Was the same gap present in other cultures, or was it exclusively a U.S. problem?
NEGOTIATING
GLOBALLY
The Jossey-Bass
Business & Management Series
The Instructor’s Guide for the third edition
of Negotiating Globally contains an overall
course design as well as chapter-by-chapter
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including cases, exercises, questionnaires,
and tools. It is available for free at
www.wiley.com/college/brett.
NEGOTIATING
GLOBALLY
how to negotiate deals, resolve
disputes, and make decisions
across cultural boundaries
THIRD EDITION
JEANNE M. BRETT
Cover design by Adrian Morgan
Cover image © Thinkstock
Copyright © 2014 by John Wiley & Sons, Inc. All rights reserved.
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Library of Congress Cataloging-in-Publication Data
Brett, Jeanne M.
Negotiating globally : how to negotiate deals, resolve disputes, and make decisions across cultural
boundaries / Jeanne M. Brett. —Third edition.
pages cm. —(The Jossey-Bass business & management series)
Includes bibliographical references and index.
ISBN 978-1-118-60261-4 (cloth/website); ISBN 978-1-118-61150-0 (ebk); ISBN 978-1-118-61158-6
(ebk)
1. Negotiation in business—Cross-cultural studies. 2. Negotiation—Cross-cultural
studies. 3. Decision making—Cross-cultural studies. 4. Conflict management—Cross-cultural
studies. I. Title.
HD58.6.B74 2014
658.4′052—dc23
2013047582
Printed in the United States of America
third edition
HB Printing 10 9 8 7 6 5 4 3 2 1
Preface ix
Acknowledgments xix
The Author xxvii
1. Negotiation Basics 1
2. Culture and Negotiation 25
3. Culture and Strategy for Negotiating Deals 49
4. Resolving Disputes 81
5. Negotiating in Teams 117
6. Social Dilemmas 159
7. Negotiations Between Governments and Foreign
Direct Investors 187
8. Will the World Adjust, or Must You? 215
Notes 227
Glossary 263
Name Index 273
Subject Index 281
vii
Contents
To all the negotiators
who shared their experiences
so that others could learn
If you must negotiate deals, resolve disputes, or make decisions
in multiparty environments, this book is for you. If you have had
formal training in negotiations, but no training in culture, the
book will extend your negotiating skills and knowledge across
cultural boundaries. Be prepared to discover that old familiar
negotiation concepts, such as power and interests, take on somewhat
different meaning in different cultures. If you have had no
formal training in negotiations, the book will introduce you to all
the fundamental concepts in negotiation and explain how and
why the concepts apply in different cultural settings.
Although the book emphasizes negotiations in a global business
environment, its advice is relevant not just to managers and
management students who expect to be negotiating across cultural
boundaries but also to lawyers and law students, and to
government officials and students of public policy who are concerned
with economic development in a global environment.
Global negotiations occur in multiple legal, political, social, and
economic environments. International agencies and national and
local government officials are frequently at the table in negotiations
that cross cultural boundaries. This book provides advice to
help global negotiators navigate these complex environments.
Negotiating Globally focuses on national culture, because nation
state boundaries are both geographical and ideological. The ideology
or theory underlying a nation’s social, economic, legal, and
political institutions affects the way people interact. When negotiators
are from the same culture, ideology is the backdrop against
which deals and decisions are made and disputes are resolved.
When negotiators are from different cultures, each may rely on
different assumptions about social interaction, economic interests,
ix
Preface
x Preface
legal requirements, and political realities. The book provides
insights about when and why to adapt and how to execute an effective
negotiation strategy that takes cultural differences into account.
In today’s global environment, negotiators who understand
cultural differences and negotiation fundamentals have a decided
advantage at the bargaining table. This book explains how culture
affects negotiators’ assumptions about when and how to negotiate,
their interests and priorities, and their strategies: the way they
go about negotiating. It explains how confrontation, motivation,
influence, and information strategies shift due to culture. It provides
strategic advice for negotiators whose deals, disputes, and
decisions cross cultural boundaries.
Researching Culture and Negotiations
Until recently, most of the knowledge about how to negotiate
deals, resolve disputes, and make decisions in multiparty environments
came from U.S. researchers studying U.S. negotiators
negotiating with other U.S. negotiators. The evidence is overwhelming
that U.S. negotiators leave money on the table when
they negotiate deals, escalate disputes to the point at which costs
outweigh gains, and make suboptimal decisions in teams and
allow their emotions to interfere with outcomes. Their outcomes
also often fall short of the outcomes they could have obtained if
they had integrated their interests fully with those of their counterparts
across the table.
Armed with knowledge about this gap and what can be done
about it, my colleagues at the Kellogg School of Management at
Northwestern University and I have worked with thousands of
students, managers, and executives who wanted to improve their
negotiation skills. In the early 1990s our student population and
their interests started to shift. Managers from all over the world
began to come to our executive programs. We were invited to
teach negotiation in Europe, Latin America, and Asia. Kellogg’s
students became decidedly international. We could not avoid
dealing with the question of whether what we were teaching
applied across cultures. Was the same gap present in other cultures,
or was it exclusively a U.S. problem? Would the same skills
close the gap in other cultures? What about negotiating across
Preface xi
cultures? What adjustments needed to be made to take what we
knew about negotiations effectively across cultures?
These questions motivated the research that underlies this
book. The task was to determine how culture affects negotiation
processes and outcomes in the settings of deal making, dispute
resolution, and multiparty decision making. Since 1992, I have
traveled widely and worked with scholars around the world, studying
how managers negotiate in different cultures and also how
they negotiate across cultures. We have talked with managers from
many different cultures about their strategies, collected their
stories, and shared some of our own. But we have also systematically
collected data on their strategies and outcomes, using the
same methods that we have used with U.S. managers. These data
provide a strong foundation for the insights in the book, its illustrations
of cultural differences in negotiation, and the strategies
it recommends.
The book is not about how to negotiate in Israel, Russia,
Japan, Brazil, Thailand, Qatar, Spain, India, France, Germany,
Sweden, China, Korea—all countries where managers and management
students have helped us understand culture and
negotiation and where we have done research. Instead, the book
focuses on what we know theoretically and empirically about
negotiation strategy and culture, how negotiation strategy is practiced
in different cultures and why, and what the negotiator
crossing cultural boundaries can do to modify strategy so as to
realize interests and maintain integrity even when confronted
with a very different cultural approach to negotiation. Rather
than advice about how to act when in Rome negotiating with a
Roman, the book provides practical advice about how to anticipate
cultural differences and then manage them when they appear
at the negotiating table. It challenges negotiators to expand their
repertoire of negotiation strategies, so that they are prepared to
negotiate deals, resolve disputes, and make decisions regardless
of the culture in which they find themselves.
The Plan of the Book
If you are already an experienced negotiator, having closed deals,
resolved disputes, and even taken a negotiation course or
xii Preface
workshop, the basics in Chapter One should be familiar. Chapter
One describes the different contexts for negotiation: deal making,
dispute resolution, multicultural and team decision making, social
dilemmas, and negotiations between government and foreign
direct investors. It introduces the five fundamental building
blocks of negotiation strategy: parties; issues; positions, interests,
and priorities; power; and targets. It describes how to develop a
negotiation planning document and how to evaluate the quality
of a negotiated agreement.
Chapter Two introduces a new way of categorizing culture
that goes beyond the familiar East-West divide of individualismcollectivism
that is the basis for most international management
books. The book discusses negotiation in the Middle East and
Latin America, areas of the world where little prior negotiation
research has been done. Chapter Two discusses three cultural
types: dignity culture, familiar as Western culture; face culture,
familiar as East Asian culture; and honor culture, which characterizes
cultures in the Middle East, North Africa, and Latin
America. The chapter compares and contrasts these cultural prototypes
with respect to the nature of self-worth, power, sensitivity
to insults, confrontation style, trust, and mindset with the purpose
of generating insight and understanding as to why negotiators in
these cultural types use strategy similarly or differently. It provides
the model of intercultural negotiations familiar from
previous editions and discusses the environment in which global
negotiations occur. The chapter ends with a new section focused
on planning for cultural differences.
Chapter Three is all about negotiation strategy to create joint
value in deal-making (buying and selling) negotiations in a global
environment. After explaining why creating value is important, it
describes two forms of negotiation strategy widely used around
the world. One, called Q&A for questions and answers, is all about
gathering information that can be used to reach agreements. The
other, called S&O for substantiation (influence attempts) and
offers, is all about using persuasion and making offers to close
deals. With this basic understanding of the two fundamental
negotiation strategies, the chapter turns to culture. It explains
how trust, whether based on interpersonal relations or institutional
surveillance and sanctioning, affects whether negotiators
Preface xiii
use Q&A or S&O strategy. It describes how mindset, linear and
analytic as practiced in the West versus holistic and context sensitive
as practiced in East Asia, can affect whether negotiators are
able to generate insight from the S&O strategy. The chapter ties
this understanding of culture and negotiation strategy together
in a model and then turns to advice for negotiating in high and
low interpersonal trust environments, for using offers including
MESOs and contingent contracts—all geared toward generating
the information negotiators need to create value. There is a new
section of this chapter focused on reviewing what we know about
intercultural negotiations, what to expect in terms of strategic
dominance, and how to accommodate to a counterpart’s strategy
without compromising your own interests and integrity.
Chapter Four begins by explaining the differences between
negotiating deals and resolving disputes: independent versus
linked BATNAs, maximizing gains versus minimizing costs, emotions.
It then turns to explain the differences between direct and
indirect confrontation. (In direct confrontation the claimant tells
the respondent what the claim is and what to do about it; in indirect
confrontation the claimant leaves it to the respondent to
identify the claim and what to do about it.) The chapter discusses
which type of confrontation is preferred in dignity, face, and
honor cultures and why, and then introduces three approaches
to resolving disputes: interests, rights, and power. For each
approach there is advice about how to uncover interests, rights,
or power positions, and how to use each of the three approaches
effectively to resolve disputes. The negotiation section of the
chapter ends with advice on how to start such a negotiation and
how to move strategically between and among interests, rights,
and power approaches to see agreement. The chapter includes a
shortened version of the third-party chapter from the 2007 edition
of Negotiating Globally. This third-party section, like the old standalone
chapter, distinguishes between third parties with authority
to resolve disputes and those without that authority. It first
describes the arbitration process, and provides advice on selecting
an arbitrator and some insight into how culture might affect arbitration
decisions. It then describes the mediation process, gives
advice on selecting a mediator, and briefly reviews research on
how differently mediation is used around the world.
xiv Preface
Chapter Five focuses on using negotiation strategy to make
decisions in teams when multiple parties are likely to have both
different approaches to teamwork and different ideas about what
the team’s decision should be. The chapter begins by explaining
procedural conflict in teams and introduces three models of
teamwork: in which a subgroup or individual dominates; in which
there is a hybrid, but stable process melded from members’
different approaches; and fusion, when members’ different
approaches are used simultaneously or in sequence. The difference
between fusion and hybrid is primarily in terms of stability.
Hybrid teams have stable processes; fusion team processes are
more dynamic, responding to the changing elements of the team
situation. The chapter then turns to using negotiation strategy to
manage task conflict and make decisions in teams. This section
applies familiar strategy including using negotiation concepts to
evaluate team decisions, using negotiation strategy to generate
information, and using negotiation strategy to integrate information
and reach decisions. In doing so it addresses language,
structural barriers of virtual teams, and psychological barriers to
information sharing. It addresses issues, interests, and priorities
in the multiparty environment, it discusses BATNAs for the team
and individual team members, and talks about decision rules,
setting norms, and considering second agreements. There is an
important section of advice for minimizing and managing interpersonal
conflict, and another for team leaders to consider the
skill set, the motivations, and the environmental support that
teams need to reach high-quality decisions.
Chapter Six focuses on social dilemmas—those ubiquitous
multiparty extensions of the famous Prisoner’s Dilemma (PD)
situations in which self- and collective interests are in conflict.
Social dilemmas are special cases of team decision making. Teams
with members representing many different nations are currently
struggling with dilemmas concerning global resources, including
forests and fisheries, air, and water. The chapter starts with the
more familiar PD to explain the challenge of balancing self- and
collective interests. It then introduces two types of social dilemmas:
cooperative, in which the public interest is for the parties to
cooperate and their private interests are to compete, and competitive,
when the public interest is for the parties to compete but
Preface xv
the parties’ private interest is to cooperate, as in a cartel. The
best-known example of a cartel is OPEC, which is untouched by
law because it is a cartel of nations. But the chapter provides many
up-to-date examples of cartels that are illegal, such as the one in
which Apple was found to lead by coordinating with publishers
to fix prices for e-books and break Amazon’s domination of the
market. This section of the chapter includes advice for competitors
on signaling within the law, based on research in game theory.
The major portion of the chapter is devoted to using negotiation
strategies of interests, rights, and power to foster cooperation in
dilemmas in which the public interest is for the parties to cooperate
but their private interests are to compete. These dilemmas can
be taking dilemmas, for example harvesting of fisheries and
forests, or contributing dilemmas, such as paying taxes of free
riding on teams. Throughout this section are examples; discussion
of cultural differences in the application of interests, rights,
and power strategies; and advice for generating cooperation.
Foreign direct investment (FDI) is a major engine of globalization,
economic development, and cultural change. Chapter
Seven focuses on negotiations between foreign direct investors
and the governments in which they are investing. It begins by
outlining the interests of the investors, to make money via access
to resources or technology, cheap labor, or extension of markets,
and the interests of governments, which turn out to be quite different
from those of other private companies with which the
investor is likely to have had the most experience negotiating
deals. Governments tend to be interested in infrastructure they
otherwise cannot afford, technology that they otherwise lack
access to, and jobs that they otherwise cannot create domestically.
But they want all this without compromising their political power,
their national security, and their cultural hegemony! Where at
first glance FDI seems like a great opportunity for creating value,
a deeper understanding of parties’ interests, which Chapter
Seven provides with many up-to-date examples, shows that FDI
may not always be the best approach to create shareholder value,
much less the solution to pressing government problems. The
chapter addresses the predictable challenges of FDI, including
protecting legal rights, especially in nations where the rule of law
is weak; facing corruption and having your own personal ethical
xvi Preface
standards; navigating and negotiating with complex layers of government
bureaucracy; keeping employees safe; and avoiding
entanglements in human rights abuses. These are challenges that
the foreign direct investor should be able to anticipate and be
prepared for. These challenges are not easy to negotiate, but they
are at least to some extent controllable. More vexing are the
unpredictable challenges of political and economic instability.
The final chapter addresses why you should not expect a
global negotiation culture based on the dignity model and then
goes on to reprise some of the advice throughout the book for
adjusting strategy without compromising outcomes or integrity
when negotiating globally.
New in This Edition
I hope you find the third edition of Negotiating Globally a somewhat
slimmed-down refinement of the second edition. It keeps the
structure of the previous edition. In particular, Chapter One
introduces negotiation basics and holds off from addressing
culture, first addressed in Chapter Two. A major change in
content, but not in structure, comes in Chapter Two, which introduces
the dignity, face, and honor framework of cultural
prototypes. This frankly is a big intellectual change for those like
me who have focused on cultural differences between the West
and East Asia for so many years. But once into this framework, it
becomes more comfortable because dignity characterizes familiar
Western culture and face characterizes familiar East Asian culture.
It is only honor culture that is all new to us, but so important
because it characterizes so many understudied parts of the world.
Give the framework a chance, and I think you will see that it really
helps to understand why people in different parts of the world
use negotiation strategy differently.
Beyond Chapter Two the old structure continues, though
slimmed down, with one chapter on deal making, Chapter Three,
and one chapter on dispute resolution, Chapter Four. Both the
chapter on deal making and the chapter on dispute resolution
are newly organized and review new research, but at the same
time cover all the old content. Chapter Five reprises the research
on using negotiation strategy in teams and has been enhanced by
Preface xvii
some new research on negotiating teams. Chapter Six, on social
dilemmas, retains its old structure but gains many new examples.
Chapter Seven, on the negotiations between foreign direct investors
and governments, retains its content and also focuses on new
examples. I’m still not convinced that there is likely to be a global
negotiation culture any time soon, if ever, and Chapter Eight
again makes this point.
Handling Terms
Between the language used to talk about negotiation and the
language used to talk about culture, there are an awful lot of
terms in this book that have specific meaning in the context
of negotiation. Part of becoming a better negotiator is learning
negotiation strategies. Unfortunately, all these strategies have
names. Do not get annoyed by terminology—there is a glossary
in the back! The sooner you learn negotiation terminology, the
sooner you will be able to manage planning and executing your
own negotiations strategically.
Since the 2007 edition of Negotiating Globally, I have had the
privilege of continuing to do research with former collaborators
and the opportunity to do research with new ones. The third
edition of Negotiating Globally tries to distill for the global manager
the state of what scholars know and managers have experienced
about culture and negotiation. There is still much we don’t know,
and I look forward to future collaborations with scholars around
the world who are studying culture and negotiation, as well as
with managers who come to us with their stories, frustrations, and
insights.
