Authors: Ritvika Bal and Sagar Raghavan
Mentor: Dr. Gerard Dericks (PhD, London School of Economics). Dr. Dericks is currently director of the Center for Entrepreneurship and Economic Education at Hawaii Pacific University.
Abstract
This paper provides a comprehensive review of cross-cultural negotiation dynamics between North America and various global regions, including South America, Europe, Asia, and the Middle East. By analyzing key components such as negotiation tactics, communication styles, and core cultural beliefs, the study reveals how cultural differences shape negotiation strategies and outcomes. Through a regional comparison, this review highlights significant variations, such as the preference for direct versus indirect communication and individualistic versus collectivist approaches. The research underscores the critical role of cultural intelligence (CQ) in enhancing negotiation outcomes, demonstrating that those who align their strategies with their counterpart’s cultural norms achieve more successful results. These findings offer valuable insights into the complexities of cross-cultural negotiations, providing a framework for improving international business practices and fostering more effective global collaboration.
Introduction
Negotiation is the process by which at least two parties try to reach an agreement on matters of mutual interest. This process involves communication, compromise, and the willingness to reach a mutually beneficial outcome. Many problems have a global scale, such as carbon dioxide emissions, international trade, and geopolitical conflicts, necessitating effective cross-cultural negotiation skills. Cultural diversity and inaccuracies in intercultural negotiation schemas render negotiations more complex and challenging in intercultural contexts than in intracultural ones. This complexity arises from differences in communication styles, values, beliefs, and negotiation practices across cultures. Research suggests that negotiators in cross-cultural contexts engage in less cooperative behavior than those in culturally homogeneous environments. This lack of cooperation can lead to suboptimal outcomes and missed opportunities for mutually beneficial agreements.
As the proportion of foreign to domestic trade increases, so does the frequency of business negotiations between people from different countries and cultures. Wharton School of Management Professor Howard Perlmutter has estimated that over 50% of an international manager’s time is spent negotiating (Adler and Graham, 1989), highlighting the importance of effective negotiation skills in a globalized economy. Differences in values and beliefs can lead to misunderstandings and conflicts in international negotiations. Common wisdom suggests that cultural differences can lead to breakdown and failure in international negotiations. According to the similarity-attraction theory (Byrne, 1971), similarities in values, attitudes, and behaviors lead to attraction between parties, resulting in a higher willingness to cooperate. This theory underscores the importance of understanding and appreciating cultural differences to foster cooperation and achieve better negotiation outcomes. Negotiators who adapted their styles to align with another country’s cultural preferences experienced increasing economies of scale in terms of success, showcasing the importance of cultural intelligence (CQ) in cross-cultural negotiations. Brett and Okumura (1998) found that joint gains in negotiations were higher in intracultural (US-US, Japan-Japan) versus intercultural (US-Japan) settings. They noted that the priorities and needs of the other party were less known and less yielding in intercultural negotiations, indicating a lack of understanding and lower cultural intelligence (CQ). Similarly, Simintiras and Thomas (1998) highlighted that negotiators from the same culture, such as Mexican, Brazilian, French, Japanese, Chinese, and Middle-East Arabs, display similar thinking processes—like preferences, attitudes, impression formation, and decision-making—which helped in achieving mutually beneficial outcomes.
Studying regions instead of individual country cultures offers simplicity and practicality, as there would be an intractable number of possible pairs if studied by country. Regions tend to be culturally similar, providing a more manageable scope for analysis. Additionally, there may need to be more data to perform a comprehensive review of every individual country, thus supporting the study of regions. Focusing on regions also allows for a broader understanding of cultural patterns and trends, which can be useful for developing general strategies and frameworks for cross-cultural negotiation. Moreover, regions often share historical, economic, and social ties that influence their negotiation practices and behaviors. By studying regions, we can gain insights into how these shared factors impact negotiation dynamics and outcomes.
Dyadic Regional Differences
North America-North America
The study of cross-cultural negotiations in North America-North America reveals significant insight into how even neighboring countries’ negotiation behaviors differ due to cultural differences shaping negotiation strategies, attitudes, and outcomes. For instance, Francis (1991) found Canadians to be more reserved, Americans to be more direct, and Mexicans to value strong relations while examining the effects of cultural adaptation on cross-cultural negotiations between the US, Canada, and Mexico. In North American contexts, Salacuse (1998) reported that cultural awareness significantly improves negotiation outcomes, with North Americans typically using a more direct communication style and valuing punctuality. Bazerman and Neale (1994) discussed the impact of cognitive biases on negotiations, noting that Americans' individualistic goals contrasted with Canadians' collective goals. Canadian negotiators, with their collaborative approach, were better able to mitigate biases such as overconfidence. Lastly, Gomez and Taylor (2018) found that Mexicans are more likely to use social influence in negotiations, while perceptions of fairness are more critical to Americans, highlighting different approaches to conflict resolution.
