Navigating Culture in Negotiations
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Leadership Dec 1, 2011

Nav­i­gat­ing Cul­ture in Negotiations

Bar­gain­ing style can affect outcomes

Based on the research of

Brian C. Gunia

Jeanne M. Brett

Amit Nandkeolyar

Dishan Kamdar

Cul­ture can have a pro­found influ­ence on nego­ti­at­ing style. For exam­ple, Amer­i­can and Euro­pean deal­mak­ers pre­fer to exchange infor­ma­tion first, while nego­tia­tors from Asian cul­tures tend to trade offers at the begin­ning. Although these dif­fer­ences were first report­ed by Jeanne Brett, Wen­di Adair, and Tet­sushi Oku­mu­ra in 2001, until recent­ly there was lit­tle under­stand­ing of the aspects of cul­ture that account for them.

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New research from Jeanne Brett, a pro­fes­sor of man­age­ment and orga­ni­za­tions at the Kel­logg School of Man­age­ment, sug­gests that cul­tur­al atti­tudes toward inter­per­son­al trust explain the dif­fer­ences in nego­ti­at­ing styles. She and co-authors Bri­an C. Gunia, a doc­tor­al can­di­date at the Kel­logg School, and Amit Nand­ke­ol­yar and Dis­han Kam­dar, both pro­fes­sors at the Indi­an School of Busi­ness in Hyder­abad, India, found that Amer­i­can man­agers were more like­ly than their Indi­an coun­ter­parts to believe that an oppos­ing nego­tia­tor was being hon­est with them. They also found that the infor­ma­tion-first style of nego­ti­at­ing favored by Amer­i­can nego­tia­tors pro­duced high­er-val­ue deals. Nego­tia­tors who share infor­ma­tion gain insights into what the oth­er side wants, and this insight enables nego­tia­tors to struc­ture deals of greater ben­e­fit to both parties.

When Indi­an or Amer­i­can nego­tia­tors do not trust each oth­er, they nego­ti­ate via many offers and much sub­stan­ti­a­tion, which inter­feres with insight and achieve­ment of high joint gains,” Brett says. Con­verse­ly, when Indi­an or Amer­i­can nego­tia­tors trust each oth­er, they share infor­ma­tion and make trade­offs that gen­er­ate high joint gains. In our stud­ies of Indi­an and Amer­i­can man­agers, all with sub­stan­tial work expe­ri­ence, Indi­ans were less like­ly to trust in nego­ti­a­tions than the Amer­i­cans, result­ing in low­er joint gains among Indi­an than Amer­i­can negotiators.”

Insti­tu­tion­al trust has lit­tle influ­ence at the bar­gain­ing table. This leaves indi­vid­u­als from coun­tries with tight” cul­tures, such as India, with lit­tle basis to trust the behav­ior of others.

Cul­tur­al Influ­ence

Brett’s research relies on work of Toshio Yam­ag­ishi of Hokkai­do Uni­ver­si­ty, Japan, who describes cul­tures that have either an insti­tu­tion­al or inter­per­son­al basis for trust. In coun­tries with rel­a­tive­ly few social con­straints, such as the Unit­ed States, inter­per­son­al trust gov­erns behav­ior. Peo­ple in these loose” cul­tures tend to extend inter­per­son­al trust eas­i­ly, until their trust is vio­lat­ed. Coun­tries with strong social norms and sanc­tion­ing sys­tems — such as India, where social groups are aligned by fam­i­ly, lan­guage, caste, reli­gion, and geog­ra­phy — rely on insti­tu­tion­al trust to con­trol behav­ior and sanc­tion deviance. As long as insti­tu­tions remain in force, inter­per­son­al trust is unnec­es­sary in tight” cultures.

Insti­tu­tion­al trust has lit­tle influ­ence at the bar­gain­ing table, Brett says. This leaves indi­vid­u­als from coun­tries with tight” cul­tures, such as India, with lit­tle basis to trust the behav­ior of oth­ers. Thus, Indi­an nego­tia­tors rely on a tech­nique described in the study as sub­stan­ti­a­tion and offer,” in which nego­tia­tors present sin­gle- or mul­ti-issue offers and use log­ic, moral­i­ty, threats, flat­tery, or oth­er appeals with­out reveal­ing too much about what they real­ly want.

In choos­ing schools in India and the Unit­ed States for her research, Brett relied on a 33-nation rank­ing of cul­tur­al tight­ness” and loose­ness” devel­oped by Michele J. Gelfand, of the Uni­ver­si­ty of Mary­land, and col­leagues. On Gelfand’s scale, India ranked third in tight­ness, ahead of Japan, while the Unit­ed States ranked 22nd.

Brett’s research con­sist­ed of three stud­ies. In the first, Brett and col­leagues sur­veyed 135 Indi­an and 143 Amer­i­can MBA stu­dents to test that hypoth­e­sis that Indi­ans are less trust­ing than Amer­i­cans in nego­ti­a­tions. Stu­dents were asked if they agreed or dis­agreed with such state­ments as, The oth­er par­ty will try to be some­one who keeps promis­es and com­mit­ments” and The oth­er par­ty will do what they say they will do.”

Results showed that Amer­i­can deal­mak­ers who shared infor­ma­tion had greater insight into their coun­ter­parts’ think­ing and nego­ti­at­ed high­er joint gains.

