ©2014 Pearson Education, Inc. publishing as Prentice Hall

18. Stage Three: Exchanging Task-Related Information
Cultural differences remain an
issue.
The French enjoy debate and
conflict.
Mexicans can be suspicious and
indirect.
The Chinese ask many questions,
but provide ambiguous
information in return
Show understanding of the
other viewpoint
In this stage, each side typically makes a presentation and states its position. Then, there is a question-and-answer period, and alternatives are discussed.
To Americans, this phase is straightforward, objective, efficient, and understandable. Negotiators from other countries, however, may continue to be indirect during this stage.
Adler suggests the most effective negotiators practice role reversal to show understanding of their counterpart’s viewpoint. Doing so may open up a wider range of alternative solutions.
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19. Stage Four: Persuasion
Dirty tricks are in the eye of the beholder
False information
Ambiguous authority
Non-verbal messages
Individualism vs.
Collectivism
In this phase both parties try to persuade the other to accept more of one position and give up some of the other. Managers may find bargaining and making concessions to be fraught with difficulties because of different uses and interpretations of verbal and nonverbal behaviors.
Dirty tricks include efforts to deliberately mislead opponents—e.g., by giving wrong or distorted factual information and using ambiguous authority. Other techniques are intended to place opponents in physically or psychologically stressful situations so that they will give in. It is important to keep in mind, though, that what is a “dirty trick” to Americans may be accepted conduct in other cultures.
It also is important to recognize the relevance of nonverbal behaviors. Nonverbal cues often are ingrained in our behavior, and we do not change them for the purposes of negotiation. The latter is important because different cultures have different nonverbal behaviors. For example, Brazilians interrupt more often and use more touching than Japanese or Americans. The Japanese use more silent periods.
Though persuasion is treated here as a distinct stage, it often underlies all stages of negotiation.
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20. Stage Five: Concessions and Agreement
Russians and Chinese start
with extreme positions
Swedes start with what
they will accept
Starting with extremes may
be most effective
Linear vs. holistic
Importance of contracts
Well-prepared negotiators are aware of various concession strategies across cultures and have decided ahead of time what their own strategy will be.
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21. Chapter Learning Goals
To learn the complexities of negotiating with the Chinese.
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22. Management Focus: Negotiating with the Chinese
Beijing (capital) “Political, bureaucratic, educated, diversified, high relationship orientation, more direct, high ‘face.’”
Shanghai (commercial center) “Business savvy, focus on details, bottom line, career- oriented younger people, materialistic, confident.”
Guangzhou/Shenzhen (south, near Hong Kong) “Entrepreneurial, hard-working, manufacturing center, outside the norm, more risk-taking, like Hong Kong, more informal.”
Western China (Chengdu/Chongqing) “Traditional ‘People’s’ mentality, less experience with international business/negotiations, socializing importance.
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23. Comparative Management in Focus: Negotiating with Chinese
Two problems:
Chinese desire for details
Apparent insincerity
Saving face:
Lien
Mien-tzu
Importance of harmony
Guanxi
Guanxihu networks
Two stages of Chinese negotiation
Technical
Commercial
The negotiation process the Chinese use is mystifying to most Westerners.
Two major areas of conflict with the Chinese are their desire for a large amount of detail about product characteristics and their apparent insincerity about reaching an agreement. Regarding the latter, the Chinese often have little authority to close a deal. They must report to the government trade corporations, which often have a representative on the negotiation team. As such, Chinese negotiators are constrained within the framework of state planning and political ideals.
When confronted with aggressive and emotional attempts at persuasion, the Chinese often respond with negative strategies, such as discontinuing or withdrawing from negotiation. The concept of “face” is at the heart of such responses.
There are two components of face. Lien refers to a person’s moral character, and it is considered the most important thing defining a person. Mien-tzu refers to one’s reputation or prestige, earned through bureaucratic or political power. In negotiations, it is important not to act as though you have “won” because that implies the other party has “lost” and they will lose face.
Strong social obligations and the need for harmony (i.e., in terms of personal relationships, trust, and ritual) underlie Chinese negotiations. Guanxi refers to the intricate, pervasive network of personal relations that every Chinese personally cultivates. Guanxi establishes obligations to exchange favors in future business activities. Firms that have special guanxi connections and give preferential treatment to one another are known as members of guanxihu networks. The Chinese also expect corporate goals and profit to be subordinate to friendship, national development, and mutual benefit.
Americans often experience two stages of negotiation with the Chinese. During the technical stage, every detail of the proposed product specifications and technology is hammered out. The commercial stage deals with aspects of production, marketing, and pricing.