North America-South America
North and South American negotiations differ in negotiation tactics. This is in large part due to their cultural backgrounds (Volkema and Fleury, 2002). For instance, an analysis between Brazilians and Americans by De Moraes Garcez (1993), showed that differences in ‘point-making’ - meaning; (i) the statement of one’s intentions, and (ii) the rhetorical argument, which may include evidence supporting one’s statement of intentions - by the two cultures led to significant conflicts in negotiation. In particular, American negotiators made their points in a direct, self-explanatory way, while the Brazilians made points in an indirect way which demanded a high degree of conversational involvement and contextual interpretation. Consequently, Americans may start thinking that the Brazilians are in fact incoherent when they speak; whereas the Brazilians may surmise that the Americans are uncooperative and inconsiderate when they negotiate, even though follow-up interviews indicated that everyone had meant well.
Volkema (1999) likewise analyzed five categories of negotiation behaviors between American and Brazilian parties, namely; (1) traditional competitive bargaining, (2) misrepresentation of information, (3) bluffing, (4) information collection, and (5) influencing an opponent’s professional network. Participants from the United States perceived themselves less likely than participants from Brazil to strategically misrepresent information (misrepresent facts, mislead the press) and to bluff (feign threats, mislead opponents), but no more or less likely to engage in competitive bargaining, information collection, or influencing an opponent’s professional network. These results were similar to a prior study by Volkema (1997).
A further difference in North and South American negotiations is the extent of individualism and collectivism. Dos Santos-Pearson (1995) showed that the United States, in comparison to Brazil, was more individualist in negotiating. This difference led to a more complicated negotiation between the two cultures. Johnston and Burton (2009) additionally found that Americans were more aware of cultural differences and their effect on negotiation, and suggested that Americans may be more adept at interpreting negotiations through another party’s cultural lens, which may be useful in dealing with potential conflicts.
North America-Europe
North American-European studies have covered differences in cooperation and the expression of emotion. In an experiment of 60 Mexican and Norwegian subjects, Halvor Natlandsmyr and Rognes (1995) showed that each culture’s differences affect the extent to which each party is willing to work together to find a mutually beneficial solution. However, this lack of cooperation has not been shown to ultimately affect the distribution of value in the outcome – regardless of cooperation, these two cultures always end up with the same results. On the side of emotion, Benetti et al. (2021) showed that Italian negotiators more readily expressed their emotions than U.S. counterparts. Italians consider it more culturally acceptable to express emotions, and indeed, not doing so is considered dishonest or disingenuous, and attempts to appear detached are perceived as a form of deception. This is in contrast to American negotiators, who do not openly share their emotions in a negotiation.
North America-China
There exist substantial differences in Chinese and American negotiation styles, a dyad that is large in global presence with significant implications for the global economy and geopolitical relations. Sino-American studies have found significant differences regarding preferences for hierarchy, directness, response to anger, and communication style in business negotiations. When assessed, Chinese negotiators were far more hierarchical in leadership than Americans, preferring high power distance between superiors and subordinates, rather than equals in an organizational structure (Pan et al., 2010; Huang, 2010). Furthermore, Chinese negotiators both follow a hierarchical structure and believe in its superiority compared to other forms of organization (Zhang et al., 2021). Chinese negotiators speak about the hierarchy between the two negotiators far more when they are angry, a sign of needing a feeling of superiority (Liu, 2009).
Directness in communication was another factor studied in Sino-American negotiations. This matter is of significance to negotiators, with Americans having stressed the importance of direct communication as equals with the other side of a negotiation (Zhang et al., 2021). Reviews of previous literature find that Chinese negotiators prefer team-building and indirect communication more than North Americans, while North American negotiators prefer direct communication and efficiency (Zhu and Sun, 2004; Huang, 2010; Cao et al., 2018). Zhu and Sun (2004) also examined how individualism/collectivism, power distance, physical characteristics, and high versus low-context information (H/L information, which evaluates whether one must pay close attention to body language and physical features for information, high-context, or whether the information is explicitly said, low-context) affect directness in communication. They found that these traits indicate that the North Americans were more direct when communicating with the Chinese negotiators. Lastly, Chinese negotiators also tend to communicate less than Americans (Sai, 2023).
Anger was another characteristic that was studied. After taking 66 Chinese sojourners (a Chinese immigrant in America who aims to return to China at a later date) and 64 Americans, Liu (2009) found that American negotiators more readily expressed anger. A positive correlation was found between this anger and Chinese negotiators’ attempt to more heavily persuade the other party. American negotiators did the opposite, with their anger taking their focus off of the deal, making them less concerned about the negotiation. Chinese negotiators would tackle each issue individually when angry, integrating issues together less than American negotiators (Liu, 2009).
