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Fundamentals of International Negotiation

Remigiusz Smolinski 1

1. Introduction

Jan graduated from a leading Polish business school. He had learned a lot about economics,

finance, marketing, and strategy and his grades were excellent. Everything indicated that he

was well prepared for his starting career. Very soon he found a job he was dreaming of and

started applying what he had learned in real business environment.

his career rather quickly and taking over new areas of responsibility.

He has been advancing

Recently, his boss has

asked him to identify a company potentially interested in cooperation especially in the area of

research

and

development.

Since

his

company

was

operating

in

a

niche

market

manufacturing very specialized products, very early Jan realized that for a potential partner he

would have to look in Southeast Asia, particularly in Japan, Taiwan, and possibly in China.

Not without difficulty he came up with a short list of potential partners and scheduled the first

meetings with them. Today, his secretary gave him the tickets. Next week Jan and his boss

are flying to Asia. Suddenly, he realized that all he knows about Asian culture actually comes

from TV and movies. The same was true for his boss. A hundred questions went through his

mind.

How is he supposed to behave there?

What can he say and what not?

Will they

understand what he has to tell them? How should Jan negotiate with these guys?

Within the last few decades the number of international negotiations has been increasing

rapidly.

This trend is especially evident in Poland.

Intensification of trading relationships,

1 Ph.D. candidate at Leipzig Graduate School of Management, Department for Microeconomics and Information Systems, Jahnallee 59, 04109 Leipzig, email: remigiusz.smolinski@hhl.de, tel. +49 341 9851656.

political and economic integration with the European Union and progressing globalization

have caused that international negotiations have become relatively common both in the

diplomatic as well as in the business environment.

Similar processes occurring worldwide

were most likely also the reason for increased interest in this topic among the scholars. Amid

all issues connected with the international negotiations the one that has been attracting the

most attention has been the influence of culture on negotiation. 2

2. Culture

There are numerous definitions of culture in the literature.

Kroeber and Kluckhohn (1963),

for instance, have collected more than 160 of them.

Despite the fact that some researcher

consider the concept of culture not well defined 3 , most of the definitions, share three key

features:

- Culture is a group-level phenomenon – Although each group essentially consists of

individuals and despite the fact that culture is manifested through individuals, culture

itself is a phenomenon that can only be observed once it is shared by the vast majority

of the individuals belonging to a certain group.

- Culture is acquired by individuals from the group they belong to – either through

socialization or acculturation – This implies that culture not only has to be shared by

the individuals belonging to a certain group but also that it has to be preserved in time

and transmitted from one generation to another. 4

2 Source: Lewicki, Saunders, Minton, and Barry (2006) p. 413.

3 Zartman (1993), for example, claims that culture is tautological, vague and epiphenomenal. Weiss (1994) points out that culture is neither consistently nor well defined. Similar critique was also expressed by Moran and Stripp (1991) and Usunier (2003).

4 It does not necessarily mean that culture is static and remains invariant over time. On the contrary, Faure and Sjöstedt (1993, p. 5) argue that in a short-term perspective culture should be seen as a structure influencing human behavior, whereas in the long-term it is a dynamic social phenomenon.

- Culture is a unique set of attributes that subsumes every area of social life – These

attributes can possess intangible or intangible characteristics.

The first group, for

instance, includes: meanings, values, beliefs, etc. the second – their expressions such

as behavior patterns and artifacts. 5

We define culture as the socially transmitted norms, beliefs, and values influencing the

behavior of individuals in a given community. 6

This definition possesses all three features

listed above and creates a firm foundation for our further analysis. Generally, there are many

kinds of cultures e.g. corporate, family and professional cultures and each of them can

influence negotiating behavior. 7

It is also important to add that some cultures exist within

countries whereas the others extend across the borders (e.g. diplomatic culture).

Jan’s

negotiating behavior is influenced, for instance, by the way of doing business in his company,

norms and values he was raised in at home as well as by general management practices taught

and pursued in Poland.

Much has been written about the meaning of culture in international and cross-cultural

negotiation both from a theoretical as well as from practical perspective. 8

There

is

a

noticeable consensus and substantial evidence in the literature that negotiators from different

cultures tend to behave differently.

