Cross-Cultural

Negotiations
Dr. Yahia H. ZOUBIR
Professor of International
Management
EUROMED-MARSEILLE School of
Management, France
International Consultant
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Cross Cultural
Negotiations

Todays world great need for

negotiation skills

Knowledge of techniques of negotiation

vital

Each negotiator must influence the

other in positive constructive ways
We must learn to think globally to be
effective as organizations and as
individuals within these organizations
We must be effective globally
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 Reasons why important to become

world-class negotiator
Emergence of global economy
Increase of foreign investments in
various parts of the world
Multitude of international
business arrangements (jointventures, takeovers)
Contracts more complicated
especially big ones
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 Intercultural savvy matters in

international negotiations
Expertise and savvy more
important than size or
reputation of company
Globalization means dealing
with many different cultures
Negotiating international
business transactions difficult
and can easily fail
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 Difference between failure and

success in IBN resides in ability &
knowledge of the persons at
negotiating table
Business community needs to be
skilled at international deal making
Culture important factor in making
global deals but not only factor
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 Effective negotiation Not just matter

of following fixed rules & formulas
Every negotiation is special
Affected by host of different factors
Effective deal maker must:
identify factors
evaluate them
& determine course of action

How should I proceed? It depends!

Depends on culture/political
system/stake holders...
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 All international business

negotiations influenced by a variety
of factors
Many barriers
Antagonisms between negotiators
Failure to look at different options
Interference of personal feelings with
talks
Mutual suspicions
Members of both teams bickering
among themselves
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 Skilled negotiator overcomes

barriers
Task needs
creativity/sensitivity/ &
patience

International negotiators
meet same sort of obstacles
International deal-makers face
other problems not usually
found in ordinary domestic
business transaction
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 Naive indeed to venture into international

negotiation with belief that after all people
are pretty much alike everywhere and
behave much as we do.
Foolish to view member of another culture as
brother in spirit even if speaking same language
& wearing same clothes

Negotiation style you use so effectively at

home can be ineffective & inappropriate
when dealing with people from another
cultural background
in fact its use can often result in more harm
than gain

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 The greater cultural differences the

more likely barriers to communicate
Cultural interpretation & adaptation
prerequisites to understanding of
national and international business
practice especially when purpose of
negotiation is to achieve win-win
relationship rather than a win-lose
relationship
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 Heightened sensitivity/more attention to

detail/ & perhaps even changes in basic
behavioral patterns required when working in
another culture
When negotiating internationally this
translates into anticipating culturally related
ideas most likely to be understood by person
of given culture
Discussions frequently impeded because two
sides seem to be pursuing different paths of
logic
in any cross-cultural context potential for
misunderstanding & talking past each other is great

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 Members of one culture may focus on different

aspects of agreement (i.e., legal, financial) than do
members of another culture (personal,
relationships)
Implementation of business agreement may be
stressed in one culture while range & prevention of
practical problems emphasized in another culture
In some cultures attention of people directed more
towards specific details of agreement (documenting the
agreement), while other cultures focus on how promises
can be kept (process and implementation)
Americans negotiate a contract; Japanese negotiate a
personal relationship

Cultures force people to view & value differently

many social interactions inherent in fashioning an
agreement

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 Often barriers to successful agreement

are of cultural nature rather than of
economic or legal basis
Since each side perceives other from its
own ethnocentric background &
experience often neither side fully
comprehends why negotiations failed
It is precisely this lack of knowledge
concerning culture & "alien" and
"unnatural" expectations of other side that
hinders effective negotiation with those
from another culture

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 Different cultural systems can produce

divergent negotiating styles-- styles shaped
by each nations culture, geography, history,
and political system

Unless you see the world through the others eyes

(no matter how similar they appear to you) you
may not be seeing nor hearing the same
No one can usually avoid bringing along his
cultural assumptions, images, and prejudices or
other attitudinal baggage into any negotiating
situation
The way one succeeds in cross-cultural
negotiations is by fully understanding others,
using that understanding to ones own advantage
to realize what each party wants from the
negotiations, and to turn the negotiations into
win-win situation for both sides

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 In cross-cultural context--besides usual

rules of negotiation--one has to be wary of
fine nuances in relationships & practices
and how they are perceived & executed by
members of other culture
Two business negotiators separated from each
other not only by physical features, a totally
different language and business etiquette, but
also by different way to perceive the world, to
define business goals, to express thinking and
feeling, to show or hide motivation and interests
From other partys perspective, for example,
Americans may appear aggressive & rude

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 In cross-cultural negotiations many of rules

taught & used domestically may not apply-especially when they may not be culturally
acceptable to other party
For most Western negotiators this includes
concepts of give and take, of bargaining, & even
of compromise
Common Western ideal of persuasive
communicator-- highly skilled in debate, able to
overcome objections with verbal flair, energetic
extrovert--may be regarded by members of other
cultures as unnecessarily aggressive, superficial,
insincere, even vulgar and repressive

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 To other Americans, for example, valued

American traits of directness and frankness
show evidence of good intentions & personal
convictions
To an American it is complimentary to be called
straightforward & aggressive
Not necessarily so for members of other cultures
To describe person as aggressive is derogatory
characterization to British citizen
To Japanese those very same traits indicate lack
of confidence in ones convictions & insincerity
Instead, terms such as thoughtful, cooperative,
considerate & respectful instill positives in Japanese &
many Asian cultures

