Negotiation

Alternative Dispute Resolution
Types
Arbitration Collaborative divorce Collaborative law Conciliation Conflict resolution Dispute resolution Mediation Negotiation Online dispute resolution Party-directed mediation Restorative justice
See also
Litigation

Negotiation is a dialogue intended to resolve disputes, to produce an agreement upon courses of action, to bargain for individual or collective advantage, or to craft outcomes to satisfy various interests. It is the primary method of alternative dispute resolution.

Negotiation occurs in business, non-profit organizations, government branches, legal proceedings, among nations and in personal situations such as marriage, divorce, parenting, and everyday life. The study of the subject is called negotiation theory. Professional negotiators are often specialized, such as union negotiators, leverage buyout negotiators, peace negotiators, hostage negotiators, or may work under other titles, such as diplomats, legislators or brokers.

Contents 1 Etymology 2 Approaches to negotiation 2.1 The advocate's approach 2.2 The new creative approach[3] 2.2.1 10 Ways to Generate More Ideas [9] 2.3 Other negotiation styles 2.4 Adversary or Partner? 3 Emotion in negotiation 3.1 Positive affect in negotiation 3.2 Negative affect in negotiation 3.3 Conditions for emotion affect in negotiation 3.4 The effect of the partner’s emotions 3.5 Problems with lab negotiation studies 4 The pervasive impact of culture on international negotiations[28] 4.1 Differences at the level of language 4.2 Nonverbal behaviors 4.3 Distinctive negotiation behaviors of 15 cultural groups 4.4 Differences in managerial values as pertinent to negotiations 4.4.1 Objectivity 4.4.2 Competitiveness and Equality 4.4.3 Time 4.5 Differences in thinking and decision-making processes 4.6 Implications for managers and negotiators 5 Team negotiations 6 See also 7 Notes 8 References and further reading

Etymology

The word "negotiation" is from the Latin expression, "negotiatus", past participle of negotiare which means "to carry on business". "Negotium" means literally "not leisure".

Approaches to negotiation

Negotiation typically manifests itself with a trained negotiator acting on behalf of a particular organization or position. It can be compared to mediation where a disinterested third party listens to each sides' arguments and attempts to help craft an agreement between the parties. It is also related to arbitration which, as with a legal proceeding, both sides make an argument as to the merits of their "case" and then the arbitrator decides the outcome for both parties.

There are many different ways to segment negotiation to gain a greater understanding of the essential parts. One view of negotiation involves three basic elements: process, behavior and substance. The process refers to how the parties negotiate: the context of the negotiations, the parties to the negotiations, the tactics used by the parties, and the sequence and stages in which all of these play out. Behavior refers to the relationships among these parties, the communication between them and the styles they adopt. The substance refers to what the parties negotiate over: the agenda, the issues (positions and - more helpfully - interests), the options, and the agreement(s) reached at the end.

Another view of negotiation comprises 4 elements: strategy, process and tools, and tactics. Strategy comprises the top level goals - typically including relationship and the final outcome. Processes and tools include the steps that will be followed and the roles taken in both preparing for and negotiating with the other parties. Tactics include more detailed statements and actions and responses to others' statements and actions. Some add to this persuasion and influence, asserting that these have become integral to modern day negotiation success, and so should not be omitted.

Skilled negotiators may use a variety of tactics ranging from negotiation hypnosis, to a straight forward presentation of demands or setting of preconditions to more deceptive approaches such as cherry picking. Intimidation and salami tactics may also play a part in swaying the outcome of negotiations.

Another negotiation tactic is bad guy/good guy. Bad guy/good guy tactic is when one negotiator acts as a bad guy by using anger and threats. The other negotiator acts as a good guy by being considerate and understanding. The good guy blames the bad guy for all the difficulties while trying to get concessions and agreement from the opponent.^[1]

The advocate's approach

In the advocacy approach, a skilled negotiator usually serves as advocate for one party to the negotiation and attempts to obtain the most favorable outcomes possible for that party. In this process the negotiator attempts to determine the minimum outcome(s) the other party is (or parties are) willing to accept, then adjusts their demands accordingly. A "successful" negotiation in the advocacy approach is when the negotiator is able to obtain all or most of the outcomes their party desires, but without driving the other party to permanently break off negotiations, unless the best alternative to a negotiated agreement (BATNA) is acceptable.

Traditional negotiating is sometimes called win-lose because of the assumption of a fixed "pie", that one person's gain results in another person's loss. This is only true, however, if only a single issue needs to be resolved, such as a price in a simple sales negotiation.

During the 1960s, Gerard I. Nierenberg recognized the role of negotiation in resolving disputes in personal, business and international relations. He published The Art of Negotiating, where he states that the philosophies of the negotiators determine the direction a negotiation takes. His Everybody Wins philosophy assures that all parties benefit from the negotiation process which also produces more successful outcomes than the adversarial “winner takes all” approach.

Getting to YES was published by Roger Fisher and William Ury as part of the Harvard negotiation project. The book's approach, referred to as Principled Negotiation, is also sometimes called mutual gains bargaining. The mutual gains approach has been effectively applied in environmental situations (see Lawrence Susskind and Adil Najam) as well as labor relations where the parties (e.g. management and a labor union) frame the negotiation as "problem solving". If multiple issues are discussed, differences in the parties' preferences make win-win negotiation possible. For example, in a labor negotiation, the union might prefer job security over wage gains. If the employers have opposite preferences, a trade is possible that is beneficial to both parties. Such a negotiation is therefore not an adversarial zero-sum game. Principled Negotiation method consists of four main steps: separating the people from the problem, focus on interests, not positions, generating a variety of possibilities before deciding what to do and insisting that the result be based on some objective standard.^[2]

There are a tremendous number of other scholars who have contributed to the field of negotiation, including Holly Schroth and Timothy Dayonot at UC Berkeley, Gerard E. Watzke at Tulane University, Sara Cobb at George Mason University, Len Riskin at the University of Missouri, Howard Raiffa at Harvard, Robert McKersie and Lawrence Susskind at MIT, and Adil Najam and Jeswald Salacuse at The Fletcher School of Law and Diplomacy.

