1.

INTRODUCTION

1.1 Background
When two people communicate, they rarely talk about precisely the same subject, for effective
meaning is flavored by each person’s own cognitive world and cultural conditioning. When
negotiating internationally, this translates into anticipating culturally related ideas that are
most likely to be understood by a person of a given culture. Discussions are frequently impeded
because the two sides seem to be pursuing different paths of logic; in any cross-cultural
context, the potential for misunderstanding and talking past each other is great.
When one takes the seemingly simple process of negotiations into a cross-cultural context, it
becomes even more complex and complications tend to grow exponentially. Negotiation style
we use so effectively domestically can be inappropriate and when dealing with people from
another cultural background; in fact its use can often result in more harm than gain.
Heightened sensitivity, more attention to detail, and perhaps even changes in basic behavioral
patterns are required when working in another culture.

No one can usually avoid bringing along his cultural assumptions, images, and prejudices or
other attitudinal baggage into any negotiating situation. The way one succeeds in cross-cultural
negotiations is by fully understanding others, using that understanding to one’s own advantage
to realize what each party wants from the negotiations, and to turn the negotiations into a win-
win situation for both sides. In cross-cultural negotiations, many of the strategies and tactics
used domestically may not apply—especially when they may not be culturally acceptable to the
other party.

This assignment paper focuses on the impact of culture on negotiations. It begins by defining
culture, and then breaks out the four dimensions of culture identified by Geert Hofstede. It
includes definition of negotiations, cross cultural negotiation, factors influencing cross cultural
negotiation, cross cultural negotiation behavior, and coping with cross cultural negotiation.

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 2. CULTURE

2.1 Concept of Culture

The word ‘Culture’ came from the Latin cultura stemming from colere, meaning "to cultivate" is

a term that has various meanings. For example, in 1952, Alfred Kroeber and Clyde
Kluckhohn compiled a list of 164 definitions of "culture" in Culture: A Critical Review of
Concepts and Definitions. However, the word "culture" is most commonly used in three basic
senses:

 Excellence of taste in the fine arts and humanities, also known as high culture

 An integrated pattern of human knowledge, belief, and behavior that depends upon the
capacity for symbolic thought and social learning
 The set of shared attitudes, values, goals, and practices that characterizes an institution,
organization or group.

Culture consists of learned ways of acting, feeling and thinking, rather than biologically
determined ways. The British anthropologist Sir Edward Burnett Tylor defined culture as "that
complex whole which includes knowledge, belief, art, morals, law, custom and any other
capabilities and habits acquired by man as a member of society." Tylor's definition includes
three of the most important characteristics of culture: (1) Culture is acquired by people. (2) A
person acquires culture as a member of society. (3) Culture is a complex whole.

Culture is a term used by social scientists for a people's whole way of life. In everyday
conversation the word 'culture' may refer to activities in such fields as art, literature, and music.
But to social scientists, a people's culture consists of all the ideas, objects, and ways of doing
things created by the group. Culture includes arts, beliefs, customs, inventions, language,
technology and traditions. The term 'civilization' is similar, but it refers mostly to scientifically
more advanced ways of life. A culture is any way of life, simple or complex.

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2.2 Dimensions of Culture

Hofstede devised four cultural dimensions which could explain much of the differences
between cultures: Power distance, individualism, masculinity and uncertainty avoidance.

2.2.1 Power Distance

Power distance is the extent to which the less powerful members of institutions and
organizations within a country expect and accept (emphasis added) that power is
distributed unequally. The power distance dimension is a measure of the relationships
between individuals of different status within a culture. Following Table illustrates the
salient characteristics of the PDI.

Low PD (Collectivist) High PD (Individualist)

Inequalities among people should be
minimized
Interdependence between less and more
powerful people
Hierarchy means an inequality of roles
Decentralization preferred
Students treat teachers as equals
Children treat parents as equals
Inequalities among people are both
expected and desired
Less powerful people should be dependent
on the more powerful
Hierarchy reflects existential inequality
Centralization preferred
Students treat teachers with respect
Children treat parents with respect

2.2.2 Individualism
Individualism is the degree to which people in a country or region learn to interact with
each other. The majority of the people of the world live in societies where they are
taught from birth that the interest of the group, starting with the extended family, is
paramount to the interest of the individual. These are described as collectivist societies.
The reverse is the case for the individualist societies.

