THE TOP TEN WAYS THAT CULTURE CAN AFFECT INTERNATIONAL NEGOTIATIONS
Clarke Ricks School of Business,
Liberty University
BUSI 690: Policy and Strategy in Global Competition
Dr. Hicks
May 7, 2022
THE TOP TEN WAYS THAT CULTURE CAN AFFECT INTERNATIONAL NEGOTIATIONS
International business deals not only cross borders, they also cross cultures. Culture
profoundly influences how people think, communicate, and behave. It also affects the kinds of
transactions they make and the way they negotiate them. Differences in culture between
business executives—for example, between a Chinese public sector plant manager in Shanghai
and a Canadian division head of a family company in Toronto– can create barriers that impede
or completely stymie the negotiating process.
1. Negotiating goal: Contract or relationship?
Negotiators from different cultures may tend to view the purpose of a negotiation
differently. For deal makers from some cultures, the goal of a business negotiation, first and
foremost, is a signed contract between the parties. Other cultures tend to consider that the
goal of a negotiation is not a signed contract but rather the creation of a relationship between
the two sides. Although the written contact expresses the relationship, the essence of the deal
is the relationship itself. For example in my survey of over 400 persons from twelve
nationalities, reported fully in The Global Negotiator, I found that whereas 74 percent of the
Spanish respondents claimed their goal in a negotiation was a contract, only 33 percent of the
Indian executives had a similar view. The difference in approach may explain why certain Asian
negotiators, whose negotiating goal is often the creation of a relationship, tend to give more
time and effort to negotiation preliminaries, while North Americans often want to rush through
this first phase of deal making. The preliminaries of negotiation, in which the parties seek to get
to know one another thoroughly, are a crucial foundation for a good business relationship. They
may seem less important when the goal is merely a contract.
It is therefore important to determine how your counterparts view the purpose of your
negotiation. If relationship negotiators sit on the other side of the table, merely convincing
them of your ability to deliver on a low-cost contract may not be enough to land you the deal.
You may also have to persuade them, from the very first meeting, that your two organizations
have the potential to build a rewarding relationship over the long term. On the other hand, if
the other side is basically a contract deal maker, trying to build a relationship may be a waste of
time and energy.
2. Negotiating attitude: Win-Lose or Win-Win?
Because of differences in culture, personality, or both, business persons appear to
approach deal making with one of two basic attitudes: that a negotiation is either a process in
which both can gain (win-win) or a struggle in which, of necessity, one side wins and the other
side loses (win-lose). Win –win negotiators see deal making as a collaborative, problem-solving
process; win-lose negotiators view it as confrontational. As you enter negotiations, it is
important to know which type of negotiator is sitting across the table from you. Here too, my
survey revealed significant differences among cultures. For example, whereas 100 percent of
the Japanese respondents claimed that they approached negotiations as a win-win process,
only 33% of the Spanish executives took that view.
3. Personal style: Informal or formal?
Personal style concerns the way a negotiator talks to others, uses titles, dresses, speaks,
and interacts with other persons. Culture strongly influences the personal style of negotiators.
It has been observed, for example, that Germans have a more formal style than Americans. A
negotiator with a formal style insists on addressing counterparts by their titles, avoids personal
anecdotes, and refrains from questions touching on the private or family life of members of the
other negotiating team. A negotiator with an informal style tries to start the discussion on a
first-name basis, quickly seeks to develop a personal, friendly relationship with the other team,
and may take off his jacket and roll up his sleeves when deal making begins in earnest. Each
culture has its own formalities with their own special meanings. They are another means of
communication among the persons sharing that culture, another form of adhesive that binds
them together as a community. For an American, calling someone by the first name is an act of
friendship and therefore a good thing. For a Japanese, the use of the first name at a first
meeting is an act of disrespect and therefore bad.
Negotiators in foreign cultures must respect appropriate formalities. As a general rule, it is
always safer to adopt a formal posture and move to an informal stance, if the situation
warrants it, than to assume an informal style too quickly.
4. Communication: Direct or indirect?
Methods of communication vary among cultures. Some emphasize direct and simple
methods of communication; others rely heavily on indirect and complex methods. The latter
may use circumlocutions, figurative forms of speech, facial expressions, gestures and other
kinds of body language. In a culture that values directness, such as the American or the Israeli,
you can expect to receive a clear and definite response to your proposals and questions. In
cultures that rely on indirect communication, such as the Japanese, reaction to your proposals
may be gained by interpreting seemingly vague comments, gestures, and other signs. What you
will not receive at a first meeting is a definite commitment or rejection.
