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How to Steer Clear of Pitfalls in Cross-Cultural Negotiation - Tips for Avoiding Misunderstandings When Negotiating Cross-Border Deals

 
3/31/2003
Negotiation is a delicate business, made even more delicate by different cultural understandings. How can you avoid the subtle pitfalls and make deals go smoothly? This article from Harvard Management Communication Letter has suggestions.

Tips for Avoiding Misunderstandings When Negotiating Cross-Border Deals

Henry in Los Angeles and Hiroshi in Tokyo both like Armani suits, baseball, Mozart, and good Bordeaux. But Henry recently spoke for days with Hiroshi, his potential business partner, and yet the barriers between them were never broached—and the deal didn't get inked.

The problem had to do with different conceptions of the negotiation process itself and misinterpretations of the other's behavior. For Henry, negotiation is about pushing through a deal, period. When Henry didn't think their discussion was moving forward as quickly as he thought it should, his arguments became increasingly forceful. Because Hiroshi read this as disrespect, the negotiation essentially ended days before their talks did.

Although globalized communications and marketing have made the world smaller in many ways, deep differences between cultures remain. Despite similar tastes, Henry and Hiroshi each approach negotiation in a way heavily conditioned by his national culture. Because they sat down at the table without understanding the other's assumptions about the negotiation process, all they ended up with was an impasse.

Negotiation is always a delicate business, requiring determination and diplomacy in equal measure. But finessing a cross-cultural negotiation is a particular challenge. Here are some tips that can help you put together a deal with a foreign partner.

Understand expectations
Your negotiating partner's expectations of the negotiation may well be very different from yours. Like you, he will want to succeed, but success may not mean the same thing to him and his co-nationals as it does to you.

In many cultures, negotiation is ritualized, especially in its early stages.
— Andrew Rosenbaum

Decision-making styles may be different, too. American managers usually make decisions by themselves, while Japanese managers tend to make decisions by consensus, a practice that can add time to the negotiation process. Americans place a high value on flexibility, whereas once a Japanese manager has reached a decision, he believes it is shameful to change it, says Tokyo-based management consultant Mitsugu Iwashita, director of the Intercultural and Business Communication Center. Understanding these underlying attitudes helps you see what your potential partner's priorities are, and you can then adapt your strategy accordingly.

Establish common ground and choose your style
Find anything that will allow your foreign colleague to share something with you. This can help you get past "people" problems—ego wars, saving face, and so on—which is a good tactic because these problems can crop up where you may least expect them.

Now the real work can begin. You'll need to choose which of two classic negotiating styles you'll adopt: Contentious or problem-solving. The contentious negotiator, a tough, demanding guy who makes few compromises, can be a great success given the right conditions. He either wins or loses, but never comes to a conditional agreement. The problem-solving negotiator takes a broader view, attempting to get as much as she can without handing out a deal breaker. She establishes common ground wherever she can find it and approaches negotiations on a step-by-step basis.

While one has to be careful about generalizing across cultures, experts agree that a problem-solving approach to cross-cultural negotiations is prudent. (Indeed, many would say it's the right choice for almost any negotiation.) The problem-solving approach helps to avoid blunders, says Elaine Winters, coauthor of Cultural Issues in Business Communication (Program Facilitating and Consulting, 2000). But there are limits to this approach. In many cultures, negotiation is ritualized, especially in its early stages. It is obviously important to learn these negotiating rituals for a given culture, even if your foreign partner turns out not to require them. Germans, for example, often need to spend a large part of the initial negotiations in number crunching. All the facts and figures must be agreed upon, and woe betide the negotiator who makes a mistake! This German trait is not really about number crunching, however; it is a confidence-building ritual in which two potential partners run through a series of routine checks just to display trustworthiness. So the problem-solving approach, which would try to find common ground quickly, could prove threatening for the ritual negotiators.

"When confronted with cultural differences in negotiating styles, we need to be aware of the potentially adverse effects of a flexible, mixed style," says Willem Mastenbroek, director of the Holland Consulting Group (Amsterdam) and professor of organizational culture and communication at the Free University of Amsterdam. "If it is not understood, people may perceive it as smooth and suave behavior and resent it. Because they are not able to counter it with equal flexibility, they may feel clumsy and awkward, in some way even inferior. It may also become difficult for them to believe in the sincerity of the other side. They may see it as an effort to lure them into a game defined by established groups which will put them at a disadvantage."

Manage the negotiation
Let's assume that you have passed successfully through the initial stages of the negotiation and that you have agreed upon common ground with your prospective partner. The game of tactics now broadens. It is at this stage, in which the actual issues go back and forth between participants, that your awareness of negotiating behavior typical to your potential partner's culture can be put to use.

Italian negotiators, for example, will often try to push through this stage quite quickly, repeatedly insisting on their terms to tire out their opponents. Knowing this, a foreign negotiator may find a good tactic is to display no great hurry to deal—change the subject, digress, etc.

On the other hand, Chinese negotiators usually make one offer after another at this point to test the limits of a possible deal. According to Winters, nonverbal communication in negotiations with a Chinese businessman can be quite important. He may say little in response to your questions, and expect you to garner what you need to know from his gestures and from the context of whatever he does say. More demonstrative Western cultures can find this conduct very difficult to work with, but the application here of patience and deductive reasoning can take you a long way.

Most Europeans won't break off discussions unless they are deeply offended, but Asian negotiators are often happy to drop the project if they are uncomfortable with some aspect of the negotiations. If this happens, try to backtrack and fix the problem.

But in focusing on your potential partner's culture, don't lose sight of him as an individual. It's always best to learn as much as you can about his personality and communication style. "Personalize negotiation methods and approaches," Winters says. "Don't ignore culture (impossible anyway!), try to treat it as background; focus on the capabilities of the specific individuals at the table. This is frequently successful because a new, mutually agreed-upon culture is being created just for this effort."

Excerpted with permission from "How to Steer Clear of Pitfalls in Cross-Cultural Negotiation," Harvard Management Communication Letter, March 2003.

Andrew Rosenbaum is a Time magazine correspondent in Amsterdam. He also writes regularly on European financial and management issues for specialized publications. He can be reached at hmcl@hbsp.harvard.edu.

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