International Negotiation 16 (2011) 511533

brill.nl/iner

Culture and International Alliance Negotiations:

A Sensemaking Perspective
Rajesh Kumar* and Gerardo Patriotta**
Management Division, University of Nottingham Business School,
Wollaton Road, Nottingham NG8 1BB, United Kingdom
(E-mail: rajesh.kumar@nottingham.ac.uk; gerardo.patriotta@nottingham.ac.uk)
Received 8 November 2010; accepted 26 March 2011

Abstract
International alliance negotiations are now a pervasive feature of the contemporary global economy. As
the alliancing rms cross national boundaries to forge cooperative partnerships they face the inevitable
necessity of bridging the cultural divide to ensure successful negotiation. Existing research has focused
primarily on the impact of national cultural dierences in shaping negotiating strategies and ensuing
outcomes. Less attention has been paid to how negotiators from dierent cultures understand and manage the ambiguity of international alliance negotiations. We employ the theoretical lens of sensemaking
to understand how negotiators embedded in dierent cultures manage simultaneously the task and cultural related ambiguity that they are confronted with. This perspective suggests the critical role that tertius iungens (the third who joins) plays in facilitating the negotiation process. The tertius iungens
represents a form of intermediation that acts as a catalyst in the negotiation process. We propose three
alternative types of intermediation, namely, cognitive, aective, and holistic and provide illustrative
examples of these types of intermediation. We conclude by highlighting the theoretical and managerial
signicance of our framework and by suggesting future directions for research.
Keywords
alliances, ambiguity, cross cultural, negotiations, intermediation, sense making

Negotiating successful international alliances has increasingly become an important component of a rms global strategy. Yet, this is easier said than done, for

*) Rajesh Kumar is an Associate Professor of International Business Strategy at the University of

Nottingham. He has a Ph.D. in International Business from New York University. His research interests
encompass cross-cultural negotiations, strategic collaboration and institutional theory. He is the author
of a book (with Verner Worm), International Negotiations in China and India: A Comparison of the Big
Emerging Giants, London: Palgrave-Macmillan, 2011.
**) Gerardo Patriotta is Associate Professor of Organizational Behavior at the Nottingham University
Business School, UK. He received his Ph.D. in Business Studies from the University of Warwick, UK.
His research interests include organizational knowledge, organizational sensemaking, and the study of
institutionalization processes in organizations. He is the author of Organizational knowledge in the making: how rms create, use, and institutionalize knowledge, published by Oxford University Press.
Koninklijke Brill NV, Leiden, 2011

DOI: 10.1163/157180611X592978

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the alliancing rms must learn to successfully navigate the cultural divide. A considerable body of literature attests to the impact of national culture on the negotiating processes and outcomes (e.g., Adair and Brett 2005; Weiss 2006). A major
theme in this literature is that culture shapes the negotiation scripts that are utilized by members of dierent cultures (Kumar 1999a). Dierences in negotiation
scripts may lead to impasses or prevent the emergence of an integrative agreement
(Kumar 1999b). Although this stream of literature has been useful in enhancing
our understanding of how culture inuences negotiation strategies and perceptions of outcomes, much of this research has not explicitly assessed the impact of
culture in the context of international alliance negotiations. This may be limiting
for a number of reasons. First, existing research suggests that the impact of culture
on negotiations is context dependent (Leung et al. 2005). If context matters, then
one has to explicitly assess the impact of culture in the context of a specic negotiating situation. Negotiating an alliance is a more complex undertaking than
negotiating a buyer seller agreement and its complexity is further enhanced when
negotiators have to cross cultural boundaries (Meglino, Ravlin, and Adkins 1989).
As complexity increases so does the level of ambiguity that negotiators have to
deal with. Culture may thus exert a more insidious and a more profound impact
on international alliance negotiations than in negotiations that are simpler, such
as buyer and seller negotiations. For example, ambiguity may lessen negotiators
sense of control and in doing so, it may enhance their perception of threat confronting them. This may provoke a threat rigidity response (Staw et al. 1981),
with the negotiators reverting to their dominant response, which is shaped by
culture.
It would therefore be useful to enrich the existing literature on culture and
negotiations by exploring the interplay between culture and negotiations in the
context of alliance negotiations that have become both more prevalent and are
characterized by a high level of ambiguity. It is also worth noting that much of the
existing research linking culture to negotiations has been experimental with much
more of a focus on assessing the impact of culture on negotiation strategies and
outcomes, and less on how the negotiators simultaneously deal with the issue of
both task and cultural ambiguity in a negotiating context. This would be an
important extension to the literature as managing task and cultural ambiguity
require dierent approaches and this is not an issue that has been addressed in
either the negotiation or the strategic alliance literature to date. A further observation is that there is a dearth of studies that have explicitly investigated the
negotiation processes in alliance formation, either theoretically or empirically,
and fewer still that have studied the impact of national cultural dierences on
international alliance negotiations (Das and Kumar 2011). The frame that is proposed in this article develops a novel theoretical perspective for appreciation of
the dynamics of international alliance negotiations and in doing so may further
enrich our understanding of cross cultural negotiations.

