Business Horizons (2014) 57, 677—684

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BUSINESS LAW & ETHICS CORNER

Contracting from East to West: Bridging the

cultural divide
Eric L. Richards

Kelley School of Business, Indiana University, Bloomington, IN 47405, U.S.A.

KEYWORDS Abstract When contracting in a global environment, basic cultural differences

China; increase the risk of misunderstandings. Culture generally provides the context for
Contract law; contract language and shapes the parties’ most basic assumptions regarding their
Contracting; respective rights and responsibilities. Businesses must recognize, respect, and recon-
Culture; cile cultural differences if they hope to contract successfully in the global environ-
Cultural differences; ment. For U.S. and Chinese businesses to better understand how to successfully
Individualism; negotiate and carry out contractual relations with one another, they must recognize
International business; the differences in core cultural values between the two countries and develop
Collectivism; strategies for reconciling these differences. Bridging these cultural differences adds
Universalism; value to business transactions and minimizes the risk of failure. To help managers
Particularism; recognize and understand cultural differences between the U.S. and China, this
Power distance installment of Business Law & Ethics Corner focuses on five dimensions of the culture
of the U.S. and China: individualism/collectivism, universalism/particularism, power
distance, context, and direction. These aspects explain some of the major differences
in viewing the law and approaching contracts. To help managers navigate these
cultural differences, this article offers guidance regarding how to respect and
reconcile cultural predispositions to achieve true synergies. By bridging these
cross-cultural differences between the U.S. and China, managers can achieve the
mutual expectations necessary to the long-term success of cross-cultural business
transactions.
# 2014 Kelley School of Business, Indiana University. Published by Elsevier Inc. All
rights reserved.

1. Introduction At the same time, China has emerged as a leader in

As the line blurs between domestic and global busi-
ness, managers today scan the globe in search of
suppliers, customers, and other partners. They pay
particular attention to the Far East, in large part due
to China’s extensive labor pool and consumer market.
E-mail address: richarde@indiana.edu
overseas investment. For example, Chinese foreign
direct investment (FDI) in the United States has
increased more than 300% since the global financial
crisis, while FDI from most other countries has con-
sistently decreased. The impetus for China’s growing
appetite for FDI stems from the country’s govern-
mental policies and the increasing number of private
Chinese companies which recognize the competitive
benefits of global expansion (Lee, 2013).

0007-6813/$ — see front matter # 2014 Kelley School of Business, Indiana University. Published by Elsevier Inc. All rights reserved.
http://dx.doi.org/10.1016/j.bushor.2014.04.003
678
2. Contracting to minimize risks
Of course, business opportunities generally are ac-
companied by corresponding risks. The nature and
complexity of those risks often increase exponen-
tially as firms expand their horizons in search of
greater returns. Successful global companies recog-
nize the need to carefully identify risks and develop
sound strategies for managing them. Particularly in
the United States, this form of risk management is
implemented through the use of business contracts.
The wise use of contracting can be integral to the
success of a business transaction. Proper negotiation
and careful drafting of the underlying agreement
facilitate planning and provide greater peace of mind
for participants in complex transactions. After all,
costs might rise to unmanageable levels if managers
could not rely on suppliers’ promises to deliver raw
materials at agreed-upon prices and at designated
times and locations. Similarly, a manufacturer would
be unwilling to commit to purchasing raw materials if
it was uncertain whether distributors would honor
promises to market the finished products.
Within the United States contracts are negotiated
and drafted by private parties, but are enforced by
public institutions: the courts. Even in cases where-
by contracting partners agree to resolve disputes
through private arbitration, courts enforce the ar-
bitrators’ decisions. In essence, U.S. courts elevate
private agreements to legally-binding obligations;
they become a form of private law that lends cer-
tainty and credibility to the corresponding promises
of the contracting partners (Richards & Shackelford,
2014).
2.1. Contracts and mutual intent
To maximize their effectiveness, contractual agree-
ments should be negotiated and drafted in a manner
that accurately reflects the parties’ original intent.