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 Negotiator must know how to

cope with special international
negotiating barriers
Requires ability to recognize
these barriers, to understand
their structure, and to devise
strategy to tackle them

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Negotiating across national and

cultural boundaries complicates
the negotiation process
Logistics, language, meaning of time,
how concessions are made, who
should be the members of the
negotiating team, and so on abound
in global negotiations
Basic assumptions about what
negotiation is, how it works, why it is
done, and where it is appropriate may
or may not be shared by the other
party with whom
one negotiates
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Environmental Context of
International
Negotiations
Negotiating Environment
Foreign Laws and Governments (Legal
Pluralism)
Foreign Governments (Political Pluralism)
Multiple Money & Currency Fluctuations
Foreign Bureaucracies
Instability and Sudden Change
Ideology
Cultural Differences
Influence of External Stakeholders
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Barriers to a Global Deal

Negotiating Environment
Location
Travel
Foreign turf for traveler
Foreignness potential barrier
to a deal making
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Foreign Laws and

Governments (Legal
One of the parties to the deal
Pluralism)
brought into contact with laws and

governments of another countries

International deal makers deal with
the laws of their own country and
with foreign laws and governments
Failure means double taxation,
contract governed by two legal
systems, dispute decided by two
courts!
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Legal Pluralism
Every Nation-State makes laws in its
own national interests
IB transaction must conform to laws of
the countries involved
Laws of given country might prohibit
sale of types of equipment in the name
of national security or because
considered strategic
Critical for negotiators to avoid acting
illegally vis--vis host country and
home country
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Foreign Governments (Political

Pluralism)
Close to 200 countries with particular
political systems and foreign policies
IB often caught in crossfire of potentially
conflicting policies of two or more
countries (e.g., US v. Canada regarding
Cuba; US v. Germany/France re. Iran
During Cold War best illustration was
Trans-Siberian pipeline
Study of countrys political systems
important for IB
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Multiple Money &

Currency Fluctuations
Different currencies, different monetary
systems
Global deals cross monetary boundaries
Multiple money always present in
negotiation
Impact of currency value fluctuations on
IBN significant
IB must incorporate contingency clauses
regarding currency fluctuations into
agreements
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Foreign Exchange & Currency

Fluctuations
IB Negotiators must also be
skilled at dealing with foreign
exchange controls that many
governments put in place

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Foreign Bureaucracies
Americans unprepared for extensive
influence exerted by foreign governments
on business activities, especially in LDCs
Government agencies may have authority
to control total output of an industry
They may in some cases have absolute
control over granting of permits to
expand production capacity
Effective international negotiators know
how to deal with all kinds of foreign
organizations

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Foreign Bureaucracies
Negotiators must be prepared to
extensive dealings with
government agencies in IB
Some companies already
developed those skills dealing
with countries with important
state-owned enterprises

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Risk of Instability and

Sudden Change
Common occurrence
Fall of the Shah of Iran, opening of Berlin
Wall, collapse of USSR
Dire consequences
IB negotiators must analyze political risk
Reliable information helps IB negotiators
to pursue effective negotiations
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Risk of Instability...
IB Negotiators must have
expertise in target country and in
global business environment, i.e.,
need to be knowledgeable about
IPE
Need for negotiators to have
BATNAs regarding investment
opportunities before entering
agreements with given countries
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Ideology
Ideologies different from one country
to another
In US business executives whether
democrats or republicans share same
ideology
Many countries opposed to perceived
foreign domination by Western businesses
MNCs still target of left-wing parties &
unions in many nations; blame MNCs for
domestic problems
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Ideology
In international arena negotiators
encounter and must be prepared
to deal with ideologies vastly
different from their own
They must find middle ground
and frame language & content of
negotiated contract in a pattern
that is acceptable to both sides
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Cultural differences &

Language
Shape how people think, communicate, and
behave
Cultural norms and values affect style of
negotiation
Trust & relationships important in Asian,
Middle Eastern, and Latin cultures
Issue of time different according to cultural
norms
Low Context [US, Northern Europeans] v. High
Context [Latin, Middle Eastern, &
Mediterranean] Cultures
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Language

Language can be real barrier in

international negotiations

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External Stakeholders
Competitors, customers, labor
unions, organized business
groups (chambers of commerce
& industry associations), and
companys shareholders are the
external stakeholders
They have an interest or stake in
the outcome of the negotiations
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External Stakeholders
Lobbying by competitors to block
joint venture if its means
introduction of important
competition in market
Consumers lobby on variety of
issues
labor unions oppose deals that
may reduce employment
opportunities for their members
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 International negotiation process fraught with

dangers & opportunities for failure
To achieve success firms must be better
prepared, must improve their knowledge of the
other side & its culture, and must be ready to
devote time & effort to process of negotiations
Larger firms tend to be more successful than
smaller firms not necessarily because of their
size but for what their size allowed them to
offer: more time to prepare, use of translators,
and access to cultural briefers /experts
These factors crucial toward differentiating
between success & failure in cross-cultural
negotiations

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Special Barriers for

International Business
Negotiating Environment
Negotiators
Foreign Laws and Governments (Legal
Pluralism)
Foreign Governments (Political Pluralism)
Multiple Money & Currency Fluctuations
Foreign Bureaucracies
Instability and Sudden Change
Ideology
Cultural Differences
Influence of External Stakeholders
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