Learning Objectives After reading this chapter, you should be able to: > spot and categorize some of the important causes of cross- cultural confict; > recognize how other cultures commonly interpret and react: > pinpoint some of the more effective methods of managing cross-cultural conflict, including the role that can be played by effective negotiations; > diagnose the various stages of international negotiation and how cultural values impact the way that those stages unfold. Managing Conflict and Conducting Effective Negotiations International Challenge Two Sides of a Common Border: Negotiations between Mexicans and Americans WO COMPANIES WERE wi fo a rave cotton “T tetiotcn event sedan crt te Utd States and the other Swedish, already had jumped several rus in har efor to gl the bustess. Ech as ed To Moxco yo pecan thet popocas wo May oss a 9 tat {othe process ot regotaing hs tes fo provosed da "ho Anercars put at of ef in rece an trressie nigh ochan raring osariaton.Thetim wrod har oot togthor steam oan sch experts awvas, ancitoeters tom hr Now Yok oe Thr bata ine as Core an ve Youth ros technical avarced eavpmen a pce th others {ant at Te tear net ovr! tes wih sro manaperent beta te prosertaton fo dacus posbl coreesone and Tey woe vt nto fo ral dots on ea endow, The tom tow down fora wee, saya rao ho tp Pe the Gi An elabort feConroce or wes ogre o al oy cov mae the best pest prsetton to he Ms ota tran eon todo ter cue dignce ard to mess ev pen te custome, ey bough al he necssay eau wih, and nied oun of ho preeraton oli wo oot shed of to, Lite, hay propossd a casing sched and ih Srangerersine muro tooled aon win preaision For ha pat tho Mercay ots duty rv to Amscars fo aeration ond sod tra thoy oko foward omoeing wan ad ning ot te about or prepa and ef Thoy vd ifrnaton abou feisty ote ago an he Capron oft cunert Misty The Arcane sod eat re dy be, iano to aot oroblans wth nr fg, Ana eam mors et te cor Snco ‘com very ao a tp and malo Sao at was 29" tre moat tT dy. Fray a eae tie. he Arca wo a os) to rset and oess. von, te Hexic Vans oicas worenot~nlac none ton e Mela was hae Yer en. vttue Mnsty os aval ee om oly222 Part il interacting Effectively in an International Environment over the next hour. They offered no apologies to the perplexed Americans, but instead began to chat amiabiy about a varity of noncontract-related matters. The American teem leader was feeing pressure ftom both the stuation and his team members—shouid he ‘act leaderly and get the meeting organized, or should he let the Mexican officials provide the night signal? Fnaly, ater about an hour of glancing at his watch and scanning nev ously, the team leader assertively suagested that the meeting should start. For their pan, the Mexicans seemed surprised, but poitely agreed and took their seets (seating set up ahead of time by the Americans) “The presentation began with informal introductions of the team members by the presenter, The presentation itself was lawiessly delvered, thanks to the endless practice they had putin, But about 20 minutes into the presentation, the Minister himsel, with an entourage of other officials, wakedin. When he realized what was going on, his demeanor tured unpleasant, Angry he asked the Americans to start the presentation from the beginning again. They complied and started over. Again, the presentation was going wel Unti about 10 minutes later when an aide arrived with a message forthe Minister that he delivered to him in hushed tones. Not wanting to anger him again. the American presenter stopped to wait until the message was delivered, but the Minister signaled for him to continue, He did, but a few micutes later, a number of audience members were taking among themselves. By this ime the American was vey frusated, but he slogged on and finished. At the end, when invited to ask questions, the Minister's only comment was to "wonder why the Americans had focused so much on the technical details—wty had they told the Mexicans so tle about ther ems history? Later during lunch, the Americans felt that they had to be very forceful about keep: ing the conversation focused on the topic at hand—the contract and any outstanding 'soues or problems they could adress. Most of the conversation! was again seemingly casval, having ittie or nothing to do wilh the business at hand—not unike what they had experienced during their interactions before the presentation started. The Americans ‘were surpxised by the many questions about ther individual backgrounds and personal experience —inclucing their qualfcatios. The Minister breezed in during the lunch, had a bret but casual conversation with the American team leader, ad then let, not to return. Over the next several days of their time in Mexico Giy, the Americans repeatedly contacted the Mexican officials for folow-up, Were there addtional questions about the specs? The technical features of theirimplementation? What wer the ital reactions and \was more information needed? They reminded Ministry officals of the schedule they had shared ahead of time and the fact that they needed to return to New York soon. In shoxt, ‘they wished to start the negotiation process. The Mexican response was the sare to all these forays across the rest ofthe week: ‘We need time to examine your proposal among ourselves here firs.” The Americans became more and more angry; atthe end of the week, this tumed to plan frustration, Aer al, the Ministry oficials had had the proposal for several weeks before the meeting and had had multiple opportunities for elaboration of the specs and other elements. They lett Mexico empty-handed, Later they found that the contract was awarded to the Swedish frm ‘As you read through this chapter, youl learn how culture can impact international Confict and negotiation. As you'l see actos and strategies may ton extent be cuitualy liven, We'l aso discuss ways that intemtional managers can overcome the challenges represented inthis end rested negotiation situations. inthe meantime, keep an eye out as you read the chapter for the spectic negotiation tactics, styles, and strategies being used by the Mexicans and Americans in this example. Think about how they might ius trate the cultural values andl perspectives of each. After you've thought about these, take [00k at the "Up to the Challenge?" box atthe end of this chapter for some insights into this exchenge." > A World of Conflict As Chapter 6 vividly illustrated, communicating effectively in an international business environment can be quite a challerge. There are many ways that a message can getChapter 7 Managing Conflict and Conducting Effective Negotiations 228 distorted, confused, or missed altogether across cultures, leaving the door wide open {or potential differences and disagreements. In other words, miscommunication can lead to conflict. Conflict occurs when disagreements and friction arise in the course of social interaction because of opposing interests, cultural differences in communication styles, and misunderstandings. Compounding the communication challenge today is {hat international managers are more like diplomats than ever before, with an increas- ingly burdensome set of “missions” to carry out that can stir up serious disagreements. For example, international managers may have to handle foreign labor strife. negotiate with overseas vendors, tend to unsatisfied clients, deal with partners. manage suppliers, lobby governments, soothe relations with outside pressure groups over environmental or other issues, and somehow convince employees with conflicting interests to work logether.* That is a plateful of duties. Additionally, a major reason that firms send expa. triates abroad, at least for the short or medium term, isto fix a problem and resolve a conflict. Not all conflict is bad, even though it may be challenging. In fact, sometimes conflict helps focus peoples attention on getting things done. Regardless, conflict is, incredibly common. It has been estimated that American managers spend about 20 percent of their time at work dealing with conflict situations.’ And given all the cross- cultural communication problems we reviewed in the previous chapter, it woulda surprise us to learn that conflict occupies an even greater portion of time for managers with international responsibilities For all these reasons, inthis chapter we will review some of the causes of conflict and how to manage it effectively in an international context. And well devote a lot of discussion to the subject of negotiation in international business. As you'll see, the ‘view of the negotiation process itself, as well as the tactics that are used, are the result of many factors. One of the most prominent factors is culture. Failing to understand the role of culture in negotiations will cause conflict and, in the end, undoubtedly cost, you business. Cultural Causes of Conflict in international Management Given the stakes, international managers need a good understanding ofthe basic causes of conflict, WeVve already addressed some ofthese at least indirectly. For instance, lan- ‘guage difficulties represent one major contributor to contfict. For example, in Chapter 6, we showed how a misinterpretation due to a poor translation can cause confusion and anger on both sides. We also know that differing cultural normis may give rise to contfict, especially when each side lacks an appreciation or understanding of the other's typical frame of reference. More than one American manager has been great offended tobe kept waiting well beyond a scheduled appointment time ina foreign county, with some even storming out at this “offense."* The resalting conflict in this example could have been avoided had the American manager been aware that they were bringing ‘4 monochronic perspective about time into a polychronic culture. Additionally. had the meeting actually taken place, different norms about the directness of communica- tion (eg., low vs. high context) might have been a source of frustration and resulting conflict “The decision-making methods that a company uses ean be yet another potential source of conflict, especially if there is a mismatch with employee values. Some inter- national firms are structured to be highly centralized, with power and decision-making control concentrated with a few people at the top. Other firms, however, operate in a more dispersed fashion, with decision-making control decentralized and pushed down Into lower ranks, But, as we illustrated in Chapter 4, employees in high power distance cultures may have a preference for centralized and hierarchical decision making. They see it as perfectly acceptable for those higher up inthe firm to make important decisions without any of their input. In fact, in stich cultures, altempts to decentralize decision ‘making by applying participative management strategies (e.., involving employees in conflict When disagreements and fiction arise in the Course of interaction because of opposing interests, cutural ferences, and more224 Part I interacting Effectively in an International Environment goal setting) can backfire, as Exhibit 7.1 shows. The conflict felt inthis situation could have been avoided if the American manager had understood the Greek preference for centralization, ‘A final cause of conflict that we will mention is the propensity for people in a given culture to be involved with conflict in the irst place. That is, some cultures go to great lengths to avoid friction between individuals and groups. In collective cultures, various social mechanisms are in place to make direct conflict less likely to occur in the first place. For example, in the previous chapter, we discussed the Japanese ten. dency to use indirect ways to say no as a way to smooth interpersonal relations, Yet paradoxically this tendency can be extremely frustrating and conflict provoking when itis used across cultures. The risk of damaging conflict may be highest when a cultural mismatch occurs—say, between a Japanese person and an American who thinks that -ompetition ‘Astveofdeaing win conflict should be addressed openly and aggressively, Although a tendency tobe open cconfict in which one and blunt may be seen as upfront and effective within American culture, few traits may prefers to dealhead.on be more off:putting to the Japanese. The same can be said about Thai culture, where ‘with the conflict kkids are taught at a young age to be sam ruam—to keep their feelings inside. Conflict avoidance in the form of outward expression of anger is seen as ignorant, crude, and immature. AAstye of confit that fact, one study found that Thai people are so sensitive to others negative comments ental avoiding as eect say that they downgrade their ratings of interaction with others (feel they less support- ive, helpful) more than do Americans viewing the same behavior* isagreerents accommodation confit style that Managing Conflict Effectively involves high concern withthe inferests of _‘Ifconflict is nearly inevitable in international business, how can you manage it efec others, sometimes at tively to minimize the damage, or even prevent it from happening? To begin with the expense of one's international managers need to understand that there are different styles for resolv own interests ing conflict once it occurs.’ Exhibit 72 shows a layout of these styles. Basically, this compromise approach balances concern for your own outcomes against concern for outcomes of Acar ie others with whom you interact. The result is the five distinct styles that are portrayed aes in the figure, There is plenty of research on these styles, although most studies focus eee on American employees. The research shows tha, even within a culture, there are indi seater that vee vidual differences in style preferences. You can probably think of both someone who Both aries ging up likes to confront conflict head on (competition), and another who prefers to try to something to reach an ignore it altogether (avoidance). ‘The same can be said about accommedation (giving ‘agreement in to the other during conflict) and compromise (each gives a bit to reach a mutual EXHIBIT 7.4 The Road to Conflict is Paved with Interpretation: A Conversation between a Greek and an American ‘American: How long wil i take you to finish the report’? Greek: His behavior makes no sense, He isthe boss. Why «doesn’t he tell me? Greek: | don't know, How long should it take? ‘American: He has refused to take responsibilty ‘Greek: | asked him for an order ‘Arnerican: You ara in the best position to analyze the American: | press him to take responsibilty for his actions ne Greek: What nonsense—I'd better give him an answer Greek: 10 days ‘American: He lacks the abiity to estimate his time; this, estimate is totally nadequate ‘Arnerican: Take ‘5. Is it agreed? You wil do it in 15 ‘American: | offer a contract ays? Greek: These are my orders: 15 days ‘Source: ands, H.C. (1877) nerpersanar behavior Pacite Grove, CA: Sreoks/Gole Pubishing Comper, a dion of ntrnatonal ‘Tromson Publishing, nc. Reprinted by permssin.Chapter 7 Managing Contlict and Conducting Effective Negotiations 225, EXHIBIT 7.2 A Typology of Confict Styles High | Accommodation Collaboration (Concern with others! Compromise Low | Avoidance Competition Low ASSERTIVENESS High (Concern with own outcomes) ‘Source: Adapted tom Thomas, K. W, (1978), Conflctanc confit management. M. D. Dunnetts Ed), Mendoook of industrial and ‘xgantzational bohav. Chicago: Rand NeNaly, pp, 889-835, resolution). The collaboration style isthe hardest and least common style to have. This, integrative approach is often called a "win-win’ situation, in which both parties gain (without great compromise) because someone thinks of a new and inventive solution, ‘Once people learn or choose a style, they tend to stick with that approach—it becomes part of their personality, For our purposes, however, research does show that some general, culture-based tendencies exist that can distinguish how sets of people tend to handle conflict. For instance, it appears that many Americans like a good argument, One study compared Japanese and American subjects on a scale that measured the tendency to either embrace or avoid arguments. ‘The results showed that the Japanese were less inclined to argue in the first place, but once they were involved their degree of argu. rmentativeness was less than that of Americans Based on this and other studies, some ‘experts have gone so far as to say that Americans feel stimulated by an argument and enjoy the intellectual challenge it provides.* Whether or not that’ true, the same defi hitely cannot be said for the Japanese. ‘The Japanese are not fond of open conflict, may ‘even feel mortified that it has occurred, and worry that it could disturb group harmony. Based on these findings, it is reasonable to conclude that Americans tend toward the competitive conflict management style whereas Japanese tend to fall in the avoidance area shown in Exhibit 7.2. That said, we would remind you that these generalizations ‘may not apply to individuals in either culture. Likewise, interaction within one’ culture ‘might result in different forms of conflict resolution.” Other studies have compared conflict styles of Americans with conflict styles of people from many other countries. In general, this research finds that people from col- lectivist cultures tend to prefer an avoidance style whereas people from individualistic cultures tend to prefer a direct, competitive style of dealing with conflict. Examples of countries with a collectivist orientation include China, Japan, South Korea, and Mexico, whereas the United States has been the priniary individualistic culture studied.” So as we suggested earlier, Americans prefer more active, confrontational approaches, whereas Koreans, Chinese, and Mexicans tend to use more avoidance-type approaches when handling conflict.” But we should also note that avoidance does not necessarily mean the same thing across individual and collective cultures." In the later cultures, for example, a high concern for others can underlie the use of avoidance, whereas in Western cultures it is believed to reflect low concern for others (see Exhibit 7.2). One study, for example, found that Australian students (individualists) rated the competitive style higher and the avoidance style lower than did Chinese students. But at the same time, when their collaboration ‘An uncommon conflict ‘management sty that involves inventing new ‘and creative options for dealing with confit in which both parties win"226 Part ll_ interacting Effectively in an international Environment equity norm ‘The belie that rewards should be closely tied t0 one's performance ‘equality norm Acuiture preference for every group member to get a more orless equal share of the rewards, which functions to keep Confict at a minimum reputation or “face” was threatened, respondents from both countries preferred to use direct, assertive approaches to defend themselves." Plus, more recent research sug ests that it may be the type of conflict and the reason for it that really distinguishes cultures. Consider as an example how you would respond if someone asked you to do something. Would you avoid the request somehow or directly say no? Across a series of four studies, both American and Chinese subjects rejected requests from others when they were asked to do something without a good reason, and both agreed to the request, when it was presented with a very good reason, It was only in conditions of moderate legitimacy/moderately good reason that the American subjects were more assertive in rejecting the requests. It appears that, under these conditions, which may be common, in business interactions, the American sense of self and the Chinese sense of others are more likely to be activated. ‘This seems to account for the more assertive response by Americans.” Experts also point out that conflict preferences may vary depending on who is party to the conflict. Managers from Turkey and Jordan, for example, tend to use an verall conflict handling style that isnt all that different from their American coun- terparts. But when peers are involved, Turkish and Jordanian managers tend to avoid conflict: with subordinates, they take a much more forceful approach when conflict erupts. Contlict preferences are deeply rooted in culture and extend to a variety of differ- ent areas. For instance, people in individualistic cultures often prefer an equity norm (*to-each according to what they deserve”) when dividing up organizational resources.” In determining pay raises for subordinates, individual contributions should be closely related to the eventual raise for these individualists. In these cultures (eg., the United States) this is the “natural” way to figure out who deserves what. In collective cultures, however, people have a tendency to prefer an equality norm (every group member gets a more or less equal share of rewards)."* (Our point here is that these preferences may in part result from inherent cultural differences in dealing with conflict. As we mentioned in a previous chapter, the Japanese say that “the nail that sticks up gets hammered down” In other words, displaying a direct, out-in-the-open conilict style isa “naif” that sticks out in Japan and other col- lectivist cultures. {n the United States, however, there are many myths and stories that celebrate rugged individualists (the “nails") who oppose and conflict with the majority (the squeaky wheel gets the grease’). Likewise, the tendency to engage in conflict in the first place's also related to the cultural dimension of uncertainty avoidance. Those cultures high on this value tend to avoid conflict, Clearly, then, there are cultural prescriptions about how to deal with conflict. “There is perhaps no better place to look for those prescriptions than at Disney, an icon ‘of American culture ‘The U.S. pavilion at Disney's Epcot Center used to display statues that symbolize national virtues, ‘The statues are said to represent the most important American attributes or values. Four of the statues were labeled “individualism,” “self reliance” “independence” and “freedom.” Its unlikely that these four would stand out in any dramatic way to most Americans. Yet people from other cultures often focus oon these attributes because they are so different from their own values. Plus, although individualism isa virtue for Americans, it can have negative connotations (eg. selfish ness) in other cultures.” To this point we havent really explored how people respond when conilict rears its head in the form of anger, frustration, orloss of face. What happens in an international business interaction, say, when an American manager gives a Chinese employee a poor performance rating? This feedback could violate social norms in China and result in fan enormous loss af face. The result could destroy the employees commitment and ‘ultimately lead to poorer performance. Along the same lines, a Mexican plant manager ‘might be visibly upset after an American manager from the home office says they need to do much more to modernize their “inefficient” plant, In both cases, the reactions to the conflict that’s been provoked provide an opening to “repair the damage” toa loss ofChapter 7 Managing Conflict and Conducting Effective Negotiations 227 face or reputation. An astute manager would be sensitive to these messages and might respond with an appropriate account (basically an explanation for @ negative action, which, in part, soothes the pain). Better still it would be wise to offer an account even, before taking what may be seen as a negative or conflic- provoking step with someone from another culture, “The whole issue of managing account giving across cultures is an emerging area of research in international management. Current thinking is that culture can impact how various accounts are perceived and which type might serve to mollify a perceived slight. We could benefit from knowing how other people’ values might shape the view of actions taken in the first place and the accounts used to explain them later. Take a look at Exhibit 73. It provides an overview of the account-giving process were describing here. From a conflict management perspective, its the last two steps in the account sequence that matter most. After all, negative feedback might be necessary or accounts Explanations for ‘negative actions that in part are designed to soothe or mitigate the pain of such actions concession A type of mitigating ‘account in which the ‘unavoidable inthe course of doing business. But how managers respond with accounts P&S" acknowledges if offense is taken may go along way toward determining whether the situation is ulti OS at ately salvaged or not. and offs rograts So, what sort of account giving could someone provide after a negative action or perhaps even they take or a conflict situation? One example is a concession, a type of mitigating compensation EXHIBIT 7.3 International Conflict Management: Linking Culture and Face to the Account-Giving Process ‘The Account Negative Action or Conflict Cultural Values “Repair Face Concerns Evaluation of ‘Account Contextual Factors Direct or indirect Request for Account Giving in Response Adequacy [Bautoe: Adapted om Tata, J (2000), Toward 8 theoretical raework of nterculural account giving and account evaluation. Internetionsl Joumal of Organtatonal Anais. 