At the most basic level, this requires the parties to
identify and comprehend one another’s expecta-
tions fully. This is no small task. For instance, in
Heggblade-Marguleas-Tenneco v. Sunshine Biscuit
(1976), a potato grower contracted to sell 10 million
pounds of potatoes to a food processor. This contract
was the grower’s first experience with selling pota-
toes for processing. When the time of performance
arrived, the processor would accept delivery of
only 6 million pounds because of a decline in de-
mand for its processed potato products. The grower
sued, arguing that the processor was liable for
the full amount because the quantity term in the
contract was definite and unambiguous. However, a
California court sided with the processor, concluding
that the express language in the contract was
BUSINESS LAW & ETHICS CORNER
trumped by a trade usage in the potato processing
industry, which treated the number of potatoes
specified in such contracts as mere estimates sub-
ject to actual demand. Ultimately, the processor
prevailed in the lawsuit despite the fact that it knew
the grower was new to the industry and never
mentioned at the time of contracting that quantity
terms were mere estimates.
Being new to the industry, the grower did not
realize that the express term ‘10 million pounds’
actually meant 10 million pounds or less–—depending
on demand for the processor’s product. Yet, under
prevailing contract law in the United States, such
trade usages are part of the meaning of the words in
the agreement unless they are carefully negated
when the contract is drafted. Unless the contract
expressly rejects such industry standards, they are
implicitly incorporated into the agreement. Obvi-
ously, the two parties to this contract had very
different expectations when they inserted the
quantity language in their agreement because of
their different levels of familiarity with the prevail-
ing industry standards. However, objective stand-
ards–—determined by trade usage–—prevailed over
the grower’s subjective intent. Ultimately, the
Heggblade dispute illustrates both that language
is contextual and that pitfalls await those who fail
to grasp that fact.
2.2. Culture’s impact on contracting
When contracting in a global environment, the like-
lihood of misunderstanding is heightened due to
cultural differences. Why is this? Culture generally
provides the context within which the contractual
language derives its meaning. Culture also shapes
the most basic expectations people have over the
role that contracts–—and law, in general–—should
play in the interactions between the parties.
Ultimately, cultural values define the parties’ as-
sumptions regarding their respective rights and re-
sponsibilities. This is an important point because the
long-term success of business transactions often
depends upon the existence of mutual expectations.
Trompenaars and his co-authors have reviewed the
issues and the dimensions whereupon differences in
culture emerge (Trompenaars & Hampden-Turner,
1998; Trompenaars & Woolliams, 2003). According-
ly, businesses must recognize, respect, and recon-
cile cultural differences if they hope to contract
successfully in the global environment.
Understanding the importance of recognizing cul-
tural differences represents only half the battle;
one must also discover those value distinctions. Yet,
the most powerful values that define our culture are
acquired so early in our lives that they might not be
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directly observable by others; in fact, they fre-
quently remain unconscious to members of the very
society that exhibits them. Often, they are merely
inferred from the way in which people behave under
various circumstances (Hofstede & Hofstede, 2005).
Thus, U.S. and Chinese businesses must first recog-
nize the differences in core cultural values between
their respective countries before they can under-
stand how to successfully negotiate and carry out
contractual relations with one another. In addition,
they must understand when and how those values
are outwardly manifest in the contractual orienta-
tion of businesses from each culture. Only after first
recognizing these differences will they begin to
respect one another’s values and, ultimately, devel-
op strategies for reconciling their differences
(Trompenaars & Woolliams, 2003).
3. U.S. culture versus Chinese culture
Our respective cultures must be distinguished from
both human nature and individual personalities.
Culture stands in the mid-ground and is derived
from shared learning of our social environment. In
a sense, culture represents a mutual understanding
of how to resolve basic dilemmas confronting all
mankind (Hofstede & Hofstede, 2005). For the pur-
pose of understanding business transactions and the
contracting process, this article focuses on shared
responses to five dimensions related both to inter-
personal relationships and to mankind’s connection
with the environment: (1) individualism versus
collectivism, (2) universalism versus particularism,
(3) low power distance versus high power distance,
(4) low context versus high context, and (5) inner
direction versus outer direction (Hampden-Turner &
Trompenaars, 2000; Hofstede & Hofstede, 2005;
Richards & Shackelford, 2014; Trompenaars &
Hampden-Turner, 1998; Trompenaars & Woolliams,
2003).
