2011-12_MGT 348_Cross Cultural Negotiations

Cross Cultural Negotiations: 

Cross Cultural Negotiations Jose Bibat MGT 348: Negotiating in Business December 2011 ( Thomas Cushing) (Image from International Research – Dortmund)

Overview: 

Overview Define Culture Challenges of Culture in Negotiations Culture in a 2-party Negotiation Impact of Culture on Negotiations: 10 Factors Integrative vs Distributive Strategy Relationship between Culture and Negotiation is Complex Summary/Conclusion

Definition of Culture: 

Definition of Culture Culture (for this presentation) is defined as the socially transmitted behavior, attitudes, norms and values of a given community. (Intercultural Negotiation in International Business, p.341)

Challenges of Culture on Negotiations: 

Challenges of Culture on Negotiations 3 ways culture can be a challenge in negotiations: Create misunderstandings in communication Foster differences in interpretation of actions Influence the form and substance of the agreement

Culture in a 2-party Negotiation: 

Culture in a 2-party Negotiation (Intercultural Negotiation in International Business, p.334)

Impact of Culture on Negotiations: 10 Factors: 

Impact of Culture on Negotiations: 10 Factors Goals of creating a contract or business-relationship Attitudes towards the negotiation process Personal Styles that lean towards formal or informal Direct or indirect Styles of Communication High or Low Time Sensitivity High or Low Emotionalism A specific or broad Agreement Form A bottom-up or top-down Agreement B uilding process Team Organization by consensus or single-leader Risk Taking or level of aversion to risk ( Salacuse , 2005)

Impact of Culture on Negotiations: Goal: 

Impact of Culture on Negotiations: Goal What is the goal/purpose of the negotiation? Signed Contract Development of Business R elationship Tendency towards a contract … Country Percentage Spain 73.7 France 70 Brazil 66.7 US 53.7 China 45.5 Mexico 41.7 India 33.3

Impact of Culture on Negotiations: Attitudes: 

Impact of Culture on Negotiations : Attitudes What is the negotiators attitude? Win-Win (integrative bargaining) Win-Lose (distributive bargaining) A win-win attitude … Country Percentage Japan 100.0 China 81.8 Argentina 80.8 US 70.7 Nigeria 46.7 Brazil 44.4 Spain 36.8

Impact of Culture on Negotiations: Personal Styles: 

Impact of Culture on Negotiations : Personal Styles Personal styles towards a formal or informal way of talking to others, using titles, attire and interactions. As a rule of thumb, the recommendation is to go with a formal posture and move towards a more informal style if the situation warrants it. Formal Style … Country Percentage Nigeria 53 Spain 47.4 China 45.5 India 22.2 Brazil 22.2 French 20 US 17.1

Impact of Culture on Negotiations: Communications: 

Impact of Culture on Negotiations : Communications Communication Direct: Clear and definitive responses Indirect: Requires interpretation of comments, gestures and other signs Tendency towards indirect communication … Country Percentage Japan 27.3 France 20 China 18.2 US 4.9 Spain 0 Mexico 0 Nigeria 0

Impact of Culture on Negotiations: Time Sensitivity: 

Impact of Culture on Negotiations : Time Sensitivity Time Sensitivity High: Want to get to an agreement quickly Low: Greater emphasis on taking time to establish a business relationship Low sensitivity to time … Country Percentage India 44.4 France 40 Germany 36.4 US 14.6 Nigeria 6.7 UK 5.9 Brazil 0

Impact of Culture on Negotiations: Emotionalism: 

Impact of Culture on Negotiations : Emotionalism Emotionalism: high or low Tendency towards low emotionalism … Country Percentage Germany 63.6 UK 52.9 Japan 45.5 US 36.6 Mexico 16.7 Argentina 15.4 Brazil 11.1

Impact of Culture on Negotiations: Agreement Form: 

Impact of Culture on Negotiations : Agreement Form Agreement Format Specific Broad/General Preference towards general agreement form … Country Percentage Japan 45.5 German 45.4 India 44.4 US 22 Mexico 16.7 Spain 15.8 UK 11.8

Impact of Culture on Negotiations: Agreement Building: 

Impact of Culture on Negotiations : Agreement Building Agreement Building Process Bottom-up: Build on specifics to develop the over-all agreement Top-down: Start with a general description then develop specifics Prefer top-down approach to agreement … Country Percentage India 66.7 Argentina 61.5 France 60 US 53.7 Japan 36.4 Brazil 33.3 Mexico 33.3

Impact of Culture on Negotiations: Team Organization: 

Impact of Culture on Negotiations : Team Organization Team Organization Consensus Single-leader Tendency to negotiate with a single-leader … Country Percentage Brazil 100 China 90.9 Mexico 90.9 US 63.4 India 44.4 Nigeria 40 France 40

Impact of Culture on Negotiations: Risk Taking: 

Impact of Culture on Negotiations : Risk Taking Risk Averse versus Risk Takers Tendency to take risks … Country Percentage France 90 India 88.9 UK 88.2 US 78 Mexico 50 Spain 47.4 Japan 18.2

Integrative vs Distributive Strategy: 

Integrative vs Distributive Strategy Research DOES NOT support the idea that negotiators from some cultures use integrative strategy and those in other cultures use distributive strategy. 3 reasons: Though negotiators have a preferred strategy, they may alternate integrative and distributive strategies during a negotiation. There exists variations within cultures in the ability to use an integrative strategy. Highly-skilled integrative negotiators can steer hard-set distributive negotiators to high joint-net-gain outcomes.

Relationship between Culture and Negotiation is Complex: 

Relationship between Culture and Negotiation is Complex Cultural stereotypes do not apply to all of its members Cultures overlap Cultures are comprised of multiple profiles and not just a single feature How an individual reacts in a given situation may be contextually-based There is influence from other negotiators participating in the discussions

Summary/Conclusion: 

Summary/Conclusion “Culture profoundly influences how people think, communicate, and behave. It also affects the kinds of transactions they make and the way they negotiate them ( Salacuse , 2005).” Utilizing your resources to better understand cultures, having representation from various cultures on your team and using other strategies that take into account culture may help make someone a successful negotiator in today’s multi-cultural business environment; without having to get a PhD in the Study of World Cultures.

Cross Cultural Negotiations: 

Cross Cultural Negotiations End of Presentation (Image from International Research – Dortmund)

References: 

References Lewicki , R., Saunders, D., & Barry, B. (2010). Negotiation: Readings, Exercises and Cases (6 th ed.). New York, NY: The McGraw-Hill Companies. Photo . http:// internationalresearchdortmund.wikispaces.com/2011gbp Salacuse , J. W. (2005). Negotiating: The top ten ways that culture can affect your negotiation. Ivey Business Journal, 69(4), 1-6.