Effect of Culture in Negotiation

Negotiations are a frequent part of international business. Parties involved in a negotiation face different problems in reaching a successful outcome. When the parties have different cultural backgrounds the faced problems becomes more complex.

Intracultural Approach

1. Inputs – Critical psychological states (i.e., cognitions, goals, affect) and situational factors (i.e., negotiation structure) affect negotiation processes and outcomes in all cultures. Negotiators across cultures have different biases, goals, and levels of trust and respond differently to the same types of contextual influences (accountability, team configuration, power, communication media)

2. Process – Negotiators across cultures use two different goal-directed strategies: direct information exchange and persuasion/offers, with the former promoting value creation and the latter promoting value claiming. Culture influences the strategies that negotiators typically employ, with Western cultures relying on direct information exchange and East and South Asians relying on persuasion/offers, in part due to different levels of trust.

3. Outcomes – Negotiators across cultures seek to achieve economic outcomes as well relational outcomes. Culture affects the weight placed on economic versus relational outcomes. In structured negotiation simulations, some cultures (e.g., US, Germany) achieve more value creation and others (e.g., India, China) achieve more value claiming

Intercultural Approach

1. Inputs – Certain factors such as cultural intelligence, social goals for relationship building, concern for face, and communication quality encourage value creation in intercultural negotiations. Other factors, such as cultural distance and hierarchical concerns hinder value creation in intercultural negotiations.

2. Process – Negotiators use the strategy that is normative in their cultures but some also adapt to the counterpart’s strategy.

3. Outcomes – Value creation is usually more difficult in intercultural negotiations than in one or both intracultural comparison samples.