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Understanding the dynamics of the negotiation process is important for several

reasons. First, it is at the negotiation phase that the partners begin the process of
developing a relationship between them. If the negotiation process is a contentious one, the alliance may not be formed, or even initiated. There may be a lingering distrust among the parties which may aect subsequent interactions.
Second, this is also the period where the relevant parties develop a set of expectations about the alliance and formalize a contractual agreement. The codied
expectations as manifested in the contract and the emergence of informal norms
will then form the basis for how the alliance partners evaluate each other during
the operational phase of the alliance. Third, the negotiation phase also gives the
alliance partners the opportunity to test the suitability of their potential partner
and thereby begin to assess whether there is a good strategic, organizational, and
cultural t among the alliancing rms (Lasserre 2007). The negotiation process
takes on an added importance in international alliances due to dierences in cultural norms and negotiating style among the alliance partners (e.g., Adair and
Brett 2005; Kumar and Worm 2004; Kumar 1999; Tinsley and Pillutla 1998).
These dierences have the potential of creating ambiguity in the negotiating process, i.e. an unclear interpretation regarding the negotiating task (Feldman 1991).
It is this ambiguity that the negotiators may have to eectively manage if they are
to successfully conclude a deal. In particular, ambiguity is associated with negotiators sensemaking (Weick 1995). In fact, the presence of multiple, often conicting, interpretations of the negotiating situation often creates gaps in
negotiators expectations and induces them to take steps in order to achieve a
degree of working consensus regarding the negotiating task.
Much of the existing research on international negotiations has mainly focused
on the types of negotiation strategies used by members of dierent cultures. Less
attention has been devoted to the sensemaking processes by which negotiators
manage ambiguity in the negotiating process. As rms cross cultural boundaries,
they are confronted with a dierent set of norms and values concerning the negotiation of the alliance. These dierences manifest themselves as dierences in
expectations that are often unconsciously held by members of the dierent cultural groups. Conicting expectations may give rise to all kinds of interruptions
or discrepancies during the negotiating process as each partner violates the others
unstated norms. Alliance managers will need to make sense of this expectational
gap as they decide to choose how best to deal with their negotiating counterpart.
The issue of sensemaking in a negotiating context characterized by heightened
ambiguity has only been infrequently studied both in the negotiation and the
cross cultural literature and our article attempts to rectify this deciency.
The articles contribution is three fold. First, we seek to analyze the dynamics
of the international negotiating processes in the context of international alliances.
This is a rarity both in the international negotiation and in the international
alliance literatures and it constitutes an under researched area that is likely to have

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signicant theoretical as well as managerial implications (e.g., Faems, Janssens,

Madhok, and Looy 2008; Argyres and Mayer 2007). Second, we enhance current
understandings of international alliance negotiations by utilizing the framework
of sensemaking which is critical in determining how partners manage cultural
distance, deal with ambiguity and develop strategic courses of action that aect
negotiation outcomes. Finally, our article attests to the importance of ambiguity
management as a precondition for enhancing negotiators condence and a sense
of control as they negotiate with their opposite number. This, too, is an insight
that has not received attention in the international negotiation literature.
We begin by examining the factors that make the negotiation process of international alliances particularly challenging. We then discuss the relevance and
value of employing a sensemaking perspective in understanding international alliance negotiations. This leads us to develop a sensemaking-based framework that
characterizes the negotiation process in terms of the level of cultural distance and
the level of task ambiguity which together dene the context for alliance negotiations. We conclude by outlining future research directions and the managerial
implications of the proposed framework.

Sensemaking and International Alliance Negotiations: An Overview

Sensemaking constitutes a central feature of processes of organizing (Weick 1979,
1995; Gioia and Chittipeddi 1991; Patriotta 2003a, 2003b; Weick, Sutclie and
Obstfeld 2005). Traditionally, the concept has been used to denote deliberate
processes of interpretation and meaning production whereby individuals concerned with their own identities establish understandings, display these understandings to others and act purposively (Garnkel 1967; Berger and Luckmann
1967; Gioia and Thomas 1996; Patriotta and Brown 2011; Pratt 2000). Sensemaking is one of the central cognitive functions that people must perform in
organizational settings in order to enhance their grasp of what is happening. Sensemaking enables individuals to identify problems and form explanations, to
integrate what is known and what is conjectured, to relate what is observed to
what is inferred, and to guide actions for performing tasks (Klein et al. 2007:
114117).
Although sensemaking has established itself as a particularly inuential stream
of research with the eld of management studies, few or no studies have explored
the role of sensemaking in the negotiation literature. This is an important omission because negotiation processes are marked by ambiguity which is an essential
precondition for sensemaking. The ambiguity is likely to be higher still in cross
cultural negotiations given the heightened cultural distance that exists between
members socialized in dierent cultures. The ambiguity in the negotiation pro-

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cess may pertain to ones counterparts intentions, the nature of the interaction,
and/or what might constitute a satisfactory negotiation outcome. To address
ambiguity, negotiators engage in ongoing, reciprocal and repeated interpretations
of the situation in order to reach some form of agreement. For the purposes of
this article, we consider three aspects of sensemaking that are particularly relevant
to enhancing our understanding of international alliance negotiation: ambiguity
as a trigger for sensemaking, the role of cultural identity in shaping relational
processes of sensemaking, and sensegiving as a mechanism through which both
individual and interpersonal processes of sensemaking are accomplished. When
there is ambiguity, be it task or partner related, negotiators lack clarity as to how
best to deal with the situation that they are confronted with. In particular, what
kinds of negotiation strategies should they pursue and how should they respond
to their counterparts oers? Sensemaking is an essential rst step in helping the
negotiators to attain some level of clarity. Cultural identity is critical in determining the manner or approach negotiators use in the sensemaking process. Cultural
identity may both open as well as restrict the alternative mechanisms by which
negotiators from dierent cultures manage ambiguity. Finally, sensegiving represents the strategies that the negotiators use to try to inuence their counterparts.
Eective sensegiving mechanisms may inject meaning into the situation thus
reducing the overall level of ambiguity, lowering the sensemaking eorts required
of negotiators, and thereby contribute to the success of the alliance negotiation
process.
Making Sense of Ambiguity
Ambiguity is a characteristic feature of all negotiations as negotiators strive to
attain a balance between value creation and appropriation (Brett 2000; Lax and
Sebenius 1986). However, as negotiations vary in their level of simplicity, so we
would presume would the level of ambiguity. The greater the simplicity the lower
the ambiguity, in that the outcomes are likely to be well dened and so are the
strategies to attain them. A buyer-seller negotiation, for example, is much simpler, relative to a joint venture negotiation. In a similar vein, negotiations conducted within a well dened cultural setting will exhibit lower levels of ambiguity
compared to negotiations that cross cultural boundaries. Our starting premise is
the recognition that while ambiguity exists in both domestic and cross cultural
negotiations, it exists at a maximal level in international alliance negotiations
for a multitude of reasons. First, there is the heightened ambiguity associated
with alliance negotiations. The origins of it lie in the fear of opportunistic behavior by ones counterpart, desire for control, issues of reciprocity, legitimacy, justice, dierences in cognitive and temporal orientations, and dierent regulatory
foci (e.g., Kumar and Das 2007; Das and Kumar 2011; Das 2006; Das and