8, 158.228 Part il_ Interacting Etfectively in an international Environment justification ‘An account that provides a less ‘extreme form of ‘mitigation; a person ‘admits that action ‘occurred, but lars that it wasn't intentional or couldn't be helped Ideological account ‘Apperson owns up to thei part in the confict, but argues that it was legitimate under the ‘circumstances refusal ‘final form of account ‘hereby one either denies the existence of ‘one's negative actions Cr decines to provide the reasons for one’s actions: account in which the person acknowledges the conflict, takes responsibilty for it, and offers regrets or even some form of compensation (e.g.,“Itwas my poor choice of words that gave offense. For that I'm very sorry). A justification is an account that often provides a less extreme form of mitigation. Here the person admits that the action or conflict has occurred but claims that it wasnt intentional or couldnt be helped under the circumstances (eg. "I was late for our meeting because an accident on the road caused a major delay”). An ideological account may be less satisfying to another party, bbut people provide them sometimes all the same, Here the person owns up to actions taken or the conflict provoked but makes the argument that this was legitimate under the circumstances (eg. "The poor performance rating | gave you will help make you a better employee in the long run’), Finally, refusal is an account in which the person either denies the existence of any negative actions or declines to share the reason for taking them (eg, “Yes, Im going to refuse to go along with your request and lets let it {0 at that—it would take me half the day to explain why"). As you might suspect, this type of account may aggravate rather than reduce tensions* ‘What would be helpful at this point isa conflict management road map that could explain how specific cultural values ate linked to perceived conflicts (e.., about losing face), the accounts that will be used, and how accounts will be evaluated. It would be very useful to know, for example, which accounts would work best in certain cultural circumstances. Unfortunately, such a map is very complex to construct. For instance, there’ evidence that, when Americans or other foreigners make a significant effort to adapt to the interaction rules of collective cultures (€g.. Japanese), it may be viewed quite positively (ie. asa sign of respect). But let's say we reverse this scenario. If foreigners, try to fit in with the interaction and conflict management patterns found in the United States or other individualistic cultures, it may buy them precious litle. Why? Because individualists may view such adaptation efforts as filing to present yourself honestly as you really are. In any case, the road map is incomplete at this point and more research needs to be completed to Mesh out all the issues. A related and interesting topic that’s starting to receive attention is the nature of ‘work-family conflict. It turns out that cultural factors may impact how work-family overload occurs and the problems it creates. This in turn is likely to produce accounts to one’s spouse and other family members. Many people think of work-family conflict, as largely a Western phenomenon. But globalization may be changing all that, includ- ing in developing nations such as China. That said, atitudes toward work, family, and the relationship between them are inextricably linked to cultural values. So, although its reasonable to expect that employees in the United States and China will both experi- ence work-family conflict, its nature may be quite different in the two countries. In fact, that’ a prediction that researchers are starting to explore. And the answers have implications for how a company should respond to and deal with work-family conflict in their international workforces. One recent study addressed how decisions about how you allocate your time impacted the work-family equation in the United States and China. These researchers suggested that individualistic cultures such as the United States may place a higher value on personal family time than do more collectivistic societies, especially in Asin ‘This hypothesis seems to run counter to our image of Americans as career obsessed and our perception of the Chinese as intensely family oriented, But the basic idea is that, ‘when push comes to shove, individualistic Americans will put self interest (eg. time with family) above collective interest (work). The more collectivitic Chinese may do just the opposite. Another perspective on this issue is that in the United States careers dare viewed as vehicles for personal achievement. The stated ethic at least is that "a ‘good family person’ won't let personal ambitions harm the family. And having a solid family environments ostensibly part of the high “American quality of life” In contrast Chinese employees often seek work as a vehicle for bringing prosperity and honor to their families. So working 80 hours a week and not seeing much of your family, even ifChapter? Managing Conflict and Conducting Effective Negotiations that extended family lives with you, would be considered a personal sacrifice you are ‘making for the family rather than a selfish statement about your career objectives. In shor, family demands may cause more conflicts in the United States than in China, although the reverse may be true for work demands. And that’ exactly what the study found, Of course, more research needs to be carried out to tease out the exact role of culture and other factors such as economic development. Plus, we also have evidence that the latest generation of young urban professionals in China—a growing group—is increasingly challenged by the balance between work and family—as we illustrate with 229 ‘our focus on the Fan family in the accompanying " other issues in international management, one size may not fit all—i conflict. Managers in China, or anywhere else for that matter, try to identify the source of work-family conflict before trying to design it comes to work-fan should firs ternational Insights.” Like so many this case when “palanced” workplaces that reduce employee strain and stress." {international Insights The Ties that Bind Sometimes Break: The Fan Clan and Work-Family Relations in the New China HE CHINESE HAVE made the family all | important in their culture. In Confucian thought ‘and practice, a deep respect for parents. and ancestors—fial piely—is one virtue to be held above all others. This value means that taking care of one's ‘parents through if, bringing @ good name to them and fother ancestors, and success in the job that provides the material means to support one’s parents are all key values. For thousands of years, extended families have lived together, with the younger members defeing to the older ones. Opportunities offered by China's dramati cally expanding economy, however, are testing those long-held belies and ties. Some cracks and strains in the social siructure are beginning to show, including in the Fan family from Nanchang. A close 100k at the family leads you to think you're watching an American realty television show! Life folowed the traditional guidelines when the Children were growing up in the Fan house. The father, Hamiin Fan, now pines for the old days when the family ‘was close and the three children were expected to obey him. Qun, the oldest boy fa key role in the Chinese famiy) looked after his two younger siblings wrile the parents were both at work. They worked hard because, like many generations before them, the older Fans had big dreams for their three children: they would do well in school, land good jobs, marry and have (mala) chil- dren, and support and respect them as parents into old ‘age. Untortunately, times got the better of all of ths fal duty. The Fan chitdren came of age when the economic reforms in China began to flower—new opportunities, lWestyles, and jobs. Qun, the oldest son, jumped in head first. Instead of taking a state-sponsored job, he opted for a position with a joint-venture pharmaceutical firm here he learned their Western marketing techinques. After a decade of experience, he took this knowledge and stated his own consulting business, provicing advice to other drug companies in China. Now his firm has 12 employees, generates mare than $1.3 milion of sales, and has after-tax profs of about 20 percent ofthat revenue. ’As the business grew and work demands increased, the relations with his parents became strained. In no small pat, this was because he relocated to Being from their hometown of Nanchang. When he talks with his parents on the phone now, he doesn't share many ife etal because they don't approve ata He and his wife booth drive their own car, eat out often, employ house- keepers (including one for their Pekinese dog), and grab Starbucks on the run ftom their new two-story house in ‘a weary Being neighbornood. Pus, they spend more ‘on iunuries alone (wundreds each month) —such as fresh beet, imported foods, and dog treals—than their par- ents monthly income. “if my parents saw me spending this kind of money. I'd be embarrassed,” said Gun. Qun did buy his parents a new apartment and takes them sightseeing when in town a few times a year, but his fst priority now is to his xa0 ating ~the family unit contered around his marriage. He and his spouse have ignored suggestions by his parents to have a baby. Qun’s wite, however, insists. that the Pekinese (named “Wrong Wrong") should be their “grandson,” teling them the dog's surname is Fan. The parents were offended and told Qun so—not surprising in Chinese families. What ‘was surprising, however, was that Qun, the son, tld his ‘mom that it she had a problem with his wie then she should tel her so The second son, Jun Fan stillives inthe hometown of Nanchang but, in another reversal of Chinese trad: tion is ving in is parent's homme. He's a bit down on his luck now, stil reeing after a divorce from his wite, who took advantage of job opportunities and increased free- dom to take a new job in southern China (interestingly,i ae 230 Partil divorce is on the rise in China; in 2005 over 1.5 milion Couples spit up, a 20 percent jump over the previous year) They have a son together, and after the baby was bborn Jun's mother spent a long time ving with ther and caring for the child. But his wife regarded the mother-in law's presence as an intrusion: "It would be betler I the colder generation didn't lve with us, but | couldn't refuse,” she said. His wife eventually left him and their son: she is living with her boyftied and running a business teaching Engish. Jun spars with his parents, the grandparents, over how he raises the now nine-year-old bay. The elder Mr. Fan says, "tel! Jun that his son should go to bed at 9.p.u, oF hel be tired for school. But | talk and no one listens.” Jun says that you need to show love to your kids now and that his father didn’t express emotions when he was young. After losing his job, Jun moved to Bejing and worked for a year for his brother, but this ‘didn't work out well—his sales performance was weak and he missed his son (letin the care of his parents back in Nanchang). After he returned to his parent's home to lve, his older brother said that Jun just wasn't cut out for the Job, and instead approached it ke he was stil at a state-run company. "He got up in the morning, drank a ‘cup of tea, and then did only what | told him to do.” The elder Fans also have a daughter, the youngest child in the family. Like her two older brothers, she too went against the traditional grain. instead of setting in Nanchang after colege, Min left forthe big city. Now she lives in Guangzhou, is martied, and has.a child and a suc ‘cessful career with a Chinese insurance company. She 100 doesn't get nome often because of work demands. Despite the general success of their children, the elder Fans are at a loss what to do. As the patriarch, Hanlin Fan, now 70 years old, often spends time alone ins bedroom in thei apartment in Nanchang. His older ‘son has social standing he never dreamed of and whicts far exceeds his, his younger son is struggling, doesn't Interacting Effectively in an International Environment lision to his advice, and his daughter is 1,000 miles away. Mrs, Fan escapes this by playing mahjéngg every aftemoon with fiends. The Fan family’s experience is not isolated. Increasingly, younger Chinese are seeking p- vvacy rather than extended family ving. Some, like Qua Fan, can buy their parents apartments. Others are seen: ingly violating Chinese fila! obfigations by puting their parents in nursing homes. The total number of elderly in nursing homes is stil very small (about one rrillor), but this number is on the rise, having increased 40 per- cent over the last decade. One couple, the Wengs, live in the Bejing First Social Welfare Institution, near their daughter, a securities firm executive, They explained: ‘We didn’t want to live with her because, in a market economy, competition is very fierce and children have no time or energy to take care of their parents.” The Wangs say that their daughter used to visit weekly, But now only during holidays, She does phone often; the parents understand that “she has no time.” Time right be the biggest casualty in today’s China. Many Chinese don't tunderstand the latest generation's ews about work and the family. Some have turned to television for an answer (One cf the most popular series in China is a show called “Chinese-Style Divorce.” A doctor is followed after he takes a new, higher-paying job at a foreign-run hospital Viewers follow the failed marriage, the doctor unable to satisfy his spouse's demands for a better fe, The show {gets lots of attention in newpapers, blogs, and a best- seling book. The producer said the impetus for the show was his observations about how family relations suffer as people race to get ahead at work. “Everyone is focused ‘on making money; it destabiizes society.” For centuries, outsiders have tried changing China and all have fale. Pettiaps this change will come from the inside; centering ‘on work-family conflict may finally do that. For the Fan family i's already happened ** Although it’ dificult now to provide a definitive “accounts” road map, we present Exhibit 7.4 as a partial effort to “connect the dots” when it comes to prov- ing explanations of conflict management, As you can see, we used two of Hofstede's cultural value dimensions (individualism-collectivism and masculinity-femininity) to explain concerns about face and the account-giving and -receiving process. You ‘might remember from Chapter 4 that masculine cultures tend to stress values such as autonomy, achievement, and assertiveness, whereas feminine cultures tend to place ‘more emphasis on relationships and cooperation. Knowing how to manage accounts effectively in a cross-cultural negotiation, setting would be extremely valuable. Negotiations that reach an impasse need to be understood and explained—hopefully to avoid those problems in the future. Speaking of negotiation, theres been quite a bit of research about how that process unfolds and the factors, including culture, that impact it. Welll turn our attention to negotiation next.Chapter 7 Managing Conflict and Conducting Effective Negotiations 231 EXHIBIT 7.4 The Use of and Reaction to Accounts in Reacting to Conflict across Borders Coliectivstio- High titigating High feminine iy Sete (Concessions) Colietvistc