Several new collaborations have had an important impact on
the third edition of Negotiating Globally. The major redirection of
this edition is to move from viewing culture from an East Asian–
Western perspective, which assuredly leaves out much of the world,
to the expanded perspective of dignity, face, and honor, which
includes the Middle East, North Africa, Southern Europe, and
Latin America. This change I owe to the influence of Soroush
Aslani. He introduced me to this way of conceptualizing culture
and then took a major role in a multiyear research project to
compare and contrast negotiations in honor (Qatar) and dignity
(United States) cultures, to which we later added data from a face
culture (China). I owe huge thanks to all the members of this
research team: to Soroush, to be sure, but also to Jimena Ramirez-
Marin, without whose three trips to Qatar there would have been
no study. To long-time collaborator Laurie Weingart, who arranged
for data collection in Qatar, and to Starling Hunter, who welcomed
Jimena to his classes and encouraged his students to participate.
To Cathy Tinsley, who is always our fiercest intellectual critic and
who has read and commented on draft after draft, and also
xix
Acknowledgments
xx Acknowledgments
supported some of the research financially. To Wendi Adair, who
always keeps the team grounded in solid methods and stronger
logic, and for introducing Zhaleh Semnani-Azad to the team. To
Zhaleh, who always knew all the latest literature and made sure
we did! To Zhixue Zhang, who invited me to teach at Guanghua
School of Management, Peking University, in the spring of 2012,
making it possible to add face culture data to the study with the
excellent support of Jing Jing Yao. Jing Jing and Jimena collaborated
on data analysis; Soroush is our major writer and presenter.
It has been a special pleasure for me to work on this project with
long-time collaborators, Wendi, Laurie, Cathy, and Zhixue, and
share with them the training of and the learning from Soroush,
Jimena, Zhaleh, and Jing Jing. It is particularly gratifying that this
unfinished research was chosen as one of five papers to be recognized
by the Academy of Management in 2012 for the All Academy
Dexter Award for best paper on an international business topic.1
It was Brian Gunia, finishing up his dissertation and wanting
to learn more about culture, who encouraged me to take out my
India data and then led our research into trying to understand
the important role that trust has in influencing negotiation strategy.
Brian is responsible for the Q&A and S&O terminology that
provides language to distinguish strategy from outcome—a point
also emphasized by Brosh Teucher. Although I am not personally
acquainted with Toshio Yamagishi, his intellectual distinction
between interpersonal and institutional trust has had a major
impact on my thinking about culture and trust, along with the
scholarship of my colleague Michele Gelfand, who has done much
to conceptualize the implications of tight versus loose cultures.
Michele continues to be a resource and sounding board both
when we are working on a project together and when we are not.
Amit Nandkeolyar and Dishan Kamdar ably supported the trust
studies in India, and Amit continues to work with us on issues of
trust and mindset. This research was recognized by the International
Association for Conflict Management with the Outstanding
Published Journal Article Award in 2011.2 In another project
stemming from the 2012 trip to China, Zhixue Zhang and Cuilian
Zhang are also working with trust data from Chinese managers.
Still, with all this scholarly attention to trust in negotiation, we
have a lot more to learn about trust, culture, and negotiation.
Acknowledgments xxi
The new section in Chapter Three on intercultural deal-making
negotiations owes much to the influence of several scholars.
Many years ago it was Shirli Kopelman and Dania Dialdin who
originally challenged me to consider what happens when negotiators
from different cultures come to the table. Ashleigh Rosette,
Zoe Barness, Anne Lytle, and I first learned about the high aspirations
of East Asian negotiators in an online intercultural study in
which the Hong Kong Chinese followed up their high aspirations
by claiming value on their U.S. counterparts. More recently, it has
been Brosh Teucher who challenged Brian Gunia and me to think
through the implications of negotiators with different types of
trust and mindset at the table. Jimena Ramirez-Marin’s empirical
scholarship made an important contribution to the intercultural
section. She is the only researcher I know to have collected negotiation
data from Americans negotiating in a language other than
English! We have a long way to go to understand when and why
one culture’s strategy conforms to another’s, but Jimena’s scholarship
is taking us there. My collaboration with Molly Kern and
Sujin Lee led me to see how multiyear experience in American
culture affects East Asian negotiators. That research was recently
recognized as the International Journal of Conflict Management’s
Outstanding Paper at the Literati Network Awards for Excellence
2013.3 Studies by Leigh Anne Liu, with whom I have not collaborated
but whose research I respect greatly, provide independent
corroboration of this cultural accommodation by East Asian scholars
studying in the United States.
The book continues to benefit from the years of collaboration
that underlie the scholarship in each chapter. In particular, I am
grateful for all the insights about Japanese negotiators that I
learned from working with Tetsushi Okumura, Wendi Adair, and
Laurie Weingart. The culmination of much of that research
received the Conflict Management Division of Academy of Management
Most Influential Paper 2004–2009 award in 2012.4
The insights about dispute resolution I gained from working
first with Bill Ury and Steve Goldberg to develop the conceptualization
of interests, rights, and power. Then with Cathy Tinsley’s
dissertation we learned for the first time how different cultures
use all the same strategies but with startlingly different emphasis.
With Ray Friedman, Mara Olekalns, and Cameron Anderson, who
xxii Acknowledgments
all participated in the eBay studies, I began to study how anger
has an impact on dispute resolution. More recently, I have been
collaborating with Hajo Adam on studies that contrast the impact
of the expression of anger in one-shot deal making, long-term
deal making, and dispute resolution negotiations. Back to culture,
recently Kristen Behfar and Jeffrey Sanchez-Burks and I have
been working on developing a clearer understanding of the distinctions
between indirect and direct confrontation, which has
brought clarity to Chapter Four, on dispute resolution. I’ve also
worked with Steve Goldberg and Roderick Swaab over the past
few years on different projects identifying what effective mediators
do. Both projects have the potential to have a major impact
on how mediation is enacted, at least in the United States and
Europe. We find that more important for a mediator’s success
than the technical skills of how to run a mediation conference is
the ability to develop an empathic relationship with the disputants.
Further, we documented that it is easier to do so in private
conferences prior to joint sessions than vice versa—a structure
that is anathema to standard mediation practice. That paper was
recognized in 2009 as the International Association for Conflict
Management’s Best Applied Paper.5
The multiparty sections of the book, Chapters Five and Six,
continue to rely on the series of studies on multicultural teams
with Maddy Janssens, Kristin Behfar, and Molly Kern. Maddy came
up with the idea of fusion teamwork. All the interviews that Kristin,
Molly, and I did surfaced the challenges that multicultural teams
face and piqued our curiosity as to whether fusion could work in
the real world. That test was Susan Crotty’s dissertation, and the
resounding answer was yes! The paper we wrote testing fusion
process in multicultural teams was recently recognized by the
journal Negotiation and Conflict Management Research as Best Published
Paper 2012.6 Kristin Behfar, Ray Friedman, and I have also
been studying negotiating teams—knowledge that also contributed
heavily to the restructuring of Chapter Five. The social
dilemmas research continues to be supported by my collaboration
and consultations with Shirli Kopelman.
When I wrote acknowledgments in 2001, I said what a great
privilege I had had in the 1990s to work in an environment in
which many scholars were investigating negotiations. Although
Acknowledgments xxiii
my 1990s colleagues Max Bazerman and Margaret Neale have
moved to other schools, I continue to be grateful to them for the
energy they gave to the study of negotiations at Kellogg. My colleagues
Leigh Thompson and Keith Murnighan are still at
Kellogg and joined for a time by Adam Galinsky; we still have a
very active incubator for negotiation research at Kellogg. Many
scholars have passed through Kellogg’s Dispute Resolution
Research Center since its founding in 1986. Some have been
Ph.D. students, others post-doctoral students, others visiting
scholars, and still others participants in the DRRC certificate
program. I learned much from them when they were at Kellogg
and benefit greatly from continuing contact with them, most
particularly Mara Olekalns, but also Zoe Barsness and Anne
Lytle, who with Maddy Janssens and Catherine Tinsley spent two
years with me in the early 1990s studying the cross-cultural
research in psychology and helping me develop facility with
cross-cultural research paradigms. The two chapters we published
in 1995 and 1997 about how to do cross-cultural research
have served us well, but importantly, they continue to be in
demand today—a testimony to the scholarship that resulted from
this collaboration.7 The subsequent cohort of Ashleigh Rosette,
Shirli Kopelman, and Dania Dialdin got us collecting data via a
web survey and initiated a bevy of studies mentioned earlier.
They were closely followed by Wendi Adair, without whom I
would have no understanding of how the Japanese acquire
insight from S&O, and Molly Kern and Sujin Lee, who introduced
me to studying biculturals.
I owe an enormous intellectual debt to all of these people. I
hope that they have learned as much and enjoyed as much working
with me as I have with them. I am confident that they will not
agree with all my conclusions and encourage the interested reader
to seek out the original research papers and my colleagues’ independent
work.
Max Bazerman and Ann Tenbrunsel wrote the original exercise
on which Cartoon was based. I am grateful to them for letting
us adapt it for research. The dispute between U.S. and Chinese
joint venture managers was inspired by an example given by Karen
Jehn at the 1998 International Association of Conflict Management
meeting at the University of Maryland. The rattling bicycle
xxiv Acknowledgments
story was told by Jeff Palmer at the 1999 International Executive
Masters Program at the Kellogg School of Management. Madame
Petit’s grandson shared the book and the pumpkin story with her
shortly before she died.
Much of the research underlying this book was supported by
the Dispute Resolution Research Center at the Kellogg School of
Management, Northwestern University. I appreciate the willingness
of the members of the center’s research committee to invest
in cross-cultural research.
So many people have helped in the research for and production
of each edition of the book, including Northwestern
undergraduate research assistants and DRRC staff. For the first
edition, students Man Ho Han and Sara Bachman managed the
data sets; Michael Teplitsky and Sara Bachman worked on the
references. Linda Stine produced the tables and figures; Jason
Bladen formatted the book; Molly Kern read the proofs. Anne
Lytle, Maddy Janssens, Jacques Tibau, Wendi Adair, Zoe Barsness,
Judy Krutky, Julianna Gustafson, and several anonymous reviewers
gave me wonderful feedback, support, and encouragement in
making the final revisions. For the second edition, students Raina
Dong, Martin Siow, and Brian Tam managed the data sets; Minjee
Kang formatted the book and worked on the references. Jenny
McGrath produced the book for the publisher. For the third
edition, student Chase Eck produced the references and generated
many of the real-world examples, used particularly in Chapter
Seven. Jessica Nelson produced the glossary.
The staff of the Dispute Resolution and Research Center—
Rachel Hamill, Margaret Dash, Linda Stine, and Jason Bladen for
the first edition; Nancy McLaughlin, Nicole Lehming, and Jennifer
McGrath for the second edition; and Sara Fassino, Doug
Foster, and Stephanie Dixon for the third edition—have been
extraordinarily gracious in supporting my getting the book
written. I am sure they are looking for another project for me so
that I will not be tempted to meddle in their competent and
independent running of the center.
Jossey-Bass gave me Alan Venable as a developmental editor
to work with for the second and third editions. I am extremely
grateful for all his gentle direction, the timeliness of his feedback,
and his unfailing enthusiasm for the book.
Acknowledgments xxv
Jimena Ramirez-Marin, in addition to participating in all
the new scholarship that underlies this third edition, also read the
entire book in draft and made phenomenally insightful comments
that often sent me back to completely restructure a chapter,
and always to refine it. Jimena also took charge of the Instructor’s
Manual, organizing and updating it; adding new exercises, mini
surveys, and cases; and suggesting new videos. If you are going to
be using all or any part of Negotiating Globally in the classroom, be
sure to get Jimena’s Instructors Manual off the Wiley website or
negotiationexercises.com.
There is no way to properly thank my host professors and all
the participants in the executive, MBA, and law programs I have
had the pleasure to work with since 1981. Professor Bala Balachandrin
invited me to teach in India; Dean Israel Zang, to teach in
Israel; Professor Eric Langeard (deceased), to teach in France;
Professor Akihiro Okumura, to teach in Japan; Professor Bing
Xiang and more recently Professor Zhixue Zhang, to teach in
China; Professor Toemsakdi Krishnamra, to teach in Thailand;
Professor Steve Chi, to teach in Taiwan; Professor Lourdes Munduata,
to help her teach in Spain; and Professor Dishan Kamdar
in India. Dean Donald Jacobs encouraged me to teach negotiations
in the first place, encouraged me to take the course
cross-culturally, and introduced me to many international teaching
opportunities.
I am deeply grateful to all the participants in these programs
and in Kellogg’s MBA and Executive Masters programs for sharing
their negotiation insights and experiences. I hope what you
learned from me has helped you understand as much about negotiations
as what I have learned from you. I see you again from
time to time at Kellogg alumni events around the world, in airports,
on the lakefront, and in cards and emails in which you
bring to my attention the odd negotiation term that catches your
eye in an ad or a street sign. These brief interchanges do not do
justice to my debt to you. You have made all that Kellogg has supported
in the area of negotiations possible. Bob Dewar, my
department chairman in 1981, encouraged me to take the risk
and teach a negotiation course. My husband, Steve Goldberg,
gave me the idea to do it in the first place and then negotiated
with Roger Fisher of the Harvard Law School to let me use his
xxvi Acknowledgments
exercises, even to write the lawyers out! Seventeen students took
the course that first year. It was student response in 1982 that
brought the course to the attention of Dean Jacobs and caused
our infamous negotiation over class size and the beginning of
Kellogg’s incubator for teaching new negotiations faculty. It was
the student response that moved the course from an elective to a
core course in the Executive Masters Program, and that encouraged
those running Kellogg’s far-flung joint ventures to bring
their participants to Evanston for the opportunity to learn negotiations
in an intercultural setting. It was the student support that
justified hiring Max Bazerman and then Maggie Neale and Leigh
Thompson, and Adam Galinsky. Their research, along with that
of psychologists Reid Hastie and Tom Tyler, game theorists Roger
Myerson and Robert Weber, and law professor Stephen Goldberg,
allowed us to seek the support of the William and Flora Hewlett
Foundation and develop the Dispute Resolution Research Center.
Funding from the Hewlett Foundation and the Alan and Mildred
Peterson Foundation has been instrumental in making Kellogg
not just a major site for teaching negotiation but also a major
negotiations research center. Thank you everyone who has made
Kellogg’s negotiations initiative possible.
My daughters, Valerie, Gillian, and Amanda Goldberg; my
husband, Steve Goldberg; and my gardens all learned to get along
with less attention as the first edition of the book took shape. The
girls avoided the worst of the second and third editions, leaving
the responsibility of helping me balance the responsibilities of
producing a new edition with the rest of life in their father’s
competent hands.
—J.M.B.
Jeanne M. Brett is DeWitt W. Buchanan Jr. Distinguished Professor
of Dispute Resolution and Organizations at the Kellogg School
of Management, Northwestern University, where she is also the
director and a founding member of the Dispute Resolution
Research Center. Brett initiated Kellogg’s popular “Negotiation
Strategies for Managers” course and then extended the course to
negotiating in a global environment. She conducts research and
negotiation training programs at Kellogg and in executive programs
around the world. She is the author of several books,
including Getting Disputes Resolved: Designing Systems to Cut the Costs
of Conflict (Jossey-Bass, 1988), written with William L. Ury and
Stephen B. Goldberg, and numerous scholarly articles.
xxvii
The Author
NEGOTIATING
GLOBALLY
Negotiation is the process by which people with conflicting goals
try to reach agreement about how they are going to work
together in the future. Negotiators are interdependent: what one
side wants affects what the other side can have and vice versa.
Because negotiation involves conflicting goals and interdependence,
it takes some skills to be an effective negotiator. Those
skills are put to the test when negotiating across cultures, because
people in different cultures use negotiation strategy differently.
One of the purposes of this book is to help you improve your
negotiation skills. Another is to get you prepared to negotiate with
people who do not share your cultural background, people who
you cannot assume will think about the process of negotiation in
the same way you do.
To be prepared to negotiate globally requires planning. If you
are already an experienced negotiator, having closed deals,
resolved disputes, and even taken a negotiation course or workshop,
many ideas in this chapter should be familiar. Nevertheless,
be sure to read it, because it will also likely take you beyond the
things you already know. For example, after laying out various
contexts in which negotiation skills are useful, it introduces five
building blocks of strategic analysis and a template for a negotiation
planning document that both novice and expert negotiators
1
1
Negotiation Basics
2 Negotiating Globally
find extremely useful for organizing those building blocks into a
strategic analysis. The chapter also explains how to use two important
negotiation concepts—BATNA and interests—to evaluate
how good your agreement is.
If you are going to be negotiating globally—or have already
and were not satisfied with the result—Chapter Two will introduce
you to the multiple ways that culture affects negotiations. It
includes a relatively new tripartite way of categorizing cultures:
dignity cultures (generally North American and European), face
cultures (generally Asian), and honor cultures (generally Middle
Eastern, North African and Latin American). The chapter describes
how each type of culture tends to affect negotiation strategy.
As you can see by the table of contents, subsequent chapters
will turn to strategies—the goal-directed behaviors that people
use to negotiate agreements—as they apply in the various contexts
identified in Chapter One, as well as to the strategic challenges
when negotiating globally and with government across the table.