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Teng 1998). The prospect of opportunism may make the partners wary of sharing
information that could potentially be detrimental to their interests, and this tendency may be enhanced if the partners have not cooperated with each other
before. Second, there is the ambiguity originating from cultural distance. Cultural distance implies that partners accuracy in understanding their counterparts
intentions and likewise communicating ones own intentions may diminish
(Kumar and Nti 2004). Partners, for example, may have a dicult time assessing
whether their partner is behaving opportunistically. The greater the cultural distance the greater the level of ambiguity. Not only is there a higher level of ambiguity in international alliance negotiations, it is also the case that the ability to
cope with such ambiguity is likely to be much lower in this instance, relative to
negotiations within conned cultural boundaries. Detecting and responding
to opportunistic behavior in international alliances is often accentuated by divergent interpretations stemming from the dierent meanings, values, and assumptions that negotiators bring into the negotiating process.
It is, therefore, not surprising that such a mixture gives rise to a high level of
ambiguity, which is dened as no clear interpretation of a phenomenon or set of
events (Feldman 1991: 146). The lack of a clear cut interpretation may pertain
either to the nature of the problem, causality about the origins of such a problem,
and/or the intentions of the actors (March 1994). International alliance negotiators may struggle in evaluating the optimal scope and the nature of the alliance.
They may also have diculty in ascertaining the reasons why their potential partner acted in a particular way and resolving the dominant motivational orientation
of their partner- be it cooperative or competitive. A key aspect of ambiguous situations is that . . . . information may not resolve misunderstandings (Weick 1995:
92). This no doubt, renders international alliance negotiations even more problematical, because the one possible solution, namely that of information exchange,
which is often touted as a key aspect of the negotiation process, may be highly
problematical when the level of ambiguity is high.
Whether dened as business transactions, relational events, or processes aimed
at producing some forms of agreement, negotiations involve a signicant degree
of ambiguity regarding the task, the partner, and the interaction. Any negotiation
process involves moving from a current state of aairs to a desired one; it originates from a situation of imbalance that generates ambiguity regarding the
amount and consistency of information shared between the alliancing rms as
well as uncertainty about the outcomes that may follow from the choice of particular negotiation strategies during the negotiation process. When task ambiguity is high, the partners may have congruent goals but may still be unable to
eectively negotiate an alliance amidst the noise and uncertainty that may be
prevalent in such an environment. Alternatively, the alliancing rms may be able
to negotiate an agreement, but may have a less than a complete understanding of
the agreement that they have entered into. Furthermore, negotiations are instances

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of social interaction processes that occur at the interface between two or more
parties and therefore require dealing with partner ambiguity. In the case of international alliance negotiations, ambiguity stems primarily from the degree of cultural distance between the partners, which may aect the quality of interaction
and communication during the negotiation process.
It follows that the negotiating of an international alliance can be a daunting
task for many alliance managers. They are confronted with the challenge of managing the ambiguities inherent in an alliance [task ambiguity] with the additional
challenge of managing the cross cultural interface in international alliances [cultural ambiguity]. Managers may be confronted, therefore, with all kinds of unexpected events or disruptions in the negotiating process, which necessitate
sensemaking. The negotiators may develop divergent interpretations of the situation; they may fall out on matters of principle; and/or they may miss-communicate
or misunderstand each other.
It may not be immediately clear to them what kind of disruption is critical and
how that should be dealt with. Nor might the cause of the disruption be immediately salient. Is the disruption due to a lack of cultural understanding or does it
represent some more fundamental problem in the negotiation of the alliance or is
it a combination of both? If it is a combination of both, which is more critical or
salient? These disruptions and breakdowns in communication may bring the dialogue between negotiators to a halt and ultimately aect the outcome of the alliance negotiation process. As the negotiating situation encounters interruptions,
negotiators must take purposeful steps to reduce their uncertainty and re-establish
their sense of control. During negotiation processes, sense is continually being
made and remade as events unfold, and negotiators need to work hard in order to
seek to reduce uncertainty and ambiguity, recover from all types of disruptions,
and maintain a semblance of control. The implication is that managing alliance
negotiation processes requires deliberate sensemaking work aimed at repairing
meaning and maintaining a clearly recognizable and shared understanding of
the situation.
Cognitive Implications of Cultural Identity
Identity aects the way negotiators interpret the situation and act accordingly.
As Weick has pointed out, from the perspective of sensemaking, who we think
we are (identity) as organizational actors shapes what we enact and how we interpret, which aects what outsiders think we are (image) and how they treat us,
which stabilizes or destabilizes our identity (Weick et al. 2005: 22). Negotiators
enter alliance negotiation with their own identity, which spans individual, organizational, and cultural levels. At the individual level, the particular positions,
histories and personal backgrounds of the negotiators aect their cognitive orientations during the alliance negotiation process (see Dutton and Dukerich 1991;