The new creative approach^[3]

Perhaps the most famous negotiation parable involves an argument over an orange. The most obvious approach was to simply cut it in half, each person getting a fair share. But, when the negotiators began talking to each other, exchanging information about their interests, a better solution to the problem became obvious. The person wanting the orange for juice for breakfast took that part and the person wanting the rind for making marmalade took that part. Both sides ended up with more. Neither agreement is particularly creative. The parable of the orange becomes a story about creativity when both parties decide to cooperate in planting an orange tree or even an orchard. In a similar way, Boeing buys composite plastic wings for its new 787 Dreamliner designed and manufactured by Japanese suppliers, and then sells the completed 787s back to Japanese airlines, all with a nice subsidy from the Japanese government. This is what is meant by creativity in negotiations. At business schools these days much is being learned about creative processes. Courses are offered and dissertations proffered with “innovation” as the key buzz word at academic conferences and in corporate boardrooms. And, the more heard about innovation and creative processes the greater is the appreciation that the Japanese approach to negotiations, by nature, uses many of the techniques commonly emphasized in any discussion of creative processes. Indeed, there appears to be a deeply fundamental explanation why the Japanese have been able to build such a successful society despite their lack of natural resources and relative isolation. While Japanese society does have its own obstacles to creativity – hierarchy and collectivism are two – they have developed a negotiation style that in many ways obviates such disadvantages. Indeed, the ten new rules for global negotiations advocated by Hernandez and Graham^[4] nicely coincide with an approach that comes naturally to the Japanese:

1. Accept only creative outcomes
2. Understand cultures, especially your own.
3. Don’t just adjust to cultural differences, exploit them.
4. Gather intelligence and reconnoiter the terrain.
5. Design the information flow and process of meetings.
6. Invest in personal relationships.
7. Persuade with questions. Seek information and understanding.
8. Make no concessions until the end.
9. Use techniques of creativity
10. Continue creativity after negotiations.

Beyond the practices of the Japanese, credit must also be given to the luminaries in field that have long advocated creativity in negotiations. Howard Raiffa^[5] and his colleagues recommend: …the teams should think and plan together informally and do some joint brainstorming, which can be thought of as “dialoguing” or “prenegotiating.” The two sides make no tradeoffs, commitments, or arguments about how to divide the pie at this early stage. Roger Fisher and William Ury title their Chapter 4 in Getting to Yes,^[6] “Invent[ing] Options for Mutual Gain.” David Lax and James Sebenius, in their important new book, 3D-Negotiations,^[7] go past getting to yes, and talk about “creative agreements” and “great agreements.” Lawrence Susskind^[8] and his associates recommend “parallel informal negotiations” toward building creative negotiation outcomes. These ideas must be pushed to the forefront in thinking about negotiations. The field generally is still stuck in the past, talking about “making deals” and “solving problems” as above. Even the use of terms like “win-win” expose the vestiges of the old competitive thinking. The point is that a negotiation is not something that can be won or lost, and the competitive metaphor limits creativity. The problem-solving metaphor does as well. Thus, the first rule of negotiations is: Accept only creative outcomes! Lynda Lawrence at IdeaWorks, a Newport Beach consulting firm ([4]) has developed a most useful list of ways to generate more ideas during negotiations:

10 Ways to Generate More Ideas ^[9]

1. Establish common goals of what this "collaboration" would create. A more workable deal? Some common long term goals? A closer partnership?
2. Establish the rules of engagement. The purpose of the exercise is to resolve differences in creative ways that work better for both parties. All ideas are possibilities, and research shows that combining ideas from different cultures can result in better outcomes than those from a single culture.
3. Trust is key, and difficult to establish in many cultures. Certain techniques might speed that process a little. Being offsite, for example. Establishing physical proximity that unconsciously signals intimacy.
4. Add diversity (gender, culture, extroverts, different work specialties, experts, outsiders) to the group. Indeed, the diversity associated with international teams and alliances is the real goldmine of creativity in negotiations.
5. Use storytelling. This both helps establish who you are and what point of view you are bringing to this collaboration.
6. Work in small groups. Add physical movement. Tell the participants to relax, play, sing, have fun, and silence is ok.
7. Work holistically and using visuals. If, for example, there are three sticking points where neither side is happy, agree to work on those points by spending a short time – 10 minutes – on each point where both sides offer "crazy" suggestions. Use techniques of improvisation. Neither side should be offended by the crazy ideas. No one should criticize. Explain that by exploring crazy ideas that better ideas are often generated.
8. Sleep on it. This enables the unconscious to work on the problems, and gives negotiators time to collect opinions before meeting again the next day. Other kinds of breaks, coffee, etc. are also helpful. The overnight part is particularly important. Anthropologist and consumer expert Clotaire Rapaille ^[10] suggests that the transitions between wakefulness and sleep allow new kinds of thinking “…calming their brainwaves, getting them to that tranquil point just before sleep” (page 8).
9. Doing this process over several sessions allows both sides to feel that progress is being made, and actually generates better and more polished ideas that both sides can invest in.
10. It is the process of creating something together, rather than the specific proposals, which creates bonding around a shared task and establishes new ways of working together. Each side feels honored and all can feel that something is being accomplished.