The book ends with a discussion of just how long cultural differences
are going to matter in a world where global business and
global politics are carried out in English.
We begin by considering all the contexts in which people have
conflicting goals and use negotiations to try to reach agreements
about how they are going to work together in the future.
Contexts for Negotiation
Negotiation is not limited to buying and selling—deal-making
negotiations. People negotiate to resolve disputes, and to reach
decisions in teams and other multiparty environments. The following
paragraphs briefly consider these contexts for negotiation.
Deal Making
Deal-making negotiations are usually categorized as distributive
or integrative.
Distributive Deal Making
People throughout the world negotiate deals the same way: the
buyer makes a low offer, the seller a high offer, and they trade
Negotiation Basics 3
offers and counteroffers until they reach an agreement or decide
to walk away. After viewing the terracotta warriors in Xian, China,
a friend and I visited the Muslim market or souk. A small brass
incense burner caught my eye. I asked the shopkeeper the price
and offered him half the amount he named. He came down and
I came up. When he didn’t counter, I started to walk out of his
shop, but he followed me, making a concession. I then suggested
we split the difference between my second and his third price,
and he agreed.
In Xian the shopkeeper and I were engaged in what is called
distributive negotiation, meaning negotiating over a single issue,
in this case price: how much I would pay and how much he would
get for the small incense burner. In making distributive deals,
parties assume a fixed pie or fixed amount of resources and negotiate
about how to split the resources (cut up the pie, claim value,
distribute resources). The shopkeeper in the souk started high, I
countered low, and we made reciprocal concessions until we
reached an agreement that, to each of us, was better than no deal
at all.
Integrative Deal Making
Although dividing resources is an important part of negotiating,
there is a lot more to negotiation strategy than “start high if
selling, counter low if buying.” In reading the next example,
about my negotiating for pumpkins with a woman at a roadside
stand, consider how and why we moved away from distributive
negotiation. When my daughters were in grade school in a small
village in the south of France, the teacher asked my husband
and me to plan a Halloween party. My job was to buy the pumpkins
for the thirty-two children to carve. I looked everywhere for
pumpkins and could not find any. Finally, my husband heard of
a roadside stand with pumpkins! I immediately drove over to buy
pumpkins. I did not negotiate the price, because I had no other
source of pumpkins; I also knew it’s not customary in outdoor
French food markets to negotiate prices. But when I told the
seller that I wanted to buy all her stock, she shook her head no.
What to do? My alternative to buying was terrible. Offer her
more money? Try sympathy? Tell her why I wanted all her pumpkins?
Instead, I asked her why she wouldn’t sell me all her
4 Negotiating Globally
pumpkins. She said if she sold all her pumpkins to me, she
would have no seeds to plant the next year. “Chere Madame,”
said I, “if I bring you all the seeds November 1, will you sell me
all your pumpkins?” She said yes, each child got a pumpkin to
carve, and a picture of the children and Mme. Petit’s pumpkins,
as I later learned her name was, graced the front page of the
local newspaper.
Mme. Petit and I engaged in integrative deal making. We refocused
the negotiation from the single issue of how many
pumpkins I could purchase at her price by identifying the multiple
issues of pumpkin seeds and pumpkin rind that turned out
to be the real issues in our negotiation. In our agreement, Mme.
Petit got the seeds, which were more important to her than to
me, and I got the rind, which was more important to me than
to her.
Integrative negotiation occurs when negotiators expand the
pie —actually create value in negotiations. They typically do so
either by breaking a single issue into multiple issues or by adding
issues. In either case, when one issue is more important to one
party—the seeds to Mme. Petit—and another issue is more important
to the other party—the rind to me—the parties can negotiate
a trade-off that meets both parties’ goals.
There are many opportunities for negotiators to create value if
they have the motivation and the strategy to get information about
priorities (what is more and less important to the other party) and
interests (what is motivating the other party’s positions) and use
that information to make trade-offs that create value.
Conflict Management and Dispute Resolution
No culture is immune to conflict—the perception of opposing
interests, with respect to resources, goals, or even procedures.
Disputes arise when conflict turns into a claim that one party
makes but an opposing party rejects. People everywhere negotiate
to resolve disputes. How they do so, however, often depends on
whether it is culturally appropriate to confront other people
directly or indirectly. Here are two examples in which negotiation
took a path it might not have taken had both parties been
American.
Negotiation Basics 5
An American entrepreneur had a contract to sell bicycles to
a German buyer. The American was having the bikes manufactured
in China. When the first shipment was ready, the
entrepreneur went to the Chinese plant, inspected the bicycles,
rode a few, and realized there was a problem. The bikes rattled.
Knowing that rattling bikes would not be acceptable to the German
buyer, he asked the Chinese manager about the rattle. “Is this
rattle normal?” “Do all the bikes rattle?” “Will the German buyer
think there is something wrong with the bikes if they rattle?” The
bikes were shipped to Germany on time, and the German buyer
never mentioned anything about rattling bicycles.
In U.S. culture the normal approach to the problem of the
rattling bicycles would be to tell the plant manager that rattling
bicycles were unacceptable, and that the rattles had to be fixed
before the bikes were shipped. In China, such direct confrontation
would be extremely rude and would cause the plant manager
much loss of face and possible reactance. Knowing this, the American
entrepreneur used indirect confrontation. He made it clear
to the Chinese manager that the rattling bicycles needed to be
fixed, but he did so indirectly. He did not tell the Chinese manager
what to do, he respected the Chinese manager by assuming he
would recognize and resolve the problem, which the Chinese
manager did.
Third parties may also become involved in dispute resolution
in more or less direct ways depending on culture. For example,
an American manager was working in China for a U.S.-Chinese
joint venture. When he did not receive the information he
expected to find in a report, he asked his counterpart, a Chinese
woman who was apparently responsible for the report, for a
meeting to discuss his needs. She politely put him off. A day later
he was called into her manager’s office and told there was no
problem with the report: it had the information it always had and
could not be changed. From the U.S. manager’s perspective, his
Chinese counterpart’s behavior—refusing to meet with him,
getting her superior involved, stimulating a reprimand from the
superior—was inappropriate. He had wanted to talk to her directly
about his interests; he thought she had turned the situation into
a power play that he lost. But her perspective was different: she
knew that she did not have the authority to change the report.
6 Negotiating Globally
She did not want to jeopardize her relationship with her American
counterpart by rejecting his claim for data directly. Instead,
she involved her superior to deliver the rejection.
In the United States, culture dispute resolution negotiations
tend to be direct verbal interactions between principals. There is
a tolerance for conflict and an expectation that managers are
supposed to be able to resolve conflicts with counterparts without
involving higher-ups. But in many cultures, the expectations are
just the opposite. Managing conflict is the boss’s responsibility.
Involving a third party early in the dispute resolution process,
especially a third party with the status and authority to impose an
outcome, expedites dispute resolution and allows conflicting
parties to save face, since neither has to back down to the other.
Multiparty Negotiation and Team Decision Making
Negotiation strategy is particularly relevant to reaching agreement
in teams when members have different goals, there are
multiple issues to be decided, and there is not a simple majority
of team members who agree on all the issues. Multicultural teams
have another obstacle to overcome, as culture affects how people
go about decision making. The following example illustrates
many of the challenges associated with being a member of a multicultural
team. A UN peacekeeping task force consisting of army
officers from Russia, Germany, Turkey, and the United States was
charged with preparing for the exhumation of a mass grave in
Bosnia. “Everyone kind of viewed the Turks as a second-class military.
The Germans and the Russians didn’t really hit it off too well.
And we [Americans] were viewed with kind of different levels of
trust or skepticism by everybody else.”1 The task force leader, a
Russian major, realized that the task force had to find a way to
work together. So he separated the task into four subtasks and
then assigned a multicultural team of one Russian, one U.S., one
Turkish, and one German officer to each subtask. Each day four
Russians, four Americans, four Turks, and four Germans would
drive from their respective camps to a central meeting place, split
up to work in their assigned subgroups, and then regroup at the
end of the day to drive back to their respective camps. Inevitably
the talk on the way home was, How did it go today? And surprisingly,
everyone began to recognize the value of the Turkish team
Negotiation Basics 7
members, whose experience in earthquake relief was more relevant
to the task than any of the other officers’ experience. The
subgroups still had to negotiate with each other to coordinate the
execution of their different subtasks, but the multicultural structure
of the subgroups transformed that negotiation from being
one army’s way versus another to a cooperative effort that
respected expertise.
Negotiation strategy is particularly relevant to decision
making that requires the collaboration of multiple parties with
conflicting interests. When team members, like those in the UN
task force, also have different cultural backgrounds, they need to
be prepared to confront not just conflicts of interests—what the
decision should be—but also procedural conflict—how to go
about decision making. Chapter Five focuses on using negotiation
strategy to make decisions in teams, particularly multicultural
teams.
Social Dilemmas
Our world is beset by commons problems, or social dilemmas—
interdependent situations in which incentives lead individuals to
take from the common pool of resources, but the more individuals
take, the more rapidly the resource disappears. The dilemma
is how to balance self-interests and common interests to cooperate
to maintain the resource. The label “commons problems” comes
from a 1968 Science article written by ecologist Garrett Hardin in
which he explained this dilemma by referring to farmers sharing
common grassland.2 But social dilemmas are age-old problems,
for example, as discussed by Thucydides:
[T]hey devote a very small fraction of time to the consideration of
any public object, most of it to the prosecution of their own
objects. Meanwhile each fancies that no harm will come to his
neglect, that it is the business of somebody else to look after this
or that for him; and so, by the same notion being entertained by
all separately, the common cause imperceptibly decays.3
and Aristotle:
That all persons call the same thing mine in the sense in which
each does so may be a fine thing, but it is impracticable; or if the
words are taken in the other sense, such a unity in no way
8 Negotiating Globally
conduces to harmony. And there is another objection to the
proposal. For that which is common to the greatest number has
the least care bestowed upon it. Every one thinks chiefly of his
own, hardly at all of the common interest; and only when he is
himself concerned as an individual. For besides other
considerations, everybody is more inclined to neglect the duty
which he expects another to fulfill; as in families many attendants
are often less useful than a few.4
The most challenging contemporary commons problems are
associated with global warming and overharvesting of shared
resources, for example fisheries and forests. As we shall see in
Chapter Six, in today’s business world price fixing and cyberattacks
can be framed as commons problems.
Negotiation strategy doesn’t solve social dilemmas, but the
strategy we will learn to use in resolving disputes also applies to
social dilemmas, in which takers need to be turned into sharers.
In Chapter Six we’ll look at a variety of types of social dilemmas
and ways to use negotiation skills to generate cooperation in these
innately competitive situations.
Negotiations Between Governments and Foreign
Direct Investors
Governments seek foreign direct investment (FDI) to develop
natural resources and access technology. They seek FDI for job
creation and the economic development that governments hope
will be a by-product. Investors seek access to resources, markets,
and low-cost labor. These clearly differentiated interests mean
there is good potential to create value in negotiations between
governments and foreign direct investors. However, when we
address these negotiations in Chapter Seven, we find that integrating
the profit-making goals of global companies with the
developmental goals of government economic policymakers is a
major negotiation challenge. Chapter Seven begins by identifying
and contrasting the interests of foreign direct investors with the
interests of governments. It then covers the challenges of actually
trying to make FDI work, including protecting legal rights when
the rule of law is weak, dealing with corruption and coming faceto-
face with one’s own ethical standards, navigating complex layers
Negotiation Basics 9
of government bureaucracy, protecting the safety of one’s own
people, and avoiding entanglement with human rights abuses.
From Contexts to Planning
Regardless of whether they are negotiating deals, resolving disputes,
or making multiparty decisions, negotiators are more likely
to fulfill their goals if they develop a strategic plan. The next
section of this chapter introduces five building blocks of a negotiation
strategy: parties; issues; positions, interests, and priorities;
power (BATNAs and reservation prices); and targets. It then
shows how to use the “Negotiation Planning Document” to organize
the information generated from analyzing these five building
blocks into an overall strategic plan.
If the negotiation jargon that follows is new to you, be easy
on yourself about trying to learn it all at once. There will be definitions,
there’s a glossary in the back of the book, and there
should be enough repetition that you will soon get comfortable
with all these useful terms.
Five Building Blocks of a Negotiation Strategy
Analyzing each of the five building blocks of negotiation strategy
will generate the information that you need to be prepared to
negotiate.
Parties
Who are the parties? When analyzing who the parties are, a good
rule is to identify the parties whose goals in conflict make it a
negotiation situation. Sometimes those parties will be at the table
representing themselves. But sometimes, as in the example that
follows, those at the table will be agents with only limited authority
to share information and make commitments.
A manager on a team representing a U.S. company describes
negotiating a lease agreement with representatives of a Saudi
Arabian company as follows:
The negotiation on the Saudi side was carried out by
“messengers.” These were often rather high-level managers,
10 Negotiating Globally
with significant Western culture experience, who nevertheless
were not making any decisions themselves but shuttling between
negotiation sessions and their bosses. Prior to a negotiation
meeting, the Saudi side always wanted a list of questions and
points that we wanted to cover, and they would get back to us,
preapproving some questions [presumably those for which
approval came from the principals] and indicating others were
not approved. We were pretty sure the information provided to
the Saudi “bosses” was being filtered by the messengers, and we
couldn’t always tell the spin they would put on information.5
Often when negotiations are complex, involving different types
of expertise or political points of view, teams of negotiators represent
each party at the table. In these situations, members of the
team representing a single party to the negotiation may have quite
different and conflicting goals. For example, in 2010 when Google
was negotiating with the Chinese government to renew its license
for its local Chinese domain name, google.cn, there were factions
with different goals within each party. On the Google side there
were the visionaries who believed that Google had compromised
its “don’t be evil” values in 2006 when Google agreed to Chinese
government censorship of searches in return for the google.cn
domain name. But Google was also represented by professional
managers who saw Google’s mission as creating shareholder value.
On the Chinese side in 2010 were the ideologues concerned with
protecting the sovereignty and power of the Chinese state and
those who were primarily concerned with how free access to the
web would support economic development in China.6 When the
counterpart brings a team to the table, you need to address two
issues. First, why are they bringing a team? What expertise or political
perspectives are represented by team members? Second, are
team members’ goals likely to be in conflict, as in the Google negotiation
in China? What are those conflicting goals?
In other negotiations, the goals of the parties at the table may
not be the same as the goals of the people who are going to be
affected by the negotiated agreement, and who then try to sabotage
the agreement. The French branch of an international
consulting firm learned to pay attention to who the ultimate
clients are when they negotiated a contract to audit the efficiency
of several ministries of a North African nation. Contract negotiations
went smoothly, but in starting the audit the French
Negotiation Basics 11
consultants were stymied by the lack of cooperation of people
in the ministries being audited, who feared they would lose
jobs and power as a result of the audit. Failure to take into
account the concerns of parties who are not at the table but will
be affected by the agreement is a classic mistake that jeopardizes
implementation.
After identifying the parties, you can turn to an analysis of the
issues.
Issues
Negotiators usually know what issues are important to them, but
sometimes fail to consider what issues are important to the counterpart,
or fail to heed the intangible issues, such as reputation in
the bicycles example discussed earlier. Here are some strategies
for identifying issues prior to the negotiation:
• On your own side of the table, consult with those who will be
affected by the negotiated agreement to make a list of issues.
• Have someone take the role of the counterpart to come with
a list of issues that are important to the counterpart.
• Ask the counterpart to send over a list of issues; send your list
to the counterpart.
• Have a pre-meeting with the counterpart just to discuss issues
(and use that meeting as an opportunity to build a
relationship).
Of course, some parties may be reluctant to share information
about issues, fearing that by identifying important issues they will
make themselves vulnerable to exploitation. We will talk in detail
in Chapter Three about how to get information sharing going. As
a preview, it may be necessary to put a list of issues on the table
and ask the other party “what are we missing?” or even make a
multiple issue offer designed to get the issues out and under
discussion.
Positions, Interests, and Priorities
Negotiators need to know six things about each issue: their own
and their counterpart’s position on the issue, their own and their
counterpart’s interest underlying that position, and their own and
12 Negotiating Globally
their counterpart’s priority for that issue. A position is what the
negotiator wants with respect to the issue. For example, my position
in the pumpkin negotiation was to buy all of Mme. Petit’s
pumpkins. Underlying that position are one or more interests. An
interest is the answer to the question, Why is the negotiator taking
that position? Interests are the needs, concerns, motivations, and
goals that underlie positions. The key to uncovering interests is
asking why and why not questions. That worked for me with Mme.
Petit: I asked her why she would not sell me all her pumpkins,
and she revealed her interest in the seeds. However, such direct
questioning might not work with everyone, everywhere in the
world. As we will discuss, it depends a lot on communication and
trust.
The now classic introduction to negotiations, Getting to Yes,
urges negotiators to get behind positions to interests.7 This is
excellent advice because focusing on interests will give you a more
flexible goal than focusing on positions. By my focusing on my
interests (pumpkins to carve) and Mme. Petit’s focusing on hers
(seeds to replant), we were able to transform the issue over which
we were in conflict—how many pumpkins she would sell me—to
an issue over which we had no conflict—when I would deliver the
seeds to her.
