Doing Business in the Middle East

Despite its thousands of years of history at the crossroads of trade between the East and the West—and its oil resources upon which both Eastern and Western economies depend—the Middle East is seriously understudied by negotiation scholars, explains Jeanne Brett, a professor of management and organizations at the Kellogg School of Management who has studied culture and negotiation for years. So in 2010, Brett and Soroush Aslani, a doctoral candidate at the Kellogg School, put together a team of scholars to zero in the Middle East.

Negotiation in Dignity and Honor Cultures

Aslani suspected that a theory of honor culture could be used to predict differences in how Middle Easterners and Americans would use negotiation strategy. A key point in this theory—which cultural psychologist Richard Nisbett has used to explain how men from northern and southern regions of the U.S. respond differently to insults—is the idea of self-worth.

The U.S., for instance, tends to be what anthropologists call a “dignity culture.” This is because self-worth reflects social status, which is constructed and maintained somewhat independently from the social interactions in which an individual is involved. Middle Eastern countries, on the other hand, are described has having “honor cultures” because self-worth reflects a social status acquired through social interactions. People compete for primacy, sometimes by trying to protect themselves and their families from being taken advantage of, and other times by being generous and developing a reputation for warmth and hospitality.

Understanding a culture’s sense of self-worth matters when negotiating new business relationships, the researchers argue, because Middle Easterners are more likely than Americans to approach the negotiation as a competition—and thus an opportunity to establish and protect honor. But Americans, for whom dignity should be little affected by the outcome, are more likely than Middle Easterners to approach the negotiation as a puzzle in need of a solution.

To investigate their ideas, the researchers designed a simulation in which pairs of participants take the role of business owners who are negotiating about sharing space to expand their respective businesses. The goal: to set terms for the use of the space, including questions of staffing, temperature control, and the hiring of a family member to build a joint website. Sixty-three pairs of American university students and 68 pairs of students at a top university in Qatar negotiated the simulation, each participant earning “points” if he could negotiate terms favorable to his own business. (Encounters were recorded so that researchers could count the number of times certain negotiation techniques were used.) Afterwards, the students filled out questionnaires about the experience.

Cultural Differences Emerge

What the researchers found as they analyzed the data was that there were indeed significant differences in how American and Middle Eastern negotiators used strategy. The Qataris were much more competitive than were the Americans, setting higher aspirations while preparing for the negotiation—just as predicted, given the extent to which honor cultures value preserving social status and appearing firm.

Another major difference consistent with the researchers’ predictions was that Americans tended to exchange information more openly with each other, trying to make clear their needs, while Qataris shared much less information. This may be due to differing levels of trust in negotiations in dignity versus honor cultures, says Aslani. “There is a notion in Western culture called swift trust: when first interacting, people trust each other, unless their counterpart proves to be untrustworthy,” he explains. “In Middle Eastern culture, trust is a commodity you have to earn through repeated social interactions. So when interacting for the first time, usually the Middle Easterner’s assumption is ‘I’d better not trust you too much, until you prove yourself trustworthy.’”

The researchers also found that the Qataris were more likely than the Americans to use emotional tactics—such as showing anger, frustration, or sympathy—to influence the outcome of the negotiation. “People in honor cultures have strong norms for hospitality and warmth, but in a competitive situation like negotiations, in which their self-worth could be threatened, they are more inclined to get emotional and use aggressive negotiation tactics than Americans,” Aslani explains.

Moreover, the Qataris considered the hiring of a brother in the joint business more important than the Americans did—perhaps reflecting the focus on family that is more characteristic of honor culture.

Forging Sustainable Relationships

Brett cautions that there is still much to learn about how Middle Easterners negotiate differently from Americans. Yet, she says, it would be useful for American managers negotiating new business relationships in the Middle East to keep in mind that their Middle Eastern counterparts are very likely to approach the negotiation as a contest to be won via emotional tactics, not a problem to be solved via trust and information sharing. Aslani, who is Iranian, adds that in order to build sustainable cross-cultural relationships between the West and the Middle East, people should “try to first build strong relationships based on mutual trust before moving to the details of the negotiation.”

Editor’s Note: An interim paper from this research project was a finalist for the Academy of Management’s prestigious 2012 Dexter Prize for research on international issues.