Low IDV (Collectivist) High IDV (Individualist)

People are born into extended families People grow up to look after him/herself
and the immediate family

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 Identity is based on your social network Identity based on the individual
High context communications Low context communication
Diplomas provide entry to higher status Diplomas increase economic worth/self-
groups respect
Employer-employee relationship perceived Employer-employee relationship is a
in moral terms; like a family link contract based on mutual advantage
Management of groups Management of people

2.2.3 Masculinity
The masculinity-femininity dimension identifies what are considered appropriate gender
roles for that culture.

Low MAS (Feminine) High MAS (Masculine)

Dominate values in society are caring for Dominate values in society are material
others and preservation success and progress

People and relationships are important Money and things are important
Failing in school is a minor accident Failing in school is a disaster
Managers use intuition & strive for Managers expected to be decisive &
consensus assertive
Work to live Live to work

2.2.4 Uncertainty Avoidance

Extreme uncertainty creates intolerable anxiety. Every human society has developed
ways to alleviate this anxiety. These ways belong to the domains of technology, law and
religion. In the context that Hofstede uses, uncertainty avoidance is not the same as risk
avoidance. Ambiguity is the root cause of uncertainty avoidance, with risk-taking a by-
product of attempts to mitigate ambiguity. As such, cultures scoring high on the
uncertainty avoidance index (low tolerance for ambiguity) look for structure in their
organizations, institutions and relationships in order to reduce the ambiguity and thus
risk.

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 Low UA (High tolerance for Ambiguity) High UA (Low tolerance for Ambiguity)
Uncertainty is a normal feature of life Uncertainty inherent in life is felt as a
continuous threat that must be fought
Low stress; subjective feeling of well being High stress; subjective feeling of anxiety
Aggression and emotions should not be Aggression and emotions at proper times
shown may be expressed
Comfortable in ambiguous situations and Acceptance of familiar risks; fear of
with unfamiliar risks ambiguous situations and of unfamiliar
risks
Few and general laws and rules Many and precise laws and rules
Tolerance, moderation Conservatism, extremism, law and order
Internationalism, regionalism Nationalism, xenophobia
Precision and punctuality have to be Precision and punctuality come naturally
learned
Time is a framework for orientation Time is money

2.3 Cultural Dimensions of Various Cultures

Asian

Countries Power Distance Individualism Masculinity Uncertainty

Avoidance
Japan Low Low High High
China High Low High Low
Korea High Low Low High
India High Low High Low
Pakistan High Low High High
Iran High Low Low High

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Kuwait High Low High High
Saudi Arab High Low High High
Malaysia High Low Low Low
Singapore High Low High Low
Bangladesh High Low High High

European
Countries Power Distance Individualism Masculinity Uncertainty
Avoidance
UK Low High High Low
Germany Low High High High
Italy Low High High High
Russia High Low Low High
France High High Low High
Spain Low Low Low High
Netherlands Low High Low High
Denmark Low High Low Low
North American
Countries Power Distance Individualism Masculinity Uncertainty
Avoidance
USA Low High High Low
Canada Low High High Low
Mexico High Low High High

South American
Countries Power Distance Individualism Masculinity Uncertainty
Avoidance
Brazil High Low High High
Argentina Low Low High High
Chile High Low Low High
Venezuela High Low High High

Australasia
Countries Power Distance Individualism Masculinity Uncertainty
Avoidance
Australia Low High High High

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 New Zealand Low High High High
African
Countries Power Distance Individualism Masculinity Uncertainty
Avoidance
South Africa Low High High Low
Egypt High Low Low Low
Nigeria High Low Low High
Kenya High Low Low High
Libya High Low High High
3. NEGOTIATION

3.1 Concept of Negotiation

In simplest terms, negotiation is a discussion between two or more disputants who are trying to
work out a solution to their problem. This interpersonal or inter-group process can occur at a
personal level, as well as at a corporate or international level.