Once Mme. Petit and I shared interests, it became clear that
seeds were her priority and rind was mine. The integrative agreements
that Getting to Yes extols, and Mme. Petit and I reached,
come from trading off a low-priority issue (for me, seeds) for a
high-priority issue (for me, rind). This means that you need to
prioritize—to rank-order the issues on the basis of your interests.
In a multi-issue negotiation, it’s unrealistic to expect to get your
position on every issue. But you can probably get more on the
issues that are more important to you if you are willing to concede
on the issues that are less important.
Power: BATNAs and Reservation Prices
A major source of power in a negotiation is what you are going
to do if you cannot reach agreement and how good that alternative
is.8 Getting to Yes introduces the acronym BATNA to stand for
your Best Alternative To a Negotiated Agreement. If your BATNA
Negotiation Basics 13
is good (and your counterpart knows that it is good), you can
demand more and likely receive more from your counterpart. If
your BATNA is poor (and your counterpart knows that it is poor),
you can still make a high demand, but the counterpart is not likely
to offer much more than your alternative.
It is for these reasons that negotiators around the world are
very reluctant to reveal their BATNAs to their counterparts, and
lying about BATNAs is widespread. When your counterpart knows
your BATNA, the counterpart knows you should be willing to
settle for something only just slightly better than this best alternative.
You can see why negotiators are tempted to lie about their
BATNAs. If you lie convincingly about your BATNA, your counterpart
should offer more to close the deal.
The problem with lying about alternatives is the reputational
implications of getting caught lying. Counterparts who know the
markets in which they are negotiating are seldom taken in by lies.
Those who find out they have been lied to have long memories
and a tendency to retaliate. Reputation once lost is difficult to
regain. I was talking to a group of commodity traders recently
about lying in negotiations. There is a lot of information available
to buyers and sellers in commodity markets. Liars get caught. “We
know who the liars are,” they told me. “We tell them, ‘Hey, if you
can get it at that price, go right ahead.’ ” But these commodities
dealers also added some good advice. They said, “We’re careful
though when the liar calls back an hour later asking for our price
again, not to call attention to their lying. At the same time we
don’t forget who the liars are. When we move to a new desk we
give our successors a list of the liars.”
Negotiators not infrequently have multiple alternatives from
which to choose the best. Beginning the BATNA acronym with
best recognizes that negotiators need to determine which among
multiple alternatives is the best alternative. For example, I had
several alternatives when negotiating for the incense burner in
the souk in Xian, China. I really wanted a souvenir of my trip to
Xian, and I liked the idea of the incense burner. I knew I could
try another shop in the souk. I had seen similar incense burners
in other shops that day. That was my best alternative, but of course
I also could have bought something else as a less expensive souvenir,
or gone home without any souvenir at all. The shopkeeper’s
14 Negotiating Globally
best alternative to selling to me was to sell the incense burner at
a bigger profit to another tourist. (I noticed the market was not
crowded, but thought maybe the tour buses would come in later.)
Both of our BATNAs were uncertain, which no doubt encouraged
us to reach an agreement.
How do you determine which alternative is best? In general,
you need to order your alternatives with respect to the degree to
which they meet your interests and priorities.9 For example, if
your company wants to acquire a new technology, you might buy
another company that owns patent rights to that technology, or
you might license that technology, or you might develop your own
competing technology. The anticipated costs and gains will be
different, depending on which option you choose. Analyzing
these costs and gains is an essential step in business strategy that
precedes negotiation. Once the analysis is done, negotiations can
proceed with the counterpart that holds the lowest-cost, highestgain
choice. But this choice is not static. When negotiations with
the first choice are not going well, negotiators may threaten or
actually break off negotiations and start anew with the second-best
option.
How do negotiators know when to turn to the BATNA? This
requires the introduction of another negotiation concept: reservation
price (also called “walk away” or “bottom line”). Your reservation
price is the most that you are willing to give or the least you are
willing to take to reach a negotiated agreement. To set your reservation
price, you must know your BATNA. Your reservation
price is a just-noticeable difference from your BATNA. I like to
think of reservation price as being inside the negotiation and of
BATNA as being outside the negotiation.
Knowing your reservation price gives you discipline in negotiations.
You can tell yourself (and others), “If I can’t get this
much out of the deal, I’ll walk away to my BATNA.” You know that
until you have an offer that meets or exceeds your reservation
price, you do not have an offer that you can accept.
Setting a reservation price can be challenging. People seldom
go into negotiations with absolute certainty about the cost, value,
and availability of the BATNA. For example, I was fairly certain
I could find a similar incense burner at a nearby shop, but I
didn’t know whether or not I could buy it at a lower price than
Negotiation Basics 15
what the current shopkeeper was offering. Negotiators need to
consider all these aspects of the BATNA: cost, value, and availability
when setting a reservation price. In general the rule is the
greater the uncertainty about the BATNA, the more you should
discount its value when you use it as a standard for setting a
reservation price.
Here is some advice for setting BATNAs and reservation
prices:
• Understand how what you are planning to negotiate fits into the
larger strategic picture. What’s the goal of this negotiation? To
enter new markets? To gain access to new technology? How
else might the goal be met than by completing this
negotiation?
• Know your BATNA. You always have a BATNA, even if it is
simply staying with your current course of action.
• If your BATNA is poor, try to improve it. Generate a better
alternative.
• Use your BATNA to set a reservation price. Do not change your
reservation price unless you receive new, credible information
that changes your BATNA. Credible information about your
BATNA is not likely to come from the other party. After all,
it is in that party’s interest for you to think your BATNA is
poor.
Targets
Your target is what you reasonably think is possible to get in a
negotiation. It should be optimistic, but not ridiculous! Having a
target will keep you negotiating even after you know that you can
agree because you’ve already received an offer that is better than
your reservation price. Having targets helps negotiators fashion
agreements that meet their interests. It’s very important to set a
target—and challenging to do!
The rule for setting targets is to base them on the other party’s
BATNA. Be a little more generous than your analysis of the counterpart’s
BATNA, and if he is rational, he will understand that
your offer is better than the best he can do elsewhere. Admittedly,
in practice it is even harder to evaluate the other party’s BATNA
16 Negotiating Globally
than your own. There are several reasons why. First, you usually
lack information about the other party’s BATNA. Second, it is
difficult to get deeply enough into the other party’s mind to know
exactly how he evaluates the BATNA. And, third, he may not be
rational about the BATNA, and decide that regardless of the value
of the BATNA, after negotiating with the likes of you, he does not
want to do business with you!
A fallback in setting a target is to find out about precedents or
standards of comparison, what Getting to Yes calls objective standards.10
When buying a house you know to find out what other houses in
the neighborhood sold for. You also know to find out about the
particular house you are interested in: how long it has been on
the market; why the sellers are selling. Precedents help you make
decisions when BATNAs are unclear or uncertain. When you have
a dispute with a supplier, you ask your lawyer how much disputes
like yours normally settle for (and how long it will take), and then
you evaluate this particular supplier. Is the supplier engaged in
other disputes? Are you an important customer? Is reputation at
stake? All this information will help you set an optimistic but
realistic target.
Here is some advice for setting targets:
• Know your industry and market. What are the characteristics of
recent negotiations like this one? Get as much information
about them as possible.
• Determine if there is reason to think the environment has changed
since the most recent similar negotiation.
• Determine what the other party’s BATNA is. The other party is
not going to agree to something that is worse than its
BATNA.
• Be optimistic and realistic.
• Don’t lose sight of your target as soon as you get an offer better than
your BATNA. Keep working toward the target.
Combining Fundamentals
We’ve just gone through five key building blocks of negotiation
strategy: parties; issues; positions, interests, and priorities; power
(BATNAS and reservation prices); and targets. Combining the
Negotiation Basics 17
information each provides is the purpose of what we call the
“Negotiation Planning Document.” While its name includes the
word planning, as we will see, the document will also be useful
when evaluating a potential agreement.
The Negotiation Planning Document
The Negotiation Planning Document, illustrated as a template in
Exhibit 1.1, is a one-page tool for organizing the information
associated with the five building blocks of negotiation strategy.
Completing it means you’ve identified the parties; the issues; and
your own and the counterpart’s positions, interests, and priorities,
as well as your BATNA, reservation price, and target. The template
models a two-party negotiation, but by adding columns for
additional parties, you can adapt the same format for multiparty
negotiations. With additional columns you can add in the different
perspectives of members of a negotiating team. Even in a
two-party negotiation you may want to add columns for the parties
who will not be at the table but who have interests in and influence
over the negotiation. You can also use the completed
planning document to explain your strategic analysis to your boss
and get authorization for a reservation price as well as your strategic
approach to the negotiation, the theme of Chapter Three.
Completing the counterpart’s column in the planning document
is challenging. Trying to do so makes clear what you think
you know about the counterpart’s positions, interests, and priorities,
and what you don’t know and need to find out. Verifying what
you think you know about the counterpart’s positions, interests,
and priorities, and finding out the information you don’t know
about them, should be your first order of business once negotiations
begin.
Here’s how to read and use the Negotiation Planning Document.
There should be a column for each party to the negotiation,
including yourself, and a row for every issue. The intersection of
row and column makes a box that is further subdivided into three
parts. Write the position on the issue in the top part of the box
and the interest underlying the position in the bottom part of the
box, then put a number indicating the priority of the issue in the
space to the left. At the bottom of the planning document are
18 Negotiating Globally
rows for entering BATNAs, reservation prices, and targets. You are
really not ready to begin negotiating until at least your column of
the planning document is complete. You may not be able to complete
the counterpart’s column with a lot of confidence, but not
being sure about where the counterpart is coming from with
respect to positions, interests, priorities, and BATNA is no excuse
for leaving the counterpart’s column blank. Spend some time
Exhibit 1.1. Negotiation Planning Document.
Isssue Self Other
Key Position Position
Priority Interests Priority Interests
Issue 1
Issue 2
Issue 3
Issue 4
Issue 5
Issue 6
Issue 7
BATNA
Reservation
Price
Target
Negotiation Basics 19
thinking about answering the questions posed by the blank
boxes in the counterpart’s column. Talk to others about the
counterpart’s interests and priorities and BATNA. Use informal
opportunities to acquire information to fill in those empty boxes.
Consider the opening rounds of the negotiation as a time to verify
and complete the planning document.
From Planning to Evaluating Agreements
The Negotiation Planning Document also provides quite a bit of
the information you need to evaluate offers and potential agreements.
Negotiators all over the world want to “win,” and you
should, too. At the same time, negotiators are frequently uncertain
about when to accept an offer and end the negotiation. They know
they shouldn’t agree to an offer that is worse than their BATNA,
although evidence about the agreement bias in negotiations suggests
that some negotiators fall into this trap.11 Having your BATNA
and reservation price clear in the planning document can help
to minimize agreement bias. But negotiators are frequently not
so sure how to decide whether to stop negotiating and accept an
offer that is better than their BATNA. The planning document is
also helpful in making the decision to accept an offer.
Evaluating Potential Agreements
The Negotiation Planning Document and these four criteria are
useful for evaluating potential agreements:
• Is the offer better than my BATNA?
• Does the offer meet my interests?
• Does the offer meet my counterpart’s interests?
• What are the transaction costs of continuing to negotiate?
○ How much time and energy have we committed to this
negotiation?
○ How much time and energy would be required to continue
negotiating?
○ Will continued negotiations improve or hurt the
relationship with the counterpart?
○ How likely will continuing negotiations result in an
improved agreement?
20 Negotiating Globally
Evaluating potential agreements against the BATNA in
the planning document has three important implications
for the negotiators’ own outcome or net value. (Net value refers to
the difference between the value to the negotiator of the potential
agreement and the value to the negotiator of the BATNA.) First,
identifying the BATNA helps negotiators clarify the minimum of
what they need in terms of value to say yes to a potential agreement.
Second, identifying the other party’s BATNA helps
negotiators identify how much they can ask for at the negotiation
table. (Recall that in setting up the Negotiation Planning Document
you can use information about the counterpart’s BATNA to
set your target.) Third, thinking net—considering how much better
you are doing than your BATNA—helps negotiators avoid
satisficing—that is, accepting an outcome just a tiny bit better than
the alternative. Thinking net helps negotiators stay motivated to
find an outcome that is closer to their target than to their BATNA.
Evaluating potential agreements against the negotiator’s own
interests as opposed to positions has the important implication
of encouraging creative solutions. Note that in the pumpkin
example, once Mme. Petit and I got beyond our positions and
shared information about our interests, we were able to craft a
creative agreement in which both of our interests were met in
a way that neither of us had contemplated at the outset of the
negotiation.
Evaluating potential agreement against the counterpart’s
interests not only encourages creativity and settlements, it also
increases the potential value for individual negotiators to claim.
When negotiators fail to pay attention to their counterparts’
interests and fail to use information about their own and the
counterparts’ interests and priorities to make trade-offs, they
leave value on the table that no one gets, with the result that the
value they can claim is limited.
Exhibit 1.2 will help you understand this very important point
about negotiation strategy: if you do not care about meeting the
counterpart’s interests, you will hurt your chances of claiming
value and meeting your own interests. The graph in Exhibit 1.2
shows some of the results from a negotiation simulation that I
have used with managers all over the world. Colleagues and
I collect the agreements that managers negotiate as the first
Negotiation Basics 21
exercise in executive education workshops. We assign managers
to the role of the buyer or the seller, give them confidential information
for their role, provide at least an hour to prepare with a
same-role counterpart, and then split them up to negotiate one
on one with an opposite-role counterpart for seventy-five minutes.
There are four issues in the negotiation, and all are financial. This
makes it easy to score the exercise and to see which negotiators
made the trade-offs meeting each other’s interests and capturing
the entire $5.08 million in potential joint gains. (Joint gains are
the sum of the buyer’s net value and the seller’s net value.) The
data in the exhibit are from intracultural negotiations; that is,
managers from particular countries were negotiating with their
countrymen. The first result to notice in Exhibit 1.2 is that, on
average, negotiators from all over the world fail to take full advantage
of the maximum potential in the exercise. The best
negotiators on average leave about $1 million of value on the
table that neither party gets. (Why they do so is a problem of
strategy—the subject of Chapter Three.)
To see the point about hurting your own net value because
you were not sufficiently concerned about helping the
Exhibit 1.2. Individual and Joint Gains
Within and Across Cultures.
5
Millions of Dollars
0
United States
Brazil
China
France
Germany
Hong Kong
India
Israel
Japan
Russia
Thailand
4
3
2
1
Seller Buyer
22 Negotiating Globally
counterpart maximize his net value, look at the shading in the
bar chart of Exhibit 1.2. When joint gains are lower (for example,
the results for Chinese or Indian negotiators), both buyers and
sellers’ net values are lower, but when joint gains are higher (for
example, the results for Brazilian or American negotiators), both
buyer and seller’s net values are higher than those of Chinese and
Indian buyers and sellers. The data in Exhibit 1.2 show that it is
in negotiators’ self-interest to search for agreements that meet
their own and their counterparts’ interests.
Transaction costs refers to the time, money, and energy that
negotiators put into planning and executing a negotiation. High
transaction costs can be justified if the result is an agreement that
over time actually yields high net value to both parties. Often,
however, it is difficult to judge whether, by persisting in a frustrating
negotiation that does not seem to be making much progress
toward agreement, you will ultimately reach a high net value
agreement. There are two analyses to do to help you make the
decision to end a negotiation by accepting an offer or declaring
an impasse. As discussed earlier, the first analysis is to compare
the value of the offer to the value of your BATNA. The second
analysis covers a point we have not yet discussed—the nature of
your relationship with the other party.
Rationally, if the negotiation is stalled after significant effort
and you do not have an offer that is better than your BATNA, you
should cut your losses and turn to your BATNA. On the other
hand, if progress stalls but your BATNA is poor, it’s time to invest
significantly more effort in building a relationship and in becoming
creative about how to resolve the impasse.
Negotiations are not just about economic outcomes but also
about relational outcomes.12 Some negotiations are about building
new relationships, others about extending, managing conflict
in, or ending old relationships. Negotiators from some parts of
the world assume that if they can negotiate high-joint-gains economic
agreements, a trusting relationship will follow. Yet, as we
begin to talk about culture and trust in subsequent chapters, it
will become clear that negotiators from other cultures assume
that economic gains will follow from relationships. Leaders of the
American private equity group Blackstone and the Brazilian
Negotiation Basics 23
private equity group Pátria spent more than ten years building a
relationship that ultimately culminated in a $200 million equity
investment in Pátria by Blackstone.13 Savvy global negotiators
patiently engage in building and maintaining relationships and
extending networks even when there is no obvious immediate
payoff.