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Maitlis 2005). These cognitive orientations are embedded in broader organizational and cultural identities (Patriotta and Lanzarra, 2006). National identities
inuence the predispositions of the negotiators and contribute to the negotiators
sensitivity and openness during the negotiation process (Luis and Sutton 1991).
National cultural dierences will no doubt aect the way in which the alliancing
rms cope with ambiguity and deal with discrepancies.
Negotiation research has highlighted the impact of cultural identity on the
mental models and cognitive orientations of the negotiators during the negotiation process (e.g., Adair and Brett 2005; Brett 2000; Brett and Okumura 1998;
Graham 1993; Kumar and Worm 2004; Kumar 1999b). In particular, negotiators from dierent cultures rely on dierent scripts for negotiations, which
impinge on such processes as information exchange, persuasion, and concession
making (Graham and Sano 1984; Kumar 1999). Kumar (1999) highlights the
importance of negative emotions and/or distrust that emerges when the task oriented Americans negotiate with the relationship oriented Japanese. Faure (1998)
suggests that the Chinese negotiation script may oscillate between a problem
solving approach as exemplied in search for a joint quest and a confrontative
approach as exemplied in mobile warfare. Joint quest is concerned with . . .
negotiating the construction of a problem rather than its solution (Faure 1998:
143). This is a time consuming and a lengthy process. Mobile warfare, by contrast, is a ght in which the interests of the parties are being viewed as being
conicting. This leads to the use of negotiation strategies which put pressure on
the foreigner to concede. The combination of these approaches may confuse their
counterpart and lead to a slow down of the negotiation process or perhaps an
irretrievable breakdown. Kumar (2004) suggests that the Indian script usually
follows a contending negotiation strategy in which the Indians rigidly stick to
their positions and expect the other party to concede. This too is a negotiating
strategy that is likely to lead to an impasse and negative outcomes. Brett and
Okumura (1998) noted that US and Japanese negotiators are less successful in
generating mutual gains when they negotiate with each other, as opposed to the
circumstance when they negotiate within their own group. This is so because
while the Americans exchange information directly, the Japanese do it only indirectly. This makes it dicult for the Americans to understand or fully appreciate
their counterparts perspective, thus leading to the diculty in the creation of
joint gains. Adair and Brett (2005) point out that high context negotiators are
much less likely to reciprocate oers vis--vis their low context counterparts. This
script dierence may also cause confusion inasmuch as the lack of reciprocity may
be interpreted negatively by their high context counterparts.
Cultural identities and related scripts are enacted during the negotiation process as a result of ongoing social interaction. Negotiation is a relational process in
which partners form expectations, engage in self-presentation and impression

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management tactics, and respond to each others moves on an ongoing basis.

Watzlawick et al. (1967) have eectively described how actors jointly dene the
situation through the formation of reciprocal perceptions and responses: Actor A
denes him/herself through the message: This is how I see myself. This is followed by a message from Actor B to A: This is how I see you; Actor A will reply
to this message with another one stating, among other things: This is how I see
that you see me; and B, in turn, will reply with the message: This is how I see
that you see that I see you; and so on. The construction and maintenance of
reciprocal expectations is a sensemaking process which unfolds through ongoing
armations and revisions of the self during negotiation exchanges (Goman
1967; Patriotta and Spedale 2009; Weick 1995). The latter illustrates how the
negotiated and relational features of identity contribute to the development of
intersubjective meanings that ultimately aect the negotiation outcome.
Sensegiving
Negotiation is a two-way ongoing communication process between individuals
who deliberately attempt to direct each others interpretations toward a preferred
denition of the situation (Gioia and Chittipeddi 1991; Maitlis and Lawrence
2007). In this regard, negotiation involves both sensemaking (the process by
which individuals develop a meaningful framework within which to understand
certain events and situations) and sensegiving (the process of attempting to inuence the way in which others construct meaning and make sense). Sensegiving is
a form of framing that has two aspects: one related to interpersonal dynamics
between the negotiators, the other related to the role of external frameworks during the negotiation process. Interpersonal dynamics of sensegiving refer to the
ways in which negotiators attempt to inuence each other and impose certain
meanings on the situation. Through repeated face games and impression management tactics negotiators endogenously generate an interaction order, which
frames the situation and delimits the negotiators moves and sensemaking (Goman 1967). A main implication is that positive outcomes of sensemaking associated with negotiation are contingent upon the negotiators ability to jointly
generate interaction orders that are conducive to working consensus (Patriotta
and Spedale 2009).
Furthermore, negotiators sensemaking is likely to be inuenced by external,
higher-order structures such as templates, pre-existing protocols, institutions, sector best practices and so on (Patriotta et al. 2011). Powell (1993) and Suchman
and Cahill (1996) have explained the successful negotiation of deals in the Silicon
Valley by referring to the presence of governing frameworks that orient and coordinate in organic fashion the coming together of consultants, lawyers, entrepreneurs, and venture capitalists in a specic venture. Their study emphasizes the

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role of institutional templates, that is, pre-fabricated conceptual resources potentially available to participants and around which the negotiation of a deal can
organize itself. From a sensemaking/sensegiving perspective, negotiation dynamics can be articulated in terms of the interaction between meaning and frameworks underlying any process of structuring and reality construction (Barley
1986; Giddens 1984; Ranson, Hinings and Greenwood 1980). According to
Weick (1993), in the human endeavor to create and maintain meaning, high
levels of structure will allow for minimal sensemaking work whereas a decrease in
the levels of structure will require increased levels of sensemaking. For example,
the availability of pre-existing templates (protocols, previous agreements, shared
cultural frameworks) for negotiating alliances provides pre-fabricated meaning
thus requiring less sensemaking and cognitive work on the part of the negotiators;
on the other hand, the absence of pre-existing frameworks generates higher level
of uncertainty and ambiguity which results in more need for sensemaking. In
sum, interpersonal sensegiving mechanisms and higher order templates can constructively orient interaction among negotiators by providing a common set of
expectations about behaviors. Positive interaction based on working consensus is
likely to aect the outcome of alliance negotiation.
Our perspective suggests that the negotiation of international alliances is a
sensemaking process in which the parties create meaning out of task- and culturalrelated ambiguity. Resolving ambiguity requires intermediation mechanisms,
either interpersonal or structural, that support sensemaking by either simplifying
the scope of the task or facilitating the interaction between partners. In other
words, international alliance negotiation events can be characterized as a triad in
which the partners are brought together by means of sensegiving mechanisms.
The portrayal of international alliance negotiation as a joining activity is similar
to what Obstfeld (2005) with reference to social networks has called a tertius
iungens (the third who joins). The tertius iungens orientation is a strategic,
behavioral orientation toward connecting people in their social network by
introducing or facilitating interaction between parties who have no immediate
prospect for direct introduction or connection. Transposed to the setting of international alliance negotiations, the joining of the parties to the alliance emerges
from the development of sensegiving mechanisms that facilitate coordinated
action. The tertius iungens, whether human or non-human, acts as a broker.
This might involve, for example, bringing into the negotiation people with a
multi-cultural background or translators who are able to promote multicultural
understandings of the situation; developing organizational roles and structures
that redene or restructure the scope of the task at hand; mobilizing templates
and best practices from exemplary alliances. From a sensemaking perspective, this
brokering/sensegiving activity supports managers framing of international alliance negotiation events.