The confrontation of these styles of communication in the same negotiation can lead to
friction. For example, the indirect ways Japanese negotiators express disapproval have often led
foreign business executives to believe that their proposals were still under consideration when
in fact the Japanese side had rejected them. In the Camp David negotiations that led to a peace
treaty between Egypt and Israel, the Israeli preference for direct forms of communication and
the Egyptian tendency to favor indirect forms sometimes exacerbated relations between the
two sides. The Egyptians interpreted Israeli directness as aggressiveness and, therefore, an
insult. The Israelis viewed Egyptian indirectness with impatience and suspected them of
insincerity, of not saying what they meant.
5. Sensitivity to time: High or low?
Discussions of national negotiating styles invariably treat a particular culture’s attitudes
toward time. It is said that Germans are always punctual, Latins are habitually late, Japanese
negotiate slowly, and Americans are quick to make a deal. Commentators sometimes claim that
some cultures value time more than others, but this observation may not be an accurate
characterization of the situation. Rather, negotiators may value differently the amount of time
devoted to and measured against the goal pursued. For Americans, the deal is a signed contract
and time is money, so they want to make a deal quickly. Americans therefore try to reduce
formalities to a minimum and get down to business quickly. Japanese and other Asians, whose
goal is to create a relationship rather than simply sign a contract, need to invest time in the
negotiating process so that the parties can get to know one another well and determine
whether they wish to embark on a long-term relationship. They may consider aggressive
attempts to shorten the negotiating time as efforts to hide something.
This difference between the Indian and U.S. attitudes toward time was clearly revealed in
my survey. Among the twelve nationalities surveyed, the Indians had the largest percentage of
persons who considered themselves to have a low sensitivity to time
6. Emotionalism: High or low?
Accounts of negotiating behavior in other cultures almost always point to a particular
group’s tendency to act emotionally. According to the stereotype, Latin Americans show their
emotions at the negotiating table, while the Japanese and many other Asians hide their
feelings. Obviously, individual personality plays a role here. There are passive Latins and hot-
headed Japanese. Nonetheless, various cultures have different rules as to the appropriateness
and form of displaying emotions, and these rules are brought to the negotiating table as well.
Deal makers should seek to learn them.
7. Form of agreement: General or specific?
Whether a negotiator’s goal is a contract or a relationship, the negotiated transaction in
almost all cases will be encapsulated in some sort of written agreement. Cultural factors
influence the form of the written agreement that the parties make. Generally, Americans prefer
very detailed contracts that attempt to anticipate all possible circumstances and eventualities,
no matter how unlikely. Why? Because the deal is the contract itself, and one must refer to the
contract to handle new situations that may arise. Other cultures, such as the Chinese, prefer a
contract in the form of general principles rather than detailed rules. Why? Because, it is
claimed, that the essence of the deal is the relationship between the parties. If unexpected
circumstances arise, the parties should look primarily to their relationship, not the contract, to
solve the problem. So, in some cases, a Chinese negotiator may interpret the American drive to
stipulate all contingencies as evidence of a lack of confidence in the stability of the underlying
relationship.
Among all respondents in my survey, 78 percent preferred specific agreements, while only
22 percent preferred general agreements. On the other hand, the degree of intensity of
responses on the question varied considerably among cultural groups. While only 11 percent of
the English favored general agreements, 45.5 percent of the Japanese and of the Germans
claimed to do so.
Some experienced executives argue that differences over the form of an agreement are
caused more by unequal bargaining power between the parties than by culture. In a situation of
unequal bargaining power, the stronger party always seeks a detailed agreement to “lock up
the deal” in all its possible dimensions, while the weaker party prefers a general agreement to
give it room to “wiggle out” of adverse circumstances that are bound to occur. According to this
view, it is context, not culture that determines this negotiating trait.
8. Building an agreement: Bottom up or top down?
Related to the form of the agreement is the question of whether negotiating a business
deal is an inductive or a deductive process. Does it start from an agreement on general
principles and proceed to specific items, or does it begin with an agreement on specifics, such
as price, delivery date, and product quality, the sum total of which becomes the contract?