The research found, as expect­ed, that Indi­an stu­dents were less like­ly than their Amer­i­can coun­ter­parts to trust the oth­er par­ty in nego­ti­a­tions. The sec­ond study explored the rela­tion­ship between cul­ture, trust, nego­ti­a­tion strat­e­gy, insight into the oth­er party’s needs and objec­tives, and joint gains. Brett and col­leagues recruit­ed 78 Amer­i­can and 56 Indi­an man­agers enrolled in exec­u­tive MBA pro­grams. Par­tic­i­pants in each coun­try were grouped in pairs. One per­son in each pair was ran­dom­ly assigned to rep­re­sent a TV sta­tion and the oth­er per­son was assigned to rep­re­sent a film com­pa­ny in a sim­u­lat­ed nego­ti­a­tion over rerun rights for a car­toon. The TV sta­tion was inter­est­ed in how many times the car­toon could be shown; the film com­pa­ny cared more about how quick­ly it would get paid. Nego­tia­tors could decide whether to include a sec­ond car­toon in the deal or devise a con­tin­gent con­tract that would pro­vide a rebate to the TV sta­tion if rat­ings fell.

Fol­low­ing the sim­u­la­tion, Brett and col­leagues used ques­tion­naires to deter­mine nego­ti­at­ing styles and nego­tia­tors’ insights into their coun­ter­parts’ pri­or­i­ties. To assess the out­come, they cal­cu­lat­ed whether an agree­ment was a win for one par­ty or both.

Results showed that Amer­i­can deal­mak­ers who shared infor­ma­tion had greater insight into their coun­ter­parts’ think­ing and nego­ti­at­ed high­er joint gains. Nego­tia­tors who did not trust over­whelm­ing­ly used the sub­stan­ti­a­tion-and-offer strat­e­gy and nego­ti­at­ed poor­er joint gains. But, sur­pris­ing­ly, researchers found only a weak link between trust and the ques­tion-and-answer nego­ti­a­tion style. This may be because some nego­tia­tors who did not trust at the begin­ning nev­er­the­less shared enough infor­ma­tion dur­ing the nego­ti­a­tion to gain insight and real­ize high joint gains, Brett speculates.

Nego­tia­tors who are prone to trust nev­er­the­less under­stand that trust­ing the oth­er par­ty makes them vul­ner­a­ble to exploita­tion. There­fore they share slow­ly and care­ful­ly. If the oth­er par­ty fails to rec­i­p­ro­cate with truth­ful infor­ma­tion, or starts to use the shared infor­ma­tion in a self-serv­ing way, they will no longer con­tin­ue to share the infor­ma­tion,” Brett says.

The third study fea­tured the car­toon-nego­ti­a­tion sim­u­la­tion with dif­fer­ent groups of Amer­i­can and Indi­an exec­u­tive MBA stu­dents, whose con­ver­sa­tions were record­ed. Brett and her col­leagues assessed the record­ings to deter­mine whether par­tic­i­pants nego­ti­at­ed in the man­ner they report­ed, and whether that was by trad­ing infor­ma­tion about their pri­or­i­ties and inter­ests or by trad­ing offers. The results con­firmed that Indi­an nego­tia­tors’ reliance on offers — and their less fre­quent use of infor­ma­tion-exchange strate­gies — result­ed in low­er joint gains.

Dif­fer­ent Ways of Think­ing

In their paper, the researchers con­clude: With these stud­ies, we pro­vide causal evi­dence that cul­ture pro­motes more or less trust, with mate­r­i­al and sub­stan­tial con­se­quences for nego­ti­a­tion.” Brett says the study opened relat­ed areas for research. For one thing, she is explor­ing the impact of a negotiator’s mind­set (lin­ear ver­sus holis­tic) on the suc­cess­ful use of the sub­stan­ti­a­tion-and-offer strat­e­gy to nego­ti­ate joint gains. Lin­ear thinkers tend to set­tle one issue at a time, while holis­tic thinkers delay agree­ment on sin­gle issues until they can see how all of the issues fit together.

Her research has impor­tant lessons for inter­na­tion­al deal­mak­ers, Brett says. Glob­al nego­tia­tors need to antic­i­pate whether the par­ty across the table is like­ly to be trust­ing and there­fore com­fort­able with the ques­tion-and-answer strat­e­gy,” she says. If they are not, then glob­al nego­tia­tors need to know how to use the sub­stan­ti­a­tion-and-offer strat­e­gy and avoid being anchored and leav­ing valu­able joint gains on the nego­ti­a­tion table. How to do so is what we are teach­ing nego­tia­tors at Kellogg.”

Relat­ed read­ing on Kel­logg Insight

Cul­tur­al Intel­li­gence in Glob­al Teams: A fusion mod­el of collaboration

Suc­cess­ful Medi­a­tors Want­ed: No Robe Required — Skill should trump judi­cial expe­ri­ence when choos­ing a mediator?

Sight Over Sound: Mode of com­mu­ni­ca­tion mat­ters in negotiations

Featured Faculty

Jeanne M. Brett

DeWitt W. Buchanan, Jr., Professor of Dispute Resolution and Organizations; Professor of Management & Organizations

About the Writer

Denise Gellene is a freelance science and business writer based in Los Angeles, California.

About the Research

Gunia, Brian, Jeanne Brett, Amit Nandkeolyar, and Dishan Kamdar. 2011. “Paying a Price: Culture, Trust, and Negotiation Consequences.” Journal of Applied Psychology. 96(4): 774-789.

Read the original

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