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Managing Ambiguity in International Alliance Negotiations

We posit that international alliance negotiators are confronted with two fundamentally dierent types of ambiguity, namely task and cultural ambiguity.
Depending on the degree of task and cultural ambiguity, international alliance
negotiations will require dierent types of sensemaking with correspondingly different implications for how the negotiating process might unfold. In this section
we conceptualize task and cultural ambiguity and provide illustrative examples of
the dierent types of sensemaking that unfolds in the negotiation process.
Task Ambiguity
This refers to the lack of clarity regarding the problem confronting the alliancing
rms. It may be related both to the overall objectives of the alliancing rms as also
to the means by which they should attain them. Scholars have noted that there
are two fundamentally distinct types of alliances, namely exploitation, and
exploration alliances that deal with dierent types of alliancing problems (Koza
and Lewin 1998). The distinction between the two types of alliances is derived
from the exploration-exploitation dichotomy developed by March (1991) and
further elaborated upon by Levinthal and March (1993). Exploration is dened
by Levinthal and March (1993: 105) as the pursuit of knowledge, of things that
might come to be known while exploitation, by contrast, refers to the use and
development of things already known. Exploration alliances involve the search
for something novel and as Rothaermel and Deeds (2004: 204) note envisioned
outcomes and paybacks are distant in time and generally exhibit high variance.
The focus in exploration alliances is on developing new technologies that might
enhance the value creation potential of the rm. Exploitation alliances, by contrast, involve the partnering rms sharing their complementary assets to maximize joint value creation. These are alliances that are focused less on creating
something new but more on exploiting the new technology that has been developed through exploration (Li, Vanhaverbeke and Schoenmakers 2008). Although
learning exists in both types of alliances, there might be the greater potential of
learning in exploration as opposed to exploitation alliances (Gupta, Smith and
Shalley 2006). We would therefore suppose that the level of task ambiguity is
likely to be much higher in exploration as opposed to exploitation alliances.
Exploration is associated with the development of new technologies and this is no
doubt an uncertain process. It may not be self evident that even if the partners are
fully committed to the venture that they might discover something earth shattering. In other words, there exists ambiguity in the nature of the problem confronting the alliancing rms. Nor might it be clear to the alliancing rms as to the best
way of trying to discover or develop a new technology. There may also be many
false starts in the process of discovery. In other words, these alliances are likely to

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be faced with a high level of causal ambiguity. There is also the issue of intentionality, in that it may be unclear to the alliancing rms if they might be the most
adept in this type of an alliance. Task ambiguity is most fundamentally cognitive
in character and it requires bridging that enables the alliancing rms to most
eectively cope with the demands of a challenging task.
The fundamental challenge for the alliancing rms under conditions of task
ambiguity is to initiate what we would describe as cognitive intermediation. Most
fundamentally, cognitive intermediation means the framing or the structuring of
a task in a manner that might help to minimize or lessen task ambiguity. Framing
might imply that the task denition is viewed from a particular perspective so
that the alliancing rms can get along with the specic task in question. Structuring implies that the task itself is partitioned in a particular manner so that an
exploratory approach becomes that much more feasible or legitimate. In an alliancing context cognitive intermediation may occur either internally or externally.
In the former case, the alliancing partners may themselves suggest an alternative
redenition or restructuring whereas in the latter scenario external consultants
might be called upon to provide the solution.
One way to address task ambiguity is through the design of structural sensegiving mechanisms that are systematically applied during the negotiation process.
For example, Dyer et al. (2001) have stressed the strategic relevance of a dedicated
alliance function that coordinates all alliance-related activity within an organization. A dedicated alliance function is charged with codifying best practices, routines, processes and systems that reect a rms prior alliance experience and
know-how. The mechanisms available via the dedicated alliance function act as
joining devices that provides negotiators with a pre-dened framework for making sense of the negotiating task. This framework may address critical issues such
as what contractual provisions and governance arrangements are most appropriate, which metrics should be used, or the most eective way to resolve disagreements with partners. For example, Hewlett-Packard developed a wide range of
tools and templates, which were incorporated in a comprehensive manual for
guiding decision making in specic alliance situations. The manual included such
tools as a template for making the business case for an alliance, a partner-evaluation form, and a negotiations template outlining the roles and responsibilities of
dierent departments (Dyer et al. 2001). From a sensemaking perspective, a dedicated alliance function provides ex-ante sensegiving mechanisms that impose
pre-dened meanings on the key phases of the negotiation process and thereby
reduce task ambiguity.
The success of alliance negotiations may also depend on the partners ability to
comprehend the nature of the alliance exchange and understand the value of the
core traded assets. Consider how two small startups negotiated deals with large
established companies in their sectors (see Watkins and Matthews 2005). Millennium, a biotech company, developed an innovative generic technology platform