masculine (Gusticatons) (e9, Mexico) | Individuals feminine | deoiogica (ea., Sweden) | | | individuaito— || (Retusatsiéenias) masculine i (ea, US) Low Aggravating tow Source: Adapted torn Tata, J. (2000), Toward a theoretical ramewerk of intercultural socount-gng and account evaluation. Inlemasional Journal of Organizational Analysis, 8, 169. > Understanding International Negotiation [Negotiation is perhaps one of the best ways to avoid conflict or at least Keep it to minimum, Negotiation is the process of communicating back and forth with another negotiation person or group with theexplicit purpose of working toward ajoint decision orreaching The process ot ‘agreement about a particular issue or dispute. All negotiations have four key elements; communicating back ‘agreement about a particula dispute. All negotiations have four key elements: communicating back person or rou wth + multiple parties (two or more) are involved: foape caesar + mixed motives typically exist (i.e, areas of disagreement or conflict, but also mating a jint decision some interests in common) or reaching agreement + movement of positions held by the parties often occurs over time: about a depute + there isa goal of reaching an agreement Basic Approaches to International Negotiation ‘As weve said, because of the ubiquitous nature of international business negotiation, it has been studied heavily. Indeed, there are two well-established approaches to studying international negotiations. ‘The macrostrategie approach focuses on how negotiation outcomes are affected macrostrategic by the relative bargaining power of the parties. For instance, consider a situation negotiation in which an American multinational wants to set up operations in a developing AN approach to country—say, Tanzania, To pursue that, the American firm may end up in a series negotiation that of negations vith the Tarzanan goverment (long ath aber local consituen- SRwecn Row he relative bargaining cies). As the negotiation issues shift from initial entry to site acquisition to ongoing power ol the patios operations, the relative power of the parties may also shift, as illustrated in Exhibit fo international 7.5. Basically, a multinational’ leverage tends to decrease once it has made an initial negotiations impacts investment, whereas the local government's power tends to increase. We will address outcomes the strategic issues associated with international market entry in the next section of the book (Chapters 8-10). For now, however, we will focus on another approsch to232 Part il Interacting Effectively in an international Environment EXHIBIT 7.5 Setting yp Shop in Developing Countries: How Negotiating Strength May Shift over Time High —% American Multinational Strength —*— Developing Country Government Strength Negotiating Strength Low Entry Entry Implementation Start-up Operation Maturity negotiations agreement (acquire site, build facility) EE Time ‘Source: Adspted trom Stoever, W. A. (1979). Renegolitions: The outing edge of atone between MNCs and LDCs, Columbia Journal fof Wertd Business, Spring, 7. comparative international negotiations—the comparative perspective, ‘The primary emphasis of negotiation this approach is on what happens between negotiators during face-to-face interactions ‘An approach that and how those interactions shape the outcomes that result. Within this perspective, a ‘emphasizes what Fan bee lot of attention is paid to how cultural factors may affect the way that the negotiation process unfolds between individuals or small groups of negotiators” To stat this sec pegotiators during face-to-face tion rolling, consider the “International Insights” presented here on how culture may interactions and how affect negotiations that have life or death consequences—literally this shapes the resuits ~ International Insights Getting to Yes: Negotiating Safely in a Hostage Crisis F YOU'VE EVER dickered about a job offer you a lot of fcous. This is true in spades for those with the received or the price you will pay for a car, you know jb of crisis negotiation—such as some police units who that negotiation can be stressful. People who negoti- specialize in hostage crises. For example, in August ate for a ving seem to have a relatively tough skin and of 2002, a Dutch citizen and medical aid volunteerChapter 7 Managing Conflict and Conducting Effective Negotiations 233 was kidnapped while working in Dagestan, a Russian’ Federation Republic. The Dutch negotiators talked with and engaged the Russian kidnappers for months and months, with 2 positive result: the aid volunteer was released after 600 days in captivity. Observers said that the Fussian criminals were very oblique in their negotiat ing style, often seerning very ambiguous to the Dutch authorities. And they expected a similar type of discus- sion with the Dutch —who for their part used a more direct ‘and upfront style that is common in the Netheriands. Clearly, the negotiation engaged in by both parties was complicated by the common cutture styles used. although fortunately there was no loss of ife. One recent study took this a step further. Researchers looked at crisis discussions in which police negotiators interacted with criminals who held hostages and/or who kidnapped others. For our purposes, they also looked at the degree of context of the culture in which the potce and the per petrators negotiated. You'l recall from Chapter § that low-context cultures are those that commonly use direct ‘communication methods—ones in which the meaning of the exchange is accurately reflected in what people say oF writs. High-context cultures are those more likely to use indirect messages, or where thase messages are best interpreted within the framework of one’s culture. Of course, all cultues and countries use high-context ‘and low-context communication, but in some cases one Of these approaches is more common. In individualistic cultures, iow context is more common, whereas high context messages are more common in colective cultures. ‘These researchers found thet, across a number of these hostage negotiation situations around the word, low-context perpetrators of the crime (more than high context) were moro Ikely 10 Use persuasive arguments during their negotiations (e.g., “‘You just said you have the money avalabl, 80 why cen't you bring to me ight away?"). And these low-context criminals were them- selves more likely to respond to persuasive arguments of negotiators with compromises. The research also showed that low-context perpetrators were more tkely to communicate direct threats than igh-context crim nals — especialy early in the negotiation time period ie. wil kil the hostage if | don't get the money soon’. These cultural elfects were more likely to oocur in the lator phases of negotation—when the ial crisis had given way to the more common cultura sys. Although this study shows us that cuture can affect the progress and success of negotiations, there are Ccbviously some more important and larger implications ‘These situations are extremely volatile and complex. with many features including luck being determinants of success. But at least this work suggests that police negotiators who are sensitive o the cultural backgrounds cf those involved inthe crisis might be better off Frameworks for Understanding the Process of international Negotiations. Several frameworks have been developed that can help managers understand the international negotiation process from a comparative perspective. We'll consider two of these frameworks here. The first framework is the broadest. It describes 12 sets of factors whereby cultural issues may be relevant in international negotiations, includ- ing the frame of reference of the negotiators. This framework is displayed in Exhibit 7.6. However, the exact relationships between the factors listed have yet to be fully researched. Despite this, the framework presents valuable guide for helping managers grasp the cultural forces that may impact international negotiation outcomes. ‘The second framework focuses more specifically on four distinct stages that the ‘negotiation process goes through once people begin interacting face to face. Again, the ‘emphasis here is on how cultural differences may impact interactions and outcomes ‘Welll consider this framework in some depth. First, however, its best to consider all of the planning and preparation that should go into a negotiation before beginning the first of the four important steps, and often before any face-to-face interaction even starts. So, well start by providing advice about this part ofthe process before we present the four-stage model of negotiations. Preparing for Negotiations Americans have long been advised to better prepare for international negotiations, yet some of this advice still goes unheeded. Over 30 years go, one expert cautioned American executives to pay close attention to the Japanese negotiating style. He reasoned that, if Americans did a good job of studying Japanese customs and negotiation tactics, the United States would be much better off. In par- ticular he thought that this kind of homework would help prevent the US. trade deficit234 Part It Interacting Effectively in an international Environment EXHIBIT 7.6 When Culture Pays Off: A Framework for Understanding international Negotiations ‘Basic model used by negotiators How the negotiation ‘= a bargaining efort * joint problem-solving or exploration © adebete ‘What the most significant issues might be: + concems of substance * relationships +» proceduresirules «intemal or personal goals Perspectives on incivicvals How negotiators are chosen + knowledge/experience + pereonal chacacteristics/status ‘Aspirations of individuals: * individual vs. community goals Group decision making: ‘+ authoritarian vs. consensual Dispositions affecting interactions Time o*entation: ‘+ monochronic vs. polychronic Fiskcaking orientation: + high v8. low How trust is determined: * intuition + common experiences ‘reputation ‘+ Uveat of sanctions ‘Views about the interaction process Importance of protocol: * forinal vs. informal Complexity of communication * low vs, high Tactics for persuasion: * logic/tacts/experience + dogmiviradition + emotiorvintuition Outeomes: ‘Agrooment preferences: * contractual vs. imi Source: Adapled trom Weiss, SE. (1994). Negotiating with "Romans" —Part | Stan Management Review, Winter, 63, with Japan from rising to the then "impossible level of $4 billion” (the US. goods deficit with Japan was $67 billion in 2007; the trade deficit with China was $251 billion). Cross-Cultural Advice Much of the advice that’s been around for decades about how to prepare for international negotiations is still sound. And, as the same advice con- tinues to be echoed today. repetition may indeed provide the best counsel. Moreover, that advice is often supported by research on international negotiation successes and failures.” Consider the following general suggestions that experts say should be consid- ered before undertaking an international negotiation: + International negotiation is notoriously complex and replete with opportunities to fail never underestimate it. + Take whatever steps are necessary to gain an in-depth understanding of the other side—not only on issues of substance, but also on how their negotiatingChapter 7 Managing Contict and Conducting Effective Negotiations styles, views of the process, and cultural values may come into play (Exhibit 7.6 provides one example of this by laying out the various issues that need to be Considered). It can be a big mistake to think that everyone is similar to you." «Seek outside help ifthe necessary expertise or knowledge is missing inside the company. There are plenty of consultants and cultural trainers who are available {or international negotiations. + Ifnegotiators' language skill are insufficient, use interpreters that are hited by your company-—dont rely on interpreters provided by the other side. «Consider the use of an international negotiating team (more on this later). + Be prepared to spend significant time and effort on the preparation process. Dor't short-change this process or be impatient in collecting information: you'll pay later. Allowing Time ‘The last point is one in which Americans are said to have continu. ing challenges. An American manager leaving the United States for a negotiation in ‘Asia generally should be prepared for a stay that might be longer than expected. Many ‘Americans still assume that they can spend a few days on the ground in a place such as Japan or China and quickly wrap up a negotiation. This may be the case if you've got experience there and/or have worked with the other party before, but often not. When ‘we were in Shanghai a few years ago, we spoke with an executive from an American, automotive company. He groused that he had already “wasted” a week in the country without getting anything done other than “eating and drinking” with officials. And he ‘was angry about having to choose between spending an unknown and indefinite period of time in the country or simply calling the effort a failure and going home. Business people in some Asian countries expect a good bit of time to be spent on establishing a rapport, whereas Americans want to “get down to business” Worse yet, some foreign, negotiators are savvy to Americans’ time sensitivities and may end up using this against them. Bringing Friends As we mentioned, using a negotiating team is often advisable in an international context. Once again, however, some Americans believe that teams are cumbersome and feel that they‘ better off going it alone. Sometimes American negotiating teams are small because of the costs associated with larger groups. In other «cases, the team is small because of the negotiators’ inflated views of their own abilities. ither way, Americans may find themselves “outnumbered” And the sheer number of details, let alone the language and cultural issues, often greatly reduce the odds of a g00d outcome for an understaffed negotiation team.” Even with a solid team, its members may not be properly prepared or understand how best to work with the teamis translator. Experts will often recommend plenty of sdvance meetings with the interpreter and, ideally, including them from the start ‘Companies that follow this advice have more success in negotiations. A survey of over 100 multinationals revealed that nearly 90 percent felt that the presence ofa bilingual team member improved the quality of the negotiation process with their negotiat- ing partners, About the same number of firms thought that such a team member also helped speed up the process. And among those firms without a bilingual team ‘member, most indicated that they would include one in future negotiations. Taking this Point a step further, other studies suggest that international negotiating teams should be multicultural. In other words, a company’s negotiating team would ideally consist of employees from both the home country as well as the country represented by the other side in the negotiations. A multicultural team such as this could make bargaining Berspectves, traditions, and tactics clearer forall sides and help resolve any culturally riven impasses™ Basic Familiarity with Customs and Norms Regardless of the size and composition of the negotiating team, we want to repeat the point that familiarity with the prominent fea- {ures of the host countrys culture and customs usually pays big dividends for everyone. 