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24. Comparative Management in Focus: Negotiating with Chinese
Some recommendations:
Practice patience
Accept prolonged stalemate
Refrain from exaggerated expectations
Establish a contact in China
Remember to save ‘face’ for everyone
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25. Chapter Learning Goals
To gain insight into the various types of negotiating styles around the world
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26. Comparison of Negotiation Styles
Japanese
North American
Latin American
Hide emotions
Deal impersonally
Emotionally passionate
Subtle power plays
Litigation, not conciliation
Great power plays
Step-by-step approach
Methodological organization
Impulsive, spontaneous
Group good is the aim
Profit is the aim
Group/
individual good is aim
This slide highlights some of the information in Exhibit 5-3 and illustrates some differences in negotiation styles between the Japanese, North Americans, and Latin Americans.
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27. Successful Negotiators: Americans
Knows when to compromise, but stands firm at the beginning. Accept compromises only when there is a deadlock
Refuses to make concessions beforehand and keeps his/hers cards close to chest
Keeps a maximum of options open before negotiation, operate in good faith
States his/her position as clearly as possible, respects the “opponents”
Is fully briefed about the negotiated issues, has a good sense of timing and is consistent
The text provides additional characteristics of American, Indian, Arab, Swedish, and Italian negotiators.
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28. Successful Negotiators: Indians
Look for and say the truth, not afraid to speak up
Exercise self-control
Respect other party, look for solutions acceptable to all parties
Will change their minds, even at risk of seeming inconsistent and unpredictable
Humble and trusts the opponent
Indians often follow Gandhi’s approach to negotiation (satyagraha), which combines strength with a love of truth.
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29. Successful Negotiators: Arabs
Protect honor, self-respect, dignity, and, thus, are trusted and respected
Avoid direct confrontation
Come up with creative, honorable solutions.
Are impartial and can resist pressure
Can keep secrets
Controls temper and emotions
Many Arabs, following Islamic tradition, use mediators to settle disputes.
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30. Successful Negotiators: Swedes
Quiet, thoughtful, polite, straightforward
Overcautious, but flexible
Slow to react to new proposals, but eager to be productive and efficient
Able to hide emotions, afraid of confrontation
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31. Successful Negotiators: Italians
Have a sense of drama, do not hide emotions
Good at reading facial expressions and gestures
Want to make a good impression and use flattery, but are distrusting
Handle confrontation with subtlety and tact
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32. Managing Negotiation Avoid person-related conflicts. Examples
Low-context Americans appear impatient, cold, and blunt to Mexicans.
Americans must approach negotiations with Mexicans with patience; refrain from attacking ideas.
Person-related conflict in negotiation is likely to invite negative and relationship-oriented (i.e., as opposed to information-oriented) responses. As such, the nature and appearance of the relationship between negotiators needs to be carefully addressed.
Research by Husted suggests many of the problems stem from whether a culture is individual vs. collective and whether it is high vs. low context. Husted’s research provides examples between Americans and Mexicans.
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33. Cross-Cultural Negotiation Variables
Successful management of negotiation requires the negotiator to go beyond the general issues and variables involved. Rather, he or she must gain specific knowledge of the parties, prepare accordingly to adjust to and control the situation, and be innovative.
Research suggests skillful negotiators tend to consider a wider range of options, pay greater attention to areas of common ground, make more comments regarding long-term issues, make fewer irritating comments (e.g., “We’re making a generous offer”), make counterproposals less frequently, and use fewer reasons to back up arguments. They also practice active listening—asking questions, clarifying understanding, and summarizing.
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34. Successful Negotiators
Consider a wider range of options and pay greater attention to areas of common ground
Tend to make twice as many comments regarding long-term issues
More likely to set upper and lower limits regarding specific points
Make fewer irritating comments: “We’re making you a generous offer”
Make counter proposals less frequently and use fewer reasons to back up arguments
Actively listen
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35. Using the Internet to Support Negotiations
Negotiation Support System (NSS)
Web Application
Increase likelihood of agreement
Decrease direct and indirect costs
Maximize optimal outcomes
Provide support for phases and dimensions such as:
Multiple-issue, multiple- party business transactions of a buy-sell nature
International dispute resolution
Internal company negotiations and communications
Though face-to-face interaction is likely to remain necessary for most negotiations, the web and technology can provide useful support to the negotiation process.
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36. E-Negotiations Speed Less travel
Advantages
Disadvantages
Speed
Less travel
Laying out much objective information over time
Not being able to build trust and interpersonal relationships
Nonverbal nuances are lost
Video conferencing may be a good compromise
Though face-to-face interaction is likely to remain necessary for most negotiations, the web and technology can provide useful support to the negotiation process.
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37. Managing the Conflict Resolution
To negotiate on the basis of factual information and logical analysis
Instrumental-Oriented Conflict
To handle a situation indirectly and implicitly, without clear delineation of the situation by the person handling it
Expressive-Oriented Conflict
Instrumental oriented conflict resolution often is used by Americans and in other low-context cultures. It entails addressing conflict directly and explicitly, and conceptually separating the conflict from the person doing the negotiation. This type of conflict resolution is often based on factual information and logical analysis.
High-context cultures tend to use expressive oriented conflict resolution. In this case, conflict is treated indirectly and implicitly. Negotiators want to avoid confrontation because it is viewed as insulting and can cause loss of face. As an alternative, they rely on evasion and avoidance.
