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Chapter 11
International and Cross-Cultural Negotiation
Overview
In this chapter, we first discuss some of the factors that make international negotiation different,
including both the environmental context (macropolitical factors) and the immediate context
(microstrategic factors). We then turn to a discussion of the most frequently studied aspect of
international negotiation: the effect of culture be it national, regional, or organizational. We
discuss how culture has been conceptualized, and discuss four approaches to culture used by
academics and practitioners. Next we examine the influence of culture on negotiations,
discussing this from managerial and research perspectives. The chapter concludes with a
discussion of culturally responsive strategies available to the international negotiator.
Learning Objectives
1. What makes international negotiations different?
2. Conceptualizing culture and negotiation.
3. The influence of culture on negotiation from a managerial perspective.
4. The influence of culture on negotiation from a research perspective.
5. Culturally responsive negotiation strategies.
International negotiations are much more complex than domestic negotiations but challenge
the negotiators to understand the science of negotiation while developing their artistry.
I. What Makes International Negotiations Different?
A. Environmental context.
1. Political and legal pluralism.
a) Implications for the taxes that an organization pays, the labor codes or standards
that it must meet, and the different codes of contract law and standards of
enforcement.
b) Political considerations may enhance or detract from the conduct of business
negotiation in various countries at different times.
2. International economics.
a) According to Salacuse (1998), the risk is typically greater for the party who must
pay in the other country’s currency.
b) Any change in value of a currency (upward or downward) can significantly affect
the value of the deal for both parties.
3. Foreign governments and bureaucracies.
a) Firms in the United States are relatively free from government intervention,
although some industries are more heavily regulated than others (e.g. power
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generation, defense) and some states have tougher environmental regulations than
others.
4. Instability.
a) Instability may take many forms, including:
(1) A lack of resources that Americans commonly expect during business
negotiations (paper, electricity, computers);
(2) Shortages of other goods and services (food, reliable transportation, potable
water);
(3) Political instability (coups, sudden shifts in government policy, major
currency revaluation).
5. Ideology.
a) According to Salacuse (1988), Americans believe strongly in:
(1) Individual rights.
(2) The superiority of private investment.
(3) The importance of making a profit in business.
6. Culture.
a) According to Salacuse (1998), people in some cultures approach negotiations
deductively (they move from the general to the specific) whereas people from
other cultures are more inductive (they settle on a series of specific issues that
become the area of general agreement).
7. External stakeholders.
a) Phatak and Habib defined stakeholders to include:
(1) Business associations.
(2) Labor unions.
(3) Embassies.
(4) Industry associations.
B. Immediate context.
1. Relative bargaining power.
a) Joint ventures have been the subject of a great deal of research on cross-border
negotiations, and relative power has frequently been operationalized as the
amount of equity (financial and other investment) that each side is willing to
invest in the new venture (see Yan and Gray, 1994 for a review).
b) The presumption is that the party who invests more equity has more power in the
negotiation and therefore will have more influence on the negotiation process and
outcome.
2. Levels of conflict.
a) High-conflict situations, or conflicts that are ethnically, identity, or geographically
based, will be more difficult to resolve.
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3. Relationship between negotiators.
a) Negotiators are part of the larger relationship between two parties.
4. Desired outcomes.
a) Tangible and intangible factors will play a large role in determining the outcomes
of cross-borders negotiations.
5. Immediate stakeholders.
a) Immediate stakeholder negotiations include:
(1) Managers.
(2) Employers.
(3) Boards of directors (Phatak and Habib, 1996).
b) Skills, abilities, and international experience of the negotiators themselves clearly
can have a large impact on the process and outcome of cross-border negotiations.
II. Conceptualizing Culture and Negotiation
A. Culture as learned behavior.
1. The first approach to understanding the effects of culture concentrates on
documenting the systematic negotiation behavior of people in different cultures.
2. Rather than focusing on why members of a given culture behave in certain ways, the
pragmatic, nuts-and-bolts approach concentrates on creating a catalogue of behaviors
that the foreign negotiator should expect when entering a host culture (Janosik, 1987).