235236 —Partil interacting Etfectively in an international Environment nontask sounding ‘The frst stage in international negotiations, often the longest, especialy in non-Western cultures, whose purpose is to establish rapport or to {et to know the other party When asked about this, Japanese managers said that the most important factor for ‘ensuring success in negotiations with U.S. firms was the willingness of Americans to devote time, effort, and patience to building relationships. Not far behind was “cultural awareness.” This included things such as a familiarity with Japanese business norms, customs, and practices. You mfght say that this reflects a self-serving perspective by the Japanese, and maybe you'te right, Bu i likely that an understanding of norms and practices are important in most al international negotiations, not only those involving the Japanese. Fortunately, these two factors, among the others we discussed, can be worked ‘on and fine-tuned well before the actual negotiation process begins. ‘That said, we don't want to create the impression that preparation will automati- cally lead to successful negotiations. As with any business venture, competition plays a role, as well as political considerations and more. But, although these complexities make for no guarantees, preparation should at least improve your ods of success—if done correctly. Some studies show that, even ifyou are well prepared and display behaviors and tactics that are comfortable for your counterparts, your efforts to “adapt” will be viewed more positively in some cultures than in others, In addition, training may not always have the intended effects. Even after they went through identical training in negotiation tactics, Danish and Spanish negotiators in one study still used more cultur- ally comfortable bargaining styles. The Spaniards tended to connect relationships to the issues at hand and were willing to attack the other side, whereas the Danes preferred to focus on the issues and avoid direct conflicts. Consequently, the Spaniards were likely to view the Danes as being too focused on the business issues and emotionally distant, whereas the Danes were likely to view the Spaniards as uncooperative and confronta- tional, All this suggests that training alone, although helpful, is unlikely to completely suppress engrained styles that people have used over the years, whether they result from cultural influences, direct experiences, or both.” Training in Advance Finally, consider this. Whatever its drawbacks and limitations, ‘more training is usually going to be more desirable than less training. And that's where big firms have an advantage over small ones, Research has found that larger firms tend to do better in international negotiations than their smaller counterparts. And it’ not size per se that counts, Rather, its the resources that often come with size. Big firms are more likely to have the money for consultants, trainers, and interpreters, and perhaps even for role-playing the negotiations.” In short, big firms often have the luxury of taking more time to prepare and spending more money in doing so.” To sum up here, ‘we propose that training in a high-context approach—or at least the flexibility to use this style—would serve most Western negotiators well. Although there is no direct research to support our claim, some work does speak to this issue. For example, one elaborate study had participants from high-context (Russian, Japan, Hong Kong, and Thailand) and low-context (German, Isréel, Sweden, and the United States) countries participate in a simulated negotiation. The researchers taped the interactions and later transcribed and coded all that was said during the 90-minute bargaining session, ‘Overall, the findings show that the high-context negotiators used more flexible and complementary tactics than the low-context negotiators. The authors suggest that the high-context approach allowed negotiators o get more information from the other party ‘without signaling that they were completely cooperating or giving in, Additionally, the high-context participants were better able to mimic the opposite approach: low-context negotiators found it difficult to switch styles to the high-context approach, Internationai Negotiation: A Four-Stage Process Regardless of the amount (or lack) of preparation, as we suggest with our discussion of the above study, eventually you must begin the interaction and negotiation pro- cess, Experts suggest that the complete negotiation process can be divided up into four main stages.” The frst stage is called nontask sounding. This is often a relatively long stage, especially outside the United States. The basic purpose of this stage is toChapter 7 Managing Conflict and Conducting Effective Negotiations, 237 establish a rapport with a potential business partner; to get to know the other party. In other words, interaction in this stage is not directly related to the task of negotiat ing but instead involves “sounding out” the other party. The next stage involves the task-related exchange of information. This process basicaly involves an exchange of the two parties’ needs and preferences as well as an explanation of background issues. Following this is the persuasion stage of negotiations, in which, as the label implies, there are overt altempts to modify each other's position. All three of these stages lead to the final agreement stage. in which bargains are agreed upon and pethaps contracts signed. There is a good deal of research comparing cultures across these four stages, and well present some of that work next.* Stage 4: Nontask Sounding First, let’s consider nontask sounding, This is probably 4 normal stage in most social interaction, especially among those meeting’ for the first time. In fact, the effort to establish rapport or to get to know someone is not only typical across cultures, but also within cultures. But that doesn't mean that nontask sounding unfolds the same way everywhere. In fact, there often are great differences between Americans and many other cultures about how this stage is approached. ‘One important variable in the nontask-sounding stage is the amount of time spent on entertaining one’s guests in an effort to feel them out and establish personal relationships. You may, for example, encounter people who want to know about you ‘and the company you represent in great detail. They may wish to know your company history, your personal background, your qualifications, and more. In fact, they may even identify themselves when first introduced as belonging to that company. For instance, in many Asian cultures we might introduce ourselves by saying, "We are the University of Dayton’ Paul Sweeney and Dean McFarlin.” Obviously, in the United States we would almost certainly introduce ourselves by saying, “Hi, 'm Paul Sweeney and this is Dean McFarlin; we're with the University of Dayton.” This is a subtle dif ference, but substantial in its underlying meaning. It reflects what we have already discussed—that people in individualistic cultures such as the United States tend to give primary emphasis to the person, whereas people in collectivistic cultures give primacy to the group (the organization, in this case). But nontask sounding goes well beyond this. What to an American might seem to be discussions about irrelevant personal details or tangential issites often mean a great eal to, say, a Chinese negotiator. In fact, it might be vital from their perspective to have such “irrelevant” discussions early on. Remember that people from low-context cul- tures such as the United States often don't want a lot of personal “background” before ‘undertaking negotiations. Generally their perspective is that, because a “contextless” contract (one that’ explicit and in writing) should be the result of the negotiation pro- ‘ess, spending enormous amounts of time to get to know the other party is relatively uunimportant and possibly an impediment to reaching one’s goal. The perspective of people from high-context cultures such as China, Japan, and Mexico is often very dif- ferent, making it extremely important to spend a significant amount of time on nontask sounding. The personal and organizational information that they seek provides the context that is critical for understanding messages in their culture. Exhibit 77 summa~ ties this and other differences that might be observed between high- and low-context ‘cultures in the nontask-sounding stage. So, the amount of time spent on what Americans might consider “meaningless” interaction can vary dramatically across cultures. And in high-context cultures, it really ‘does maiter in ways that impact final outcomes. For example, one study showed that, for Brazilian and Japanese negotiators, interpersonal comfort was much more likely to Tead to outcomes that satisfied the negotiating partner than it was for Americans. This finding underscores the role of nontask sounding in building the personal relationships that are essential for successful negotiations in high-context cultures. ‘Another sign of a culture's emphasis on the ‘getting to know you” stage is the importance that negotiators place on status. The status of the participants involved in the negotiation, although not directly relevant to the issues being discussed, is relevant taskcrelated exchange of information ‘The second stage of negotiation wherein both parties share their ‘needs and preferences persuasion ‘The third stage of ‘negotiation wherein partes make attempts to madity the positions of others agreement ‘The fourth and final stage of negotiation ‘wherein the agreement is reached, but also ‘one in which aiferent modes are used for agreement (0.9.. ‘contract, handshake, tc)238 Part Il_ Interacting Effectively in an International Environment EXHIBIT 7.7 Behavior in the Stages of Negotiation: Differences across Low- and High- Context Cultures Stage 1: Nontask souncing Briatly exchange soca niceties Wil want to know al about you anc ‘your company Wil gel tothe point (.e., stage 3} Long presentations, meetings in auict’y ‘order to gel to know you Not especialy concerned with status Give caret altenton to age, rank, of other group slats of other negotiators Stage 2: Task-rolated exchange of Relatively rel stage ‘Ammong the longer stages bere! Young, ambitious, kely1o do well Advantage given to older higher status team member Stage 3: Persuasion ‘Argumeniative Deciaratve “The most important stage The least important slage “To the point” negotiating siylo More guarded style Cost-benefil approach face-saving _Face-saving very important not very mporiant Stage 4: Concession/agreemant Favor or require detailed written ‘Less emphasis on long contracts contract Decision/agreement is imperscnel Deal is sealed on the basis ofthe contextual varabes| Prof motive determines agreement Good setting necessary for na agieernents in some cultures during the nontask-sounding stage. Once again, the distinction between high- and low-context cultures is useful for making this point. Negotiations among equals are much more common in low-context cultures such as the United States. American negotiators often downplay status in any number of ways (e.g. by ‘using first names, dressing casually, and soliciting input from all team members). But in many high-context cultures, title and status are very important and interactions are more formal.