Further research suggests that Chinese negotiators have fewer moral scruples regarding what it takes to achieve an adequate outcome. For example, it was found that Chinese negotiators were more open to taking bribes in negotiations (Ma, 2010). Furthermore, it was found that Chinese negotiators thrived under pressure – as compared to the Americans who performed worse under pressure in simulation negotiations (Lee et al., 2006). Additionally, Chinese negotiators have been shown to be much more methodical in thinking through each step of a situation before making a move (Sai, 2023).
North America-Korea
In the dynamic interplay of North American and South Korean negotiations, cultural backgrounds play a pivotal role. For example, Han et al. (2021) discovered that Korean negotiators are more risk-averse and cautious, while American negotiators are more risk-taking and assertive. Similarly, Gomez and Taylor (2018) noted that Americans prefer direct conflict resolution methods, whereas Koreans favor indirect and implicit methods, emphasizing the need for cultural adaptation in their negotiations. Chang and Martin (2008) found that Korean negotiators often use high-context communication, leading to potential misunderstandings with Americans who prefer a more direct approach. Richter (2023) highlighted that Korean managers prioritize hierarchical structures, in contrast to American managers who emphasize individualism. Adair and Brett (2005) showed that Americans favor a "fast-paced negotiation style," while Koreans prefer to "narrow down and focus on details”, which can lead to frustration if not managed properly. These differences significantly affect negotiation strategies, as East Asians and Westerners exhibit contrastive approaches based on their cultural backgrounds. Collectively these studies underscore the necessity for cultural awareness and adaptability in negotiations between North American and South Korean business professionals, as understanding and bridging these cultural differences can significantly enhance negotiation success.
North America-Middle East
Negotiations between North American and Middle Eastern counterparts are influenced by significant cultural differences that shape communication styles, negotiation tactics, and underlying values. For example, Engle et al. (2013) demonstrated that Turkish negotiators favor a competitive style over problem-solving, contrasting with the preference of Americans for collaborative approaches. Gelfand and Brett (2004) stressed the significance of communication styles, noting that “Middle Eastern negotiators often use high-context communication, while Americans prefer low-context communication.” This disparity highlights how messages are conveyed implicitly versus explicitly, impacting negotiation dynamics.
Metcalf et al. (2006) noted that Americans tend to employ direct communication, whereas Turkish negotiators prioritize relationship-building. This distinction reflects broader cultural values regarding communication clarity versus relationship depth. In a similar vein, Weiss and Stripp (1985) highlighted that Middle Eastern negotiators prioritize trust and personal relationships, while Americans tend to focus more on transactional outcomes, illustrating divergent priorities in building rapport versus achieving goals.
Radford and Shehadi (1992) emphasized the cultural value of honor among Arab negotiators, contrasting with the pragmatic, goal-oriented approach typically favored by Americans. Additionally, Hurn (2007) pointed out that Middle Eastern negotiators emphasize hospitality and patience, whereas Americans prioritize efficiency and speed. These studies collectively underscore the critical importance of cultural awareness and adaptability in negotiations between North America and the Middle East.
Discussion
What Was Studied Most
In general, studies on cross-cultural negotiations focused on three key components of negotiations; negotiation tactics, communication, and core beliefs. Negotiation tactics were studied amongst most cultural dyads. For instance, in the North America-North America dyad, it was found that Mexicans use social influence more than Americans in negotiations (Gomez and Taylor, 2018). In the North America-South America dyad, negotiation differences come in a variety of ways. North Americans found themselves just as likely as South Americans to use competitive bargaining, information collection, or network influence as a negotiation tactic (Volkema, 1999). Sino-American studies of negotiation tactics found that Chinese negotiators were ready to be less ethical to achieve an outcome than North Americans through, for instance, taking bribes (Ma, 2010). Within North American-Japanese comparisons, Americans take on a competitive approach (Adair et al., 2001). Korean negotiators, when compared to Americans, are less likely to take risks (Han et al., 2021) and focus more on details, taking a cautionary approach (Adair and Brett, 2005). In general, Americans tend to follow a straight line in negotiation tactics. They are to the point, use what is given to them in a negotiation, and take risks if they can. Their ideals fluctuate less than other cultures in negotiation tactics.
As for communication, the style of communication has been a focus of many studies. This includes direct versus indirect, high versus low context, and hierarchical communication. In every dyad except for North America-Europe, studies focused on directness in communication. They find that North American negotiators tend to be more direct in communication than other cultures, with negotiators from China, Brazil, Japan, and Korea being far more indirect in their point-making and speech. Along this line, in every Asian dyad besides North America-Japan, high vs low-context communication was studied. Each non-American culture, when negotiating, used high-context communication, being more indirect in speech, as shown by numerous studies.
