Laura van de Geer

15 May 2011

Negotiation between different Cultures

In its basic form, negotiation is a method of conflict resolution. It is a problem-solving process in

which two or more parties attempt to resolve their disagreement or conflict in a manner, and
through a process, that is mutually agreeable. Whereas the general concept of negotiation is easy
enough to understand, in practice it can be an extremely difficult proposition. Opposing views about
what is right and wrong, disagreement on what is fair and equitable, understanding each other’s
message and form of communication, and even the procedures that will be used to conduct
negotiations are but a few of the hurdles that negotiators will encounter.

Negotiation is further complicated when the parties find themselves negotiating across dissimilar
cultures. “Culture is a powerful factor in shaping how people think, communicate and behave. It
therefore affects how they negotiate”.

Concept of Cross-culturalNegotiation

Cross-cultural negotiations are negotiations where the negotiating parties belong to different
cultures and do not share the same ways of thinking, feeling and behaving. Indeed, negotiations in
foreign markets are conducted in more or less unfamiliar cultural environments and this is what
differentiates national and international business negotiations.

Negotiations including two or more cultures are far more complicated than negotiations within a
culture, because the negotiators simultaneously have to take both different styles of negotiating and
cultural variables into consideration. When two people communicate, they rarely talk about
preciously the same subject, because effective meaning is flavored by each person’s own cognitive
world and cultural conditioning. When negotiating internationally, this translates into anticipating
culturally related ideas that are most likely to be understood by a person of a given culture.
Discussions are frequently impeded because two sides seem to be pursuing different paths of logic;
in any cross-cultural context, the potential for misunderstanding and talking past each other is great.
Members of one culture may focus on different aspects of an agreement (legal, financial) from
members of another culture (personal relationships). The implementation of a business agreement
may be stressed in one culture while the range and prevention of practical problems may be
emphasized in another. In some cultures, the attention of people is directed more towards the
specific details of the agreement (documenting the agreement) while other cultures focus on how
promises can be kept (process and implementation)

Why Culture affects Negotiation

Why does culture affects negotiation? Or the reason behind differences in negotiation?

The behaviors that negotiators from a culture characteristically use to enact a negotiation are related
to other features of that culture including its values and norms. From the research findings of Geert
Hofstede, the following features or dimensions of culture seen to be related to the variability in
negotiation across cultures:

* Individualism Vs Collectivism

* Egalitarianism Vs Hierarchy

* Masculinity Vs Femininity

* High Uncertainty Avoidance Vs Low Uncertainty Avoidance

* High context Vs Low context Communications

1) Individualism Index (IDV) Vs Collectivism:

This dimension focuses on how much a culture reinforces individual achievement and interpersonal
relationships. A high individualism culture promotes personal independence and gives self-interest a
high priority among important life values, whereas collectivism promotes the interdependence of
individuals with the social groups to which they belong and supports collective interests over self-
interests as the predominant life value.

Low IDV (Collectivist) High IDV (Individualist)

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

Identity is based on social network Identity based on the individual

Management of groups Management of people

2) Power Distance Index (PDI):

PDI focuses on the degree of equality or inequality between people in the country’s society. A high
PDI culture aspires to social equality, especially in political, social and economic affairs. On the other
hand, a low PDI culture accepts social inequality in political, social and economic affairs. It
emphasizes differentiated social status that implies social power.

Low PDI High PDI

Inequalities among people should be minimized Inequalities among people are both expected
and desired

Interdependence between less and more powerful Less powerful people should be dependent
people on the more powerful

Subordinates expect to be consulted Subordinates expect to be told

Decentralization preferred Centralization preferred

 3) Masculinity & Femininity Index:

This measures the distribution of roles between sexes. High Masculinity experiences a high degree of
gender differentiation whereas Low Masculinity has a low level of differentiation and discrimination
between genders.

Femininity Masculinity

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

People and relationships are important Money and things are important

Managers use intuition & strive for consensus Managers expected to be decisive & assertive

4) Uncertainty Avoidance Index (UAI):

The dimension of uncertainty avoidance refers to the extent to which people in a culture feel
threatened by uncertain or unknown situations.

Low UAI High UAI

Uncertainty is a normal feature of life Uncertainty inherent in life is felt as a

continuous threat that must be fought

Low stress, subjective feeling of well being High stress, subjective feeling of anxiety

Aggression and emotions should not be shown Aggression and emotions at proper times
may be expressed

Few and general laws and rules Many and precise laws and rules

Belief in generalist and common sense Belief in experts and technical solutions

5) High context & Low context Communication:

High and low-context refers to how much of the meaning of a communication comes from the
surrounding context compared to the words that are actually spoken.

Low Context Culture High Context Culture

Values individualism Values group sense

Tends to develop transitory personal relationships Tends to take time to cultivate and establish
permanent person relationships

Tends to use “logic” to present ideas Tends to use more “feeling” in expression

Emphasize linear logic Emphasize spiral logic

Perceive highly verbal persons favorably perceive highly verbal persons less favorably

These 5 dimensions can all have a big influence on the way countries negotiate and the way they
adapt their negotiation styles to the different conflicts. When doing business with other cultures you
will always have to consider these 5 dimensions in order to reach a positive outcome and diminish
the risk in having trouble when negotiating between cultures.

When two or more parties (individuals, clubs, nations, etc) reach a position where their interests or
values come in conflict with one another, there are several ways in which to resolve the conflict. If
one party is significantly more dominant (powerful) than another, they could attempt to simply
enforce their will on the other. Other times, both parties may choose to enlist the aid of an outside
neutral party to “mediate” the issue. Generally, the mediator’s role is that of a facilitator, bringing
the parties together and assisting them to work through the particular issue. Another tool for conflict
resolution involves the use of an “arbitrator.” There are generally two types of arbitration; binding
and non-binding. In both cases the arbitrator hears the positions of both parties and then renders a
decision. In binding arbitration, both parties are “bound” to the decision. Under the non-binding
case, either party is free to disregard the arbitrator’s decision.

Another approach would be to attempt to settle the issue through a process in which the parties
interact in a manner that will eventually bring about an agreement that would resolve the issue in
controversy. The third approach falls into the realm of negotiations with definitional characteristics
that separate it from the other types of resolution.