3.1. Individualism versus collectivism
Individualists seek to gain their own wants and needs,
and work with others as a means to that end. Collec-
tivists, on the other hand, are primarily motivated by
the desire to achieve some shared good (Trompenaars
& Hampden-Turner, 1998). The United States and
China rest on opposite ends of the individualism
versus collectivism spectrum. Of all the nations of
the world, the United States ranks highest in terms of
individualism. This cultural orientation manifests in
several ways. For instance, direct contact with po-
tential new business partners is considered to be
acceptable. Further, Americans generally are per-
ceived as outspoken and egocentric. They are highly
679
competitive, with often-adversarial negotiation
styles. Conflict seems tolerable, perhaps even inevi-
table, as long as it is channeled toward productive
ends. In individualist societies, the ties binding peo-
ple outside of one’s immediate family are fairly loose
and shifting.
In contrast to American individualism, China
ranks high on the collectivism scale, valuing harmo-
ny over conflict. Among the Chinese, social and
business activities typically emanate from an intri-
cate network of overlapping interpersonal relation-
ships. New business contacts are expected to occur
only via introduction by a common intermediary.
Relationships with partners fit more within a family
model than a contract model. Instead of the com-
petitive, adversarial bargaining style associated
with U.S. culture, the Chinese are more inclined
to seek shared outcomes based on cooperative in-
teraction. Collectivist societies are characterized
by an ever-growing network of cohesive relation-
ships that engender mutual obligations and deep-
rooted loyalty (Hofstede & Hofstede, 2005).
3.2. Universalism versus particularism
Universalists prefer standardized rules while
particularists favor more flexible approaches that
account for unique circumstances (Trompenaars &
Woolliams, 2003). Americans score high on the uni-
versalism scale. As universalists, Americans rely on
general rules as guarantors of their moral compass.
They are quick to impose their values on others,
particularly through the promulgation of a plethora
of rules or a myriad of contractual obligations.
Accompanying this rule-based orientation is a strong
aversion to exceptions, which they fear might un-
dermine the integrity of the underlying rules.
Chinese culture exhibits strong particularist
values. The particularist approach complements
Chinese society’s collectivist underpinnings. That
is, the Chinese favor the subjective relationship over
objective rules. Westerners often mistake this cul-
tural distinction as a form of corruption since the
Chinese have historically valued the ‘rule of man’
(renzhi) over the ‘rule of law’ ( fazhi). However, the
Chinese are equally perplexed by the willingness of
their American counterparts to seemingly abandon
their moral responsibility to those in their inner circle
in order to comply with an abstract rule (Cutshaw,
Burke, & Wagner, 2010; Trompenaars & Hampden-
Turner, 1998).
3.3. Low versus high power distance
Perhaps because of its universalist and individualist
bent, U.S. society is situated on the low side of the
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power distance scale. Low-power-distance socie-
ties, like the United States, exhibit a tendency to
rely on rules to restrain the exercise of power. They
are opposed to exceptions to these rules, insisting
that everyone is entitled to equal rights and oppor-
tunities. Within business organizations, there gen-
erally is greater consultation with subordinates
when making decisions.
China falls at the other end of the power-distance
spectrum. There, employees are less likely to ap-
proach, let alone contradict, their supervisors. In
addition, in high-power-distance societies, it is ex-
pected that some people will have greater privi-
leges, and it is more acceptable to overtly wield
power to enhance one’s prestige and wealth. Thus,
it is more common to observe the use of side pay-
ments and other indications of corruption–—in the
Western sense of the word–—because there exists
less reliance on legal and moral checks against such
practices (Hofstede & Hofstede, 2005).
3.4. Low versus high context
The United States is a low-context (or specific)
society while China is a high-context (or diffuse)
realm. Low-context cultures are analytic in na-
ture, relying on detailed discussions and feedback
to reach a decision. However, in this specific-
oriented approach, each encounter is generally
segregated from other dealings. That is, people
in low-context cultures look at specific things
before attempting to understand their relation-
ship to a greater whole.