Negotiation is one of the most common approaches used to make decisions and manage
disputes. It is also the major building block for many other alternative dispute resolution
procedures.

Negotiation is a dialogue intended to resolve disputes, to produce an agreement upon courses

of action, to bargain for individual or collective advantage, or to craft outcomes to satisfy
various interests. It is the primary method of alternative dispute resolution.

Negotiation occurs in business, non-profit organizations, government branches, legal

proceedings, among nations and in personal situations such as marriage, divorce, parenting,
and everyday life.

3.2 Why Parties Choose To Negotiate

The list of reasons for choosing to negotiate is long. Some of the most common reasons are
to -
 •     Gain recognition of either issues or parties;
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  •     Test the strength of other parties;
 •     Obtain information about issues, interests and positions of other parties;
 •     Educate all sides about a particular view of an issue or concern;
 •     Ventilate emotions about issues or people;
 •     Change perceptions;
 •     Mobilize public support;
 •     Buy time;
 •     Bring about a desired change in a relationship;
 •     Develop new procedures for handling problems;
 •     Make substantive gains;
 •     Solve a problem.
 
3.3 Cross Cultural Negotiation

Cross cultural negotiation is one of many specialized areas within the wider field of cross
cultural communications. In cross cultural negotiation, negotiation involves people from
different cultures and places. Simple process of negotiations into a cross-cultural context, it
becomes even more complex and complications tend to grow exponentially. Negotiation style
we use so effectively domestically can be inappropriate and when dealing with people from
another cultural background.

3.4 Factors Influencing Cross-Cultural Negotiations

3.4.1 Negotiating Goal and Basic Concept

How is the negotiation being seen? Is mutual satisfaction the real purpose of the meeting? Do
we have to compete? Do they want to win? Different cultures stress different aspects of
negotiation. The goal of business negotiation may be a substantive outcome (Americans) or a
long-lasting relationship (Japanese).
3.4.2 Protocol

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There are as many kinds of business etiquette as there are nations in the world. Protocol factors
that should be considered are dress codes, number of negotiators, entertainment, degree of
formality, gift giving, meeting and greeting, etc.
3.4.3 Communications
Verbal and non-verbal communication is a key factor of persuasion. The way we express our
needs and feelings using body language and tone of voice can determine the way the other side
perceives us, and in fact positively or negatively contributes to our credibility. Another aspect of
communication relevant to negotiation is the direct or indirect approach to exchanging
information. Is the meaning of what is said exactly in the words themselves? Does "...it's
impossible" really mean impossible or just difficult to realize? Always use questions to identify
the other side's needs, otherwise assumptions may result in you never finding common
interests.
3.4.4 Risk-Taking Propensity - Uncertainty Avoidance
There is always risk involved in negotiations. The final outcome is unknown when the
negotiations commence. The most common dilemma is related to personal relations between
counterparts: Should we trust them? Will they trust us? Certain cultures are more risk averse
than others, e.g. Japan (Hofstede 1980). It means that less innovative and creative alternatives
are available to pursue during the negotiation, unless there is a strong trust-based relationship
between the counterparts.
3.4.5 View of Time
In some cultures time is money and something to be used wisely. Punctuality and agenda may
be an important aspect of negotiation. In countries such as China or Japan, being late would be
taken as an insult. Consider investing more time in the negotiating process in Japan. The main
goal when negotiating with an oriental counterpart is to establish a firm relationship, which
takes time. Another dimension of time relevant to negotiation is the focus on past, present or
future. Sometimes the past or the distant future may be seen as part of the present, especially
in Latin American countries.
3.4.6 Decision-Making System

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The way members of the other negotiating team reach a decision may give us a hint: who we
shall focus on providing our presentation. When negotiating with a team, it's crucial to identify
who is the leader and who has the authority to make a decision.
3.4.7 Form of Agreement
In most cultures, only written agreements stamp a deal. It seems to be the best way to secure
our interests in case of any unexpected circumstances. The 'deal' may be the contract itself or
the relationship between the parties, like in China, where a contract is likely to be in the form of
general principles. In this case, if any unexpected circumstances arise, parties prefer to focus on
the relationship than the contract to solve the problem.