For the Japanese reader, some of these will be quite familiar. It’s easy to get Japanese in close physical proximity (#3), they’ve been living that way for millennia. In Japanese companies there are not so much marketing specialists as different from engineers as different from finance analysts. Each executive may have worked in several functional areas, limiting the “chimney effect” often associated disparagingly with American firms (#4). Physical movement (#6) – picture the start of the day at the typical Japanese factory. The Japanese also seem to work best in small groups (#6). Silence is definitely ok (part of #6). The Japanese invented karaoke (#6 and singing). The Japanese have difficulty criticizing others, especially foreigners (#7). The use of visuals and holistic thinking are natural for Japanese (#7). Breaks are also a common procedure for Japanese (#8). Japanese will work better with people with whom they are familiar (#9).

It should also be noted that some of these techniques will seem foreign to Japanese negotiators. For example, diversity is not a strong suit for Japanese – purposefully adding women and other elements of diversity (#4) to their groups would seem odd. However, the two key things the Japanese do in negotiation that others can and should learn are: First, the Japanese are the absolute champion information vacuums on the planet. They keep their mouths shut and let everyone else do the talking. Thus, they use the diversity of their international colleagues (customers, suppliers, competitors, scientists, etc.) to a greater extent than any other society. Often this is denigrated as copying and borrowing, but in fact being open to everyone’s ideas has always been the key to creativity and human progress. While the Japanese, like everyone else around the world, are ethnocentric, they still very much respect foreign ideas. Second, the Japanese will only work with dolphins (cooperative negotiators), that is, when they have a choice. Trust and creativity go hand-in-hand. And, they will work to train their foreign counterparts to behave more cooperatively for the latter’s own good. Witness the 25-year joint venture between Toyota and General Motors for manufacturing small cars in Fremont, CA as a prominent example.

Application of principles of creativity will be appropriate in at least three points during negotiations. Above noted was Howard Raiffa’s suggestion that they be used in pre-negotiation meetings. Second, others advocate their use when impasses are reached. For example, in the negotiations regarding the Rio Urubamba natural gas project in Peru, the involved firms and environmentalist groups reached what at the time seemed to be an irreconcilable difference—roads and a huge pipeline through the pristine forest would be an ecological disaster. The creative solution? Think of the remote gas field as an offshore platform, run the pipeline underground, and fly in personnel and equipment as needed.

Finally, even when negotiators have arrived at “yes,” a scheduled review of the agreement may actually move the relationship past “yes” to truly creative outcomes. Perhaps such a review might be scheduled six months after implementation of the agreement has begun. But, the point is time must be set aside for a creative discussion of how to improve on the agreed to relationship? The emphasis of such a session should always be putting new ideas on the table – the answers to the question “what haven’t we thought of?”

Other negotiation styles

Shell identified five styles/responses to negotiation^[11]. Individuals can often have strong dispositions towards numerous styles; the style used during a negotiation depends on the context and the interests of the other party, among other factors. In addition, styles can change over time.

1. Accommodating: Individuals who enjoy solving the other party’s problems and preserving personal relationships. Accommodators are sensitive to the emotional states, body language, and verbal signals of the other parties. They can, however, feel taken advantage of in situations when the other party places little emphasis on the relationship.
2. Avoiding: Individuals who do not like to negotiate and don’t do it unless warranted. When negotiating, avoiders tend to defer and dodge the confrontational aspects of negotiating; however, they may be perceived as tactful and diplomatic.
3. Collaborating: Individuals who enjoy negotiations that involve solving tough problems in creative ways. Collaborators are good at using negotiations to understand the concerns and interests of the other parties. They can, however, create problems by transforming simple situations into more complex ones.
4. Competing: Individuals who enjoy negotiations because they present an opportunity to win something. Competitive negotiators have strong instincts for all aspects of negotiating and are often strategic. Because their style can dominate the bargaining process, competitive negotiators often neglect the importance of relationships.
5. Compromising: Individuals who are eager to close the deal by doing what is fair and equal for all parties involved in the negotiation. Compromisers can be useful when there is limited time to complete the deal; however, compromisers often unnecessarily rush the negotiation process and make concessions too quickly.

Adversary or Partner?

Clearly, these two basically different ways of negotiating will require different approaches. To ignore this can be devastating for the result, but it all too often happens. Because in the distributive approach each negotiator is battling for the largest possible piece of the pie, it may be quite appropriate - within certain limits - to regard the other side more as an adversary than a partner and to take a somewhat harder line. This would however be less appropriate if the idea were to hammer out an arrangement that is in the best interest of both sides. If both win, it's only of secondary importance which one has the greater advantage. A good agreement is not one with maximum gain, but optimum gain. This does not by any means suggest that we should give up our own advantage for nothing. But a cooperative attitude will regularly pay dividends. What is gained is not at the expense of the other, but with him.^[12]

Emotion in negotiation

Emotions play an important part in the negotiation process, although it is only in recent years that their effect is being studied. Emotions have the potential to play either a positive or negative role in negotiation. During negotiations, the decision as to whether or not to settle, rests in part on emotional factors. Negative emotions can cause intense and even irrational behavior, and can cause conflicts to escalate and negotiations to break down, but may be instrumental in attaining concessions. On the other hand, positive emotions often facilitate reaching an agreement and help to maximize joint gains, but can also be instrumental in attaining concessions. Positive and negative discrete emotions can be strategically displayed to influence task and relational outcomes ^[13] and may play out differently across cultural boundaries ^[14].

Affect effect: Dispositional affects affect the various stages of the negotiation process: which strategies are planned to be used, which strategies are actually chosen,^[15], the way the other party and his or her intentions are perceived,^[16] their willingness to reach an agreement and the final negotiated outcomes.^[17] Positive affectivity (PA) and negative affectivity (NA) of one or more of the negotiating sides can lead to very different outcomes.

