Cultural Differences in Approaches to Arbitration Peter B. Smith University of Sussex Brunel University May 24, 2013

In Search of ‘Culture’ Behaviors have different meanings in different contexts Values are context free, but not all cultures endorse value-behavior consistency Beliefs are also context free and may account for additional variance in behavior Roles determine behaviors more in some cultures

Figure 2-5: Schwartz’s Mapping of 67 Nations in Relation to Seven Value-Types

Conceptions of Justice Distributive Justice Procedural Justice Interactional Justice Some evidence for generality across cultures

Motives Related to Negotiation Individualistic Cultures: Thomas – Concern for Self - Concern for Other Collectivistic Cultures: Leung - Animosity Reduction - Disintegration Avoidance

Levels of Analysis Interpersonal conflicts Intergroup conflicts International conflicts Gelfand and Realo (1999): Accountability accentuates normative behaviours Persons from individualistic cultures become more competitive Persons from collectivistic cultures become more relational Wu et al. (2012) In China, this effect is stronger when negotiating with other Chinese. In the US, the effect is the same whoever is the other party

Handling Interpersonal and Intergroup Conflicts: Canadians and Nigerians

Reasons for Preferences? Nigerians perceived threats and accepting situation as is as more fair Canadians perceived negotiation as more fair Nigerians perceived arbitration as giving more control of the process than Canadians Canadians perceived threats, accepting the situation-as-is and arbitration as less likely to reduce animosity Gire & Carment, Journal of Social Psychology, 1993

Handling an Interpersonal Conflict: Israelis and Hong Kong Chinese

Reasons for Preferences? Making threats was perceived as likely to increase control over the process and also to increase animosity Arbitration was perceived as likely to reduce animosity These effects were significantly stronger for the Israelis and can therefore be said to explain the differences in preference between the more individualistic Israeli culture and the more collectivist Hong Kong culture. Bond, Leung & Schwartz, International Journal of Psychology, 1992

Handling Interpersonal and Intergroup Conflicts: Canadians and Dutch

Reasons for Preferences? The Dutch perceived greater process control than Canadians from mediation, negotiation and arbitration The Dutch perceived greater animosity reduction than Canadians from mediation and negotiation Thus, process control and animosity reduction can explain the difference between the confrontational procedures favoured in a masculine culture over those more favoured in a feminine culture Leung et al., Journal of Experimental Social Psychology, 1990

Handling Interpersonal and Intergroup Conflicts: Spanish and Japanese

Reasons for Preferences? Process control and animosity reduction can again explain the difference between preferred procedures However, the comparable data from this study and the preceding one suggests that preferences for mediation and for arbitration cannot be predicted from either the dimension of individualism/ collectivism or that of masculinity/ femininity We may need to investigate how terms such as ‘mediation’ and ‘arbitration’ are interpreted by respondents in different cultural contexts Leung et al., International Journal of Psychology, 1992

Accountability and Arbitration (1) Gelfand and Realo (1999): Accountability accentuates normative behaviours Persons from individualistic cultures become more competitive Persons from collectivistic cultures become more relational Wu, Friedman et al. (2012): In China, this effect is stronger when negotiating with other Chinese. In the US, the effect is the same whoever is the other party

Accountability and Arbitration (2) Friedman et al. (2007): 68 Chinese and 68 US arbitrators evaluated scenarios that gave different types of reasons for a contract violation Most other companies also failed to deliver Mixed information Most other companies did not fail to deliver Chinese arbitrators made higher awards, especially in the mixed condition Hypothesis: Chinese arbitrators hold violators more accountable because they attribute causality to groups

Psychological Mediation If the association between A and B disappears when C is controlled, there is evidence for psychological mediation National samples who respond to arbitration in different ways will differ from one another in numerous ways. Psychological mediation studies enable us to test whether our theories as to why these differences occur are supported.

Attribution of internal causality partially mediated the magnitude of arbitrator awards. Mediation in Friedman’s study

Conclusions (1) National cultures differ in both beliefs and values In situations of conflict, negotiating partners favour process control and animosity reduction Nations differ in their beliefs as to whether arbitration, mediation and negotiation will yield optimal process control and animosity reduction.

Conclusions (2) Members of individualistic and collectivistic cultures take differing views of individual and collective accountability Studies of intergroup conflict have greater relevance to real world arbitration These differences will affect arbitrators’ decisions and the reactions of parties to these decisions These conclusions are preliminary because of incomplete sampling and the use of imaginary scenarios