3.4.8 Power Distance

This refers to the acceptance of authority differences between people. Cultures with low power
distance postulate equality among people, and focus more on earned status than ascribed
status. Negotiators from countries like Britain, Germany and Austria tend to be comfortable
with shared authority and democratic structures. When we face a high power distance culture,
be prepared for hierarchical structures and clear authority figures.
3.4.9 Personal Style
Our individual attitude towards the other side and biases which we sometimes establish all
determine our assumptions that may lead the negotiation process towards win-win or win-lose
solutions. Do we feel more comfortable using a formal or informal approach to
communication? In some cultures, like America, an informal style may help to create friendly
relationships and accelerate the problem solving solution. In China, by comparison, an informal
approach is proper only when the relationship is firm and sealed with trust.

3.5 Cross Cultural Negotiation Behavior

3.5.1 U.S. Approaches to Negotiation

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U.S. negotiators tend to rely on individualist values, imagining self and other as autonomous,
independent, and self-reliant. This does not mean that they don't consult, but the tendency to
see self as separate rather than as a member of a web or network means that more
independent initiative may be taken. Looking through the eyes of the Japanese negotiator who
wrote "Negotiating With Americans", American negotiators tend to:
 Be competitive in their approach to negotiations, including coming to the table with a
fall-back position but beginning with an unrealistic offer;
 Be energetic, confident, and persistent; they enjoy arguing their positions, and see
things universally -- i.e., they like to talk about broad applications of ideas;
 Concentrate on one problem at a time;
 Focus on areas of disagreement, not areas of commonality or agreement;
 Like closure and certainty rather than open-endedness or fuzziness.

Do these generalizations ring true? Clearly, it depends which Americans you are talking about,
which sector they represent, and the context surrounding the negotiations. Is this a family
matter or a commercial one? Is it about community issues, national policy, or a large public
conflict? Strategies change according to context and many other factors.

3.5.2 African Approaches to Negotiation

Many African nations have indigenous systems of conflict resolution that have endured into the
present, sometimes quite intact and sometimes fragmented by rapid social change. These
systems rely on particular approaches to negotiation that respect kinship ties and elder roles,
and the structures of local society generally. In Nigeria, for example, people are organized in
extended families (nnu'), village (idu' or obio), lineage ('duk), and lineage groups (iman). A belief
in the continuing ability of ancestors to affect people's lives maintains social control, and makes
the need to have formal laws or regulations minimal. Negotiation happens within social
networks, following prescribed roles. Women in conflict with husbands, for example, are to
defer and apologize, preparing a ritual meal to symbolize the restoration of harmony.

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In the Nigerian Ibibio context, the goal of restoring social networks is paramount, and individual
differences are expected to be subsumed in the interest of the group. To ensure that progress
or an agreement in a negotiation is preserved, parties must promise not to invoke the power of
ancestors to bewitch or curse the other in the future. The aim of any process, formal or
informal, is to affect a positive outcome without a "residue of bitterness or resentment." Elders
have substantial power, and when they intervene in a conflict or a negotiation, their words are
respected. This is partly because certain elders are believed to have access to supernatural
powers that can remove protective shields at best and cause personal disaster at worst.

In other African contexts, a range of indigenous processes exist in which relationships and
hierarchies tend to be emphasized.

3.5.3 Asian Styles of Negotiation

In certain Asian countries such as India, Nepal or Sri Lanka or in the Mid-Eastern countries such
as Egypt or Saudi Arabia, the social contacts developed between the parties are more
significant than the technical specifications and price. It is often suggested that in cultures like
China and Japan, pride and honor are of great importance. Because of the influence of
Confusiaism, honesty, integrity and sincerity in deal making are greatly appreciated in these
countries. Many cultures are holistic, especially in the Far East, all issues are discussed at once
and no decisions made until the end. Especially in the Far East, the negotiating session is less a
forum for working out issues than it is a formal and public expression of what has already been
worked out beforehand. Asians may use cooperative styles when negotiating among
themselves but can be ruthless with outsiders.