Strong relationships between parties to a negotiation have
long-term payoffs. Though parties can negotiate contingent contracts
or hedge elements of agreements that are predictably
unpredictable, the environments in which agreements are reached
are often dynamic in unpredictable ways. In the rush to gain access
to new consumers, markets get misread. Political, economic,
social, and technological environments change. Some negotiated
agreements seem to promise high net value but fail to deliver on
actual gains, due to factors outside either party’s control. Parties
that develop a trusting relationship can often accept that environmental
shocks are no one’s fault and from there proceed to
renegotiate. In the absence of a trusting relationship, depending
instead on the contract, parties may be unable to renegotiate and
end up in court or arbitration or even just selling out to get out
of the relationship. This is what BP ultimately did in 2012 to end
its involvement in the 50-50 joint venture in the Russian oil and
gas industry that was called TNK-BP. The joint venture, formed in
2003 between BP and a group of Russian investors (AAR), was
profitable and grew to be Russia’s third largest oil company by
output, even though it was plagued from the outset by internal
governance problems. But the death blow to the TNK-BP was a
change in the environment. The Russian government had privatized
much of its oil and gas sector in the 1990s, selling to tycoons
such as the AAR investors, and seeking technology and know-how
from foreign investors such as BP to revitalize an unproductive
industry. This policy changed in 2000 as President Putin sought to
reestablish government control of the effectively revitalized oil
and gas sector, which brings in half of all of Russia’s tax revenues
and is a major source of international influence. BP sold its stake
to the Russian-government-controlled Rosneft in October 2012,
and the AAR investors sold their stake also to Rosneft in December
2012.14
24 Negotiating Globally
Moving on to Culture
In this opening chapter, we’ve reviewed the basics of negotiation,
focusing on the contexts in which people negotiate, the fundamental
elements of negotiation strategy, and how to evaluate
negotiated agreements. The rest of the book will put these ideas
into action. Doing so is complicated by many factors, including
the negotiators’ cultural background and the cultural context
of the negotiation. Chapter Two addresses how and why culture
affects negotiation.
This chapter introduces a model that describes how culture
affects negotiation. To use this model to anticipate and prepare
for negotiating globally, we first need some basic understanding
of what culture is and how people act and societies are structured
in different cultures. With this understanding, we can then
begin to understand how culture affects negotiation, and how we
need to adjust our strategic negotiation planning for culture.
What Is Culture?
Culture is the unique character of a group.1 Individuals have personalities;
groups have cultures. You can see culture in the patterns
of peoples’ beliefs, attitudes, norms, and behaviors as well as in
the nature of the social, economic, political, legal, and religious
institutions that structure and organize groups.
Anthropologists suggest that culture emerges because people
are faced repeatedly with similar social problems,2 for example,
the problem of negotiation when people who are interdependent
have conflicting interests. People develop procedures, such as a
negotiation strategy, to solve those problems of social interaction.
Then when similar problems arise later, people repeat the same
procedures and teach others to use them. The result is a cultural
25
2
Culture and Negotiation
26 Negotiating Globally
norm, or standard of appropriate behavior, that guides effective
social interaction. For example, in some cultures people greet
each other by kissing, others by bowing, and others by shaking
hands. All these different greeting behaviors are equally functional
within culture; all signal recognition and respect within
culture.
The important thing to understand about the different cultural
norms that guide social interaction is that one culture’s
norms are no better or worse than another culture’s norms. The
norms are just different. Understandably, people are most comfortable
with the norms they learn at an early age, because by
following those norms they can get along fine socially without a
lot of thought and effort. The problems arise when one tries to
“get along” in a culture in which norms for social interaction are
quite different from those one is used to. Greeting via cheek
kissing is not widely practiced in Japan; bowing is not widely practiced
in France. Violating a culture’s greeting norms has the
ironic effect of being disrespectful when your intention was just
the opposite, to signal respect.
Greeting norms also provide a ready example for understanding
cultural prototypes. A cultural prototype describes the way that
many people in a culture act: many Japanese bow in greeting;
many French cheek kiss when greeting. But not everyone in a
particular culture follows the prototype. This is why scholars and
laymen like to represent culture in terms of a bell curve. The area
under the bell is the central tendency or prototype.
We’ve drawn two bell curves in Exhibit 2.1 to represent cultural
differences in greeting behavior in Japan and France,
although the base or x-axis of the figure can represent any cultural
characteristic. Here we’re showing physical distance in greeting
behavior. Japan bell curve to the right shows high physical distance
in greeting behavior; for example, bowing. The France bell
curve to the left shows physical distance in greeting behavior as
low; for example, kissing.
The bell curves in Exhibit 2.1 illustrate four important features
of cultural prototypes: central tendency, its location, cultural
tightness-looseness, and cultural overlap. The central tendency of
a cultural prototype is the 95 percent confidence interval around
the central point of the curve. It’s the unshaded area within each
Culture and Negotiation 27
culture’s curve in the exhibit. What you see immediately is that
Japan’s bell curve is higher, tighter, and located more to the right
than France’s, meaning that physically distant greeting behavior,
such as bowing, is commonly practiced in Japan. France’s bell
curve in contrast is lower, looser, and located more to the left than
Japan’s, suggesting that greeting behavior is generally physically
close in France, but varies quite widely, because most people
exchange kisses but some embrace and others shake hands.
Cultural tightness refers to the extent to which cultural norms
are relatively inflexible and formal, generating little within-culture
variation, as illustrated in the Japan bell curve in the exhibit.
Cultural looseness refers to the extent to which cultural norms are
relatively flexible, generating improvisation and interpretation
and greater variation of behavior within the culture, as reflected
by the France bell curve.3 As a result of cultural tightness-looseness,
the cultural prototype or central tendency is going to be a better
predictor of peoples’ behavior in a tight culture than in a loose
culture.
The exhibit also illustrates cultural overlap between France
and Japan. This might be greeting behavior at the point of shaking
hands. Some cultures are more similar than others. In our example
of physical distance in greeting behavior, we chose two cultures,
Exhibit 2.1. Cultural Stereotypes and Cultural Prototypes
of a Greeting Behavior.
Low Physical Distance in Greeting Behavior High
Frequency
France Japan
Kiss Shake
Hands
Bow
28 Negotiating Globally
Japan and France, that are quite different. If we had shown Japan
and South Korea, the two countries’ bell curves would have overlapped
in the bow region of the graph. It we had chosen France
and Italy, the two countries’ bell curves would have overlapped in
the kiss region of the graph.
One reality of culture that Exhibit 2.1 doesn’t illustrate is that
cultural boundaries are not as neat as the two adjacent curves
might suggest. Culture is rather like a Matryoshka (one of those
Russian nesting dolls): when you open the larger doll, there are
smaller dolls inside. There are always cultures within cultures
within cultures.
In this book we are going to talk about cultural boundaries
in two ways: geographical regions and nations. In this chapter, in
which the goal is to introduce you to important cultural differences
that can affect negotiation strategy, the discussion of culture
focuses on broad geographic regions of the world that share cultural
characteristics. In the negotiation strategy chapters to come,
the examples and the research data are situated primarily within
national boundaries. Nations are actually a pretty good way to
define cultural boundaries when preparing to negotiate globally,
because they define elements of culture—the political, legal, economic,
and social environment—within which people normally
negotiate, and which, as we will see, affect how they negotiate.
The challenge of negotiating effectively in a global environment
is in navigating cultural differences to achieve your goals
without compromising your integrity. To do so you need to be
able to recognize cultural behavior as such when you encounter
it, and then know how to respond appropriately.
Three Prototypes:
Dignity, Face, and Honor Cultures
Most people are familiar with the East-West cultural divide that
distinguishes ways of thinking and governing, grounded in Confucian
philosophy versus Aristotelian logic. This distinction between
East-West cultural prototypes remains valid today, but it ignores
vast geographic regions of the world, such as the Middle East and
Latin America, where global negotiators are also active. Fortunately,
recent cultural analysis has identified a third cultural
Culture and Negotiation 29
prototype that is worth our attention for its unique characteristics
and their implications for negotiation. This new analysis distinguishes
among dignity culture, familiar as Western culture, face
culture, familiar as East Asian cultures, and honor culture, which
is the prototypical culture in the Middle East, Latin America, and
North Africa.
There is no single explanation for why a certain cultural prototype
should be located in a certain part of the world. However,
scholars generally agree that differing political solutions (for ex –
ample, strong or weak rule of law), economic systems (for example,
controlled or uncontrolled markets), and social solutions (for
example, individualism versus collectivism) emerged in response
to geographic challenges (including, for example, access to abundant
versus scarce agricultural crops) and demographic challenges
(for example, population density).4 We suggest that this dignity,
face, and honor culture typology is relevant to negotiation because
people in these three different types of cultures analyze social
problems rather differently.
Exhibit 2.2 describes dignity, face, and honor cultures in terms
of six sets of characteristics: self-worth, power and status, sensitivity
and response to insults, confrontation style, trust, and mindset.
These are by no means the only characteristics that distinguish
these cultures, but they are ones that are particularly relevant to
how people negotiate. Self-worth refers to a person’s sense of his
or her own value in society. Power refers to a person’s ability to
influence an outcome. Status refers to a person’s position in a
social hierarchy. Sensitivity and response to insults refers to the way
a person is affected by and responds to another’s offensive behavior.
Confrontation style refers to how a person responds when faced
with defiance, opposition, or hostility. Trust is the willingness to
make oneself vulnerable to another person.5 Mindset refers to the
way people reason and process information.6
As you begin reading about the dignity, face, and honor
culture prototypes, you are likely going to be thinking: but I know
Americans who are not like that; I know Chinese who are not like
that. Remember though, we are not describing particular individuals
but cultural prototypes, or central tendencies of thought
and action that have developed historically in those cultures and
still hold, even if not practiced by all people in that culture. We
30 Negotiating Globally
should assume neither that all people in a particular honor
culture, for example Iran, follow all norms of honor culture, nor
that all honor cultures, for example Iran and Mexico, are the
same with respect to each of the characteristics described in
Exhibit 2.2. Remember, too, those Russian dolls. There are subcultures
within cultures; not everyone is going to act exactly like
the cultural prototype. For example, in dignity cultures people
generally are self-interested and they generally are not shy to
negotiate to achieve their goals, yet we know that American
Exhibit 2.2. Characteristics of Dignity, Face,
and Honor Cultures.
Characteristic Dignity Face Honor
Geographical
Location
Western
Europe
North America
East Asia Middle East
North Africa
Latin America
Self-worth Selfdetermined
Variable
Socially
conferred
Stable
Socially claimed
Dynamic
Power and
Status
Egalitarian
Dynamic
Hierarchical
Stable
Hierarchical
Dynamic
Sensitivity and
Response to
Insults
Low
sensitivity
Medium
sensitivity
High sensitivity
Confrontation
Style
Direct
Rational
Unemotional
Indirect
Control and
use emotions
Refer to social
superiors to
punish
Direct and
indirect
Express emotions
Take matters into
one’s own hands
Trust Swift trust of
in-groups
and outgroups
Trust of
in-groups and
distrust of
out-groups
Distrust of
out-groups and
often also
in-groups
Mindset Analytic Holistic Analytic and
holistic
Culture and Negotiation 31
women tend not to negotiate their employment contracts.7 Our
purpose in discussing dignity, face, and honor cultural prototypes
is to help you see cultural differences that may affect negotiation
strategy.
Dignity Cultures
Dignity culture is the prototype of Western society.8 The key characteristic
of dignity culture is the emphasis on the individual.
Self-worth—one’s value to society in dignity culture—is selfdetermined
or intrinsic, independent from social status, and
therefore quite stable even in social situations that are much more
threatening to self-worth in other cultures. In such an environment,
people are quite concerned for their own welfare, and
rather less concerned about the welfare of others.
The social independence of dignity means that there is no
presumption of social hierarchy in dignity cultures; each person
is as good as any other. People in dignity cultures view themselves
as equal to every other member of the society, and this view is
reflected in the egalitarian governments and market economies
characteristic of these cultures.9 Historically, the ideology of
market economies and dignity (that is, intrinsic sense of worth)
have developed together in environments that had abundant
resources, low population density, and strong governments that
could protect individuals’ property rights from violence.10
Interactions in Dignity Cultures
When self-worth is intrinsic, not socially determined, it is not
easily threatened in social interactions such as negotiations; in
other words, your refusal to accept my offers is a reflection on
you not me. People in dignity cultures are pretty good at maintaining
their sense of self-worth, regardless of the way others
behave toward them.11 If an insult does not damage one’s selfworth,
there is no need to reciprocate the insult. Indeed, intrinsic
self-worth provides the resilience to turn back insults, for example
by implying that it is the insulter who lacks dignity (Who are you
to say that to me?).12
Nevertheless, people in dignity cultures certainly care about
respect.13 And, consistent with their intrinsic sense of self-worth,
32 Negotiating Globally
they are likely to perceive conflicts in terms of violations of individual
rights and autonomy.14 At the same time, dignity cultures
afford several factors, less present in other cultures, that insulate
members from the need to retaliate. As we have discussed, one
insulating factor is the resiliency of dignity that resides largely in
the self, rather than depending on social support. Strong norms
in dignity cultures that encourage direct, rational, and unemotional
confrontation of conflict are a second insulating factor.
Recall the pumpkin example in Chapter One? When Mme. Petit
refused to sell me all of her pumpkins, my approach was direct—I
asked her why not. Mme. Petit’s approach was also direct—she
told me she needed the seeds. Since we were both using the same
normative approach, we quickly reached a workable agreement.
The American manager in the data example in Chapter One also
used a direct approach when asking his Chinese counterpart for
more data. He didn’t even think he was engaged in conflict until
her boss called him in. As we will see when we turn to discussing
face culture in the next section, the American manager’s dignity
culture norms did not match Chinese face culture norms about
how to address a conflict.
A third insulating factor is the rather well-developed rule of
law that is common in dignity cultures.15 Dignity cultures acknowledge
that the prevalent norm of self-interest16 will lead to a loose
culture that needs some reigning in. The rule of law in these
societies channels and restricts conflict when self-interest gets out
of hand, but still allows for the direct confrontation of disputing
parties in courts and alternative dispute resolution systems. (There
will be more about this in the dispute resolution chapter.)
Trust in Dignity Cultures
People in dignity cultures tend to be trusting of others. They trust
swiftly and on faith,17 believing that others deserve to be trusted
until they prove they are not trustworthy.18 The belief in trust is
bolstered by the norm of reciprocity—treat others as they treat
you.19 People in dignity cultures largely assume that when they
treat others as trustworthy, others will treat them as trustworthy.
Trusting signals integrity and trustworthiness. So long as enhancing
the welfare of others by trusting promotes, or at least does not
hurt, their own self-interest, they will do so.
Culture and Negotiation 33
Relying on positive reciprocity to manage interdependence is
also wholly consistent with the relatively egalitarian distribution
of power in dignity cultures. It’s not easy to get others to do what
you want in egalitarian cultures; they push back with their own
ideas! When people cannot rely on status and authority for power,
they fall back on trading and reciprocity to get things done. “If
you’ll do this for me, I’ll do that for you.” Then when what they
have to trade isn’t enough for the other, instead of being insulted,
they just go off and look for someone else to trade with.
An Analytic Mindset
People in dignity cultures tend to use Aristotelian logic when they
reason.20 They break up problems such as negotiations into separate
elements or issues, prioritize, and search for logical and
linear rules to explain causality. Abstract linear thinking is so
pervasive in Western culture that people often don’t notice its use.
Yet it is the model underlying the five-paragraph essay that American
high schools use to teach writing. It is what my lawyer husband
and lawyer daughter are using when I eavesdrop on their case
discussions. It is the way dignity culture negotiators organize
information. It underlies the structure and rules for building a
Negotiation Planning Document.
Face Cultures
Face culture is the prototype of East Asian societies.21 The key
characteristic of face culture is the emphasis on the interests of
the collective, relative to those of the individual. (By collective we
mean the groups to which people belong.) Self-worth—one’s
value to society in face culture—is socially conferred. Face depends
on a person’s relative position in a stable social hierarchy, and on
fulfillment of the person’s role obligations in that society.22 Thus
people are very concerned with the status and welfare of the
groups from which they derive face.
Face cultures are very stable hierarchical social structures. The
fundamental group in face culture is the family, and the unequal
hierarchical relationships that are characteristic of families reflect
the unequal hierarchical social structure of the rest of face societies.
23 Face cultures consist of hierarchies within hierarchies, rather
34 Negotiating Globally
like those Russian nesting dolls. Historically, face cultures have
developed in densely populated geographical areas, where their
stable hierarchical social structures facilitated the cooperation
necessary for organized food production. Although the modern
East Asian nations of Japan and South Korea are democratic, their
social structures remain very hierarchical.
Interactions in Face Cultures
Because self-worth in face cultures is a function of a person’s
relative social position in a group, it is not too easily threatened
unless the status of the group also is threatened. Japanese, for
example, view conflict as violations of duties and obligations.24 In
addition, three characteristics of face cultures help to preserve
the social status quo: norms for harmony, norms of indirect confrontation,
and that ubiquitous hierarchy.25 Norms for harmony
increase the threshold of people’s tolerance for insult or conflict.
Norms of indirect confrontation deter aggressive retaliation of
insults and conflict. Hierarchy provides an institutionalized,
although indirect, channel for face-saving resolution of conflict.
The Chinese manager in the example in Chapter One was likely
motivated by all these norms when she took her American colleague’s
request for data to her boss rather than telling the
American directly she would not provide the data. From her perspective,
directly rejecting the American manager’s request for
data would have been disrespectful and would have threatened
their harmonious peer working relationship—he would have lost
face. In contrast, by taking the request to her boss, she was engaging
in an appropriate indirect response and use of the social
hierarchy. In face cultures, due to deference to hierarchy there is
no loss of face when being told no by a higher-status member of
the society.