This differs from the prevailing attitude in China,
where people–—through their interwoven relation-
ships–—are more alert to the big picture and the
remote consequences that may spring from a par-
ticular course of action. Commentators have even
suggested that the use of characters (pictures) rath-
er than an alphabet (a succession of letters) in the
Chinese language explains China’s reliance on the
big picture as opposed to the Western tendency to
focus on details (Cutshaw et al., 2010). Chinese
decision making is a form of synthesis: a quest for
balance and harmony rather than an attempt to
resolve only the matter at hand (Hampden-Turner
& Trompenaars, 2000). High-context communica-
tions are common in collectivist societies and often
require that little be said or written because recip-
ients of the information have already acquired this
knowledge through their pre-existing relationships.
This stands in stark contrast to low-context com-
munication, which is common in individualist
cultures. Here, large amounts of detailed informa-
tion are required because there is weak under-
standing of deeper context due to the absence of
BUSINESS LAW & ETHICS CORNER
encompassing relationships among the parties
(Hofstede & Hofstede, 2005).
3.5. Inner versus outer direction
The American and Chinese cultures also differ in
their view of the relationship between man and the
environment. Perhaps related to its individualist
bias, U.S. society generally believes that it can
control nature. This is called inner direction. At
the other extreme, Chinese society is outer direct-
ed. That is, the Chinese are more likely to believe
that, as a part of nature, they must accommodate
its directions and forces. This sense of inner direc-
tion versus outer direction is not confined to any
religion or theological philosophy (Trompenaars &
Hampden-Turner, 1998).
Members of inner-directed cultures, like that in
the United States, tend to believe they know what is
right and often resort to threats or commands to
coerce others to accept that view. Because outer-
directed cultures believe ultimate virtue resides
outside of each member of society, their adherents
are likely to seek ways to harness other ideas and
forces to achieve greater synergies. Thus, the inner-
directedness of the United States, combined with its
individualist characteristics, arguably explains its
leadership in the creation of new ideas and technol-
ogies. However, the Chinese are well-suited to cash
in on those original ideas by adapting them to
consumers’ wants and needs because of China’s
outer-directedness and collectivist orientation
(Hampden-Turner & Trompenaars, 2000).
4. Culture’s impact on societal
attitudes toward law
The cultural underpinnings of Chinese and American
society explain some of the major differences in
their orientation toward the idea of law itself. Of
course, there are explanations beyond the dimen-
sions previously discussed. For instance, the U.S.
legal system is an outgrowth of the British common
law system. Closely aligned with deep-rooted
Christian values espousing individualism and univer-
salism, the predominant view of law in the United
States is that it is necessary to prevent society from
descending into chaos. Thus, the rule of law is
considered part of the foundation of U.S. society
(Richards & Shackelford, 2014).
This is in sharp contrast to the Chinese, who have
long held a deep distrust for law and legal institu-
tions. Several philosophical influences continue to
define Chinese attitudes toward legal rules and
institutions. Confucianism stresses the importance
of maintaining order by respecting hierarchies and
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demanding precise conduct (rituals) based upon
one’s place in each type of relationship. Confucians
advocate the incorporation of ‘rule of proper con-
duct’ (Li) into law. Family and the stratification of
society are widely valued, meaning that proper
behavior is dependent upon one’s position both in
the family and in other social groups. This creates a
strong particularist grounding whereby laws are
expected to apply differently to different people
depending on their status (Lam, 2009). Taoism in-
sists on achieving harmony through inaction and
political passivity. It expressly rejects the need
for written laws and discourages people from turn-
ing to courts since that path does not lead to
spiritual fulfillment (Matheson, 2006). A third influ-
ence, legalism, views reward and punishment as
means of maintaining public order; however, the
legal system was designed to control the public for
the benefit of the ruling class. Thus, legal rules and
institutions often are viewed as a means of control
rather than as a source of rights (Cutshaw et al.,
2010). Finally, the influence of communism cannot
be underestimated. It fully supports the notion of
seeking the common good and pursuing that end
through collectivist methods (Matheson, 2006).