Brett (2001) developed a simple conceptual model

illustrating the influence culture may have on negotiators.

Figure 1 – How culture affects negotiation.

5 Source: Cohen (2004), p. 11 and Lewicki, Saunders, Minton, and Barry (2006), p. 413.

6 This definition is based on the work of Salacuse (1991), p. 45 and Faure and Sjöstedt (1993), p. 3.

7 Source: Faure and Sjöstedt (1993), p. 5.

8 A complete list of reference would exceed the limitations of this document. The most important positions which should not be omitted include: Binnendijk (1987), Brett (2001), Cohen (2004), Faure and Rubin (1993), Fisher, Schneider, Borgwardt and Ganson (1997), Foster (1992), Gelfand and Dyer (2000), Habeeb (1988), Hendon and Hendon (1990), Mautner-Markhof (1989), Reynolds, Siminitiras and Vlachou (2003), Salacuse (1998 and 1999), and Weiss (1994).

Interests and

priorities

Interests and priorities Culture A negotiator Strategies Potential for agreement Type of agreement Pattern of

Culture A

negotiator

Interests and priorities Culture A negotiator Strategies Potential for agreement Type of agreement Pattern of

Strategies

Potential for

agreement

Culture A negotiator Strategies Potential for agreement Type of agreement Pattern of Interests and Culture B

Type of

agreement

Strategies Potential for agreement Type of agreement Pattern of Interests and Culture B negotiator integrative

Pattern of

Interests and

for agreement Type of agreement Pattern of Interests and Culture B negotiator integrative priorities interaction

Culture B

negotiator

agreement Pattern of Interests and Culture B negotiator integrative priorities interaction Strategies Source: Brett
agreement Pattern of Interests and Culture B negotiator integrative priorities interaction Strategies Source: Brett

integrativeagreement Pattern of Interests and Culture B negotiator priorities interaction Strategies Source: Brett (2000), p.

prioritiesPattern of Interests and Culture B negotiator integrative interaction Strategies Source: Brett (2000), p. 102.

interactionInterests and Culture B negotiator integrative priorities Strategies Source: Brett (2000), p. 102. According to this

StrategiesCulture B negotiator integrative priorities interaction Source: Brett (2000), p. 102. According to this model

Source: Brett (2000), p. 102.

According to this model cultural values have a noticeable influence on negotiation interests

and priorities, while cultural norms affect negotiation strategies and patterns of interactions.

The fundamental methodological conclusion for that can be drawn from this model is quite

discouraging for the scholars dealing with this topic. If culture affects such basic elements of

negotiation as:

interests, priorities or strategy selection and also given that the influence of

culture is mostly subconscious, all differences in any observable aspects of cross-cultural

negotiation can always be ascribed to cultural differences between the negotiators.

Each

individual is emerged in many cultures which influence his negotiating behavior. At the same

time, there are many other variables beside culture that also have similar effects.

These

include individual variables such as negotiators’ personality, as well as structural or process

variables.

As pointed out by Elgström (1994), it is very difficult to assess correctly the

relative influence of each variable and it is inappropriate to treat culture as the unique

explanatory variable of the negotiation process and outcomes.

Therefore, the studies using

culture as the only independent variable explaining the differences in any aspects of

negotiation are of limited use and in some cases can even be tautological allowing the

researchers to demonstrate what they established at the outset of their premise. 9

Moreover, as pointed out by Avruch (2000) and Sebenius (2002a), not every member of a

culturally homogeneous group equally shares all characteristics of this culture.

Rubin and

Sander (1991) emphasized that the variety of behavioral differences within cultures can be as

wide as in cross-cultural comparisons. All these and other difficulties have led Zartman and

Berman (1982, p. 224) to label the linkage between culture and negotiation a “most

troublesome question” especially in international negotiation research.

Although cultural

factors undoubtedly play an important role, it is essential not to overestimate their influence

on international negotiation. 10

This suggestion becomes especially vital in the context of the

research result obtained by Dialdin, Kopelman, Adair, Brett, Okumura and Lytle (1999) who

claimed that there is a general tendency to ignore the importance of situational factors in favor

of cultural explanations which they called cultural attribution error.

