International and Cross-Cultural Negotiation CHAPTER ELEVEN International and Cross-Cultural Negotiation

What Makes International Negotiations Different? Two overall contexts have an influence on international negotiations: Environmental context Includes environmental forces that neither negotiator controls that influence the negotiation Immediate context Includes factors over which negotiators appear to have some control

Environmental Context Factors that make international negotiations more challenging than domestic negotiations include: Political and legal pluralism International economics Foreign governments and bureaucracies Instability Ideology Culture External stakeholders

Immediate Context “Factors over which the negotiators have influence and some measure of control”: Relative bargaining power Levels of conflict Relationship between negotiators Desired outcomes Immediate stakeholders

The Contexts of International Negotiations

Conceptualizing Culture and Negotiation Culture as shared values Understanding central values and norms Individualism/collectivism Power distance Career success/quality of life Uncertainty avoidance

GEERT HOFSTEDE’ S CULTURAL DIMENSIONS http://www.geert-hofstede.com/ Also includes business etiquette for several countries

Hofstede’s Dimensions of Culture Individualism/collectivism Power distance Career Success/Quality of Life Uncertainty avoidance

Individualism/Collectivism Definition: The extent to which the society is organized around individuals or the group Individualism/collectivism orientation influences a broad range of negotiation processes, outcomes, and preferences Individualistic societies may be more likely to swap negotiators, using whatever short-term criteria seem appropriate Collectivistic societies focus on relationships and will stay with the same negotiator for years

Power Distance Definition: “The extent to which the less powerful members of organizations and institutions (like the family) accept and expect that power is distributed unequally” Cultures with stronger power distance will be more likely to have decision-making concentrated at the top of the culture.

Career Success/Quality of Life Definition: Cultures differed “in the extent to which they held values that prompted career success or quality of life.” Cultures promoting career success characterized by “the acquisition of money and things, and not caring for others, the quality of life, or people Cultures promoting quality of life characterized by “the concern for relationships and nurturing.”

Uncertainty Avoidance Definition: “Indicates to what extent a culture programs its members to feel either uncomfortable or comfortable in unstructured situations” Negotiators from high uncertainty avoidance cultures are less comfortable with ambiguous situations--want more certainty on details, etc.

Hofstede’s Cultures Ranking in the Top 10 Cultures Raking in the Top 10 on the Cultural Dimensions Reported by Hofstede (1991) Individualism Power Assertiveness Uncertainty Distance Avoidance United States 1. Malaysia 1. Sweden 1. Greece Australia 2. Guatemala 2. Norway 2. Portugal Great Britain Panama 3. Netherlands 3. Guatemala Canada 4. Philippines 4. Denmark 4. Uruguay Netherlands 5. Mexico 5. Costa Rica 5. Belgium New Zealand Venezuela Yugoslavia Salvador Italy 7. Arab Countries 7. Finland 7. Japan Belgium 8. Ecuador 8. Chile 8. Yugoslavia Denmark Indonesia 9. Portugal 9. Peru France 10. India 10. Thailand 10. Argentina Sweden West Africa Chile Costa Rica Panama Spain Source: Based on G. Hofstede, Culture and Organizations: Software of the Mind (London, England: McGraw-hill, 1991). Reproduced with permission of the McGraw-Hill Companies.

Dimensions of Culture Cultural Dimension Goal: Individual versus Collective Orientation Influence: Egalitarianism versus Hierarchy Communication: Direct versus Indirect Individualists/Competitors: Key goal is to maximize own gain (and perhaps the difference between oneself and others); source of identity is the self; people regard themselves as free agents and independent actors. Egalitarians: Do not perceive many social obligations; often regard BATNA to be major source of bargaining power. Direct Communicators: Engage in explicit, direct information exchange; ask direct questions; are not affected by situational constraints; face-saving issues likely to arise. Collectivists/Cooperators: Key goal is to maximize the welfare of the group or collective; source of identity is the group; individuals regard themselves as group members; focus is on social interaction. Hierarchists: Regard social order to be important in determining conflict management strategies; subordinates expected to defer to superiors; superiors expected to look out for subordinates. Indirect Communicators: Engage in tacit information exchange, such as storytelling, inference-making; situational norms. SOURCE: Brett, J. (2001). Negotiating globally: How to negotiate deals, resolve disputes, and make decisions across cultural boundaries. San Francisco, CA: Jossey-Bass.

Key Challenges of Intercultural Negotiation Expanding the pie Dividing the pie Biased punctuation of conflict Ethnocentrism Affiliation bias Faulty perceptions of conciliation and coercion

Culturally Responsive Negotiation Strategies When choosing a strategy, negotiators should: Be aware of their own and the other party’s culture in general Understand the specific factors in the current relationship Predict or try to influence the other party’s approach Strategies are arranged based on the level of familiarity (low, moderate, high) that a negotiator has with the other party’s culture

Low Familiarity Employ agents or advisers (unilateral strategy) Useful for negotiators who have little awareness of the other party’s culture Bring in a mediator (joint strategy) Encourages one side or the other to adopt one culture’s approaches or mediator culture approach Induce the other party to use your approach (joint strategy) The other party may become irritated or be insulted

Moderate Familiarity Adapt to the other negotiator’s approach (unilateral strategy) Involves making conscious changes to your approach so it is more appealing to the other party Coordinate adjustment (joint strategy) Involves both parties making mutual adjustments to find a common process for negotiation

High Familiarity Embrace the other negotiator’s approach (unilateral strategy) Adopting completely the approach of the other negotiator (negotiator needs to completely bilingual and bicultural) Improvise an approach (joint strategy) Crafts an approach that is specifically tailored to the negotiation situation, other party, and circumstances Effect symphony (joint strategy) The parties create a new approach that may include aspects of either home culture or adopt practices from a third culture

Advice for Cross-Cultural Negotiators Anticipate differences in strategy and tactics that may cause misunderstandings Analyze cultural differences to identify differences in values that expand the pie Recognize that the other party may not share your view of what constitutes power Avoid attribution errors Find out how to show respect in the other culture Know your options for change