5. Culture and contract law
Cultural and philosophical influences greatly impact
the Chinese orientation toward contract law. The
concept of a rigidly enforced contractual agreement
is totally alien to Chinese culture, which is deeply
rooted in Taoist and particularist values. This differs
from the expectation that rules will be followed in
American culture, with its universalist values.
Because the United States is both a universalist
and low-context society, its businesses generally fa-
vor detailed contracts that clearly denote each
party’s rights and responsibilities. This creates a
sense of security for Americans because it provides
recourse should the matter ever be litigated. Because
of its heavy reliance on both law and rigid enforce-
ment of obligations, it also is common for Americans
to depend extensively on lawyers throughout the
negotiating process, in part to alert the other party
that there will be legal consequences if promises are
not kept. Chinese businesspeople may be insulted by
these legalistic attitudes. Because of their particu-
larist values, they may believe that the working
relationship is sufficient to ensure a harmonious
end result. Veiled threats of repercussions regarding
agreement non-compliance may also be perceived as
an indirect message that the suspicious party cannot
be trusted. Ultimately, the Chinese may walk away
from negotiations because they believe rigid terms
make it impossible for relationships to evolve over
681
time. In short, while universalists view contract
terms as definitive, particularists see them as guide-
lines rather than rules (Trompenaars & Hampden-
Turner, 1998).
Contract formation in both the United States and
China does not occur until the offeror and the
offeree mutually agree upon essential terms of
the arrangement, thereby reaching an agreement.
This similarity should not be surprising given that
China looked to the West for guidance when it
promulgated its Uniform Contract Law (UCL) in
1999. Still, there are differences. For example, in
the United States, an agreement is not enforceable
unless it is supported by consideration, which means
that each party’s promises are not binding unless all
parties have committed to give something of legal
value in exchange for the reciprocal contractual
obligation. In contrast, China’s UCL has no formal
consideration requirement, transforming even gra-
tuitous promises into enforceable contracts.1 While
there are other examples of differences in U.S. and
Chinese contract rules, the most important distinc-
tion may be in how each system perceives and
applies its respective rules. For instance, as previ-
ously mentioned, Westerners believe that the sign-
ing of a drafted agreement is the culmination of the
business relationship, while the Chinese generally
view that event as merely one step in an ever-
changing relationship (Matheson, 2006).
Both contractual systems use concepts like good
faith, fair dealing, and reasonableness. Contrary to
its American counterpart, however, Chinese law
does not provide clear definitions for these terms.
Rather, it is left to the court’s interpretation to
guarantee that fairness is achieved in each individ-
ual case. Likewise, Chinese courts are suspicious of
form contracts, requiring that agreements manifest
a mutuality of obligations. Thus, rights and obliga-
tions are expected to be distributed equally. This is a
natural tendency in a high-context and particularist
culture. U.S. courts, on the other hand, commonly
limit their concern regarding fairness of the under-
lying contract to consumer transactions where there
is a clear disparity in bargaining strength (Richards &
Shackelford, 2014).
The collectivist and particularist values running
deep in Chinese society may explain why the good
faith requirement that permeates Chinese contract
law is deeper and broader than its American coun-
terpart. For instance, U.S. contract law demands
good faith dealings during contract formation and
performance while Chinese law extends the good
1
In the United States, only a small number of gratuitous
promises are enforceable.
682
faith requirement to pre-contract negotiation and
post-contract termination (Matheson, 2006). This is
consistent with the relationship-based nature of
Chinese society.
These differences might have led to a quite
different result if the Heggblade case had taken
place in China. During negotiations, the grower
might have expected the processor to fully explain
the impact that trade usage could have on the
express quantity term in the contract. When per-
formance was due, a Chinese party would be more
likely to negotiate a mutually beneficial settlement
to the conflict than seek the all-or-nothing approach
that often results from litigation. Finally, a Chinese
court, if called upon to resolve the dispute, might
well act like a court of equity and deliver its notion
of subjective fairness rather than blindly apply
contract law rules to the literal language of the
agreement (Matheson, 2006).