Although these norms for harmony, indirect confrontation,
and deference to hierarchy bring stability to ongoing social relationships
in face cultures, as we will see, they do not govern the
process of negotiating new social relationships. New social relationships
require determining parties’ status vis-à-vis each other.
Negotiation is the opportunity to make that determination. In a
face culture, once an agreement with its implications for roles and
responsibilities has been reached, the relationship is likely to be
Culture and Negotiation 35
very stable. Do not be surprised that in face cultures negotiations
of new social relationships are highly contested. (We’ll talk much
more about this in Chapter Three.)
Trust in Face Cultures
Trust functions differently in face and dignity cultures, even
though it means the same thing. Pretty much everywhere in the
world, a trustworthy person is viewed as someone who is reliable,
benevolent, responsible, and dependable, and has integrity.26
However, the environmental factors that make a person trustworthy
are quite different in the two types of cultures.27
Smooth social interaction depends on people being able to
predict with some accuracy how others are going to behave. In
face cultures, monitoring and sanctioning by institutions such as
family, community, church, and state mean that people generally
can predict how others will behave. Scholars have data to show
that such institutions serve as reliable external guarantors of
individual behavior.28 So as long as institutional surveillance is in
place, there is little need to rely on interpersonal trust.29 Knowing
that surveillance is present is enough to cause people to act
as if they trusted each other.30 But scholars argue that although
people’s resulting trust-like behavior reflects their faith in
conformity in the presence of institutional surveillance, it does
not portend a willingness to extend trust indiscriminately and
across situations.31 Thus face and dignity cultures bring very different
perspectives on trust to the task of negotiating new social
relationships.
A Holistic Mindset
People in face cultures tend to reason and analyze problems
holistically as a result of their Confucian cultural heritage.32 When
they analyze a problem, they focus both on the problem and on
the context in which it is embedded. They are highly likely to
consider what changes in the context may have caused the
problem, and they are likely to search for solutions to problems
by comparing a problem and its context’s similarities and differences
to other problems and contexts they may have encountered
before. A holistic mindset relies more strongly on experiencebased
knowledge than does the analytic mindset.
36 Negotiating Globally
One interesting test that distinguishes between the two types
of mindsets involves showing people pictures of animals in incongruent
contexts, for example a sheep in the lobby of a building.
When asked to describe the picture, face culture (holistically
minded) people tend to talk about both the sheep and its discrepant
context; by contrast, dignity culture (analytically minded)
people tend to describe the attributes of the sheep, largely ignoring
the incongruous context.
I see this holistic mindset in action in the papers that my Asian
graduate students write when they first begin studying in the
United States. They write well and their ideas are good, but their
papers gradually build to their key insight, exploring various perspectives
before proposing a thesis of their own. My American
students start the paper with their own key insight and then systematically
and linearly unpack it (much as I am doing in this
book).
Another place I see this dignity and face difference in mindset
is when negotiators address multiple issues. An American
manager told me about negotiating in Korea. At the end of
the first day, he said, “We were elated! We had covered four
of the issues on our agenda. We thought we were on a roll! On
the second day the Koreans wanted to start over discussing the
issues we’d already discussed. We wanted to move on.”33 The
Americans in this negotiation were working with that linear
mindset and swift trust. The Koreans were approaching the negotiation
in a much more holistic and slow trust manner. In wanting
to revisit issues already discussed, the Koreans were signaling that
having talked about an issue did not mean having resolved it out
of context from the other issues. They may possibly also have
wanted to hear how consistently the Americans would talk about
the issues the second day.
Honor Cultures
Honor culture societies are distributed geographically around the
world and constitute our third prototype. Honor culture is characteristic
of Middle Eastern and North African cultures, Latin
American cultures, and to some extent, Southern European cultures.
34 In honor cultures, self-worth is an individual’s estimate of
Culture and Negotiation 37
his own value as socially claimed from and recognized by society.35
Thus self-worth in honor cultures combines elements of self-worth
as defined in dignity cultures with elements of self-worth as
defined in face cultures.
Honor cultures generally have hierarchical social structures,36
but for several reasons, those social structures are relatively unstable.
37 Historically, honor cultures developed in areas with poor
agricultural resources, economies based on herding, and weak
central governments that were not able to protect people’s property
rights.38 In these economically challenging and unstable
environments tribes, clans, and families competed and contested
with each other to establish social dominance and exert control
over resources.39 The modern history of several Middle Eastern
and Latin American countries reveals such contests: cycles of
dictatorship and repression, followed by revolutions or reforms;
brief periods of political openness, followed by coups or other
events that establish new structures of power and politics that are
strongly hierarchical.40
Interactions in Honor Cultures
In honor cultures, where social hierarchies are unstable and frequently
contested, self-worth can manifest in rather different ways
depending on whether honor is being attacked or acknowledged.
There is substantial recent research showing that people in honor
cultures respond to insult aggressively, defensively, and directly to
protect their self-worth.41 Yet because honor is conferred by
others, honor is also displayed to others (particularly strangers)
by behavior that is trustworthy42 and gracious.43
Trust in Honor Cultures
To be honorable is to be trustworthy. However, the contested
social relations that characterize many honor cultures mean that
trust may not be supported by social norms or institutional structures,
or justified by norms of positive reciprocity. Trust is restricted
to the chosen few. Fear of being taken advantage of means that
people in honor cultures tend to be slow, not swift, as in dignity
cultures, to extend interpersonal trust to strangers. And honor
cultures lack the stable institutional structures that provide the
reliable external guarantors of trustworthy behavior characteristic
38 Negotiating Globally
of face cultures. In social situations in which it is difficult to anticipate
whether or not the other party will be trustworthy, the
defensive response in honor cultures is to mistrust.
In honor cultures, trusting means putting your self-worth in
the hands of others. If you trust and your trust is reciprocated,
then you gain honor because your self-worth is ratified. But there
is the huge risk associated with trusting. If your trust is not reciprocated,
there is both a social loss of social face and also a personal
loss of self-worth—I must not have deserved to be trusted. How
different lack of reciprocation is in honor culture than in dignity
culture. In dignity culture the failure to reciprocate a trust initiative
reflects poorly on the recipient, not the initiator.
A Mindset More Analytic Than Holistic
Logically, the prevalent mindset of negotiators from honor cultures
should be more analytic than holistic, although frankly
there is not yet good research on this issue. The reason is that the
modern educational systems in Latin America, North Africa, and
the Middle East, and on the Indian subcontinent, are steeped
in the European tradition, not these cultures’ ancient civilizations.
The Spanish and Portuguese brought Aristotelian logic to
Latin America. The current Mexican school system is patterned
on France’s. The British were in Egypt, Palestine, and India, and
the French in North Africa and Lebanon until the middle of the
twentieth century. Young men and some women from these parts
of the world are routinely sent to universities in Europe, Canada,
and the United States.
Most, but not all, of the people from honor cultures you
encounter across the negotiating table are likely to be very familiar
with analytic thinking. At the same time they will also be
influenced by the philosophical and moral worldviews of the
ancient civilizations of the Middle East and Latin America that
flourished economically and politically in these regions long
before the Europeans arrived and that were in many ways more
similar to civilizations in China than to those in Europe. You will
see social vestiges of this heritage in the strength and importance
of families and religious institutions and the spirituality of the
people in these modern societies. You also may see intellectual
vestiges of the way people thought holistically about problems.
Culture and Negotiation 39
For example, these ancient Middle Eastern and Latin American
civilizations shared pictographic writing with the Chinese.
The Value of This Three-Culture Framework
Understanding self-worth, power and status, sensitivity to insults,
confrontation style, trust, and mindset from the perspective of
dignity, face, and honor culture means that when you see people
acting quite like one of these cultural prototypes, you can avoid
interpreting their behavior through the lens of your own culture
and see it instead as an expression of their own culture. This has
at least three very positive benefits for the global negotiator.
First, you can reduce the risk of jeopardizing the negotiation
due to misinterpretation of your counterpart’s behaviors. For
example, in Japan it is not the norm to look a counterpart directly
in the eye. Western culture negotiators, used to eye contact and
unaware of this Japanese social norm, can easily fall into the cultural
misinterpretation trap, inferring that their Japanese
counterpart is not trustworthy.
Second, recognizing the cultural source of your counterpart’s
extremely frustrating behaviors should increase your tolerance
for those behaviors. When you understand that the behavior is
cultural, you can see that (a) your counterparts are acting normally
for their culture, (b) they are not acting specifically to
frustrate you, and (c) they may not even know how your culture
would interpret their behavior. This awareness is what Infosys
engineer Junichi Yoshida was trying to accomplish when he shared
the comparisons in Exhibit 2.3 with Indian and Japanese software
project engineers who were trying to improve their communications
with each other.
Third, when you can recognize that the counterpart’s behavior
is cultural and not personal, you should be able to be more
flexible in your choice of negotiation strategy. For example, a U.S.
software engineer working on a project for an Israeli client
reported how frustrated he was by the Israeli’s different way of
approaching issues and discussing them. “There is something
pretty common to the Israeli culture, they like to argue. I tend to
try and collaborate more and it got very stressful for me until I
figured out how to kind of merge the cultures.”44
40 Negotiating Globally
Exhibit 2.3. Assumptions of Indian and Japanese
Software Engineers.
Assumption Indian Engineer Japanese Engineer
Self-concept I am superior. I am inferior.
Customer Partner, Adult God, Child
Words Words are not final.
Some are less important.
Words are final. They
are commitment.
Commitment I cannot say I do not
know.
I cannot say I know.
Communication I talk. I listen.
Expertise I am an expert after ten
days.
I am an expert after ten
years.
Teamwork The team is there for
me.
I am here for the team.
Decision
Making
I make a decision. The team makes a
decision.
Time I value my time. I value your time.
Negotiation I convince you. I present
my position.
I sympathize with you. I
represent your position.
Silence Silence is emptiness of
the mind. (weakness)
Silence is consolidation
of the mind. (strength)
Comprehension I focus on the big
picture.
I focus on the details.
Rules Rules can be applicable.
Some are less important.
Rule is a rule. No
exception. All are
important.
Suggestion No. This is a better way.
I will give you solution.
Yes but . . . maybe, this
is a better way. How do
you think?
Risk To manage. To avoid.
Emotion To share. To hide, or explode.
Quality I achieve the goal. 90
percent is completed.
I achieve the goal. 120
percent is completed.
Relationship I spoke to him once. He
is a friend of mine.
I spoke to him ten
times. I just know him.
Culture and Negotiation 41
With the ability to see culture in the characteristics that distinguish
dignity, face, and honor cultures, we are now ready to
consider how culture affects negotiation.
A Model of Intercultural Negotiation
The model in Exhibit 2.4 illustrates how culture affects negotiation.
It shows two negotiators from different cultures. Arrows
indicate that each negotiator has a set of interests and priorities
that can be affected by culture as well as other factors, and that
these interests and priorities determine outcome potential. This
rather abstract term is easier to understand with a concrete
example. Recall that when I was buying pumpkins from Mme.
Petit in Chapter One, her interest was in the seeds and mine in
the rinds. Our different interests generated the potential for an
outcome that completely met her interests and mine. Yet to realize
that potential outcome we had to learn about each other’s interests.
This is where negotiators’ strategic behavior (which is
determined partly by culture) comes in. When the pattern of
interaction between two negotiators is effective in eliciting information
about the other party’s interests and priorities, they should
Assumption Indian Engineer Japanese Engineer
Schedule It takes five days.
Therefore, it takes a
week.
It takes five days.
Therefore, it does not
take a week.
Explanation It is information. It is an excuse.
Hierarchy I obey my boss and act
accordingly.
I obey my boss, but may
act differently.
Arguing It adds values. It is
enjoyable.
It damages the
relationship. It is
uncomfortable.
Information I share any information.
I like quantitative
information.
I share necessary
information only.
I like qualitative
information.
Source: Used with permission of Junichi Yoshida and Infosys.
Exhibit 2.3. (Continued)
42 Negotiating Globally
be able to reach an agreement that captures the outcome potential.
Although Mme. Petit and I came from different cultures,
both France and the United States are dignity cultures that, as
shown in Exhibit 2.2, share some common characteristics such as
direct confrontation, swift trust, and an analytic mindset. When I
asked Mme. Petit directly why she would not sell me all her pumpkins,
she answered directly and honestly regarding her interests;
this quickly made it clear to both of our analytic minds that selling
me all her pumpkins did not necessarily mean giving up all the
seeds. Thus, although cross-cultural, our pattern or interaction
was nevertheless successful in eliciting information about the
other party’s interests and priorities and allowed us to reach an
outcome that captured the outcome potential.
Take another look at the dignity, face, and honor cultural
prototype chart in Exhibit 2.2. It does not take too much imagination
to see how the pattern of strategic interaction between
negotiators from, say, face and honor, or dignity and face cultures
would be challenged by cultural differences in status and hierarchy,
response to insult, confrontation style, trust, and mindset. The
example of the American asking his Chinese counterpart for information
is a good illustration. He asked her directly as was normative
in his egalitarian, direct-confrontation culture. She responded
indirectly by involving her boss, as was normative in her
Exhibit 2.4. Culture in a Two-Party Negotiation.
Environment of the Negotiation
Interests and
Priorities
Outcome
Potential
Interests and
Priorities
Outcome
Strategic
Behavior
Patterns of
Interaction
Strategic
Behavior
Party from
Culture 1
Party from
Culture 2
Culture and Negotiation 43
hierarchical, indirect-confrontation culture. She never found out
why he wanted the data; he never found out why the data were not
in the report or why the data might or might not be difficult to
generate. It is possible that these two managers’ interests had
outcome potential similar to that of Mme. Petit and me. It is just
that their pattern of strategic interaction never uncovered their
interests.
Environment of the Global Negotiation
Exhibit 2.4 identifies one more element that we need to address:
the environment of the negotiation. Global negotiations occur in
environments that may be more hostile to or more supportive of
one party than the other. For example, as we will discuss more
thoroughly in Chapter Seven, cultures that lack a strong foundation
in the rule of law may be particularly risky environments for
foreign direct investors. Global negotiations also frequently
extend over a significant period of time, during which conditions
that initially were conducive to the negotiation may become hindrances.
Environmental factors may have a strong influence on
negotiators’ interests and priorities. Changes in or reassessment
of the environment are probably the most important reason for
reassessing a BATNA.
For a good example of how the environment of a negotiation
influenced changing partners, interests, priorities, and BATNAs,
let’s look at the three-and-a-half-year-long battle for control and
ownership of the Madrid-based Spanish energy company Endesa.
On September 5, 2005, Gas Natural, Spain’s leading gas utility,
headquartered in Barcelona, announced an unsolicited tender
offer for 100 percent of Endesa. At the time, Gas Natural’s market
capitalization was about 50 percent of that of Endesa—rather like
a minnow trying to swallow a whale. Importantly, the takeover was
supported strongly by the recently elected Spanish government
led by the Socialist Workers Party, which was much beholden to
the Catalan (Barcelona area) voters. Endesa, not wanting to be
swallowed by a minnow, went looking for a BATNA in the form
of another buyer, or “white knight,” as it is called in the world of
mergers and acquisitions. Six months after Gas Natural made its
first bid for Endesa, E.ON, Germany’s largest utility, made an offer
44 Negotiating Globally
for Endesa. At that point, the Spanish government, not wanting
Endesa taken over by a German company, authorized the Spanish
agency regulating the energy industry to block the takeover of any
Spanish energy companies by foreign companies. This move by
Spain got the EU’s attention and elicited a warning to Spain that
it could not make regulatory changes that contravened European
law regarding mergers and acquisitions. The Spanish government
backed off, approving the E.ON offer, but stipulating nineteen
conditions that neither Endesa nor E.ON would accept. There
was a stalemate until the fall of 2006, when in a surprise move
Acciona, a Spanish family-controlled construction, infrastructure,
and engineering conglomerate, bought 10 percent of Endesa,
which it later extended to 24.9 percent. E.ON’s response was to
increase its bid, but it subsequently discovered that Enel, an Italian
energy company, was also buying Endesa stock in league with
Acciona. E.ON, now realizing that with Acciona and Enel cooperating
it would have trouble acquiring a controlling 50 percent
of Endesa, started negotiating to get Acciona and Enel to buy its
shares, so it could walk away from its offer for Endesa, which it
did in April 2007. Acciona and Enel finally acquired Endesa in
February, 2009.45
Consider the changing array of buyers and Endesa’s changing
array of BATNAs. Consider how the involvement of the different
bidders and different government agencies caused shifts in the
legal environment in which this acquisition was occurring. Environment
is not static, and its shifts made a difference in a constantly
increasing price for Endesa’s shareholders.
Planning for Culture’s Effects
Now that we have a model of how culture affects negotiation, we
are ready to build a Negotiation Planning Document that takes a
cultural perspective. The model in Exhibit 2.4 shows that culture
affects negotiation in three important ways. First, it affects all the
negotiation basics: who the parties are and what the issues are,
their priorities and interests, and their BATNAs, reservation
prices, and targets. Second, it affects the strategic behaviors that
negotiators use at the table. Third, it affects the environment in
which the negotiation occurs. All these effects need to be
Culture and Negotiation 45
considered when building a Negotiation Planning Document that
takes a cultural perspective.