B. Culture as shared values.
1. The second approach concentrates on understanding the central values and norms of a
culture and then building a model for how these norms and values influence
negotiations within that culture (see Faure, 1999; Sebenuis, 2002a).
2. Geert Hofstede (1980a, 1980b, 1989, 1991) conducted an extensive program of
research on cultural dimensions in international business. Four dimensions could be
used to describe the important differences among the cultures in the study:
individualism/collectivism, power distance, career success-quality of life, and
uncertainty avoidance.
a) Individualism/collectivism.
(1) This dimension describes the extent to which a society is organized around
individuals or the group.
(2) Individualistic societies encourage their young to be independent and to look
after themselves.
(3) Collectivistic societies integrate individuals into cohesive groups that take
responsibility for the welfare of each individual.
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b) Power distance.
(1) The power distance dimension describes “the extent to which the less
powerful members of organizations and institutions (like the family) accept
and expect that power is distributed unequally” (Hofstede, 1989).
(2) Cultures with low 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.
c) Career success/quality of life.
(1) Cultures promoting career success were characterized by “the acquisition of
money and things, and not caring for others, the quality of life, or people.”
(2) Cultures promoting quality of life were characterized by concern for
relationships and nurturing.
d) Uncertainty avoidance.
(1) Uncertainty avoidance “indicates to what extent a culture programs its
members to feel either uncomfortable or comfortable in unstructured
situations.”
e) The culture-as-shared-value perspective provides explanations for why cross-
cultural negotiations are difficult and have a tendency to break down.
C. Culture as dialectic.
1. The third approach to using culture to understand global negotiation identified by
Janosik (1987) recognizes that, among their different values, all cultures contain
dimensions or tensions that are called dialectics.
2. According to Janosik (1987), the culture-as-dialectic approach has advantages over
the culture-as-shared-values approach because it can explain variations within
cultures.
3. Recent theoretical work by Gelfand and McCusker (2002) provides a similar way to
examine the effects of culture on negotiation but through examining cultural
metaphors rather than dialectics. Cultural negotiation metaphors help people
understand things that happen in negotiation and “make sense” of them.
D. Culture in context.
1. Proponents of the fourth approach to using culture to understand negotiations across
borders recognize all behavior may be understood at many different levels
simultaneously, and a social behavior as complex as negotiation is determined by
many different factors, one of which is culture.
2. 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.
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3. The culture-in-context models are becoming more and more complex in order to
explain nuanced differences in cross-cultural negotiations, thus are becoming less
useful for practitioners.
III. The Influence of Culture on Negotiation: Managerial Perspectives
A. Definition of negotiation.
1. The fundamental definition of negotiation, what is negotiable, and what occurs when
we negotiate can differ greatly across cultures (see Ohanyan, 1999; Yook and Albert,
1998).
B. Negotiation opportunity.
1. Cross-cultural negotiations will be influenced by the extent that negotiators in
different cultures have fundamental agreement or disagreement about whether or not
the situation is distributive or integrative.
C. Selection of negotiators.
1. Different cultures weigh the criteria to select negotiators differently, leading to
varying expectations about what is appropriate in different types of negotiations.
D. Protocol.
1. Cultures differ in the degree to which protocol, or the formality of the relations
between the two negotiating parties, is important.
E. Communication.
1. Cultures influence how people communicate, both verbally and nonverbally. There
are also differences in body language across cultures.
F. Time Sensitivity.
1. Other cultures have quite different views about time.
2. The opportunity for misunderstandings because of different perceptions of time is
great during cross-cultural negotiations.
G. Risk propensity.
1. Negotiators in risk-oriented cultures will be more willing to move early on a deal and
will generally take more chances.
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2. Those in risk-avoiding cultures are more likely to seek further information and take a
wait-and-see stance.
H. Groups versus individuals.
1. The United States is very much an individual-oriented culture, where being
independent and assertive is valued and praised.
2. Group-oriented cultures, in contrast, favor the superiority of the group and see
individual needs as second to the group’s needs.