* It would be rare, for example, for a high-context negotiator to address the other party by his o her first name. The Chinese, for instance, are very aware of status differences among people on negotiation teams and prefer to negotiate with the head of the foreign company.” This is also an apparent preference among Japanese, French, and Mexican negotiators, among others. Status or position provides background to upcoming negotiations for high-con: text negotiators, but itis less important in low-context cultures. To illustrate this point, ‘one study had groups of English, French, German, and American subjects participate ina simulated negotiation. The study found that the French (i.., the highest context of the four groups) were most interested in and affected by the status of other negotiation team members. Another study involved observations from more than 700 business people from 11 different cultures. The cultures ranged from very low context (€., the United States, Germany) to very high context (eg., South Korea, China, Taiwan). This study also found that high status and personal relations mattered more to people from high-context cultures. In Japan, for example, status distinctions can be based on age gender, and relative position in the firm. So if youre older, male, and higher up in the firm, the odds are it will impress a Japanese bargainer.* In the low-context United States, however, Americans often want to establish equality between people, even where it clearly does not exist. Stage 2: Task-Related Exchange of Information ‘This second stage involves the exchange of both parties’ needs and preferences, For some cultures this isa very impor- tant step in the negotiating process. In high-context cultures such as Japan, long and in-depth explanations of initial bargaining positions are expected. This exchange andChapter 7 Managing Conflict and Conducting Effective Negotiations the meetings that go along with it will probably be long and drawn out and will involve receiving many questions from the other negotiating party. The long-term approach taken by high-context cultures also means that youre likely to see an initial offer that is not very favorable. The belief is that a poor initial offer will leave plenty of room to maneuver in later stages of the negotiation process. This was verified in a study involv- ing groups of businessmen from the United States, Japan, and Brazil who again were asked to participate in simulated negotiations. The Japanese asked for higher profit ‘outcomes in their initial offer than their American and Brazilian counterparts. The American negotiators, however, were more likely to offer a price that was closer to the eventual terms agreed upon by both parties. And the Americans and Brazilians were irritated at the Japanese for their "greedy" initial offers. 4 second study with the same three cultural groups found that American bargainers could reduce this irritation and improve the outcomes by stretching out this second stage of negotiations, In particular, the more Americans encouraged information exchange from their bargaining partners the better their financial outcomes in the negotiation.” This finding was underscored by a more recent study of the negotiation transcripts of Japanese and American busi- ness people. Early first offers generated higher gains for the Japanese and lower ones for American negotiators. But exchange of information before the first offer resulted in @ turnaround of this effect—US. negotiators received higher gains.* In general, experts suggest that the probability of success in international negotiation increases as the negotiators are motivated to search for new information and are flexible in their approach during the process.” Stage 3: Persuasion Although these findings are clear, Americans are still often skimpy in the attention they pay to task-related information exchange. Sure, Americans may spend some time talking about sports or their families, but dramatically little time compared with other cultures. Instead, a slight glance atthe wristwatch can be enough to move an American onto the next stage of negotiations. This third stage—persua- sion—involves explicit attempts to modify each other's position. To Americans, this is the most important step in the negotiating process. And it’s the stage at which they expect to spend most oftheir time. But how the persuasion stage unfolds in other cul tures may end up surprising many Americans. Consider the amount of time spent at this tage. As we've said, Americans usually spend relatively little time and effort in the earlier two stages in order to spend greater amounts of time in this third phase. Other cultures, such as the Japanese, take the time to sound each other out earlier and therefore they spend relatively less time engaging in the kind of overt persuasion that many Americens are used to. Then there are the actual tactics used to persuade. As you might expect, most Americans believe that this stage is when the “real” negotiating takes place, So Americans typically pay very close attention to the interactions that occur here. For example, throughout this part of the process, Americans will often compromise and make modifications to their initial bargaining position. Concessions are common throughout all stages of negotiations for most Americans. However, unlike American bargainers, Japanese negotiators tend to wait toward the end of negotiations before making any concessions.” Consequently, Americans engaged in international nego: tiations may go too far and give too much away in an effort to compromise in this Persuasion stage.” Interestingly, although Americans may be among the best in the World at compromising, the meaning of the word “compromise” and related terms can differ dramatically across cultures, as shown in the following “International Insights” 239240 Parti International Insights The Devil is in the Details: The Meaning of Compromise across Cultures F YOU'RE WONDERING about how important language is in international business, consider the language of negotiation. Take the word “compro: mise,” which generally has very positive connotations for Americans. The United States was founded on com- promise and many famous compromises have dotted its history. Americans may be among the world's best compromisers. It folows, of course, that compromise has been an essential part of American business deal- ings as well It fact, to many Americans a compromise (or concession is a very strong sign of good faith and fair play between negotiators, Interestingly, however, compromise has some very different meanings in other cultures. And many of those meanings are far more negative than those conjured up by Americans. n the Midale East, for example, compro- mise caries with it many negative associations, as in Interacting Effectively in an international Environment the phrase ‘his vitue was compromised." The Persian Word for meciator translates to “meddle.” In many Latin American cultures, compromise presents an Issue of personal honor; here, compromise could connote giving in. As “giving in raises many issues of face and personal Integrity for Mexicans, it can prove problematic in nego: tiations. Russians typicaly see compromise as a sign of ‘weakness. To concede even a minor point can suggest 4 loss of control or the influence of another’ wil. AS a result, negotiations with Russians can be confrontational Likewise, many other terms that relate to the nego: tiation process are open to different interpretation, The word "aggressive" may be an insult to the British of Japanese, whereas to Americans such a characteriza lion may indicate @ tough, respected bargainer. So it ‘may pay to become aware of national sensitviies, espe- cially as far as communication about negotiation goes * Another reflection of the American belief that this stage—persuasion—is when the real negotiation takes place is that Americans now are ready to “lay their cards ‘on the table” Basically, this means that Americans ofien give, and expect to receive in return, frank information during this’stage of negotiations. It has been found that ‘Americans often believe that the ideal position for both parties should be put on the table, at which time progress can be made—often on an issne-by-issue basis—toward some kind of compro ise. One study reported that American negotiators were more likely to share information directly with negotiation partners than were those from five other countries (Brazil; France: Hong Kong, China; Japan; and Russia). Negotiators, from Russia, Japan, and Hong Kong were more likely to use indirect strategies to com. _municate in negotiations In another study, which looked at the appropriateness of various bargaining methods, Americans were less likely to endorse tactics such as bluff- ing, feigning threats, or misrepresenting information than were Brazilians." But being “up front aside, this American style often does not mesh well with the bargaining approaches used in other countries and cultures. Apparently, this American approach to negotiation stems from an idealistic moral philosophy, rather than their focus on the relative consequences of specific actions, Other cultures, such as Saudi Arabia, embrace a more relativist philosophy that affords them more freedom in their negotiating style.” Another example is when a Chinese negotiator makes sudden demands that are pre- sented as nonnegotiable. Such demands often place Westerners at a disadvantage oF throw them offif they re not well prepared Similarly, another study using a simulated bargaining session found that Chinese negotiators used more competitive approaches (persuasive communics n, threats) and fewer cooperative methods (multiple offers! attempts, focus on long-term outcomes)” With sufficient patience and flexibility, how- ever, research shows that Americans might find that concessions will appear from the ‘Chinese side and others, occasionally at the last minute. Exhibit 7.8 presents some elements of what might be considered the stereotypic American negotiating style. Most of these elements play a role here in the persuasion stage of negotiations, but also apply to other stages. Put simply, some argue that the quintessential American style is that of the frontiersman or cowboy in the Old West This “John Wayne" style of interaction may work well within the United States, but the characteristics that define American individualism can be received poorly on a foreignEXHIBIT 7.8 Hees 1 Chapter 7 Managing Conflict and Conducting Effective Negotiations 2441 eC oRARRENRRE IE AONE vst cl me John rneeans downplay sas and ‘sab wa a ote oma 0h 96 ay inode Gatto tne ol: Arcane, tke no te, wnt Tocepones th ne ra ak an go downto business Lay your card on he abe Arexicans expect evs rncon the bergarig at (ta treat you wan and itl you wha wan) Don't just sit there, speak up: Americans don't deal well with silence; they get into trouble by feetng pressured to fil in silence with possible concessions Don't take no for an answer: Americans are taught tobe persistent and not fo give up; negotiation is imostly persuasion ‘One thing ata time: Americans approach a regotiating lask sequential ("Lot's sette the ‘quantity issue first, and then discuss price”) ‘A deal is a deal: When we make an agreement, we ‘ive our word, We expect {0 honor the agreement 19 matter the circumstances ‘Some Elements of the Stereotypic American Negotiating Style Fotow local customs: Our informality is simply out of place in most other cultures; foseign cients are more ‘comlortable when we folow their customs Getting down to businass: This is defined diferently across cullutes; geting to know the other party is impostant in many counties, Hold something back: Foreign executives seldorn lay ‘everything on the table; the negotiating process is ‘expected to take time with concessions made along the way ‘Silence can be a powerful negotiating took: Consider its use, but also be aware of is use against you Minds are often changed behind the scenes: If an impasse is reached, ask more questions; take a recess; try a more subtle approach Postpone concessions: Unt you've had a chance to get alissues on he table; don't measure progress by the number of issues that have been settled ‘What we take as a commitment means different things in Tokyo, Ri, or Ryachn; deals particularly new ones—are more uncertain than we're used 10 Source: Adapted from Greham, J. & Herberger, FA, (1082). Negotiators abroad—don't shoot rom the hip. Harvard Business view, July-August, 160-168. stage. Of course, even in the United States it pays to be flexible and its probably rare for any one successful negotiator to consistently use more than a couple of those behaviors presented in Exhibit 7.8. Afterall, negotiation is by definition interdependent —some of the most successful negotiation approaches suggested in the West are more long-term oriented and focus on both parties benefiting ("win-win"). Having said this, however, interdependence, in most shapes or forms, has not been a major emphasis in American culture, Consideration of the behaviors comprising this American stereotype in Exhibit 7.8, whether accurate or not, can benefit potential negotiators.” So what can happen when the prototypic John Wayne negotiator meets another caulture—say Japanese? Let's follow this through with some possible outcomes. Fist, Americans might quickly, present a complex set of arguments, They may conclude their presentation with an offer that is not too far from what they eventually expect. A Japanese business person may be surprised by the abruptness of the offer but will probably consider it, They may know that Americans like to get to the point. What they ‘may not know, however, is that the American offers pretty close to their ideal offer. In fact, almost everywhere else in the world but the United States, bargainers leave them- selves plenty of room to maneuver. Accordingly, the Japanese may counter by asking for a