Different cultures tend to emphasize one approach over the other. Some observers believe that
the French prefer to begin with agreement on general principles, while Americans tend to seek
agreement first on specifics. For Americans, negotiating a deal is basically making a series of
compromises and trade-offs on a long list of particulars. For the French, the essence is to agree
on basic principles that will guide and indeed determine the negotiation process afterward. The
agreed-upon general principles become the framework, the skeleton, upon which the contract
is built.
My survey of negotiating styles found that the French, the Argentineans, and the Indians
tended to view deal making as a top down (deductive process); while the Japanese, the
Mexicans and the Brazilians tended to see it as a bottom up (inductive) process. A further
difference in negotiating style is seen in the dichotomy between the “building-down” approach
and the “building-up approach.” In the building down approach, the negotiator begins by
presenting the maximum deal if the other side accepts all the stated conditions. In the building-
up approach, one side begins by proposing a minimum deal that can be broadened and
increased as the other party accepts additional conditions. According to many observers,
Americans tend to favor the building-down approach, while the Japanese tend to prefer the
building-up style of negotiating a contract.
9. Team organization: One leader or group consensus?
In any negotiation, it is important to know how the other side is organized, who has the
authority to make commitments, and how decisions are made. Culture is one important factor
that affects how executives organize themselves to negotiate a deal. Some cultures emphasize
the individual while others stress the group. These values may influence the organization of
each side in a negotiation. One extreme is the negotiating team with a supreme leader who has
complete authority to decide all matters. Many American teams tend to follow this approach.
Other cultures, notably the Japanese and the Chinese, stress team negotiation and consensus
decision making. When you negotiate with such a team, it may not be apparent who the leader
is and who has the authority to commit the side. In the first type, the negotiating team is
usually small; in the second it is often large. For example, in negotiations in China on a major
deal, it would not be uncommon for the Americans to arrive at the table with three people and
for the Chinese to show up with ten. Similarly, the one-leader team is usually prepared to make
commitments more quickly than a negotiating team organized on the basis of consensus. As a
result, the consensus type of organization usually takes more time to negotiate a deal.
Among all respondents in my survey, 59 percent tended to prefer one leader while 41
percent preferred a more consensual form of organization. On the other hand, the various
cultural groups showed a wide variety of preferences on the question of team organization. The
group with the strongest preference for consensus organization was the French. Many studies
have noted French individualism. (Edward T. Hall and M. Reed Hall, Understanding Cultural
Difference, Yarmouth, Maine: Intercultural Press, 1990.)
Perhaps a consensual arrangement in the individual French person’s eyes is the best way
to protect that individualism. Despite the Japanese reputation for consensus arrangements,
only 45 percent of the Japanese respondents claimed to prefer a negotiating team based on
consensus. The Brazilians, the Chinese, and the Mexicans to a far greater degree than any other
groups preferred one-person leadership, a reflection perhaps of the political traditions of those
countries.
10. Risk taking: High or low?
Research supports the conclusion that certain cultures are more risk averse than others.
(Geert Hofstede, Culture’s Consequences: International Differences in Work-related
Values (Newbury Park, CA: Sage Publications, 1980)
In deal making, the negotiators’ cultures can affect the willingness of one side to take risks
—to divulge information, try new approaches, and tolerate uncertainties in a proposed course
of action. The Japanese, with their emphasis on requiring large amount of information and their
intricate group decision-making process, tend to be risk averse. Americans, by comparison, are
risk takers.
Among all respondents in the author’s survey, approximately 70 percent claimed a
tendency toward risk taking while only 30 percent characterized themselves as low risk takers.
Among cultures, the responses to this question showed significant variations. The Japanese are
said to be highly risk averse in negotiations, and this tendency was affirmed by the survey,
which found Japanese respondents to be the most risk averse of the twelve cultures. Americans
in the survey, by comparison, considered themselves risk takers, but an even higher percentage
of the French, the British, and the Indians claimed to be risk takers.
Faced with a risk-averse counterpart, how should a deal maker proceed? The following
are a few steps to consider:
1. Do not rush the negotiating process. A negotiation that is moving too fast for one of the
parties only heightens that person’s perception of the risks in the proposed deal.
2. Devote attention to proposing rules and mechanisms that will reduce the apparent risks
in the deal for the other side.
3. Make sure that your counterpart has sufficient information about you, your company,
and the proposed deal.
4. Focus your efforts on building a relationship and fostering trust between the parties.
5. Consider restructuring the deal so that the deal proceeds step by step in a series of
increments, rather than all at once.