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for early stage drug discovery and successfully negotiated disease-specic contracts with large pharmaceutical rms. This provided the company with income,
capital, and credibility. The negotiation of sequential deals reduced task (as well
as partner) ambiguity, spread risk over multiple deals, and resulted in successful
alliances. Having framed the explorative scope of R&D activities in a particular
manner, Millennium addressed task ambiguity through negotiation strategies
that involved skilled use of sequencing, creativity in deal design, and careful attention to avoiding capture by much larger players. On the other hand, GO Computer engaged in a comprehensive negotiation with IBM based on its leading
innovative product (a PDA). The managements sensemaking informing the
negotiation process was not eective in addressing task ambiguity. In particular,
management did not understand the value of its core technology of handwriting
recognition and was not able to leverage such technology in the negotiation process. Handwriting recognition had the potential to be useful in a broad range of
potential applications. The value was in the operating system and not so much
the hardware. But GO focused on a single initial application, which led them to
rely too much on one alliance partner to develop the technology. This interpretive
bias led GO to develop a narrow view of the negotiating task, which resulted in
the pursuit of ineective negotiating strategies (focus on a single initial application and reliance on one alliance partner). GOs inability to make sense of task
ambiguity accentuated the power asymmetry between the negotiating partners.
Negotiations soon turned into failure and contributed directly to the rms eventual bankruptcy. The above examples show that one important way of addressing
task ambiguity involves framing the scope of the alliance in a way that leads to
positive outcomes.
Cultural Ambiguity
Cultural ambiguity stems or arises from dierences in the national culture of the
alliancing rms. Culture is identity: a sort of collective ngerprint (Usunier and
Lee 2005: 9). The collective ngerprint is deeply embedded within a particular
society and manifests itself as the collective programming of the mind that distinguishes members of one group or category of people from another (Hofstede
2001: 9). It is this collective programming . . . that shapes behavior or structures
ones perception of the world (Adler 2001: 16). It needs to be noted, however,
that this collective programming is not necessarily immutably xed; on the contrary it may change over time (Leung et al. 2005). This collective programming is
often unconscious and is encapsulated in the mental models that are dominant in
a given culture. We would suppose that the greater the cultural distance between
the national cultures of the alliancing rms, the greater the potential for cultural
ambiguity between them. A higher level of national cultural distance among the
alliancing rms means that they are likely to be far apart in terms of the dominant

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beliefs/values that condition their behavior. The concept of cultural distance has
been widely used in international business and while scholars recognize the limitations in the construct developed by Kogut and Singh (1988), and suggest methods for further renement (Shenkar 2001) it continues to have an intuitive appeal.
Cultural ambiguity, like task ambiguity also revolves around issues of reality, causality, and intentionality (March 1994). When the cultural distance is high the
alliancing rms are likely to have diculty in assessing the nature of the problem
(i.e., the importance of the cultural divide in shaping partner interactions). They
may also nd it problematical to assess the rationale for why their partner behaved
in a particular manner (e.g., the partner does not share information in a timely
way). Finally, given the hidden cultural barriers, they may have diculty in fully
gauging their partners intentions.
As is evident from the above, cultural ambiguity is most fundamentally relational in character. The negotiators are unsure about their partner: Does the partner trust them? Can they trust the partner? Is the partner committed to the
alliance? In the event of a conict or conicts, can they be resolved expeditiously
and without much rancor? Under conditions of cultural ambiguity it is the relational aspect that needs to be bridged and we would propose that such a situation
calls for aective intermediation. Aective intermediation is the third who joins
(tertius iungens) who at a minimum helps the alliancing rms repair a strained
relationship. Such intermediation can also take the relationship to an entirely new
level as well. Aective intermediation is a process that involves the use of a third
party in the nature of a cultural mediator who can help the parties to look at the
situation from the others viewpoint and in doing so bring a modicum of emotional equilibrium to the relationship. In the process of aective intermediation,
the alliancing rms are recalibrating their perceptions, emotions, and attitudes
about their partner. In doing so, they may develop new insights and new causal
explanations for the discrepancies that necessitated sensemaking in the rst place.
This may allow them to move away from a state of impasse in the negotiations to
a state where a more productive dialogue is possible. This is not an easy process
by any means or where success is easily assured. But it is equally true that in the
absence of such an intermediation, the alliancing rms will have no option but to
call an end to the negotiations with their prospective partner.
Consider, for example, the case of Alpha Gearing Systems (AGS), Shangai Co
Ltd (Everatt 1999). AGS Shanghai was a joint venture between Alpha Gearing
Systems (a US manufacturer of components for motorized vehicles) and Kai
Machine which was Chinas biggest producer of gearing systems for mopeds and
motorcycles. The objective of the joint venture was to enhance the companys
market share in Asia which was below expectations. The general manager of the
joint venture was Julie Nelson who was previously the director of the companys
international division. AGS Shanghai was seeking to develop a relationship with
San Yu Moped which too was a joint venture between San Yu CO. Ltd of China