lot, which makes perfect sense, given their cultural perspective. But Americans may react angrily, something that can harden positions and result in less exchange of information. This is exactly what happened ina study based once again on a simulated negotiation session, American negotiators initially asked for a “fait” price—one closer to their final offer-—whereas Japanese negotiators intially asked for much higher profit options, a position that upset the Americans! Despite feelings like these, Americans would probably press on. ‘They may try dealing with one issue ata time, Here they may experience more frustration and anger. For example, the Japanese typically do not like dealing piecemeal with issues—which explains why their concessions are bunched toward the end of the negotiation process Second, even if Americans are very persuasive, they may get a silent response—which242 Part it Interacting Effectively in an international Environment the Americans may interpret as stonewalling. A cultural analysis shows the source of frustration here. The Americans may have used their on-the-spot latitude to grant a concession. But the Japanese may not have the same amount of discretion at their Glisposal. Instead, the Japanese decision-making style is to take time after hearing an offer to discuss it as a group and, ideally, reach a consensus. This approach is more common in high power distance couptries (eg., Mexico and India, and Japan to a somewhat lesser degree). Consequently, the Japanese negotiators are not likely to react immediately to an offer. If they are frustrated enough at this point, Americans counter with a very aggees sive tactic, They might tll the Japanese, "Ifyou cant lower your price, well just go with another supplier.” This may be the worst thing that the Americans could do. The mere directness ofthis approach might turn off the Japanese. It would be much more appro- priate if this option were presented through a third party or, if it must be done directly, in a completely different way. For example, the Americans might say, “Lower prices ‘on your part would go @ long way toward our not having to consider other option Additionally, other tactics such as repeating the explanation of your position in more detail, asking questions, playing dumb, or even silence can go a long way. Indirect approaches, however, are not the fist choice for Americans. Yet in many parts of the globe, it might be a more effective approach. Consider the following scenario presented by experts in international negotiation. You are an American firm with a contract with ‘Chinese manufacturer of bicycles. You've received convincing data that this producer has had some quality problems in the past and that the bikes in your order have an annoying rattle. They are supposed! to ship to Hong Kong next week. What would you do? 1, Fly tomorrow to the plant to see the quality problem yourself. You tell the plant ‘manager that the rattling has to be fixed before shipping, 2. Goto the plant and test some bikes. You take the plant manager for a ride near the factory and afterwards ask: “Do all the bikes rattle? Will the ratling be a problem for buyers?” And then you leave. If you're like most Americans your first instinct (and maybe the second too!) is to choose option 1, and many do. But it may not be the best choice. This brief story is true and had a happy ending when the American took the indirect approach (option 2). Gently asking about the buyer's view helped—the bikes arrived on time with no rattle. ‘And the American company ordered more and so both parties came out of this well. “This indirect confrontation is more common in collectivist cultures; it does not imply blame or make the problem personal. The isste doesn't morph from a problem with rattling bikes to a problem with the people who made the rattling bikes. This indirect approach leaves personalities out of the equation—it gets across the message without ‘communicating disrespect. For this reason, an intermediary or third party is often a useful way to fix a problem in Asia as well! Stage 4: Agreement Many negotiations do come toa conclusion when an agreement is reached, Agreements are the culmination of all of the concessions and persuasion used in stage 3 and earlier. That said, an agreement is only as good as the follow throu In other words, all of the considerable time and effort invested in the previous three stages (sounding out the other party, trying to understand their culture, traveling, per suading, etc.) could be wasted if both parties don't behave in ways that are consistent with the agreement. Recognizing this fact, many American companies will insist that elaborate formal contracts be signed that bind each party to specifics ofthe agreement. Not unexpectedly this demand is sometimes viewed as a negative or even something to resist outright. In some parts of the world, negotiators are loath to seal the deal with & final, written contract that spells out responsibilities in great detail. Instead, they hope that the ties that they spent so much time building and strengthening in the earlier stages of the process will now pay off. They hope that the general trust established inChapter 7 Managing Conflict and Conducting Effective Negotiations 243. an extended nontask sounding phase will allow a much more genetal agreement to be drafted and acknowledged by each party Despite this inclination, most foreign firms nowadays expect a lengthy formal contract to be requested if they are negotiating with US. companies. The Chinese have similar views about the form of a good agreement. Instead of a specific contract they prefer broad agreement about general principles. Some say that the Chinese want broad agreements because they believe that, if ll parties agree to the principles, the details can be worked out later by people of good intention and trust.” Of course, Americans and other Westerners often take the position that if trust exists then the Chinese should be willing to make clear commitments. Who is right probably depends on the specific case. One thing, however. is certain: Americans tend to slight the process of establishing broad principles. To Americans, these principles are similar lo the corporate philosophies thal are all the rage these days—they are nice words, but in practice they can be unimportant, if not meaningless. (Ironically, however, you will recall from Chapter 3 that US. firms are more likely to have such codes than theit Foreign competition.) ‘What many Americans fail to realize, however, is that these principles are the standards that the Chinese use to evaluate future agreements. As a result, Americans often consent to them with litle input, Ultimately, this may be the right thing to do “anyway, as general items can be interpreted to support their position, Nevertheless, ‘experts recommend that Western firms provide serious input into this process, includ- ing laying out their ideas on business concepts such as quality products, profit, and shareholder return, instead of ust going through the motions. ‘Whether itis broad oF narrow, however, even the very notion of a contract can have different implications across countries, For example, in Russia a party to a con- tract can do only what is expressly allowed. Generally, in the United States you can do anything that is not prohibited by contract (provided it is legal). Again, an agreement is only good if it is kept. Whether other parties live up to their end of the agreement ‘depends, at least in part, on the potential long-term impact. This impact. in turn, is termined by the trust that we have in the other parties and our satisfaction with the agreement. Therefore, making sure that the other party feels that they also got a good «teal pays off in the long run. Global competition isso fierce today that general prin- ciples are probably worth abiding by in order to communicate effectively and negotiate a lasting agreement. Chapter Summary Conflict occurs all too often in international business, and important causes include differing cultural norms, decision-making styles, and the characteristic cultural tendency to engage in or avoid conflict in the first place. We discussed different styles that cultures use to deal with conflict issues once they arise. These approaches balance concern for your own outcomes against concern for the outcomes of others. For instance, ‘Americans tend to use a competitive style (high in own concern/telatively low in other concern). There are also cultural differences in the accounts or explanations that people provide once conflict does occur between Parties. Cultures that are more collectivist tend to use ‘mitigating accounts (eg, concessions), whereas more individualistic cultures often use aggravating accounts (eg, denials) Likewise, culture can shape how people respond to these accounts. For example, aggravating, accounts are likely to be viewed negatively in collectiv ist cultures, ‘An important way to avoid or at least minimize conflict is through negotiation. We presented two negotiation frameworks. The broader of the two is intended to be used as a general guide to how cul- ture can impact negotiations. It covers five general ‘categories and includes everything from how people conceptualize issues in negotiations to how the process ‘of negotiation should unfold. The second framework centered on the stages of the negotiation process itself, bout it also highlights the importance of preparation Preparation should include learning about the other side in depth (about their culture and how that impacts negotiation), seeking outside experts when necessary.244 Part il using translators and a molticultural negotiating team, and generally being willing to prepare fly Once preparation is complete, the actual negoti tions typically proceed through four main stages and we showed how different cultures put more or less weight on each stage. For example, Americans tend to undervalue the first stage of negotiating—nontask sounding—relative to other cultures. This “getting to know one another” phase is viewed by Americans as best kept brief and perfunctory, whereas it isa relatively long and important stage for some other cultures. The next stage, task-related exchange of information, is also typically more important for countries other than the United States (eg. Japan). In a high-context culture such as Japan, long and in-depth exchange of bar- gaining positions is expected. Persuasion is the third stage, and one that is typically seen as the "heart" of the négotiation for most Americans. This is the point When modification and persuasion of others’ positions unfolds. Yet, for some high-context cultures, it an be less important, and relatively little time is spent in the kind of overt persuasion that Americans are used to. Agreement is the final stage and again some big dif ferences are commonly observed. Americans prefer elaborate contracts that bind parties to the agreement. ‘Jp to the Challenge? Interacting Effectively in an international Environment Others, mostly high-context cultures, rely a great deal on the trust established in earlier stages to truly seal a deal. Finally, we examined some of the mistakes than can be made in an international negotiation process as well as some techniques that may result in more beneficial outcomes. Discussion Questions 1. In discussing conflict, we highlighted negative implications and effects. Can you think of any positive effects that might result from intercultural conflict? 2. How might Asians, Latins, and Americans (US, characteristically deal with conflict? More importantly, what is it about each groups’ typical style that would create a sense of frustration when interacting with the other groups? 