Positive affect in negotiation

Even before the negotiation process starts, people in a positive mood have more confidence,^[18] and higher tendencies to plan to use a cooperative strategy.^[15] During the negotiation, negotiators who are in a positive mood tend to enjoy the interaction more, show less contentious behavior, use less aggressive tactics^[19] and more cooperative strategies.^[15] This in turn increases the likelihood that parties will reach their instrumental goals, and enhance the ability to find integrative gains.^[20] Indeed, compared with negotiators with negative or natural affectivity, negotiators with positive affectivity reached more agreements and tended to honor those agreements more.^[15] Those favorable outcomes are due to better decision making processes, such as flexible thinking, creative problem solving, respect for others' perspectives, willingness to take risks and higher confidence.^[21] Post negotiation positive affect has beneficial consequences as well. It increases satisfaction with achieved outcome and influences one’s desire for future interactions.^[21] The PA aroused by reaching an agreement facilitates the dyadic relationship, which result in affective commitment that sets the stage for subsequent interactions.^[21]
PA also has its drawbacks: it distorts perception of self performance, such that performance is judged to be relatively better than it actually is.^[18] Thus, studies involving self reports on achieved outcomes might be biased.

Negative affect in negotiation

Negative affect has detrimental effects on various stages in the negotiation process. Although various negative emotions affect negotiation outcomes, by far the most researched is anger. Angry negotiators plan to use more competitive strategies and to cooperate less, even before the negotiation starts.^[15] These competitive strategies are related to reduced joint outcomes. During negotiations, anger disrupts the process by reducing the level of trust, clouding parties' judgment, narrowing parties' focus of attention and changing their central goal from reaching agreement to retaliating against the other side.^[19] Angry negotiators pay less attention to opponent’s interests and are less accurate in judging their interests, thus achieve lower joint gains.^[22] Moreover, because anger makes negotiators more self-centered in their preferences, it increases the likelihood that they will reject profitable offers.^[19] Opponents who really get angry (or cry, or otherwise lose control) are more likely to make errors:make sure they are in your favor.^[1] Anger doesn’t help in achieving negotiation goals either: it reduces joint gains^[15] and does not help to boost personal gains, as angry negotiators don’t succeed in claiming more for themselves.^[22] Moreover, negative emotions lead to acceptance of settlements that are not in the positive utility function but rather have a negative utility.^[23] However, expression of negative emotions during negotiation can sometimes be beneficial: legitimately expressed anger can be an effective way to show one's commitment, sincerity, and needs.^[19] Moreover, although NA reduces gains in integrative tasks, it is a better strategy than PA in distributive tasks (such as zero-sum).^[21] In his work on negative affect arousal and white noise, Seidner found support for the existence of a negative affect arousal mechanism through observations regarding the devaluation of speakers from other ethnic origins." Negotiation may be negatively affected, in turn, by submerged hostility toward an ethnic or gender group.^[24]

Conditions for emotion affect in negotiation

Research indicates that negotiator’s emotions do not necessarily affect the negotiation process. Albarracın et al. (2003) suggested that there are two conditions for emotional affect, both related to the ability (presence of environmental or cognitive disturbances) and the motivation:

1. Identification of the affect: requires high motivation, high ability or both.
2. Determination that the affect is relevant and important for the judgment: requires that either the motivation, the ability or both are low.

According to this model, emotions are expected to affect negotiations only when one is high and the other is low. When both ability and motivation are low the affect will not be identified, and when both are high the affect will be identify but discounted as irrelevant for judgment.^[25] A possible implication of this model is, for example, that the positive effects PA has on negotiations (as described above) will be seen only when either motivation or ability are low.

The effect of the partner’s emotions

Most studies on emotion in negotiations focus on the effect of the negotiator’s own emotions on the process. However, what the other party feels might be just as important, as group emotions are known to affect processes both at the group and the personal levels. When it comes to negotiations, trust in the other party is a necessary condition for its emotion to affect,^[16] and visibility enhances the effect.^[20] Emotions contribute to negotiation processes by signaling what one feels and thinks and can thus prevent the other party from engaging in destructive behaviors and to indicate what steps should be taken next: PA signals to keep in the same way, while NA points that mental or behavioral adjustments are needed.^[21]
Partner’s emotions can have two basic effects on negotiator’s emotions and behavior: mimetic/ reciprocal or complementary.^[17] For example, disappointment or sadness might lead to compassion and more cooperation.^[21] In a study by Butt et al. (2005) which simulated real multi-phase negotiation, most people reacted to the partner’s emotions in reciprocal, rather than complementary, manner. Specific emotions were found to have different effects on the opponent’s feelings and strategies chosen:

• Anger caused the opponents to place lower demands and to concede more in a zero-sum negotiation, but also to evaluate the negotiation less favorably.^[26] It provoked both dominating and yielding behaviors of the opponent.^[17].
• Pride led to more integrative and compromise strategies by the partner.^[17]
• Guilt or regret expressed by the negotiator led to better impression of him by the opponent, however it also led the opponent to place higher demands.^[16]. On the other hand, personal guilt was related to more satisfaction with what one achieved.^[21]
• Worry or disappointment left bad impression on the opponent, but led to relatively lower demands by the opponent.^[16]

Problems with lab negotiation studies

Negotiation is a rather complex interaction. Capturing all its complexity is a very difficult task, let alone isolating and controlling only certain aspects of it. For this reason most negotiation studies are done under laboratory conditions, and focus only on some aspects. Although lab studies have their advantages, they do have major drawbacks when studying emotions:

• Emotions in lab studies are usually manipulated and are therefore relatively ‘cold’ (not intense). Although those ‘cold’ emotions might be enough to show effects, they are qualitatively different from the ‘hot’ emotions often experienced during negotiations.^[27]
• In real life there is self-selection to which negotiation one gets into, which effects the emotional commitment, motivation and interests. However this is not the case in lab studies.^[21]
• Lab studies tend to focus on relatively few well defined emotions. Real life scenarios provoke a much wider scale of emotions.^[21]
• Coding the emotions has a double catch: if done by a third side, some emotions might not be detected as the negotiator sublimates them for strategic reasons. Self report measures might overcome this, but they are usually filled only before or after the process, and if filled during the process might interfere with it.^[21]

The pervasive impact of culture on international negotiations^[28]

The primary purpose of this section is to demonstrate the extent of cultural differences in negotiation styles and how these differences can cause problems in international business negotiations. The reader will note that national culture does not determine negotiation behavior. Rather, national culture is one of many factors that influence behavior at the negotiation table, albeit an important one.^[24] For example, gender, organizational culture, international experience, industry or regional background can all be important influences as well.^[29] Of course, stereotypes of all kinds are dangerous, and international negotiators must get to know the people they are working with, not just their culture, country, or company.