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525

and Excel Motors of the United States. The joint venture manufactured mopeds.
AGS hoped to become a world class supplier to San Yu and made concerted
eorts in achieving this goal. The task ambiguity in the proposed alliance was low
as this was primarily an exploitation alliance where AGS was seeking to exploit its
distinctive capabilities which it had built up over several decades. Cultural ambiguity was, however, high. The cultural gap between the United States and China
is high. The United States is an individualistic culture whereas China is a collectivistic culture. Individualists dier from collectivists on a number of dimensions
(Chen, Chao, and Meindl 1998). Individuals focus on goals whereas the collectivists emphasize process. The communicative style of the individualists is direct
whereas the collectivists are indirect in communication. Aect based trust is critical for the collectivists whereas individualists are oriented towards cognitive trust.
The former requires relationship development and takes time whereas the latter is
dependent on predictability. Face management is critical in a collectivistic culture,
and while no doubt important, it is much less so in an individualistic culture.
In the interactions between Alpha Gearing Shanghai and San Yu Moped a large
dose of cultural ambiguity, and above all, the ineective management of it had
severe consequences for the relationship between the partners. In recognition of
the Chinese cultural norms where relationships might often trump a formal contract, Alpha Gearing Shanghai started to enhance its manufacturing capabilities
on the premise that they were already developing a relationship with San Yu. They
expected that the nitty gritty contractual details would be negotiated later. AGS
started shipping parts to SanYu without a rm agreement on the price. Julie
Nelson, the General Manager of AGS signed a six month contract with San Yu
Moped without any agreement on a denitive price although she did begin to
entertain the belief that SanYus expectations of the price that they would pay
would be very dierent from AGSs expectations. Recognizing that AGS needed
to recoup its investment in developing facilities specically for San Yu Moped
Julie Nelson proposed to San Yu that AGS become the lead supplier for San Yu.
It became clear to her, however, that San Yu had a dierent perspective on this.
After the expiry of the six month contract the partners signed another three
month contract but even at this stage there was no agreement on the unit price.
It was therefore not clear to Alpha Shanghai as to how much money was owed to
them at this stage. Nelson was now becoming increasingly uncomfortable with
the fact that AGS had not been paid to date. She now issued an ultimatum to San
Yu Moped, saying that no more parts would be shipped to them unless Alpha
Shanghai received payment for the money owed to them. She was well aware that
her actions were now very much in opposition to the Chinese culture where an
insistence on payment would be tantamount to not having trust in the relationship. AGS was now beginning to adopt an aggressive and a contending strategy
which was very much at variance with key Chinese cultural values. The case provides an interesting illustration of the interplay between cultural ambiguity and

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R. Kumar and G. Patriotta / International Negotiation 16 (2011) 511533

sensemaking. Cultural ambiguity was manifest in expectation gaps (e.g., dierent

understanding of trust-based business relationships) that could not be resolved
through negotiators sensemaking. Unable to engage with the counterparts cultural expectations, Julie Nelson reverted to a contract-based negotiating strategy,
which was grounded in the values of individualistic cultures. There was little by
the way of eective aective intermediation in the case and we would suggest that
a lack of it prevented the partners from reversing the directional trajectory of the
alliance.

Holistic Intermediation: Addressing High Cultural and High Task Ambiguity

When both task and cultural ambiguity are high, negotiators are simultaneously
confronted with the need for relationship repair and the necessity of learning to
cope with exploratory tasks. The need to manage two very dierent types of
ambiguity is likely to impose a lot of cognitive and organizational strain on the
alliancing rms. Indeed, the combination of the two might in itself create a very
novel form of ambiguity as the rms seek to deal with some very tricky issues.
They will have to learn to manage their attention in dealing with the two types of
ambiguity that call for dierent types of ambiguity reduction strategies. As we
have observed earlier, aective intermediation is a very interpersonally oriented
form of intervention, whereas cognitive intermediation as the name suggests has
creativity at its core. Should the two types of ambiguity be dealt with sequentially
or should one take precedence over the other? Does one need to continuously
seek to recycle back and forth between the two types of ambiguity? Does a solution to one type of ambiguity create a problem at another level? There are no easy
or clear cut answers to these issues but they need to be addressed eectively to
ensure negotiation success. We would suggest that what is called for in this case is
holistic intermediation. This is the tertius iungens which simultaneously addresses
the issue of relationship repair and the issue of task creativity in the alliancing
negotiations. As the name suggests holistic intermediation does not prioritize one
over the other. What is critical in this context is to both attain and maintain a
delicate harmony between the two contrasting needs. No doubt such a balance
may not necessarily be maintained at all points in time, but most critical is the
ability to restore the delicate equilibrium when disturbed.
A successful example of holistic intermediation can be found in the case of the
Renault-Nissan alliance. The alliance was established in 1999 when Renault
became Nissans largest shareholder (Segrestin 2005). Renault wanted to become
a truly global company by expanding its scale and reach whereas Nissan wanted
to survive the potential perils of a bankruptcy (Yoshino and Fagan 2003). The
two companies were at the same time potential competitors and, to further exacerbate the diculties, the companies did not know a great deal about each other

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527

(Segrestin 2005). Neither did the companies have a good understanding or

knowledge of working with a potential competitor. To make matters worse the
cultural ambiguity was high. The French (individualistic) and the Japanese (collectivistic) cultures are rather distinct and this no doubt meant that there was a
high level of cultural ambiguity. The potential alliance had all of the characteristics of an exploratory alliance in that the partners were seeking to develop several joint projects in which the parameters were not clearly demarcated at the
outset of the alliance. As Segrestin (2005: 663) observes . . . the collaborative
process was less a matter of platform development than a question of exploration: preconditions for commonality had to be thoroughly examined. The willingness to enter into an exploratory alliance may have been strengthened by
the fact that at the onset and during the negotiation phase of the alliance the
partners believed that there existed a shared future between them (Korine,
Asakawa, and Gomez 2002). This alliance therefore necessitated a holistic form of
intermediation. Cognitive intermediation was facilitated by sensegiving devices
that addressed task ambiguity.
Nissan and Renault had separate managements and distinct executive committees. Each company was accountable to its own board of directors and shareholders (see Burgelman and Leslie 2008). However, the alliancing rms agreed to
develop several organizational devices that acted as joining mechanisms and provided a framework for negotiators sensemaking. First of all, the companies shared
a common vision for the alliance: become one of the top three automotive producers in terms of quality, technology, and protability in the industry. Furthermore, the Alliance partners set up an Alliance Board that provided coordination
to the partners activities during the negotiation process. The Alliance Board oversaw other entities including the Renault and Nissan Coordination Bureau, steering committees chaired by members of Renault and Nissans executive teams, and
over 30 cross-company teams, functional task teams, and task teams that supported the Alliance in all aspects of the companies businesses. The presence of an
overarching vision coupled with organizational devices allowed the partners to
jointly make sense of the alliance task while maintaining their day-to-day operations separately.
The sensegiving mechanisms institutionalized during the negotiation process
enabled the partners to become even more familiar with each other, namely their
respective strengths and weaknesses (Korine, Asakawa, and Gomez 2002). As the
partners deepened their collaboration, they developed new procedures and systems to deal with the emerging issues (Segrestin 2005). Incremental learning
strengthened the impact of other cognitive intermediation mechanisms that the
partners had established. A consequence of this was the emergence of a collective
identity which had the key implication that the alliance was now viewed as indeed
being a legitimate one. Aective intermediation was set in stone by the strategies
adopted by the President of the two companies. The President of Renault, Louise