Asian negotiation is as much a ceremony as it is a form of business communication. The

negotiation style in the Asian context is often described as relationship-oriented, and
concentrates on a long-term single source arrangement. The implication of this style is that it is
collaborative and will lead to some mutual satisfaction.

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There is a great deal written about Japanese approaches to negotiation, and collisions between
American and Japanese approaches are legendary. The following values tend to influence
Japanese communication: focus on group goals, interdependence, and a hierarchical
orientation. In negotiations, these values manifest themselves in awareness of group needs and
goals, and deference to those of higher status. Japanese negotiators are known for their
politeness, their emphasis on establishing relationships, and their indirect use of power.
Japanese concern with face and face-saving is one reason that politeness is so important and
confrontation is avoided. They tend to use power in muted, indirect ways consistent with their
preference for harmony and calm. In comparative studies, Japanese negotiators were found to
disclose considerably less about themselves and their goals than French or American
counterparts.

Japanese negotiators tend to put less emphasis on the literal meanings of words used in
negotiation and more emphasis on the relationships established before negotiating begins.
They are also less likely than their U.S. counterparts to make procedural suggestions.

3.5. 4 European Styles of Negotiation

European styles of negotiation vary according to region, nationality, language spoken, and
many other contextual factors. One study found the French to be very aggressive negotiators,
using threats, warnings, and interruptions to achieve their goals. German and British
negotiators were rated as moderately aggressive in the same study.

The French expect everyone to behave as they do when doing business, including speaking their
language. Negotiations are likely to be in French unless they occur outside France. The French
enjoy conversation for the sake of conversation, but they are also very pragmatic about details
of the proposed agreement during negotiations. They are very much individualists and have a
sense of pride that is sometimes interpreted as supremacy. The French follow their own logic,
referred to as “Cartesian” logic, when negotiating,

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English negotiators reflect their cultural characteristics; they are very formal and polite and
place great importance on proper protocol. They are also concerned with proper etiquette.
British negotiation behavior is characterized by the soft sell. British negotiators are reserved
and mannered. The status and the role of the negotiators are very important.

Protocol is important and formal in Germany. Dress is conservative; correct posture and
manners are required. Seriousness of purpose goes hand in hand with serious dress. Since
Germans tend to be detail oriented, having technical people as part of the negotiation team is
important. Being punctual is expected. German negotiations are planned and well organized,
direct in their approach.

The Swedes tend to be formal in their relationships, dislike haggling over price, expect though,
professional proposals without flaws, and are attracted to quality. Italians tend to be extremely
hospitable but are often volatile in temperament. When they make a point, they do so with
considerable gesticulation and emotional expression. Impressed by style, they tend to dress
well themselves. Moreover, they enjoy haggling over prices. Italians often exhibit a calculated
nonchalance. A common tactic is to unexpectedly close a negotiating session, pretending the
whole thing is of minor importance.

3.5.5 Latin American Styles of Negotiation

Role expectations influence negotiation in Latin American contexts. Responsibility to others is

generally considered more important than schedules and task accomplishment. Their
negotiation approach relates to the polychronic orientation to time and patterns of high-
context communication and communitarianism, described earlier. Lederach reports that a
common term for conflict in Central America is enredo, meaning "entangled" or "caught in a
net." He explains that enredosignifies the way conflict is part of an intimate net of relations in
Guatemala and elsewhere in Central America. Thus, negotiation is done within networks,
relationships are emphasized, and open ruptures are avoided.

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In Central America, people think about and respond to conflict holistically. Lederach contrasts
his natural (American) inclination to "make a list, to break story down into parts such as issues
and concerns" with his Central American experience, where people tended to respond to
requests for naming issues to be negotiated with "yet another story." They preferred a storied,
holistic approach to conflict and negotiation, rather than a linear, analytical one. When Central
Americans needed help with negotiations, they tended to look to insider partials rather than
outsider neutrals, preferring the trust and confidence of established relationships and cultural
insight to other credentials or expertise. They referred to the concept of confianza to explain
this preference. Confianza means "trustworthiness," that "they know us" and "we know them"
and they will "keep our confidences."