The material here is based on systematic study of international negotiation behavior over the last three decades in which the negotiation styles of more than 1,500 businesspeople in 17 countries (21 cultures) were considered.^[30] The work involved interviews with experienced executives and participant observations in the field, as well as behavioral science laboratory work including surveys and analyses of videotaped negotiations. The countries studied were Japan, S. Korea, China (Tianjin, Guangzhou, and Hong Kong), Vietnam, Taiwan, the Philippines, Russia, Israel, Norway, the Czech Republic, Germany, France, the United Kingdom, Spain, Brazil, Mexico, Canada (English-speakers and French-speakers), and the United States. The countries were chosen because they constitute America’s most important present and future trading partners.^[9]

Looking broadly across the several cultures, two important lessons stand out. The first is that regional generalizations very often are not correct. For example, Japanese and Korean negotiation styles are quite similar in some ways, but in other ways they could not be more different. The second lesson learned from the research is that Japan is an exceptional place: On almost every dimension of negotiation style considered, the Japanese are on or near the end of the scale. For example, the Japanese use the lowest amount of eye contact of the cultures studied. Sometimes, Americans are on the other end. But actually, most of the time Americans are somewhere in the middle. The reader will see this evinced in the data presented in this section. The Japanese approach, however, is most distinct, even sui generis.

Cultural differences cause four kinds of problems in international business negotiations, at the levels of:^[31]

• Language
• Nonverbal behaviors
• Values
• Thinking and decision-making processes

The order is important; the problems lower on the list are more serious because they are more subtle. For example, two negotiators would notice immediately if one were speaking Japanese and the other German. The solution to the problem may be as simple as hiring an interpreter or talking in a common third language, or it may be as difficult as learning a language. Regardless of the solution, the problem is obvious.

Cultural differences in nonverbal behaviors, on the other hand, are almost always hidden below our awareness. That is to say, in a face-to-face negotiation participants nonverbally—and more subtly—give off and take in a great deal of information. Some experts argue that this information is more important than verbal information. Almost all this signaling goes on below our levels of consciousness. When the nonverbal signals from foreign partners are different, negotiators are most apt to misinterpret them without even being conscious of the mistake. For example, when a French client consistently interrupts, Americans tend to feel uncomfortable without noticing exactly why. In this manner, interpersonal friction often colors business relationships, goes undetected, and, consequently, goes uncorrected. Differences in values and thinking and decision-making processes are hidden even deeper and therefore are even harder to diagnose and therefore cure. These differences are discussed below, starting with language and nonverbal behaviors.

Differences at the level of language

Translation problems are often substantial in international negotiations. And, when languages are linguistically distant,^[32] greater problems should be anticipated. Particularly daunting can be work in global negotiation. Often the language used is English, but it may be spoken as a second language by most executives at the table. Indeed, native speakers from England, India, and the United States often have trouble understanding one another. Exact translations in international interactions are a goal almost never attained.

Moreover, language differences are sometimes exploited in interesting ways. Many senior executives in foreign countries speak and understand some English, but prefer to speak in their “stronger” native language and use an interpreter. Thus, we've see a senior Russian negotiator asking questions in Russian. The interpreter then translated the question for his American counterpart. While the interpreter spoke, the American’s attention (gaze direction) was given to the interpreter. However, the Russian’s gaze direction was at the American. Therefore, the Russian could carefully and unobtrusively observe the American's facial expressions and nonverbal responses. Additionally, when the American spoke, the senior Russian had twice the response time. Because he understood English, he could formulate his responses during the translation process.

What’s this extra response time worth in a strategic conversation? What’s it worth to be carefully able to observe the nonverbal responses of your top-level counterpart in a high-stakes business negotiation? Simply stated, bilingualism is not a common characteristic for Americans, and therefore competitors with greater language skills are afforded a natural advantage in international commerce.

Additionally, a common complaint heard from American managers regards foreign clients and partners breaking into side conversations in their native languages. At best, it is seen as impolite, and quite often American negotiators are likely to attribute something sinister to the content of the foreign talk—“They’re plotting or telling secrets.” This is a frequent American mistake.

The usual purpose of such side conversations is to straighten out a translation problem. For instance, one Korean may lean over to another and ask, “What’d he say?” Or, the side conversation can regard a disagreement among the foreign team members. Both circumstances should be seen as positive signs by Americans—that is, getting translations straight enhances the efficiency of the interactions, and concessions often follow internal disagreements. But because most Americans speak only one language, neither circumstance is appreciated. By the way, people from other countries are advised to give Americans a brief explanation of the content of their first few side conversations to assuage the sinister attributions.

But, there are problems at the level of language beyond translations and interpreters. Data from simulated negotiations are informative. In the study, the verbal behaviors of negotiators in 15 of the cultures (six negotiators in each of the 15 groups) were videotaped.^[33] The numbers in the body of Exhibit 1 represent the percentages of statements that were classified into each category listed. That is, 7 percent of the statements made by Japanese negotiators were classified as promises, 4 percent as threats, 7 percent as recommendations, and so on. The verbal bargaining behaviors used by the negotiators during the simulations proved to be surprisingly similar across cultures. Negotiations in all 15 cultures were composed primarily of information-exchange tactics—questions and self-disclosures. Note that the Israelis are on the low end of the continuum of self-disclosures. Their 30 percent (near the Japanese, Spaniards, and the English-speaking Canadians at 34 percent) was the lowest across all 15 groups, suggesting that they are the most reticent about giving (that is, communicating) information. Overall, however, the patterns of verbal tactics used were surprisingly similar across the diverse cultures.