3. Perception

Perception is generally defined as the process of screening, selecting, and interpreting stimuli

so that they gain meaning to the individual. Although the beginnings of perception research

date back to 1950s, 11 it was only in the late nineties that this topic drew attention and interest

of

the

negotiation

theorists

and

practitioners

who

concentrated

mostly

on

perceptual

distortions. 12

Figure 2 illustrates a general model of the perceptual process in bilateral

negotiation. According to this model the behavior of one negotiator serves as a stimulus for

9 This is precisely the case in studies attempting to separate structural and cultural effects in international negotiations. It is quite easy to find support for a given structural or cultural hypothesis by appropriately selecting the object of the study. A more detailed discussion on this topic can be found in Faure and Rubin (1993) pp. 222-224.

10 This topic is discussed in more detail in Rubin and Sander (1991), Sebenius (2002a), Weiss (2003). 11 The most influential pioneers in this field were: Gibson (1950), Bruner and Tagiuri (1954), and Broadbent

(1958).

12 One of the precursors in this field was Thompson (1995).

the other negotiator who then screens it, selects its key elements and tries to interpret them.

In international negotiation the complexity of this process is significantly greater than in other

cases.

Culturally influenced behavior of Negotiator A is perceived through the cultural lens

of Negotiator B who then acts based on his interpretation of that behavior which then is

perceived by Negotiator A and the whole process repeats.

As a consequence, the cultural

differences can lead to misinterpretation of the actual negotiators’ behavior and their

underlying motivation such as interests and objectives.

This misinterpretation in turn may

result in inappropriately adjusted reactions and given the interactive and repetitive character

of this process the final solution to the negotiated problem may in fact be based on incorrect

inferences and therefore prove suboptimal.

Figure 2 – Perceptual process in bilateral negotiation. Translation Attention Behavior Behavior Recognition
Figure 2 – Perceptual process in bilateral negotiation.
Translation
Attention
Behavior
Behavior
Recognition
Recognition
Negotiator A
Negotiator B
Attention
Translation

Source: Authors.

Accepting this statement leads us to the conclusion that perceptual processes tend to magnify

cultural differences in international negotiation.

Due to these cultural and perceptual

differences, however, international negotiation processes possess higher value generating

potential, particularly when the parties acknowledge the differences and use them as basis for

creating value.

4. National Negotiating Styles

Negotiators’ culture is expressed in their negotiating style.

Generally, negotiating style is

defined as the way persons from different cultures behave in negotiations. 13

This definition

implies that:

- There is a strong link between a person’s culture and his negotiating style.

- A negotiating style of a certain person can only be evaluated through an analysis of

that person’s behavior in several negotiation settings.

To identify cross cultural differences in negotiating styles the scholars typically focus on

selected aspects of negotiators’ behavior called negotiation factors or traits.

These traits are

usually selected based on their relevance and potential variability across different cultures.

Various traits have been used by various scholars in their research on identifying the influence

of culture on negotiation or on measuring negotiating styles. In this document we would like

to present the approach pursued by Jeswald Salacuse together with the results of his seminal

study on international negotiating styles (Salacuse 1998). Table 1 lists ten negotiation factors

he used in his survey together with the range of possible cultural responses to each of them.

This selection is based on the work of Hendon and Hendon (1990), Moran and Stripp (1991),

Salacuse (1991) as well as on the interviews with practitioners.

13 Source: Salacuse (1999), p. 221. This definition of the negotiating style, however, poses some difficulties. First, it is very general and embraces all aspects of negotiating behavior also the ones related to individual and situational factors. Second, it does not allow us to capture context specific adjustments of negotiating behavior.

Table 1 – Research framework for determining the negotiating styles.

Negotiation Factor

Range of Responses

Goal Attitude Personal Style Communication Time Sensitivity Emotionalism Agreement Form Agreement Building Team Organization Risk Taking

Contract Relationship Win/lose Win/win Informal Formal Direct Indirect
Contract
Relationship
Win/lose
Win/win
Informal
Formal
Direct
Indirect

High

L o w Low

High

L o w Low

Specific

GeneralSpecific

Bottom Up

T o p D o w n Top Down

One leader

ConsensusOne leader

High

L o w Low

Source: Salacuse (1998), p. 223.