6. Bridging the cultural divide
This article attempts to assist the reader in recog-
nizing how fundamental cultural differences be-
tween American and Chinese society can affect
contractual dealings, using broad generalizations
about each country’s national culture. Of course,
the values ascribed to a nation’s culture are not
universally held by all its inhabitants. Each individ-
ual possesses deep-rooted values derived from
a series of overlapping subcultures (Hofstede &
Hofstede, 2005). Still, there is great value in study-
ing the differences in these national cultural models
because they provide insight regarding how manag-
ers can successfully recognize cultural differences.
The remainder of this article offers guidance on how
managers can respect and reconcile those differ-
ences (Trompenaars & Woolliams, 2003).
6.1. Respecting differences
Respect for cultural difference is more likely if one
realizes that culture merely reflects the manner in
which a society has chosen to respond to a series of
dilemmas. Our core cultural values are no more than
organized responses to cope with our environment.
Thus, ‘strange’ cultures generally have values that
are now neglected in our own society due to environ-
mental changes. By identifying these, we find lost
artifacts in our own cultural heritage (Trompenaars &
Hampden-Turner, 1998). In short, respect is easier
once we realize that cultural differences reside in
ourselves; we then may see the world as we are,
rather than as it is (Trompenaars & Woolliams, 2003).
Upon careful examination, we find that collec-
tivism and individualism really are not that far
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apart. A fundamental tenet of the Western econom-
ic model is that individuals serve society’s interests
when they focus on their own self-interest.
Similarly, when collectivists act to benefit their com-
munities, they derive individual reward. In a sense,
then, these are complementary dimensions rather
than opposing preferences. Individualists view self-
interest as the end and community benefit as the
means, while collectivists see society as the end and
individual rewards as the means. In essence, this is a
circular process and the definition of one value as the
end and the other as the means is a bit arbitrary
(Trompenaars & Hampden-Turner, 1998).
The difference between a low-context and a
high-context society is also merely a question of
priority. Americans generally choose to begin with
specific goals and then attempt to sell that idea to
other business associates. The Chinese, on the other
hand, are inclined to begin with a circle of asso-
ciates that they trust and then collaboratively move
toward common business goals (Trompenaars &
Hampden-Turner, 1998). In this way, universalism
and particularism also are complementary rather
than conflicting values. In essence, we cannot give
meaning to a universal rule without reference to the
exceptions to the rule. Exceptions define the rule,
so we more effectively generalize the rule by gen-
erating more exceptions to it (Hampden-Turner &
Trompenaars, 2000).
6.2. Reconciling differences
When cross-cultural partners reconcile two cultural
predispositions rather than choose one over the
other, they can achieve true synergies. Trompenaars
and Woolliams (2003) suggest two different ap-
proaches for carrying out this process. The first is
to start from your own cultural bias and then ac-
commodate the other viewpoint. The second is to
start from the other orientation and then embrace
your own values. It seldom matters which path you
choose to follow.
There are sound reasons for reconciling the uni-
versalist and particularist persuasions when con-
tracting. Universalist principles may degenerate
into rigidity and overly bureaucratic practices. Par-
ticularists, on the other hand, encourage flexibility
by bending rules to adjust for particular circum-
stances. Universalists resist this approach because it
may lead to ambiguity and loss of direction. Rather
than discard one approach in favor of the other, a
reconciliation captures the best–—and avoids the
worst–—attributes of each. In a contract, this would
take the form of firm-general rules outlining the
parties’ fundamental goals and aspirations. This
could be supplemented by identifying a series of
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triggering events that indicate the need to reform or
revise the agreement to address unexpected sce-
narios. Rather than choose between predictability
and flexibility, this reconciliation makes both sets of
values work together, thereby creating predictable
flexibility or flexible predictability (Trompenaars &
Hampden-Turner, 1998).
This reconciliation also helps bridge the gap be-
tween individualist and collectivist cultures by cre-
ating a stronger relationship as the parties work
through various contingencies. While this approach
takes more time at the beginning of the contracting
process, it may be preferable to the stress, expense,
and loss of resources associated with litigating a
contract dispute. The individualist orientation often
allows for quicker decision making, but it can
prompt implementation-stage difficulty regarding
lack of consensus or full understanding by partners
or subordinates. In contrast, collectivist cultures
exhibit slower decision making, but those deci-
sions are often more easily and quickly imple-
mented because everyone is fully on board.