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R. Kumar and G. Patriotta / International Negotiation 16 (2011) 511533

Schweitzer and the President of Nissan came to trust each other very rapidly
(Korine, Asakawa, and Gomez 2002). As Guy Douin, Renaults head negotiator
noted I think that this trust between the Chairman has lasted all the way through,
with no stumbling blocks, deviations, or betrayals (Cited in Korine, Asakawa,
and Gomez 2002: 43). The negotiating strategy adopted by Renault further
strengthened the bonds between the two companies. As De Andria of Renaults
negotiating team noted above all we tried even if we didnt manage it 100 per
cent, to avoid putting ourselves forward as the company making an acquisition,
the side that comes out on top. We always wanted to have due regard for form, to
have due consideration for the Japanese . . . We kept in mind the lessons that
could be learned from our previous experience [with Volvo] (Cited in Korine,
Asakawa, and Gomez 2002: 46). As Schweitzer noted . . . we wanted to get people to know each other before agreeing. In many marriages today, people go for
marriage without knowing each other well. There was a good personal relationship before we started (Cited in Yoshino and Fagan 2003: 3). The actions of the
leaders at Renault and Nissan both created and strengthened a virtuous circle that
developed at dierent levels of the alliance interface between the participating
companies.

Conclusion
This article has utilized the framework of sensemaking for understanding the
dynamics of international alliance negotiations. International alliances are plagued
by high failure rates and we would suppose that the challenges at the negotiating
phase may adversely aect alliance success, even assuming that the alliance has
been negotiated in the rst phase. International alliances are confronted with the
need to manage both task as well as cultural related ambiguity. The management
of ambiguity necessitates the introduction of tertius iungens which plays dierent roles under varying combinations of task and culture ambiguity. The article
identies three dierent roles, namely aective intermediation, cognitive intermediation, and holistic intermediation, that tertius iungens can play.
There is a considerable body of literature within the micro behavioral paradigm which has sought to untangle the inuence of culture on negotiation processes and outcomes (Weiss 2006). A major stream of research in this area explores
the kind of negotiating behaviors that negotiators embedded in dierent cultures
often employ. Attention has been focused among other things on the pattern of
information exchange (Adair, Weingart and Brett 2007), the use of problem solving strategies (Gaham, Kim, Lin and Robinson 1988), and action- reaction- patterns (Adair and Brett 2005). Other research has focused on negotiator cognition
and within this paradigm the focus has been on the impact of culture on negotiators judgmental biases (Morris and Gelfand 2004). A lot of this research has used

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529

experimental methodologies and without doubt this has enhanced our understanding of cross cultural negotiating processes. Yet, we know little about how
negotiators manage the ambiguity that is inherent in the negotiating processes.
Nor do we know very much about how culture inuences negotiating processes
in negotiation situations that vary in their level of complexity.
The framework that is developed in the article enhances the understanding of
cross cultural negotiating processes on all of the above mentioned dimensions.
The process of sensemaking is intrinsic in ambiguous situations with the more
ambiguous the negotiating situation the greater the necessity of sensemaking.
Sensemaking is essential to enhancing the negotiators sense of control and with a
greater sense of control the negotiators can be more condent of the decision that
they make during the negotiating process. The negotiations between Renault and
Nissan are a perfect illustration of the positive outcomes that may occur when the
nature of sensemaking is appropriate to the nature of the negotiating situation
confronting the alliancing rms. The sensemaking perspective that is being
advanced in this article also has broader implications for the study of international alliance negotiations. The success of international alliance negotiations
may lie less in structuring a well crafted contract, but more in sensemaking and
sensegiving mechanisms that may ensure that the well crafted contract lives up to
its expectations or is easily modied if circumstances dictate it. This then suggests
that the success of international alliance negotiations may be more dependent on
the organizational commitment that is brought to bear on the negotiations than
simply the micro behavioural dynamics that get instigated during the negotiation
process, to which, considerable attention has been paid by negotiation scholars.
The framework that is developed here opens up a new set of avenues for studying the cross cultural dimension that is inherent in international alliance negotiations. If sensemaking and/or sensegiving are crucial in ensuring the success of
international alliance negotiations, then it might be useful to explore the determinants of what makes for eective and ineective sensemaking in the context of
alliance negotiations. There is likely to be an interplay between individual, group,
and organizational level factors in shaping sensemaking. This would then invite a
multi level exploration of the determinants of sensemaking in an international
alliancing context. Alliances also evolve through the stages of formation, operation, and outcome (Das and Teng 2002). While the initial negotiations are no
doubt central to the origins of the alliance, ongoing negotiations are likely to be
the norm in international alliances and it might be useful to study sensemaking
at the dierent phases of alliance evolution.
This framework invites the negotiation researchers to supplement their traditional approaches to studying negotiations with a sensemaking perspective.
The latter invites researchers to explore less the issue of specic negotiation strategies and more the issue of how negotiators seek to both create and sustain meaning when negotiating an international alliance. It promotes the use of more

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R. Kumar and G. Patriotta / International Negotiation 16 (2011) 511533

qualitative and exploratory research strategies that might provide a useful supplement to existing approaches to the study of negotiations.

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