Based on the framework illustrated in Table 1, a survey questionnaire was developed and

distributed it to over 300 business executives, lawyers, and graduate students from twelve

countries – Argentina (ARG), Brazil (BRZ), China (CHN), France (FRN), Germany (GER),

India (IND), Japan (JPN), Mexico (MXC), Nigeria (NGR), Spain (SPN), United Kingdom

(UK) and USA.

All respondents were asked to rate their own attitudes toward each of the

traits on a five-point scale. Table 2 summarizes the results of this study. The numbers in the

table denote the percentage of respondents from each country who submitted the highest or

the second highest evaluations of indicated polar extremes of each trait.

The differences in

national negotiating styles among the analyzed countries are quite evident.

Table 2 – The evaluations of national negotiating styles (in percent).

Negotiation Factor

Direction

ARG

BRZ

CHN

FRN

GER

IND

JPN

MXC

NGR

SPN

UK

USA

Goal Attitudes Personal Styles Communications Time Sensitivity Emotionalism Agreement Form Agreement Building Team Organization Risk Taking

Contract

46

67

45

70

54

33

55

42

47

74

47

54

Win/Win

81

44

82

80

55

78

100

50

47

37

59

71

Formal

35

22

46

20

27

22

27

42

53

47

35

17

Indirect

4

11

18

20

9

11

27

0

0

0

12

5

Low

15

0

9

40

36

44

9

33

7

21

6

15

High

85

89

73

60

36

56

55

83

60

79

47

74

General

27

22

27

30

45

44

46

17

20

16

11

22

Top Down

70

42

54

67

54

74

45

33

47

46

54

47

One Leader

58

100

91

40

55

44

55

91

40

58

65

63

High

73

56

82

90

72

89

18

50

73

47

88

78

Source: Authors based on Salacuse (1998).

What can Jan expect from his Asian counterparts? First, he should be prepared to experience

completely different negotiating styles than the ones he has been exposed to so far. Second,

most likely he will have to deal with different negotiating styles in each country he visits. His

Japanese counterparts will probably suggest a rather general agreement, demonstrate very

high win/win attitude, somewhat indirect communication, low emotionalism, rather high time

sensitivity, and risk aversion.

He can be also nearly sure that different negotiating styles

await him at the negotiation tables in Taiwan and in China.

5. Advice for International Negotiators

Although a lot has been written on international and cross-cultural negotiation, not much

attention has been devoted to giving prescriptive advice to those facing the challenge of

international negotiation.

Several contributions stand out as universally practical and

particularly effective. We will quote two of them here.

Initially, many negotiation scholars advised the practitioners to follow the approach attributed

to Saint Augustine:

“When in Rome, do as the Romans do.” 14

Currently, there is a

widespread consensus that this advice is oversimplified and therefore rather impractical. 15 In

1994 the need for a new approach was finally addressed by Stephen Weiss.

In his seminal

paper “Negotiating with Romans” he identifies eight culturally responsive strategies which

can be pursued in international negotiation.

As demonstrated in Figure 3, culturally

responsive strategies can be organized according to:

- The negotiator’s level of familiarity with the counterpart’s culture.

- The counterpart’s familiarity with the negotiator’s culture.

14 A detailed discussion on this topic can be found in Francis (1991) and Weiss (1994). 15 Many contributions referring to this problem are listed in Lewicki, Saunders, Minton, and Barry (2006) pp.

430-433.

- The possibility for explicit coordination of approaches.

The strategies in brackets denote joint strategies, which require close coordination with

counterpart. At each level of familiarity, a negotiator can choose the strategies designated at

that or any lower level.

Figure 3 – Culturally responsive strategies.

High

Counterpart’s

familiarity with

negotiator’s

culture

Low

Induce counterpart to follow one’s own approach

Improvise an approach [effect symphony]

Adapt to the counterpart’s script [coordinate adjustment of both parties]

Employ agent or adviser [involve mediator]

Embrace the counterpart’s approach

Low

Negotiator’s

familiarity with

counterpart’s

culture

High

Source: Weiss (1994), p. 55.

What advice can we give to Jan and his boss? Their familiarity with Asian culture is certainly

very low.

They have never been to Asia before, they do not know the language, and they

have never interacted with the Asians.