The planning document at the end of Chapter One provides
a column for each of the parties to the negotiation. A very common
mistake when negotiating globally is limiting the columns in the
planning document to the parties who will be at the negotiating
table. Other groups may need to be included, such as government
agencies, principals, holding companies, and other organizations
that have hierarchical or interlocked shareholder relationships
with whatever entity is at the table. Adding parties to the planning
document means adding those parties’ issues, considering how
those additional parties can affect BATNA, and how they might
affect the timing of the deal. Walmart’s experience in South Africa
provides a good example.
Walmart in South Africa
Walmart entered South Africa in 2011 by acquiring 51 percent
of Massmart, a large retail company with stores throughout
South Africa and twelve other sub-Saharan countries.46 At the
time of this acquisition, the South African government was
friendly toward foreign direct investment (FDI), as shown by
the fact that FDI in South Africa increased by 87 percent
between 2003 and 2010.47 Suppose we are Walmart, completing
a planning document for the negotiation. First, we would want
it to have at least three columns, for Walmart, for Massmart,
and for the South African government. Second, we would want
it to reflect that government’s strong interest in FDI. But we
should also be able to anticipate that the South African government’s
interests are complex and reflect that in the planning
document. As it turned out, although the elected South African
government was keen on FDI, government bureaucrats in agencies
responsible for protecting local suppliers to the retail sector
were opposed. So were the South African labor unions that
wanted to maintain local jobs and protect wages and working
conditions. Adding these parties to the planning document also
would mean adding their issues and anticipating what effect
these parties and their interests might have on Walmart’s
smooth acquisition of Massmart.
46 Negotiating Globally
South Africa has a Competition Tribunal, which has the
authority to approve or place conditions on mergers and acquisitions,
and its decisions can be appealed. Again, no surprise, several
government agencies and the coalition of unions opposed the
merger at the Competition Tribunal. Walmart suggested two concessions.
On the labor front it promised no layoffs for two years
and current union contracts extended for three years. On the
supplier front Walmart offered to fund a supplier development
fund for 100 million Rand (approximately $10 million). The
Competition Tribunal quickly approved, but the government
agencies and their union allies appealed. The Appeals Court was
tougher on Walmart than the tribunal had been. It upheld permission
for the acquisition, but required that Walmart rehire 503
workers who might have been fired due to the acquisition. It also
increased the supplier fund to 200 million Rand (approximately
$20 million) and created an oversight board consisting of two
members from Walmart, two from the trade departments, and
one from the unions to monitor the fund. Importantly, the
Appeals Court held that if in the oversight board’s opinion
the fund was not being operated in such a way as to assist micro,
small, and medium suppliers, approval for the merger could be
withdrawn!48
There is no evidence in the public record that Walmart negotiated
directly with the coalition of unions and government
agencies during its acquisition of Massmart. Walmart actively
resists unions in the United States, although it has relationships
with unions in some of the other countries where it has stores,
for example, Chile, Brazil, and the United Kingdom.49 Whether
or not Walmart intended to sit at the table with the coalition of
South African unions and government agencies, a Walmart Negotiation
Planning Document for the acquisition of Massmart should
have contained columns for those parties, who had the power to
influence the nature of the acquisition. Strategically, Walmart may
have decided not to set a global precedent by negotiating directly
with these parties and to take the risk that their BATNA—
conditions imposed by the Competition Tribunal and Appeals
Court and the delay in completing the acquisition—would not be
onerous. We don’t know what Walmart spent on the Competition
Tribunal and appeal process; South Africa estimates it spent about
Culture and Negotiation 47
half a million dollars.50 We do know that the process delayed
Walmart’s acquisition of Massmart by eighteen months from
shareholder approval.
Moving on to Strategy
Now that we know how culture affects negotiations by influencing
parties’ priorities and interests, the strategies they use, and the
environment of their negotiation, we are ready to take a hard look
at culture and negotiation strategy in the specific contexts of
making deals, resolving disputes, and making decisions in multiparty
situations. Our goal in the following chapters is not just to
see and understand culture’s effects but to address them. Doing
so will give us a deeper appreciation of how the factors introduced
here that distinguish dignity, face, and honor cultures—the nature
of self-worth, power and status, sensitivity and response to insult,
confrontation style, trust, and mindset—play out when cultures
collide.
The global economy is the result of millions of small and
large cross-cultural negotiations. It took negotiations for U.S.
consumers to have access to Chilean and Mexican fruits and
vegetables in the winter months. It took negotiations for Spanish
engineering construction companies to get the contract to build
new subway tunnels in New York City. It took negotiations for
Walmart to enter South Africa. It took negotiations for the
Qatari Investment Authority to buy the Paris Saint-Germain
Football Club. This chapter discusses culture and strategy for
negotiating deals. It describes two basic types of strategy negotiators
use when pursuing deals: asking and answering questions,
which we call Q&A, and offers and influence attempts, which
we call “substantiation and offers” or S&O. The chapter builds
on the research on negotiations first introduced in Chapter
One and the dignity, face, and honor prototypes of culture
introduced in Chapter Two to explain how and why negotiators’
choice of strategy is linked to culture. It describes how culture
affects negotiators’ use of strategy in different parts of the
world. It reviews the limited research on intercultural negotiation
and ends with advice for negotiating across cultural
boundaries, particularly boundaries between dignity, face, and
honor cultures.
49
3
Culture and Strategy for
Negotiating Deals
50 Negotiating Globally
Why be concerned about negotiation strategy, if so many
global deals are being completed successfully? The main reason
is these deals leave outcome potential on the negotiating table for
neither party to claim. When this happens, neither party’s interests
are met as well as they might be. In their haste to get access to
markets, labor, or resources, foreign direct investors commit to
agreements prematurely that make implementation difficult or
even to agreements that they probably should have said no to.
These poor agreements frequently happen because negotiators
assume that their strategy will work regardless of culture. Then,
when they find themselves at the negotiating table and they realize
that their strategy is not working very well, they do not know how
to adjust to their counterpart’s strategy without giving up value.
The inter cultural simulation data in Exhibit 3.1 illustrate this
point about leaving value on the table that no one party gets. The
data in Exhibit 3.1 are from the same set of studies of managers
first introduced in Chapter One in Exhibit 1.2. Recall that
maximum joint gains in this negotiation simulation are $5.08
million. Exhibit 1.2 showed that U.S. and Japanese intracultural
negotiations (negotiations between managers from the same
culture) generated about the same level of joint gains, $4.2 million.
Exhibit 3.1 shows that U.S.-Japanese intercultural negotiations
Exhibit 3.1. Individual and Joint Gains
in Intercultural Negotiations.
5
Millions of Dollars
0
4
3
2
1
Israel/
Hong Kong
United States/
Japan
United States/
Hong Kong
United States/
Israel
United States/
Germany
Seller Buyer
Culture and Strategy for Negotiating Deals 51
(negotiations between managers from different cultures, also
called cross-cultural negotiations) generated significantly lower
joint gains, $3.5 million—a substantial loss for both U.S. and Japanese
negotiators than when they negotiated intraculturally. In
Exhibit 1.2, Israeli intracultural negotiations generated about $4.2
million, whereas Hong Kong Chinese intracultural negotiations
generated only about $3.2 million. However, Exhibit 3.1 shows
that when the Hong Kong Chinese were negotiating interculturally
with the Israelis, joint gains were $4 million—only slightly
worse from when the Israelis were negotiating intraculturally and
much better for the Hong Kong Chinese than when they were
negotiating intraculturally. The data in Exhibits 1.2 and 3.1 show
that context matters: intracultural negotiations are not the same
as intercultural negotiations. Negotiating across cultural boundaries
typically hurts but in some instances may help negotiators
generate joint gains, depending on how their strategies fit together.
The data in these two exhibits also raise the important question
of why and how negotiators’ strategies vary with culture.
Deal-Making Negotiation Strategy
In this section we introduce two types of negotiation strategy:
question and answer (Q&A) and substantiation and offers (S&O).
Then we turn to how and why culture affects negotiators’ tendencies
to rely more heavily on one strategy or the other. This takes
us to a discussion of how trust and mindset—holistic versus
analytic—associated with cultural differences affect negotiation
strategy, and will bring us to a model of culture and negotiation
strategy that ties all the ideas together.
Negotiation strategy is goal-oriented behavior focused on generating
individual and joint gains.1 Negotiation research has
identified two distinct types of strategy: Q&A is all about information
exchange regarding interests and priorities. S&O is all about
attempts to influence the counterpart to make concessions.
The Q&A Strategy
Negotiators who rely on Q&A tend to generate value for themselves
and the other party.2 They try to get information sharing
52 Negotiating Globally
going by asking their counterparts questions about interests and
priorities and being willing to answer similar questions when
posed by their counterparts.3 They give each other feedback: “Yes
that will work for me” or “No, that won’t work for me because
. . .” They share knowledge about interests and priorities that are
similar and discover those that are different: “We both have a
common goal here, but to reach that goal, I’m going to need . . .”
Note that these negotiators are not asking and not sharing information
about reservation prices or bottom lines. They are not
asking questions that they do not want to answer themselves and
that they know the other party does not want to answer. They
avoid asking in the early stages of the negotiation questions such
as, “What is the least you are willing to take and say yes?” “What
is the most you are willing to offer?” They also avoid making
offers.
Once the Q&A strategy has generated insight into the
counterpart’s interests and priorities, negotiators can make
multi-issue offers that bridge interests4 or trade off priorities.5
Bridging is what Mme. Petit and I did when negotiating for
pumpkins (in Chapter One). After we had shared interests, we
were able to identify a solution that “bridged” those interests—
she got the seeds and I got the rinds. Our bridging agreement
actually involved a trade-off; seeds were less important to me
than to her and rind was less important to her than seeds.
Around the world the Q&A strategy is effective in generating
insight into counterparts’ priorities and interests and generating
joint gains.6
However, if you are worried that to use the Q&A strategy
negotiators have to trust each other, your concerns are appropriate.
Trust in negotiation is the belief that shared information will
be used to identify mutually beneficial opportunities.7 In the
absence of trust, Q&A invites exploitation.8 Questions invite vulnerability
by revealing gaps in the questioner’s knowledge. Answers
create vulnerability if they reveal truthful and sensitive information
about the answerer’s priorities and interests.9 Trust, grounded
in the belief that shared information will be used to identify mutually
beneficial opportunities, enables negotiators to use Q&A.
Uncertainty about trust is a major reason why negotiators use the
S&O strategy.
Culture and Strategy for Negotiating Deals 53
The S&O Strategy
Negotiators relying on S&O tend to be ones who are intent on
generating value for themselves. They do so by engaging in all
sorts of influence attempts to try to get the counterpart to make
concessions. Substantiation includes all types of influence and
pressure tactics, such as arguments and threats—what will happen
if the negotiator does not make concessions;10 normative appeals
such as sympathy ploys—what the counterpart should be doing;11
and displays of anger and frustration.12 At the same time as they
substantiate, negotiators intent on claiming value for themselves
also make lots of offers, particularly single-issue offers early in the
negotiation.13 Offers are proposals or suggestions to resolve issues.
Offers and substantiation share a theoretical orientation.14 They
also co-occur empirically—negotiators who make more offers
tend to engage in more substantiation.15 This makes sense intuitively
because by using one or another form of substantiation, the
negotiator is trying to get the counterpart to concede and accept
the negotiator’s offer.
S&O solves Q&A’s trust problem in a peculiar way. Rather
than opening a window into a negotiator’s interests and priorities,
offers emphasize negotiators’ positions. Although offers may be
exaggerated, offers do not require trust in order to be believed.
Substantiation, too, does not make a negotiator vulnerable in the
same way that sharing information about priorities and interests
does. Substantiation may reveal little about the self; it often focuses
on the counterpart, indicating why the counterpart should accept
an offer. Thus S&O helps negotiators avoid revealing information
that could be exploited.
Ironically, however, although the S&O strategy avoids exploitation,
it is not necessarily very effective in generating individual
net value. There are three reasons. First, the S&O strategy typically
does not develop the insight into parties’ preferences and
priorities that Q&A does (we will discuss an important exception
to this later when we talk about using these strategies in a cultural
context).16 Without insight, negotiators generate lower
joint gains and thereby, ironically, lower value for themselves—
the point made in Chapter One and illustrated in Exhibit 1.2.
Take another look at Exhibit 1.2. Remember that the dark
54 Negotiating Globally
shading in the bars represents the seller’s net value; the light
shading, the buyer’s net value. Compare the Brazil and China
bars. The Brazilians negotiated higher joint gains on average
than the Chinese and so there was more net value for both the
Brazilian buyers and sellers to claim than for the Chinese buyers
and sellers to claim.
The second reason why the S&O strategy is not very effective
in generating net value is that it can backfire, causing people to
walk away from offers that are better than their BATNAs.17
Research is just beginning to understand the circumstances under
which threats, sympathy ploys, and displays of anger encourage
and discourage concession making. A recent theory suggests
that it depends on whether the substantiation cues an emotional
reaction, for example, “I’ll not be threatened,” that is likely to
discourage concession making, versus a cognitive inferential
response, for example, “this counterpart must be serious,” that is
likely to encourage concession making.18 Recent research suggests
that the response that gets cued depends on how competitive
versus cooperative the negotiation is.19 In highly competitive
negotiations, for example the dispute resolution negotiations that
we will discuss in Chapter Four, substantiation is expected and
discounted; it typically provides no new information. In more
cooperative negotiations, for example to develop a joint venture,
when there is the potential of a long-term relationship, substantiation
may be unexpected and generate an emotional reaction: “if
this is the way you act in negotiation, how are you going to act as
a partner, no thanks.”
The third reason why the S&O strategy is not very effective in
generating net value is that it does not address explicitly the one
factor that research shows does facilitate claiming individual net
value: extreme first offers. Negotiators who make extremely
favorable-to-themselves first offers have an advantage claiming
value in negotiations.20 First offers anchor negotiations. What this
means is that a negotiator’s first offer affects the other party’s
counteroffer by pulling it toward the first offer and away from
where the counteroffer would have been if it had been the first
offer. This is called anchoring (the first offer) and insufficient adjustment
(the counteroffer). This narrows the range of possible
agreements and causes first offers to predict final agreements
Culture and Strategy for Negotiating Deals 55
extremely well. Because counteroffers are typically insufficiently
adjusted for anchors, there is a first-offer advantage in claiming
individual value in negotiation, so long as the first offer is not so
extreme as to stop the negotiation before it has started.
Many negotiators often are reluctant to make the first offer,
because they hope that the counterpart will open first with an
offer that is superior to their own target. This outcome is unlikely
unless the counterpart lacks information (about the other side’s
BATNA) to properly set a target. If you are reluctant to make the
first offer, you are going to need an antidote to keep from being
anchored by the counterpart’s first offer. So, before negotiating,
write down what your own first offer would be. Use it as your
counteroffer unless the counterpart’s opening offer is better than
your target.
Culture and Negotiation Strategy
Negotiators all over the world use both the Q&A and S&O strategies,
but they use them with different frequency and effects.21
Although negotiators from dignity cultures—for example, the
United States, Israel, Germany, and Sweden—tend to rely more
heavily on Q&A than S&O, negotiators from face and honor
cultures—such as China, Russia, Japan, Thailand, India, and
Qatar—rely more heavily on S&O than Q&A.22 We believe there
are two primary cultural reasons why: trust and using a holistic
versus an analytic mindset.
Using Q&A, as we have pointed out, requires trust. Both
asking and answering questions gives the counterpart an opportunity
to take advantage.23 Questions invite vulnerability by
revealing gaps in the asker’s knowledge. Answers create vulnerability
if they reveal truthful and sensitive information about the
answerer’s priorities and interests.24 A new meta-analysis is definitive:
trust, grounded in the belief that shared information will be
used to identify mutually beneficial opportunities, enables negotiators
to use Q&A.25
Trust appears to mean the same thing to people around the
world,26 but trust is higher in some parts of the world than others.27
This means it is going to be a lot easier to get Q&A going in
negotiations in some parts of the world than in others.
56 Negotiating Globally
Why and Where Is Trust Likely in Negotiations?
Trust in deal-making negotiations seems to be more likely in
loose (dignity) than tight (face or honor) cultures. Recall from
Chapter Two that norms governing social behavior can be tight
or loose. In tight cultures norms are relatively inflexible and
formal. Tight cultures tend to have institutional mechanisms,
such as family, community, state and religion, to enforce behavioral
expectations through monitoring and sanctioning of
deviance. In contrast, in loose cultures the norms governing
social behavior are relatively flexible, generating improvisation
and interpretation and greater variation of behavior. Loose cultures
communicate expectations, but social behavior is governed
by interpersonal mechanisms. Typically, there is a broader range
of socially tolerable behavior and people are responsible for
monitoring their own behavior.28
These two different social systems have different implications
for trust in deal-making negotiations. In loose cultures, because
interpersonal mechanisms govern behavior, people have to rely
on social intelligence to determine who is and who is not trustworthy.