Go to Exhibit 1, Verbal Negotiation Tactics, (the “what” of communications) across 15 Cultures: [5]

Nonverbal behaviors

Anthropologist Ray L. Birdwhistell demonstrated that less than 35% of the message in conversations is conveyed by the spoken word while the other 65% is communicated nonverbally.^[34] Albert Mehrabian,^[35] a UCLA psychologist, also parsed where meaning comes from in face-to-face interactions. He reports:

• 7% of the meaning is derived from the words spoken
• 38% from paralinguistic channels, that is, tone of voice, loudness, and other aspects of how things are said
• 55% from facial expressions

Of course, some might quibble with the exact percentages (and many have), but our work also supports the notion that nonverbal behaviors are crucial – how things are said is often more important than what is said.

Exhibit 2 provides analyses of some linguistic aspects and nonverbal behaviors for the 15 videotaped groups, that is, how things are said. Although these efforts merely scratch the surface of these kinds of behavioral analysis, they still provide indications of substantial cultural differences. Note that, once again, the Japanese are at or next to the end of the continuum on almost every dimension of the behaviors listed. Their facial gazing and touching are the least among the 15 groups. Only the Northern Chinese used the word no less frequently, and only the Russians used more silent periods than did the Japanese.

Go to Exhibit 2, Linguistic Aspects of Language and Nonverbal Behaviors (“how” things are said) across 15 Cultures: [6]

A broader examination of the data in Exhibits 1 and 2 reveals a more meaningful conclusion: The variation across cultures is greater when comparing linguistic aspects of language and nonverbal behaviors than when the verbal content of negotiations is considered. For example, notice the great differences between the Japanese and Brazilians in Exhibit 1 vis-à-vis Exhibit 2.

Distinctive negotiation behaviors of 15 cultural groups

Following are further descriptions of the distinctive aspects of each of the 15 cultural groups videotaped. Certainly, conclusions of statistical significant differences between individual cultures cannot be drawn without larger sample sizes. But, the suggested cultural differences are worthwhile to consider briefly.

Japan. Consistent with most descriptions of Japanese negotiation behavior, the results of this analysis suggest their style of interaction is among the least aggressive (or most polite). Threats, commands, and warnings appear to be de-emphasized in favor of the more positive promises, recommendations, and commitments. Particularly indicative of their polite conversational style was their infrequent use of no and you and facial gazing, as well as more frequent silent periods.

Korea. Perhaps one of the more interesting aspects of the analysis is the contrast of the Asian styles of negotiations. Non-Asians often generalize about the Orient; the findings demonstrate, however, that this is a mistake. Korean negotiators used considerably more punishments and commands than did the Japanese. Koreans used the word no and interrupted more than three times as frequently as the Japanese. Moreover, no silent periods occurred between Korean negotiators.

China (Northern). The behaviors of the negotiators from Northern China (i.e., in and around Tianjin) were most remarkable in the emphasis on asking questions (34 percent). Indeed, 70 percent of the statements made by the Chinese negotiators were classified as information-exchange tactics. Other aspects of their behavior were quite similar to the Japanese, particularly the use of no and you and silent periods.

Taiwan. The behavior of the businesspeople in Taiwan was quite different from that in China and Japan but similar to that in Korea. The Chinese on Taiwan were exceptional in the time of facial gazing—on the average, almost 20 of 30 minutes. They asked fewer questions and provided more information (self-disclosures) than did any of the other Asian groups.

Russia. The Russians’ style was quite different from that of any other European group, and, indeed, was quite similar in many respects to the style of the Japanese. They used no and you infrequently and used the most silent periods of any group. Only the Japanese did less facial gazing, and only the Chinese asked a greater percentage of questions.

Israel. The behaviors of the Israeli negotiators were distinctive in three respects. As mentioned above, they used the lowest percentage of self-disclosures, apparently holding their cards relatively closely. Alternatively, they used by far the highest percentages of promises and recommendations, using these persuasive strategies unusually heavily. They were also at the end of the scale on the percentage of normative appeals at 5 percent with the most frequent reference to competitors’ offers. Perhaps most importantly the Israeli negotiators interrupted one another much more frequently than negotiators from any other group. Indeed, this important nonverbal behavior is most likely to blame for the “pushy” stereotype often used by Americans to describe their Israeli negotiation partners.

Germany. The behaviors of the Germans are difficult to characterize because they fell toward the center of almost all the continua. However, the Germans were exceptional in the high percentage of self-disclosures (47 percent) and the low percentage of questions (11 percent).

United Kingdom. The behaviors of the British negotiators were remarkably similar to those of the Americans in all respects. British people believe that most British negotiators have a strong sense of the right way to negotiate and the wrong. Protocol is of great importance. However, the “right way to negotiate” may be a completely different concept for people from different cultures. Some cultures may consider the british negotiation style as extremely cold and arrogant.

Spain. Diga is perhaps a good metaphor for the Spanish approach to negotiations evinced in our data. When you make a phone call in Madrid, the usual greeting on the other end is not hola (“hello”) but is, instead, diga (“speak”). It is not surprising, then, that the Spaniards in the videotaped negotiations likewise used the highest percentage of commands (17 percent) of any of the groups and gave comparatively little information (self-disclosures, only 34 percent). Moreover, they interrupted one another more frequently than any other group, and they used the terms no and you very frequently.

France. The style of the French negotiators was perhaps the most aggressive of all the groups. In particular, they used the highest percentage of threats and warnings (together, 8 percent). They also used interruptions, facial gazing, and no and you very frequently compared with the other groups, and one of the French negotiators touched his partner on the arm during the simulation.

