Archive for the ‘Chapter 11: Cross-culture negotiations’ Category

What defines culture?

Culture is the set of shared values and beliefs of a group of people.

What Makes International Negotiation Different?

Two overall contexts have an influence on international negotiations: the environmental context and the immediate context.

Environmental Context:

Includes environmental factors that neither negotiator controls that influence the negotiation.

Seven factors:

1. Political and Legal Pluralism

  • Firms conducting business in different countries are working with different legal and political systems
  • Political considerations may enhance or detract from business negotiations in various countries at different times

2. International Economics

  • Exchange value of international currencies naturally fluctuates
  • The less stable the currency, the greater risk for both parties
  • Any change in the value of a currency can significantly affect the value of the agreement for both parties

3. Foreign Governments and Bureaucracies

  • Countries differ in the extent to which the government regulates industries and organisations

4. Instability

  • Instability may take many forms: lack of resources, shortages of other goods and services, and political instability
  • Challenge for international negotiators to anticipate changes accurately and with enough lead time to adjust for their consequences
  • Negotiators facing unstable circumstances should include clauses in their contracts that allow easy cancellation or neutral arbitration, and consider purchasing insurance policies to guarantee contract provisions

5. Ideology

  • Negotiators from other countries do not always share the same ideology
  • Clashes in ideology may lead to parties disagreeing at the most fundamental level about what is being negotiated

6. Culture

  • People from different cultures appear to negotiate differently
  • People from different cultures may also interpret the fundamental processes of negotiations differently

7. External Stakeholders

  • International negotiators can receive a great deal of promotion and guidance from their government via the trade section of their embassy, and from other business people via professional associations

Immediate Context:

Includes factors over which negotiators appear to have some control.

1. Relative Bargaining Power

  • Relative power has frequently been operationalized as the amount of equity that each side is willing to invest in the new venture
  • The presumption is that the party who invests more equity has more power in the negotiation and therefore will have more influence on the negotiation process and outcome

2. Levels of Conflict

  • High conflict situations – those based on ethnicity, identity, or geography – are harder to resolve
  • Also important is the extent to which negotiators frame the negotiation differently or conceptualize what the negotiation concerns

3. Relationship between Negotiators

  • Negotiations are part of a larger relationship between two parties
  • The history of relations between the parties will influence the current negotiation, just as the current negotiation will become part of any future negotiations between the parties

4. Desired Outcomes

  • Tangible and intangible factors play a large role in determining the outcomes of international negotiations
  • Countries often use international negotiations to achieve both domestic and international political goals

5. Immediate Stakeholders

  • Include the negotiators themselves as well as the people they directly represent
  • Skills, abilities, and international experience of the negotiator clearly can have a large impact on the process and outcome of international negotiations

Conceptualizing Culture and Negotiation

Concept of culture:

  1. Culture is a group-level phenomenon – a defined group of people shares beliefs, values, and behavioral expectations.
  2. Cultural beliefs, values, and behavioral expectations are learned and passed on to new members of the group.

Cultural attribution error – the tendency to overlook the importance of situational factors in favor of cultural explanations

Culture as shared values

  • Cross cultural comparisons are made by finding the important norms and values that distinguish one culture from another and then understanding how these differences will influence international negotiation.

Four Dimensions that Describe the Important Differences Among the Cultures:

1. Individualism/Collectivism

  • The extent to which the society is organized around individuals or the group
  • Negotiators from collectivist cultures will strongly depend on cultivating and sustaining a long-term relationship, whereas negotiators from individualistic cultures may be more likely to swap negotiators, using whatever short-term criteria seem appropriate

2. Power Distance

  • Describes the “extent to which the less powerful members of organizations and institutions accept and expect that power is distributed unequally”
  • Greater power distance will be more likely to concentrate decision making at the top
  • Negotiators from comparatively high power distance cultures may need to seek approval from their supervisors more frequently, and for more issues, leading to a slower negotiation process

3. Career Success/Quality of Life

  • Cultures differed in the extent to which they held values that promoted career success or quality of life
  • Increases competitiveness when negotiators from career success cultures meet

4. Uncertainty Avoidance

  • Indicates to what extent a culture programs its members to feel either uncomfortable or comfortable in unstructured situations

10 Different Ways Culture can Influence Negotiations

  1. Definition of Negotiation
  2. Negotiation Opportunity
  3. Selection of Negotiators
  4. Protocol
  5. Communication
  6. Time Sensitivity
  7. Risk Propensity
  8. Groups versus Individuals
  9. Nature of Agreements
  10. Emotionalism

Culturally Responsive Negotiation Strategies

According to Familiarity with the other party’s culture:

Low Familiarity

  • Employ Agents or Advisors (Unilateral Strategy)
  • Bring in a Mediator (Joint Strategy)
  • Induce the Other Negotiator to Use Your Approach (Joint Strategy)

Moderate Familiarity

  • Adapt to the Other Negotiator’s Approach (Unilateral Strategy)
  • Coordinate Adjustment (Joint Strategy)

High Familiarity

  • Embrace the Other Negotiator’s Approach (Unilateral Strategy)
  • Improvise an Approach (Joint Strategy)
  • Effect Symphony (Joint Strategy)

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