However, the choice of an appropriate culturally

responsive strategy they should pursue depends also on the familiarity of his potential Asian

partners with Polish culture. Let us assume their familiarity level is low. In this situation, the

best advice we could give to our negotiators based on the above model is to hire a cultural

expert, a translator, an outside attorney, or a financial adviser who is familiar with the cultures

of all parties. This person can either act as an agent conducting the negotiation on behalf of

our friend or an advisor providing information and recommending most suitable actions. This

strategy can be selected unilaterally and its implementation can be fully controlled by our

negotiators. However, if both parties familiarity levels with each other’s culture are low they

can decide jointly to involve a mediator – a mutually accepted person whose task is to

facilitate the interactions between the parties.

This role is usually played by interpreters or

introducers who brought the negotiators together. The task of the mediator is very difficult as

he is responsible for educating each party about the counterpart’s culture and bring out ideas

and behavior from each side that make their interactions coherent.

It is absolutely

fundamental that his task is fulfilled without losing respect and trust of the involved parties. 16

Another comprehensive set of advices for international and cross-cultural negotiators is given

by Brett (2001) and Thompson (2005). They recommend that such negotiators should: 17

1. Anticipate differences in strategy and tactics that may cause misunderstandings –

Negotiators’ culture affects their negotiating behavior and style and the differences in

culture also result in differences in negotiating style. Anticipating these differences is

a source of advantage in international negotiation.

Awareness of cultural differences

reduces the negative attributions about the negotiation partner and helps view the

differences as an inherent part of international negotiation process.

2. Analyze cultural differences to identify differences in priorities that create value –

Value in negotiation is created by differences rather than similarities.

High level of

16 A detailed description of all culturally responsive strategies can be found in Weiss (1994), pp. 51-61.

17 Source: Thompson (2005), pp. 267-272.

cultural

differences

in

international

negotiation

implies

integrative, or win/win agreement.

also

high

potential

for

3. Recognize that the other party may not share your view of what constitutes power –

Power, defined as the ability to influence other people’s decisions, is perceptual and

therefore context dependent and highly subjective. International negotiators should be

aware that the other party’s estimate of power may be based on completely different

factors that may even seem unimportant (e.g. power of alternatives vs. power of

status).

Engaging in a power contest may reduce the probability of an integrative

agreement.

4. Avoid attribution errors – Attribution error occurs when people assume that a person’s

behavior is based more on what "kind" of person he is, rather than on the social and

environmental forces that influence that person.

Interculturally sensitive negotiators

should view their partners’ behavior as a result of cultural and situational norms and

not attribute it to their underlying personality.

5. Find out how to show respect in the other culture – It is very important to show

respect for the other party before starting negotiation. However, it is wrong to assume

that respect is shown the same way in each country.

6. Know your options for change – Berry (1980) distinguished four choices negotiators

have when their cultures clash. These are:

- Integration – occurs when each group maintains its own culture and also

maintains contact with the other culture.

- Assimilation – occurs when a group or person does not maintain its culture but

does maintain contact with the other culture.

- Separation – occurs when a group or individual maintains its culture but does not

maintain contact with the other culture.

- Marginalization – occurs when neither maintenance of the group’s own culture

nor contact with the other culture is attempted.

6. Summary and Conclusions

The international negotiations are much more complex than the ones conducted domestically.

The main reason why this is the case lies in the differences in negotiators’ cultures.

These

differences have a great impact on negotiators’ behavior and in international negotiation

become even intensified by the perception of the participants.

As demonstrated by various

research results, the differences in cultures are manifested in distinct differences between

negotiating styles typical for these cultures.

This does not mean that all members of a

particular culture negotiate in the same way but rather that there are patterns of behavior

which are typical for most of them.

To be successful in the international negotiation arena,

negotiators need to develop high sensitivity to cultural factors, identify and pursue a culturally

responsive strategy most appropriate in a given negotiation setting but at the same time

acknowledge and consider also individual and structural aspects occurring in this setting.

Armed with this knowledge and advice Jan can sigh in relieve and relax a bit. Although he is

about to take off and start the negotiation process with potential partners from distant and

almost unknown cultures, he feels much better prepared now. Jan realizes that the road to a

successful agreement is still very long and rocky but at least he knows how to avoid

intercultural traps waiting for the unprepared.

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