Lastly, on core beliefs, each dyad has studies focusing on key values from both cultures. One major value that is compared is individualism versus collectivism. In every study, American negotiators followed an ideal of individualism, while other cultures consistently followed a more collectivist ideal. This trend applies to every dyad except for the Chinese and Middle Eastern Dyad. In the North America-China dyad, studies show that Chinese negotiators are more individualist than American negotiators. In the Middle Eastern dyad, this comparison was not even studied – instead, it was found that Arab negotiators value honor, and use this as a guiding principle in their negotiations. In terms of hierarchical beliefs, studies once again focus on Asian countries. Besides the Middle Eastern dyad, the Asian dyads all stressed the hierarchical communication used by the Asian negotiators. Many studies found that American negotiators follow more egalitarian communication styles, speaking in a manner that makes both sides equal. On the contrary, Asian negotiators attempted to speak from a level of hierarchy and superiority.
In general, it was found that negotiators who adapted their styles to align with another country’s cultural preferences experienced increasing economies of scale in terms of success, showcasing the importance of cultural intelligence (CQ) in cross-cultural negotiations. Brett and Okumura (1998) found that joint gains in negotiations were higher in intracultural (US-US, Japan-Japan) versus intercultural (US-Japan) settings. They noted that the priorities and needs of the other party were less known and less yielding in intercultural negotiations, indicating a lack of understanding and lower cultural intelligence (CQ). Similarly, Simintiras and Thomas (1998) highlighted that negotiators from the same culture, such as Mexican, Brazilian, French, Japanese, Chinese, and Middle-East Arabs, display similar thinking processes—like preferences, attitudes, impression formation, and decision-making—which helped in achieving mutually beneficial outcomes.
Cultures Studied Most
Most studies in the field focus on North American relations, like North America-China or North America-South America. This focus means that other dyadic comparisons, like China-Europe, have been left out of the discussion. We found that most comparisons study North America and Asia, with specific emphasis on China, Japan, Korea, and the Middle East in general. Many large countries with potentially distinct negotiation cultures such as India and Iran are left out of the equation, even though they may hold important results for future discussion. As semiperiphery countries hold an increasingly vital position in the global economy, this gap in research will need to be fixed.
There is also little information on other potential negotiation dyads such as Europe and South America and North America-Europe. Moreover, for the European studies that do exist, most only pay attention to Italy. Within South America, most studies focused on Brazil. In general, these two continents are not researched as heavily in the field, and within each continent, more needs to be done for smaller countries.
What Needs More Research
From this review, we find that more research should be done in non-North American dyads. These dyads lack research, and thus, present potentially fruitful opportunities for better understanding the full complexity of cross-cultural negotiations. On the topic of negotiations themselves, we find that there are many studies on specific negotiation tactics and behaviors. However, seldom do studies look into what may happen if cultural differences are disregarded. For example, studies could research the aftermath of European negotiators not valuing an Arab’s honor. These studies would help to better inform other researchers and international business negotiators, and further progress research in the field. Additionally, more factors of cross-cultural negotiations can be studied, like the effect of language differences. A culmination of research in these gaps can help to further broaden the perspective of international business.
Conclusion - Cross-Cultural Negotiation
This review surveyed research across various dyads between North America, South America, Europe, China, Korea, and the Middle East to understand the differences in negotiation tactics, communication styles, and core beliefs of each. We aimed to identify patterns and trends that could provide guidance on effective cross-cultural negotiation strategies to address the challenges in a growing globalized economy. As international trade and business continue to expand, understanding the cultural dynamics that influence negotiation outcomes becomes increasingly crucial.
Negotiation behaviors are deeply rooted in cultural backgrounds as evidenced by our analysis. For instance, North American negotiators often adopt a direct and individualistic approach, which contrasts sharply with the more hierarchical and indirect styles observed in regions like Asia and the Middle East. One particularly interesting finding was the contrast between the collaborative tendencies of Canadians and the more competitive nature of American negotiators, which underscores how even neighboring countries can have vastly different negotiation cultures. The pivotal role of cultural values such as individualism versus collectivism, and the importance of honor and hierarchy, highlights the necessity of cultural intelligence when navigating cross-cultural negotiations.
The implications of these findings are far-reaching. In business, understanding these cultural differences can lead to more successful international partnerships and negotiations, as companies can tailor their strategies to align with their counterparts' cultural preferences. Politically, this knowledge can enhance diplomatic relations and conflict resolution efforts by fostering a deeper understanding of the values and communication styles of different nations. This research also suggests the importance of studying less prominent dyads in future work., Our findings also call attention to the importance of continuing to explore the complexities and nuances that arise when negotiators from different backgrounds interact. Understanding these differences will allow negotiators to navigate cultural nuances effectively, fostering trust, and enhancing the likelihood of achieving mutually beneficial outcomes in cross-cultural business settings.
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