3. 6 Coping With Culture

Negotiating in the international environment is a huge challenge for any negotiator. How do we
cope with the cultural differences? What approach is more efficient and proper when dealing
with Japanese, Americans or Germans? There are some very helpful guidelines we can apply:

3.6.1 Learn the other side's culture

It is very important to know the commonest basic components of our counterparty's culture.
It's a sign of respect and a way to build trust and credibility as well as advantage that can help
us to choose the right strategies and tactics during the negotiation. Of course, it's impossible to
learn another culture in detail when we learn at short notice that a foreign delegation is visiting
in two weeks' time. The best we can do is to try to identify principal influences that the foreign
culture may have on making the deal.

3.6.2 Don't stereotype

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Making assumptions can create distrust and barriers that expose both your and the other side's
needs, positions and goals. The way we view other people tends to be reserved and cautious.
We usually expect people to take advantage of a situation, and during the negotiations the
other side probably thinks the same way, especially when there is a lack of trust between
counterparts. Instead of generalizing, we should make an effort to treat everyone as
individuals. Find the other side's values and beliefs independently of values and beliefs
characteristic of the culture or group being represented by your counterpart.

3.6.3 Find ways to bridge the culture gap

Apart from adopting the other side's culture to adjust to the situation and environment, we can
also try to persuade the other side to use elements of our own culture. In some situations it is
also possible to use a combination of both cultures, for example, regarding joint venture
businesses. Another possible solution is to adopt a third culture, which can be a strong base for
personal relationships. When there is a difficulty in finding common ground, focusing on
common professional cultures may be the initiation of business relations.

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 4. CONCLUSION

Negotiation is an important and valuable tool for resolving conflict when all parties involved
have a shared commitment to reaching a collaborative, joint outcome that satisfies both parties
needs and interests. Cultural considerations play an important role in the negotiation process
as all of the actors bring with them their own specific cultural behaviors; that is their patterns of
thinking, feeling, acting and most importantly, their own set of culturally shared values.

This assignment paper explains the nature of culture and its impact on negotiation. Hofstede’s
dimensions of culture provided a summarization of how cultures differed based on their overall
proclivity toward various values or norms. An understanding of cultural theory in this manner is
an important element in describing culture’s impact on negotiations. Equally important is an
understanding of key aspects of negotiations. Negotiations differ from other forms of conflict
resolution in that, when appropriately conducted, the parties strive to reach agreement by
accommodating their conflicting interest into a mutually acceptable agreement. In order to
achieve this state, all parties must be willing to commit to understanding each other’s position,
work toward building trust, and effectively communicate with each other.

Although other factors can and will impede on any negotiation, this paper intended to
demonstrate that cultural differences are also a variable in the negotiation process.
Understanding culture’s implications, the cultural baggage that individual actors bring to the
negotiation table and that it does play a role in the process, is an important element for any
negotiator to prepare for in order to reach for the optimum negotiated solution for all parties.
The manner in which the parties will interact in an attempt to reach an interdependent, joint
decision agreeable to and accepted by the parties will be influenced by each negotiator’s
culture.

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 5. BBILIOGRAPHY

Websites:

http://www.au.af.mil/au/awc/awcgate/army/usace/negotiation.htm

http://en.wikipedia.org/wiki/Negotiation

http://www.beyondintractability.org/essay/negotiation/

http://www.millicentrogers.org/what_is_culture.htm

http://en.wikipedia.org/wiki/Culture

http://www.calumcoburn.co.uk/articles/cross-cultural-negotiation/

http://www.kwintessential.co.uk/resources/country-profiles.html

www.au.af.mil/au/awc/awcgate/awc/horst_crosscultural_negot.pdf

http://www.clearlycultural.com/geert-hofstede-cultural-dimensions/power-distance-index/

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