3. Reflect on how an American, a Mexican, and a Sauidi negotiator might move through the four stages of negotiation (you may wish to refer back to Chapter 4 to see each country’s standing ‘on Hofstede’ dimensions). How might each stage be approached and what areas might each nationality emphasize? Understanding the Mexican and American Negotiation Gap sented a negotiation scenario between Mexican government officials and American managers. You'll recall that the American team flew to Mexico City to present their proposal and, they oped, to hammer out ‘and negotiate the terms of the large contract, Although the scenario was only simulated, there is litle doubt that Americans have faced similar situations before. The cross-cultural differences they faced, along with plenty of anger frustration, and misunderstanding, are more common than we all might expect. So what is your anal- ysis ofthis situation? What were some of the reasons for the breakdown in the process? Compare your guesses ‘with ours in the next few paragraphs, Ina nutshell, the Mexicans displayed more concern for relationships and background information than their ‘American counterparts before and during negotiations, ‘The Mexicans tended to use stories and allegories to help support their points during their interactions with the Americans, before the presentation and during the lunch afterward. They acknowledged the work done con the other side in the presentation and negotiation Likewise, the Mexicans also tended to be more effusive in their early communication and during their informal /\ T THE BEGINNING of the chapter. we pre- meetings at lunch. On the other hand, they also held some topics near and dear—such as the importance accorded their boss, the Minister—something that was ‘shared in response to the receipt of the American pro- posal and schedule, Americans, in contrast, ‘played using their own rules" —or at least the rules they should Use if they were dealing with other Americans. On the: positive side, they approached the presentation and what they hoped were the subsequent negotiations with all due dligence—they really prepared to the hilt. This term is actualy a legal one, referring to the care that @ reasonable person takes so that an action or promise pays off—doing your “homework.” But good techni ‘cal preparation was not the problem here. in fact, the inclusion of a lawyer on the American team was prob: ably done to ensure that any contract might be free of threats to the firm. This could suggest to the other party that, if there were problems later, the first stop might be the Mexican courts. Yel for many cultures, including ‘Mexican, business is more personal. Some go as far 10 say that you'd just as soon bring a lawyer to the open- ing period of a business relationship as you would to the ‘opening of romantic relations, "Prenuptials' in business arrangements in many collectvist cultures are informalChapter 7 Managing Confict and Conducting Effective Negotiations ‘The Americans also tended to focus more on moving things along by making references to time and requesting addtional information, Indeed, even at the lunch atterward, the Americans pressed for reactions to the proposal and questions, whereas the Mexicans seemingly kept the conversation light, This experience also probably stemmed from different views about precision and punctuality. In Mexico, this is a lot less important than the cultivation of a good atmosphere and relations. That said, the Americans were willing to a point to accornmadite the Mexican offcials—agreeing, if only because they didn't know what else to do, to wait around an hour after the “start” of the meeting to ectu: ally start. The Mexicans, however, were more concerned with establishing a positive working relationship frst and then preferred to expiore options jointly rather than con- sider specific arrangements. In fact, this was signaled in even their early communications that confirmed the joint meeting with the Americans. These aiiferences are ‘common across incividualstic (United States) and col lective (Mexican) cutures. Americans tend to worry less ‘about relationships and are focused more on persuading ‘and winning in a negotiation, And although the Mexican managers agreed to the American team leader's request to eventually start the meeting, they wore also abit taken aback as their leader—the Minister — had not yet arved. ‘This offense taken by the Minister and his mana- geria staff raises another cultural red flag as wel, The power distance between these two counties is great. International Development 245 Mexicans rate relatively highly on this dimension —lead- fers caity significant power in Mexican fms and they are looked to when important decisions need to be made, The United States is a more low power aistance culture— differences between managers and subordi- nates exist to be sure, but they are less significant and lower-level managers enjoy more freedom and decision control, Indeed in this case the U.S. managers were empowered by their management back in New Yor to make decisions on the ground in Mexico City. The questions raised by the Mexicans during the early meet ings might have been efforts to determine the seniority levels of the American tearn, The Americans might have considered including the CEO, the president, or a board member of the fitm, even if ust for *show,” so that the Mexican Minister could feel that the negotiations were conducted on equal terms. In summary, the reactions of each side may have been influenced by cultura differences, Do you have any suggestions about how each side might better respond and adapt to the other, or have been better prepared to do just that? Could the Americans have done anything to salvage the situation even aftor the offense taken by the Minister? As we noted in this chapter, pethaps the biggest mistake that a manager can make is to be unfa- ilar with the norms and typical behaviors of another ‘culture. Ifthe Americans had been better prepared about the potential for “cultura d'sconnects” during the negoti ations, things might have indeed gone more smoothly.” An International Negotiation Scenario Purpose To diagnose and assess an international negotiation that has gone wrong, to learn how better to approach this and other cross-cultural negotiations, and to gain self insight into your own negotiating tendencies and styles. Instructions Read the following scenario independently, either inside or outside class. Next, divide into groups of four to six. Discuss the questions posed at the end of the scenario with your group and develop consensus answers if possible (allow 20-25 minutes). Then report your group’ answers, followed by a class discussion and wrap-up (20 minutes). Scenario Econ, a rapidly growing electronics retailer located in the Southwest, is currently attempting to negotiate a number of agreements with manufacturers located in Japan and elsewhere in the Far East. Econ has a repu tation for selling the newest products at discounted prices and, at the same time, having the largest inven- tory possible. Its slogan is, “Never be undersold or out of stock,’ To demonstrate their desire to develop close ties with the new suppliers, management has decided to send Peter Nelson, one of the firm's top purchasing agents, to the Far East, He has becn given the respon. sibility to negotiate a set of contracts that will improve Econ’s market share in the Southwest and, at the same time, enhance its reputation as an up-and-coming elec- tronics firm. Accompanying Peter is Reid MacLeod, @ technical expert in computer hardware and software. One organization of particular interest to Econ is Nagaoka, Inc., a Japanese firm that has established itself as a leader in writable disk drives and wireless246 = Parti hardware, Before leaving for Japan, Peter set up a number of meetings with Mr. Washsami, Nagaoka’ vice-president of sales. ‘These meetings represent the first-time encounter with a Japanese firm for both Peter and Reid, Peter and Reid arrive at the Nagaoka plant as, scheduled and are escorted to a well-appointed meet- ing room. Besides Mr. Washsami, there ate three other individuals present, They are Mr. Asakawa, director of production, Mr. Matsuata, Mr. Asakawas assistant, and Mr. Konatshima, the company’ interpreter (Mr. Konatshima was asked to attend because only Mr. ‘Washsami speaks English). After several minutes of formal introductions, the two sides sit down to begin discussions. To break the ice, Peter indicates to the interpreter that, as the group will be working together for several days, it would be desirable to use first names. He then repeats his and his colleague's first name. ‘The Japanese nod their heads but continue to use last names. Peter tries a second time but the response is the same. He decides not to push the issue further, but ‘wonders why the Japanese ate being so formal. Peter again takes charge by explaining what he and Reid hope to accomplish and Econ’ business phi- losophy. Peter directs his comments to Mr. Washsami because he is the most senior person on the Japanese team. The interpreter repeats his comments for the benefitofthe others. They respond by nodding followed by long periods of silence. Feeling uncomfortable with the silence, Peter begins to explain the specific needs that Econ has to Mr. Washsami. Of particular impor: tance to Econ are discounts for large volumes and @ ‘multi-year contract. In response to Peter's comments, Mr, Washsami indicates that it would be difficult to make decisions so soon. He receives accepting glances from his colleagues. Not accepting Mr. Washsamis statements, Reid presses the issue of price. However, the more Peter and Reid press, the more adamant and withdrawn Mr, Washsami becomes and the longer the periods of silence. Finally, Peter and Reid accept Mr. ‘Washsami’s unwillingness to discuss price at this time Peter turns his attention to important technical specifications for the drives that Nagaoka manufacture. In thiscase, Peter directs his comments to Mr. Asakawa, director of production, Peter assumes that, because Mr. Asakawa isthe director, he is the person with the tech- nical understanding to answer questions. In response to the questioning, Mr. Asakawa hesitates and, before responding, talks to his assistant. It soon becomes clear to Peter that the person with all the answers is not Mr. Asakawa, but his assistant. Peter, however, is Interacting Effectively in an International Environment, confused because he does not want to offend the dir tor or place Mr, Matsuata in an awkward position with his boss. Peter attempts to overcome his dilemma by directing his comments to the interpreter without spe- cifig reference to either Mr. Asakawa or Mr. Matsuta, Unfortunately, such a strategy only confuses the inter preter and makes the situation worse. ‘The group has been meeting now for two hours and Peter is becoming anxious about the amount of progress being made. As far as he can see, there has been very little progress, Even worse, the Japanese negotiators’ casual and relaxed style, coupled with their reluctance to talk, has given Peter the impression that they are not very interested in doing business with Econ. In a final attempt to salvage something from the meeting, Peter turns his attention to the issues of delivery dates and how long it would take to receive an order once it had been placed. Here again, the Japanese ate reluctant to make a commitment on quantities and delivery times. However, sensing some movement by Mr Washsami, Peter presses on. After about 30 minutes of interpreter-assisted conversation, Mr, Washsami finally says yes to the specific delivery date requested by Reid. Mr. Washsami’s yes, however is followed by a long explanation about why such a date would be dif- ficult to meet and how it would put considerable strain ‘on Nagaoka’s production facility Believing that he has finally obtained a commit- ment from Mr. Washsami, Peter decided that this would be a great opportunity to begin writing down points of agreement, Peter continues by suggesting that, as there is agreement on a delivery date, they can begin to write up a tentative agreement between Econ and Nagaoka. At frst the interpreter is reluctant to repeat Peters comments, but finally translates the message. To Peter's surprise, the Japanese look shocked and indicate that there is still not agreement on a delivery date. Peter is totally confused and suggests that they take a luncheon break to reconsider their position. The two sides agree to meet at 200 pat. and leave for lunch together. 1, What do you believe went wrong with the negotiations between Econ and Nagaoka? 2. Who is at fault? 3, What would you have done differently? Source: Mealiea, LW. & Latham, G. P1996). Skil for manage ‘ral succes: Theory, experience, and practice. Chicago: Iewin, pp 166-167, 170-172, Reprinted with permission,Chapter 7 Managing Conflict and Conducting Effective Negotiations 2a7 From Theory to International Practice Characteristic Features of Negotiation Behavior in Countries around the World Purpose To explore the difficulties that can occur when negoti- ating with people from other cultures, Instructions Divide into groups. Your instructor will assign each ‘group one culture to study in order to cover a variety of different countries and cultures. Outside class, carry ‘out research to find three dominant cultural values and their corresponding behaviors for your assigned cul ture. Several websites might be useful in your research, Your instructor might also suggest other sites where you could find information, Consider the following: + Global Negotiation Resources: http://www. globalnegotiationresources.com/resources! countries! This site provides a wealth of information on over 50 countries, including cultural perspectives and preferences, especially as they might apply to negotiation + Negotiation.biz: http:/www.negotiation.bizl ‘countries. This site is a resource for those interested in studying cross-cultural negotiation. ‘The site provides country-specific information regarding coustry characteristics and values that right impact negotiation, + US. Department of State Country Background ‘Notes: htip://wwwsstate gov. This isan extremely informative site that is maintained by the US. Department of State and can provide valuable information for this assignment. +The Economist Country Profiles: htp:fiwrww. economist.com/countries/. The Economist ‘magazine is well known its Intelligence Unit— although less well known—is an invaluable resource for anyone interested in international business +The CIA World Factbook: https://www:cia.gov! library/publications/the-world-factbook/. This isa complete and detailed source of information about all countries on the globe—useful for this exercise and others as wel Based on the research carried out, each group should: + meet to discuss each cultural value and some of the behavior that it produces; + next, make some predictions about how ‘negotiators from that culture act asa result; + finally, come up with a strategic negotiating response for each of the predicted negotiating behaviors, In class your group will have 10-15 minutes to present its research findings and suggested negotiat ing strategy. The instructor will wrap things up with a discussion of cultural differences and their relationship to international business negotiations Source: Adapted from Whatley, A. (1979). Training for the cross cultural mind. Washington, DC: SIETAR.