I. Nature of agreements.
1. Cultural differences in how to close an agreement and what exactly that agreement
means can lead to confusion and misunderstandings.
J. Emotionalism.
1. Culture appears to influence the extent to which negotiators display emotions
(Salacuse, 1998). These emotions may be used as tactics, or they may be a natural
response to positive and negative circumstances during the negotiation (see Kumar,
2004).
IV. The Influence of Culture on Negotiation: Research Perspectives
A. Effects of culture on negotiation outcomes.
1. Researchers initially explored the fundamental question of how culture influences
negotiation outcomes. Two approaches were taken to explore this question.
a) Intracultural ‒ researchers compared the outcomes of the same simulated
negotiation with negotiators from several different cultures who only negotiated
with other negotiators from their own culture.
b) Cross-cultural ‒ researchers investigated this by comparing negotiation outcomes
when negotiators negotiated with people from the same culture with outcomes
when they negotiated with people from other cultures.
2. Research has found, however, that negotiators in collectivist cultures are more likely
to reach integrative outcomes than negotiators in individualist cultures.
a) Research has found that negotiators in collectivist cultures are more likely to
reach integrative outcomes than negotiators in individualist cultures (Lituchy,
1997; Arunachalam, Wall, and Chan, 1998).
b) Brett, Adair, Lempereur, Okumura, Shihkirev, Tinsley, and Lytle (1998)
compared intracultural negotiators in six different cultures (France, Russia, Japan,
Hong Kong, Brazil, United States) and found differences in joint gains achieved.
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3. The other approach to exploring cultural effects on negotiation outcomes compared
the negotiation outcomes of intracultural and cross-cultural negotiations.
a) Cross-cultural negotiations will result in poorer outcomes compared to
intracultural negotiations, at least some of the time.
4. Research suggests that culture does have an effect on negotiation outcomes, although
it may not be direct, and it likely has an influence through differences in the
negotiation process in different cultures.
5. There is some evidence that cross-cultural negotiations yield poorer outcomes than
intracultural negotiations.
B. Effects of culture on negotiation process and information exchange.
1. Graham and his colleagues found significant differences in the negotiation strategies
and tactics in the cultures they studied (also see Graham, Evenko, and Rajan, 1992).
2. Cai (1998) demonstrated how individualism/collectivism influenced negotiation
planning: Negotiators from a more collectivist culture (Taiwan) spent more time
planning for long-term goals, while negotiators from a more individualistic culture
(the United States) spent more time planning for short-term goals.
3. Adair, Brett, Lempereur, Okumura, Shikhiriv, Tinsley, and Lytle (2004) found
considerable difference in direct information sharing, with negotiators from the
United States most likely to share information directly. In addition, they found that
while U.S. and Japanese negotiators both maximized their joint gains, they took
different paths to do so.
a) direct information exchange.
b) indirect information exchange.
4. Adair (2003) found that culture led to different communication patterns in
intracultural negotiations, with negotiators from low-context cultures tending to use
direct communication while negotiators from high-context cultures used more
indirect communication.
5. The Rosette, Brett, Barsness, and Lytle (2004) study suggests that culture has an
effect on the process of e-mail negotiations, which in turn appears to influence
negotiation outcomes.
C. Effects of culture on negotiator cognition.
1. Researchers are working to understand how culture influences the way that
negotiators process information during negotiation and how this in turn influences
negotiation processes and outcomes.
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a) Gelfand and Realo (1999) found that accountability to a constituent influenced
negotiators from individualistic and collectivistic cultures differently.
b) Gelfand, Nishii, Holcombe, Dyer, Ohbuchi, and Fukuno (2001) suggest that there
are some universal ways of framing conflict (e.g., compromise-win) but there are
also significant culturally specific ways.
2. Another way to explore the influence of culture on negotiator cognition is to examine
the extent to which well-known cognitive effects identified in Western cultures occur
in other cultures.
3. Gelfand and Christakopoulou (1999) found that negotiators from an individualistic
culture (the United States) were more susceptible to fixed-pie errors than were
negotiators from a more collectivist culture.