Ultimately, the time from idea inception to oper-
ationalization may well be the same under either
approach. It merely is a matter of priority as to
where the business wishes to spend the most time:
formation or implementation (Hampden-Turner &
Trompenaars, 2000).
A marriage between American and Chinese cul-
tures offers additional benefits. For instance, the
individualist cultures generally seem more condu-
cive to idea creation by freely permitting entrepre-
neurs to mobilize resources. But collectivist
societies have shown great promise in industrial
catch-up and correctly gauging the pulse of consum-
er markets. These propensities are reinforced by
America’s inner direction and China’s outer direc-
tion. However, East Asia’s outer-directed values
make it difficult for it to comprehend the West’s
complaints that anyone owns and/or has the right to
sell access to an idea. Thus, individualism/inner
direction may combine with collectivism/outer di-
rection to ensure better implementation and refine-
ment of new products and ideas (Hampden-Turner &
Trompenaars, 2000).
During contractual negotiations, it is important
to recognize and respect the difference in power-
distance orientation and its impact on the status of
various negotiators. A Chinese negotiating team is
likely to expect its American partner to staff its own
team with members of equivalent organizational
status. Due to their collectivist nature, Chinese
negotiators also may be unsettled by any changes
in a partner’s negotiating team, thereby requiring
more time to build new relationships (Hofstede &
Hofstede, 2005). Americans are typically used to
683
starting out with an objective and then negotiating
to that end in the quickest time possible, so they
must be prepared for the slower pace at which
Chinese negotiators may proceed. Confucian and
Taoist values often inspire the Chinese to view the
negotiation process as more important than the goal
itself. Thus, they may frequently revisit issues that
their American partners thought had already been
resolved. This should be viewed as a necessary
relationship-building step that is essential to the
development of mutual expectations.
Because of China’s high-context culture,
Americans raised in a low-context culture must
learn to read between the lines. It is highly possible
that casual suggestions might actually represent
deep-rooted desires, which someone familiar
with Chinese culture would immediately recognize
(Cutshaw et al., 2010). The direct communication
and adversarial posturing that Americans frequently
display during negotiations may be offensive to their
Chinese colleagues. Part of the reason that the
Chinese are more indirect in their communication
is to avoid personal confrontations that might lead
to the loss of face (Trompenaars & Hampden-Turner,
1998). While Americans may accept personal af-
fronts as long as they get the deal, the Chinese
focus more on how you pursue an agreement than
on whether an agreement is actually reached
(Cutshaw et al., 2010). As importantly, once of-
fended, it is rare for the Chinese victims of social
indignities to openly discuss the matter with their
negotiating partner. Negotiations are therefore
more likely to be fruitful if they are conducted
cautiously and with a great deal of focus on discov-
ering one another’s aspirations, developing a long-
term relationship in the process.
7. Conclusion
Reconciliation of values is unlikely to occur unless
cultural differences are first recognized and then
respected. Toward that end, recognizing and re-
specting depend upon individual awareness of one’s
own cultural biases. A good way to begin discovering
these entails identifying how we react to the di-
mensions examined here and asking ourselves why
this is. Ultimately, reconciliation of values is neces-
sary if we hope to achieve the mutual expectations
essential to the long-term success of cross-cultural
business transactions. This synthesis of cultures
adds real value to business transactions while mini-
mizing the risk of failure.
In pursuing this path, we are reminded that
‘‘culture is a myriad of different ways of creating
the integrity without which. . .business cannot be
conducted. There are no universal answers but
684
there are universal questions and dilemmas, and
that is where we all need to start’’ (Trompenaars
& Hampden-Turner, 1998, p. 198). While the process
requires patience and introspection, it ultimately
offers a better promise of mutual benefit and long-
term success. American and Chinese cultures actu-
ally share one important cultural value that can
greatly facilitate the reconciliation process: both
societies exhibit a great deal of comfort with ambi-
guity (Richards & Shackelford, 2014). That shared
cultural predisposition should serve them well as
they navigate their cross-cultural differences.
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