Brazil. The Brazilian businesspeople, like the French and Spanish, were quite aggressive. They used the second-highest percentage of commands of all the groups. On average, the Brazilians said the word no 42 times, you 90 times, and touched one another on the arm about 5 times during 30 minutes of negotiation. Facial gazing was also high.

Mexico. The patterns of Mexican behavior in our negotiations are good reminders of the dangers of regional or language-group generalizations. Both verbal and nonverbal behaviors were quite different than those of their Latin American (Brazilian) or continental (Spanish) cousins. Indeed, Mexicans answer the telephone with the much less demanding bueno (short for “good day”). In many respects, the Mexican behavior was very similar to that of the negotiators from the United States.

French-Speaking Canada. The French-speaking Canadians behaved quite similarly to their continental cousins. Like the negotiators from France, they too used high percentages of threats and warnings, and even more interruptions and eye contact. Such an aggressive interaction style would not mix well with some of the more low-key styles of some of the Asian groups or with English speakers, including English-speaking Canadians.

English-Speaking Canada. The Canadians who speak English as their first language used the lowest percentage of aggressive persuasive tactics (threats, warnings, and punishments totaled only 1 percent) of all 15 groups. Perhaps, as communications researchers suggest, such stylistic differences are the seeds of interethnic discord as witnessed in Canada over the years. With respect to international negotiations, the English-speaking Canadians used noticeably more interruptions and no’s than negotiators from either of Canada’s major trading partners, the United States and Japan.

United States. Like the Germans and the British, the Americans fell in the middle of most continua. They did interrupt one another less frequently than all the others, but that was their sole distinction.

These differences across the cultures are quite complex, and this material by itself should not be used to predict the behaviors of foreign counterparts. Instead, great care should be taken with respect to the aforementioned dangers of stereotypes. The key here is to be aware of these kinds of differences so that the Japanese silence, the Brazilian “no, no, no…,” or the French threat are not misinterpreted.

In addition to the 15 cultures which have been discussed; below is an excerpt on negotiation approaches within the Mediterranean.

"The Mediterranean culture is altogether warmer.

Warm greetings and social aspects. Exuberant uses of postures and gestures. difficulty in pinning discussions down to particular deals or particular phases of negotiation.

In some regions, deals need to be 'lubricated'. Indeed, this question of 'lubrication' is central to the cultures of some Mediterranean countries. It is seen as a normal practice and does not have the repulsive character of 'bribery'.

The approach to negotiation in these cultures needs to retain the types of discipline we have been discussing; and yet to be conscious of the need for lubrication. Since no respectable western company would wish to be associated with the practice of bribery, the need is to secure a local agency and to ensure that that agency handles the lubrication."^[36]

Differences in managerial values as pertinent to negotiations

Four managerial values—objectivity, competitiveness, equality, and punctuality—that are held strongly and deeply by most Americans seem to frequently cause misunderstandings and bad feelings in international business negotiations.

Objectivity

“Americans make decisions based upon the bottom line and on cold, hard facts.” “Americans don’t play favorites.” “Economics and performance count, not people.” “Business is business.” Such statements well reflect American notions of the importance of objectivity.

The single most successful book on the topic of negotiation, Getting to Yes,^[2] is highly recommended for both American and foreign readers. The latter will learn not only about negotiations but, perhaps more important, about how Americans think about negotiations. The authors are quite emphatic about “separating the people from the problem,” and they state, “Every negotiator has two kinds of interests: in the substance and in the relationship.” This advice is probably quite worthwhile in the United States or perhaps in Germany, but in most places in the world such advice is nonsense. In most places in the world, particularly in collectivistic, high-context cultures, personalities and substance are not separate issues and cannot be made so.

For example, consider how important nepotism is in Chinese or Hispanic cultures. Experts tell us that businesses don’t grow beyond the bounds and bonds of tight family control in the burgeoning “Chinese commonwealth.” Things work the same way in Spain, Mexico, and the Philippines. And, naturally, negotiators from such countries not only will take things personally but will be personally affected by negotiation outcomes. What happens to them at the negotiation table will affect the business relationship regardless of the economics involved.

Competitiveness and Equality

Simulated negotiations can be viewed as a kind of experimental economics wherein the values of each participating cultural group are roughly reflected in the economic outcomes. The simple simulation used in this part of our work represents the essence of commercial negotiations—it has both competitive and cooperative aspects. At least 40 businesspeople from each culture played the same buyer-seller game, negotiating over the prices of three products. Depending on the agreement reached, the “negotiation pie” could be made larger through cooperation (as high as $10,400 in joint profits) before it was divided between the buyer and seller. The results are summarized in Exhibit 3^[37].

Go to Exhibit 3, Cultural Differences in Competitiveness and Equality in Negotiation Outcomes across 20 Cultures: [7]

The Japanese were the champions at making the pie big. Their joint profits in the simulation were the highest (at $9,590) among the 21 cultural groups involved. The Chinese in Hong Kong and the British businesspeople also behaved cooperatively in our negotiation game. The Czechs and the Germans behaved more competitively. The American pie was more average sized (at $9,030), but at least it was divided relatively equitably (51.8 percent of the profits went to the buyers). Conversely, the Japanese, and particularly the South Korean, Mexican businesspeople split their pies in strange (perhaps even unfair) ways, with buyers making higher percentages of the profits (53.8 percent, 55.0 percent, and 56.7 percent, respectively). The implications of these simulated business negotiations are completely consistent with the comments of other authors and the adage that in Japan (and apparently in Korea and Mexico as well) the buyer is “kinger”. Americans have little understanding of the Japanese practice of granting complete deference to the needs and wishes of buyers. That is not the way things work in America. American sellers tend to treat American buyers more as equals, and the egalitarian values of American society support this behavior. The American emphasis on competition and individualism represented in these findings is quite consistent with the work of Geert Hofstede,^[38] which indicated that Americans scored the highest among all the cultural groups on the individualism (versus collectivism) scale. Moreover, values for individualism/collectivism have been shown to directly influence negotiation behaviors in several other countries.