D. Effects of culture on negotiator ethics and tactics.
1. Researchers have recently turned their attention to examining ethics and negotiation
tactics in cross-cultural negotiations by exploring the broad question of whether
negotiators in different cultures have the same ethical evaluation of negotiation
tactics.
V. Culturally Responsive Negotiation Strategies
A. Several factors suggest that negotiators should not make large modifications to their
approach when negotiating cross-culturally, however:
1. Negotiators may not be able to modify their approach effectively. It takes years to
understand another culture deeply, and negotiators typically do not have the time
necessary to gain this understanding before beginning a negotiation.
2. Even if negotiators can modify their approach effectively, it does not mean that this
will translate automatically into a better negotiation outcome.
3. Research by Francis (1991) suggests that moderate adaptation may be more effective
than “acting as the Romans do.”
B. Recent research findings have provided some specific advice about how to negotiate
cross-culturally. Rubin and Sander (1991) suggests that during preparation, negotiators
should concentrate on understanding three things.
1. Their own biases, strengths, and weaknesses.
2. The other negotiator as an individual.
3. The other negotiator’s cultural context.
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C. Weiss’s (1994) culturally responsive strategies may be arranged into three groups, based
on the level of familiarity (low, moderate, high) that a negotiator has with the other
party’s culture. Within each group there are some strategies that the negotiator may use
individually (unilateral strategies) and others that involve the participation of the other
party (joint strategies).
1. Low familiarity.
a) Employ agents or advisers (unilateral strategy).
b) Bring in a mediator (joint strategy).
c) Induce the other party to use your approach (joint strategy).
2. Moderate familiarity.
a) Adapt to the other party’s approach (unilateral strategy).
b) Coordinate adjustment (joint strategy).
3. High familiarity.
a) Embrace the other negotiator’s approach (unilateral strategy).
b) Improvise an approach (joint strategy).
c) Effect symphony (joint strategy).
Summary
This chapter examined what makes international and cross-cultural negotiation different. Phatak
and Habib (1996) suggest that both the environmental and the immediate context have important
effects on international negotiations. We focused on Salacuse’s description of the environmental
factors that influence international negotiations: (1) political and legal pluralism, (2)
international economics, (3) foreign governments and bureaucracies, (4) instability, (5) ideology,
(6) culture, and (7) external stakeholders. Phatak and Habib’s five immediate context factors
were examined next: (1) relative bargaining power, (2) levels of conflict, (3) relationship
between negotiators, (4) desired outcomes, and (5) immediate stakeholders. Each of these
environmental and immediate context factors acts to make international negotiations more
difficult, and effective international negotiators need to understand how to manage them.
Next we discussed how to conceptualize culture. Robert Janosik (1987) suggests that researchers
and practitioners of negotiation use culture in at least four different ways: (1) culture as learned
behavior, (2) culture as shared values, (3) culture as dialectics, and (4) culture in context. We
then examined two perspectives on how cultural differences can influence negotiations. From the
managerial perspective, 10 ways were outlined where culture can influence negotiation: (1) the
definition of negotiation, (2) the negotiation opportunity, (3) the selection of negotiators, (4)
protocol, (5) communication, (6) time sensitivity, (7) risk propensity, (8) groups versus
individuals, (9) the nature of agreements, and (10) emotionalism. From the research perspective,
we examined the effect of culture on negotiation outcomes, negotiation process, and negotiator
ethics.
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The chapter concluded with a discussion of how to manage cultural differences in negotiation.
Weiss presents eight different culturally responsive strategies that negotiators can use with a
negotiator from a different culture. Some of these strategies may be used individually, whereas
others are used jointly with the other negotiator. Weiss indicates that one critical aspect of
choosing the correct strategy for a given negotiation is the degree of familiarity (low, moderate,
or high) that a negotiator has with the other culture. However, even those with high familiarity
with another culture are faced with a daunting task if they want to modify their strategy
completely when they deal with the other culture.