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38. Negotiation Conflicts Between Low Context and High Context Cultures
Low Context Conflict Area
High Context Conflict Area
Explicit and direct, linear presentation of facts
Individualistic, short-term oriented
Task-oriented, up-front, impatient
Implicit, circular logic
Collective, decisions by consensus; long-term oriented
“Face” and relationship-oriented; non-confrontational, patient
Exhibit 5-7 provides more examples of how conflict may arise and be dealt with among low-context and high-context negotiators.
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39. The Influence of Culture on Decision Making
Individualism VS Collectivism
Objective VS Subjective
Risk Tolerance VS Risk Avoidance
Negotiation represents a series of small and large decisions—from determining an initial position and fallback plans, to deciding how to react and proceed during the negotiation process, to determining on what to agree or disagree. Decision making also permeates a manager’s day-to-day routine.
The extent to which decision making is influenced by cultures varies among countries. For instance, Koreans, who are more collectivistic, tend to have more homogenous models regarding decision making. Individualistic Americans, however, tend to exhibit more varied decision patterns.
The objective approach to decision making is based on rationality; whereas the subjective approach is based on emotion. The objective approach is common in the US, and the subjective approach is common in Latin America.
People from Belgium, Germany, and Austria have lower tolerance for risk than people from Japan or the Netherlands. Americans have the highest tolerance for risk.
Managers with an external locus of control feel they can control events that will direct the future in a desired way (example: US). Those with an internal locus of control believe such decisions are of no value because they have little control over the future (example: Indonesia, Malaysia).
Some managers value decisions based on past experience and tend to emphasize quality (example: Europe). Others are more future oriented and look toward new ideas to get them there (example: US).
Uncertainty VS Familiarity
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40. Approaches to Decision Making
Utilitarianism VS Moral Idealism
Autocratic VS Participative
Value systems also influence the overall approach of decision makers from various cultures.
Utilitarianism tends to guide the behavior of Western managers, who favor a short-term, cost-benefit approach to decision making. Alternatively, Chinese managers approach problems from the standpoint of moral idealism and favor long-term, societal approaches to decision making.
In hierarchical societies, such as Germany, Turkey, and India, authorization has to come from the upper echelons of management. Employees expect the boss to do the decision making. Alternatively, decision making in Sweden is more decentralized and participative. Japan tends to be very participatory and is known for bottom up decision-making. Americans probably fall somewhere in the middle regarding the level of participatory decision making—though they talk a great deal about its usefulness.
As decision making becomes more participatory, it often becomes slower. Nonetheless, different cultures may have different approaches regarding the speed of decision making. North Americans and Europeans pride themselves of being decisive. In the Middle East, managers associate the importance of a matter with the time necessary to reach a decision.
Slow Pace VS Fast Pace
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41. Chapter Learning Goals
To recognize that managing negotiation requires learning about the culturally based behavioral differences, values, and agendas of the negotiating parties and how to build trust for successful negotiations
Copyright ©2017 Pearson Education, Inc.

42. Cultural Variables in Decision-Making Process
Exhibit 5-7 summarizes how the variables just discussed can affect the steps in the decision making process.
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43. Under the Lens: Negotiations and Decisions to Save the Eurozone System
The negotiations in eurozone countries and the International Monetary Fund centered on a rescue for Greece, which was threatened with default
Austerity cuts were implemented in Greece in order to receive bailout money to avert default
Cultural, historical, and lifestyle differences brought out old prejudices that nearly derailed negotiations
Negotiations were undermined by a lack of trust
The extent to which decision making is influenced by culture varies among countries
One variable is whether a people assume an objective or a subjective approach
In 2012, a major issue at the intersection of politics, economics, and business was how the eurozone crisis would be resolved. The outcome of the negotiations and decisions among representatives of the euro countries would have lasting repercussions for businesses around the world and European businesses
in particular.
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44. Chapter Learning Goals
To appreciate the variables in the decision-making process and understand the influence of culture on decision making
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45. Comparative Management in Focus: Decision Making in Japanese CompaniesWa
Amae
Shinyo
Ringi
Amae is the Japanese concept of “indulgent love,” and was is one aspect of amae. Wa means “peace and harmony,” and it is the building block of Japanese management—as indicated by the emphasis on cooperation, participative management, consensus problem solving, and long-term decision making. Amae results in shinyo, which refers to the mutual confidence, faith, and honor required for successful business relationships.
These elements generally result in a devotion to work, a collective responsibility for decisions and actions, and a high degree of employee productivity. This culture and shared responsibility underlie the ringi system of decision making.
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46. Comparative Management in Focus: Decision Making in Japanese Companies
Exhibit 5-9 shows the decision-making process in Japanese companies.
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47. Conclusion
Managers need working knowledge of decision- making processes and negotiating tactics used by managers in different countries
It is important to understand the cultural variables that influence negotiations and decision making, and how they influence these activities
Managers should prepare for, and conduct negotiations with cultural sensitivity
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