Finally, not only do Japanese buyers achieve higher results than American buyers, but compared with American sellers ($4,350), Japanese sellers also get more of the commercial pie ($4,430) as well. Interestingly, when shown these results, Americans in executive seminars still often prefer the American seller's role. In other words, even though the American sellers make lower profits than the Japanese, many American managers apparently prefer lower profits if those profits are yielded from a more equal split of the joint profits.

Time

“Just make them wait.” Everyone else in the world knows that no negotiation tactic is more useful with Americans, because no one places more value on time, no one has less patience when things slow down, and no one looks at their wristwatches more than Americans do. Edward T. Hall in his seminal writing^[39] is best at explaining how the passage of time is viewed differently across cultures and how these differences most often hurt Americans.

Americans usually place a great emphasis on time and are fast-paced in the negotiation decision making process. Their approach to time is related to the technological development in Western society. They put more emphasis on short-term profits rather than long-term growth.^[40]

Even Americans try to manipulate time to their advantage, however. As a case in point, Solar Turbines Incorporated (a division of Caterpillar) once sold $34 million worth of industrial gas turbines and compressors for a Russian natural gas pipeline project. Both parties agreed that final negotiations would be held in a neutral location, the south of France. In previous negotiations, the Russians had been tough but reasonable. But in Nice, the Russians were not nice. They became tougher and, in fact, completely unreasonable, according to the Solar executives involved.

It took a couple of discouraging days before the Americans diagnosed the problem, but once they did, a crucial call was made back to headquarters in San Diego. Why had the Russians turned so cold? They were enjoying the warm weather in Nice and weren’t interested in making a quick deal and heading back to Moscow! The call to California was the key event in this negotiation. Solar’s headquarters people in San Diego were sophisticated enough to allow their negotiators to take their time. From that point on, the routine of the negotiations changed to brief, 45-minute meetings in the mornings, with afternoons at the golf course, beach, or hotel, making calls and doing paperwork. Finally, during the fourth week, the Russians began to make concessions and to ask for longer meetings. Why? They could not go back to Moscow after four weeks on the Mediterranean without a signed contract. This strategic reversal of the time pressure yielded a wonderful contract for Solar.

Differences in thinking and decision-making processes

When faced with a complex negotiation task, most Westerners (notice the generalization here) divide the large task up into a series of smaller tasks.^[41] Issues such as prices, delivery, warranty, and service contracts may be settled one issue at a time, with the final agreement being the sum of the sequence of smaller agreements. In Asia, however, a different approach is more often taken wherein all the issues are discussed at once, in no apparent order, and concessions are made on all issues at the end of the discussion. The Western sequential approach and the Eastern holistic approach do not mix well.

That is, American managers often report great difficulties in measuring progress in negotiations, particularly in Asian countries. After all, in America, you are half done when half the issues are settled. But in China, Japan, or Korea nothing seems to get settled. Then, surprise, you are done. Often, Americans make unnecessary concessions right before agreements are announced by the other side. For example, one American department store executive traveling to Japan to buy six different consumer products for her chain lamented that negotiations for the first product took an entire week. In the United States, such a purchase would be consummated in an afternoon. So, by her calculations, she expected to have to spend six weeks in Japan to complete her purchases. She considered raising her purchase prices to try to move things along faster. But before she was able to make such a concession, the Japanese quickly agreed on the other five products in just three days. This particular manager was, by her own admission, lucky in her first encounter with Japanese bargainers.^[42]

This American executive’s near blunder reflects more than just a difference in decision-making style. To Americans, a business negotiation is a problem-solving activity, the best deal for both parties being the solution. To a Japanese businessperson, on the other hand, a business negotiation is a time to develop a business relationship with the goal of long-term mutual benefit. The economic issues are the context, not the content, of the talks. Thus, settling any one issue really is not that important. Such details will take care of themselves once a viable, harmonious business relationship is established. And, as happened in the case of the retail goods buyer above, once the relationship was established—signaled by the first agreement—the other “details” were settled quickly.

American bargainers should anticipate such a holistic approach to be common in Asian cultures and be prepared to discuss all issues simultaneously and in an apparently haphazard order. Progress in the talks should not be measured by how many issues have been settled. Rather, Americans must try to gauge the quality of the business relationship. Important signals of progress can be the following:

1. Higher-level executives from the other side being included in the discussions
2. Their questions beginning to focus on specific areas of the deal
3. A softening of their attitudes and position on some of the issues—“Let us take some time to study this issue”
4. At the negotiation table, increased talk among themselves in their own language, which may often mean they’re trying to decide something
5. Increased bargaining and use of the lower-level, informal, and other channels of communication

Implications for managers and negotiators

Considering all the potential problems in cross-cultural negotiations, particularly when you mix managers from relationship-oriented^[43] cultures with those from information-oriented ones, it is a wonder that any international business gets done at all. Obviously, the economic imperatives of global trade make much of it happen despite the potential pitfalls. But an appreciation of cultural differences can lead to even better international commercial transactions—it is not just business deals but creative and highly profitable business relationships that are the real goal of international business negotiations.^[44]

Team negotiations

Due to globalization and growing business trends, negotiation in the form of teams is becoming widely adopted. Teams can effectively collaborate to break down a complex negotiation. There is more knowledge and wisdom dispersed in a team than in a single mind. Writing, listening, and talking, are specific roles team members must satisfy. The capacity base of a team reduces the amount of blunder, and increases familiarity in a negotiation.^[45]

See also

Notes

References and further reading