As a result people tend to make the culturally normative
“swift trust” assumption: others deserve to be trusted until they
prove otherwise.29 If their trust is reciprocated, they will continue
to trust, intuitively understanding that interpersonal trust is
fragile and will not withstand defection. In tight cultures, because
institutions monitor and sanction everyday behavior, people tend
to rely on institutional trust more than interpersonal trust. What
this means is that they act as if they trust and expect others, too,
to act in a trustworthy manner, so long as institutional monitoring
and sanctioning are in place. Although people may act as though
they interpersonally trust, their behavior largely reflects assurance
in institutions to control their own and others’ behavior.
When institutional monitoring and sanctioning are not in place,
people in tight cultures may not act in a trustworthy manner and
may not expect others to do so.30
This distinction between interpersonal and institutional trust
is very important because global surveys that measure trust do not
make the distinction between the two types of trust. In both the
World Values Survey and the Pew Global Attitudes Survey, Sweden
Culture and Strategy for Negotiating Deals 57
and China both score high on measures of trust.31 We suspect,
however, that what underlies trust in tight cultures such as China
is institutional trust, and what underlies trust in loose cultures
such as Sweden is interpersonal trust. The catch is that there is
little to no institutional monitoring of deal-making negotiations
in either tight or loose cultures.32 This leaves the tight-culture
negotiator with no guarantee of protection from exploitation and
(some scholars add) without much experience in developing
interpersonal trust.33 Although there is most definitely more
scholarly work to be done on this topic, the data suggest that
interpersonal trust in deal-making negotiations is more likely in
loose than tight cultures.
At the same time, low trust appears to encourage use of the
S&O strategy, probably because S&O does not reveal sensitive
information about interests and priorities.34 Recall that although
people routinely exaggerate offers, they do not typically make
offers that they would not be perfectly satisfied with if the counterpart
would only accept their offer. Offers can be believed.
Substantiation, too, is believable. It is all the reasons why the party
making the offer believes that the counterpart should accept the
offer. Negotiators routinely discount their counterparts’ offers
and substantiation as self-serving, but norms of reciprocity encourage
an S&O response. Thus low trust encourages a vicious cycle
of S&O, which has the marginal benefit of keeping negotiators
from revealing information about priorities and interests that
could be exploited, but the disadvantage of sharing information
that could be used to create value.
Summing Up Trust and Negotiation Strategy
So far we have discussed two negotiation strategies, Q&A and
S&O. We have realized that Q&A requires interpersonal trust, but
that such trust is not likely to be present in deal-making negotiations,
especially in “tight” cultures, because the institutional
monitoring and sanctioning that make social interaction in those
cultures function smoothly are largely lacking in deal-making
negotiations. S&O is the default negotiation strategy when trust
is low. But S&O does not generally develop the information about
priorities and interests that negotiators need to bridge interests
58 Negotiating Globally
and trade off priorities to create joint gains. And, because most
negotiators using S&O do not do well creating joint gains, using
the S&O strategy limits individual net value. With this understanding,
the chances of creating joint gains negotiating globally would
appear to be rather bleak—except for some intriguing Japanese
data that suggest negotiators with a holistic mindset may be
capable of inferring information about interests and priorities
from S&O, thus enabling joint gains in value.
S&O Strategy and the Holistic Mindset
Recall our discussion in Chapter Two of the holistic versus the
analytic mindset. We said people in face cultures tend to be holistic
thinkers—that is, they focus both on the problem and on the
context in which it is embedded—whereas people in dignity cultures
tend to be analytic thinkers—that is, they focus on the
problem and its attributes. In negotiations this could mean that
people in holistic cultures can analyze the relative importance of
issues in the context of other issues, and so understand priorities.
In contrast, people in analytic cultures are more likely to analyze
the attributes of individual issues and so understand underlying
interests.35
Data from our studies of face and dignity culture negotiators,
particularly our studies contrasting Japanese and Americans,
suggest that negotiators from these two different cultures are
using strategy differently to negotiate equivalently high joint
gains.36 We found that the Japanese were relying heavily on S&O
while the U.S. managers were relying primarily on Q&A but that
their joint gains were equivalent.37 This observation led us to
investigate four questions:
1. Did the Japanese negotiators using S&O have similar levels of
insight as the Americans using Q&A, or was insight not the
path to the Japanese negotiators’ high joint gains?
2. If Japanese and American negotiators had similar insight, how
were the Japanese getting insight from S&O?
3. How important was it for Japanese negotiators to use S&O and
American negotiators to use Q&A to achieve high joint gains?
Culture and Strategy for Negotiating Deals 59
4. Is this ability to generate insight from S&O unique to the
Japanese?
Insight and S&O
Japanese negotiators using S&O had insight similar to that of
the Americans using Q&A. We tested insight immediately
following the negotiation simulation by asking negotiators how
important each issue had been to the other party and then
how important each issue was to themselves. We then looked
closely at how the negotiators rated the trade-off issues in the simulation.
Negotiators who could report correctly which trade-off
issue was more important and which trade-off issue less important
to themselves, we labeled as having “self-insight”; those who could
report correctly which trade-off issue was more important and
which was less important to the counterpart had “other-insight”;
and those who had both self-insight and other-insight had “relative
insight.” Through this process we determined that the
Japanese negotiators’ insight was equivalent to that of American
negotiators, and that insight predicted joint gains for both Japanese
and American negotiators.38 Now we really wanted to know
how the Japanese were generating insight from S&O!
What the Japanese Were Doing
At the time we were working on this question, we were relying on
Hall’s cultural theory that distinguishes between high- versus lowcontext
communication to explain cultural differences between
Japanese and U.S. negotiators. An anthropologist, Edward T. Hall
distinguished cultures by the way people communicate. In lowcontext
cultures, he said, people communicate directly and
explicitly, with the result that they have little need to engage their
high-level inferential skills to understand the meaning of communications.
In high-context cultures, he said, people communicate
indirectly and implicitly, and as a result they need to engage their
high-level inferential skills to infer meaning, because the same
words can have different meaning depending on the context.39
Negotiators with experience in Japan, for example, know that hai
doesn’t necessarily mean “yes.” It can mean “I’m listening,” it can
mean “I understand,” and it can mean “no.” Research by Hall and
60 Negotiating Globally
others suggests that communication norms in Western cultures
emphasize low context communication but that communication
norms in East Asian cultures are high context.40
More recent cultural studies suggest that East-West differences
in patterns of high- versus low-context communication
are consistent with the cultural differences in holistic versus
analytical reasoning. Holistic reasoning with its emphasis on
context is an approach to analysis that people in high-contextcommunication
cultures can use to infer meaning. Analytic
reasoning with its emphasis on linear logic is the inferential
approach used primarily by people in low-context-communication
cultures.41
We looked more closely at the Japanese and U.S. negotiators’
transcripts to try to understand how they were generating insight
from their different strategic approaches.
We found that the Japanese negotiators who negotiated high
joint gains made a lot of offers from the very beginning of the
negotiation. They introduced an issue by making an offer, not by
asking a question about it, as the Americans were prone to do.
They then tended to build on the first offer by adding another
issue, but without resolving the first. The Japanese negotiators
also used plenty of all kinds of substantiation relative to the Americans,
but unlike the Americans, who tended to substantiate
specific offers, the Japanese tended to separate offers and
substantiation.42
The Value of Negotiating Normatively
The transcripts suggest that the Japanese were treating the multiple
issues in the negotiation holistically. They seemed to use the
pattern of offers, counteroffers, and substantiation for information
gathering in the way that the Americans used Q&A.
Interestingly, in our research, the longer the Japanese negotiators
held off making their first offers, the lower their joint gains, but
the longer the U.S. negotiators held off making their first offers
and the more information the U.S. negotiators exchanged before
making the first offer, the higher their joint gains.43 When U.S.
negotiators and those from other analytically oriented cultures,
for example, India, open with offers they get anchored, tend to
address one issue at a time, and fail to explore priorities and
Culture and Strategy for Negotiating Deals 61
interests as they do when they use Q&A.44 In contrast, the Japanese
negotiators do not get anchored using the S&O strategy.45
This final analysis implies that it is important for negotiators to
use the strategic approach that is culturally normative to themselves—“
stick with what you know”—which is why intercultural
negotiations are so challenging.
Can Others Do It?
Of the negotiators we have studied, the Japanese show this
ability to infer insight from S&O more consistently than negotiators
from other East Asian cultures.46 Among some Chinese
negotiators we have seen a slightly different but still holistic
approach to generating insight from S&O.47 Some Chinese
negotiators will open with a multiple-issue offer and then trade
multiple-issue offers back and forth until they have extracted all
the potential joint gains. Their approach is not just trial and
error. These negotiators are intentionally keeping all the issues
linked in multiple-issue offers, and they do gain insight from
the exchange of offers, suggesting there is more than one way
to create joint gains taking a holistic approach and using S&O
strategy.
Summing Up Mindset and Negotiation Strategy
This analysis of the implications of holistic versus analytical
mindset for insight in negotiation leaves us in a slightly more
optimistic place than we were at the end of the previous section,
on trust. If the Japanese can gain insight from patterns of S&O,
maybe other negotiators can too; that is, if they turn on their
holistic mindset and avoid anchoring. Our brains after all are
quite amazingly malleable. People who intuitively rely on their
holistic mindset are no doubt capable of analytic thinking, and
people who intuitively rely on their analytic mindset are probably
capable of holistic thinking, although they may need a little help
doing so. That help, as well as a lot of other advice about executing
a negotiation strategy in different cultural contexts, is coming
up in the next section.
Now that we understand how and why negotiators in different
cultures use Q&A and S&O, we can use a model of culture and
62 Negotiating Globally
negotiation strategy to show how trust and mindset, Q&A and
S&O, and insight and joint gains interrelate. Then we’ll turn to
how to use our knowledge of culture to manage strategy at the
global negotiation table.
A Model of Negotiation Strategy
The model in Exhibit 3.2 shows how Q&A and S&O are related
to cultural differences in trust and mindset and to joint gains
via insight. The shortest and most reliable route to joint gains
opens up when interpersonal trust allows negotiators to use
Q&A to gain insight, which they then use to construct offers
that make trade-offs. Our research suggests that negotiators all
over the world can take this route to joint gains, and do so
when interpersonal trust is high. At the same time, our research
suggests that because of the lack of interpersonal trust in negotiations,
this Q&A route is understandably not often taken.
When interpersonal trust is low, the alternative route of S&O
typically does not generate insight, except in the hands of Japanese
and possibly other holistically minded negotiators. To
make the S&O route work requires that negotiators mine offers
and substantiation holistically for information about priorities
and interests.
Exhibit 3.2. A Model of Culture, Negotiation Strategy,
Insight, and Joint Gains.
Questions
and Answers
Insight Joint Gains
Interpersonal
versus
Institutional
Trust
Substantiation
and Offers
Holistic versus
Analytic
Mindset
Culture and Strategy for Negotiating Deals 63
Advice for Deal-Making Negotiations
The model in Exhibit 3.2 suggests that the place to start preparing
a negotiation strategy is to know your own and your counterpart’s
trust and mindset profile in the context of negotiations. Ask yourself
the following questions:
• Do I tend to trust my negotiation counterparts, generally, in certain
situations?
• How comfortable am I asking and answering the why question that
reveals interests?
• How comfortable am I asking and sharing information about
priorities?
• Do I like to negotiate one issue at a time or am I comfortable making
multiple-issue offers?
• Do I tend to focus on individual issues and their characteristics, or
do I prefer to look at the issues as a whole package?
• Do I tend to use rules to categorize negotiation issues (such as
distributive, trade-off, compatible) and then use more rules to
negotiate the resolution of the issues (for example, looking for
trade-offs)?
• Do I tend to use associations among issues (such as relative
importance among issues to you and to the other party) to negotiate
the resolution of issues?
Now ask the same questions about your counterpart. You may
need to use the counterpart’s cultural prototype to help you
address these questions from the counterpart’s perspective. Consider
the following:
• What cultural prototype—dignity, face, or honor—is likely to have
influenced the counterpart?
• What is your trust relationship with the other party?
• Which strategy (Q&A or S&O) is the counterpart likely to be most
comfortable using and why?
With this analysis you are ready to begin to consider your strategic
approach depending on whether trust is likely.
64 Negotiating Globally
When Trust Is Likely—Use Q&A
When trust is likely, consider these tactics and initiate Q&A.
• Build trust outside the negotiation. Get to know the
counterpart, let them get to know you. In face culture, it
may help to be introduced or vouched for by a third party
or a mutual acquaintance. In dignity culture, research
shows “schmoozing” or small talk can lead to learning that
parties have common interests, which in turn helps to
build cooperation in subsequent negotiations.48 Having a
meal together may challenge some people’s dietary
restrictions, but some fun recent research in a dignity
culture shows that people negotiate higher joint gains
when eating than not.49 But be careful about the alcohol!
Again dignity culture research indicates that moderately
inebriated negotiators (this was done under experimental
conditions so people were not falling down drunk)
behaved more aggressively during negotiations (for
example, used more threats), made more mistakes (gave
away information they shouldn’t have), failed to follow
up on a lead), reached less integrative agreements (left
value on the table), and were unaware alcohol affected
their behavior.50
• Set a positive tone in the negotiation. Substantiation does not
have to be negative. There is research showing that setting a
positive tone at the negotiation table helps to build rapport
and creativity, which in turn helps to avoid impasses.51
Remember you are at the table with your best potential
partner. You know this because you have carefully analyzed
your BATNA. Remind the counterpart why you are both
there. Discuss what the future would look like working
together after the negotiated agreement.
• Test trust. Give away a little information about your interests.
This gives the counterpart information in advance of your
asking them to be revealing, and it cues reciprocity. If you
have given information, be sure to ask for information in
return. Try to get reciprocal Q&A going about interests and
priorities. Hold off on making offers.
Culture and Strategy for Negotiating Deals 65
• Be trustworthy. Reciprocate information sharing. If you do
not, the counterpart will notice and quickly stop answering
your questions. Demonstrate that you are listening.
Paraphrase your counterparts’ statements about interests
and priorities. Behave consistently and predictably. When
you cannot answer a question because it would give away
too much strategic information, be honest about it and give
some other information that you can share: “I’m sorry, I
cannot give you that information at this point, but I can tell
you . . .”
• Avoid agreeing on one issue at a time. Keep any agreements
tentative until all the issues have been discussed and you can
bundle them into a multi-issue offer.
• Use multiple-issue offers to consolidate information gathered via
Q&A. Multiple-issue offers give you control over value
creation as they build in trade-offs, but they also give you
control of value claiming, as they specify what you get and
what the counterpart gets.
When Trust Is Unlikely—Use S&O
To use offers to collect information about interests and priorities,
try these tactics:
• Test trust. Use one or more of the techniques above to test
trust; you might be surprised.
• Look for information in offer patterns. If you are confident of
your holistic mindset, you may simply be able to see patterns
in offers that reveal interests and priorities. If you are not
confident, you should chart offers, yours and theirs.
Take a look at the offer chart in Exhibit 3.3. Like the Negotiation
Planning Document, the offer chart has a row for each issue
and a column for each offer regardless of whether the offer mentions
a single issue or multiple issues. Make sure you indicate who
made the offer. You can put a superscript “S” next to offers that
were substantiated. Analytic mindset people like to organize
information according to rules, and the offer chart guides them
to do so.
66 Negotiating Globally
Next comes the harder part for people with well-developed
analytic mindsets. You need to look across the offers and substantiation
in the offer chart for the pattern that uncovers the rules
of creating value in negotiation. Those rules we know are identifying
trade-offs and interests. Exhibit 3.3 presents a hypothetical
exchange of multi-issue offers and counteroffers in the simulation
we’ve been studying, about buying episodes of a television show,
in which there is one zero-sum or win-lose issue, “price,” and two
trade-off issues, “runs” and “financing.” “Runs” refers to how
many times an episode of a television series can be shown during
the contracted period. Financing refers to the scheduling of when
the contract money is to be paid. “Runs” is a more important issue
to the buyer, and financing is a more important issue to the seller.
Take a look at the first offer. This offer represents the most favorable
outcome for the buyer: the lowest price, $30,000, the highest
runs, eight, and payment percentages distributed over five years,
0, 25, 25, 25, 25. The second offer represents the most favorable
outcome for the seller, the highest price, $70,000, the lowest
number of runs, four, and a payment of 100 percent in the first
year. The third offer is the buyer’s first counteroffer. The buyer is
signaling that the buyer is flexible by conceding on the price,
moving from $30,000 to $35,000, and on the financing from 0 to
25 percent payment on the first year. That the buyer is not conceding
on runs signals that runs must be important to the buyer.
Now look at the fourth offer. Here the seller is signaling flexibility
Exhibit 3.3. Reading Information About Priorities and Interests
from Offer Patterns.
Issue
Buyer Offer
#1
Seller
Offer #2
Buyer Offer
#3
Seller
Offer #4
Buyer
Offer #5
Price $30,000 $70,000 $35,000 $65,000 $40,000
Runs 8 4 8 5 8
Financing 0% up
front, 25%
years
1,2,3,4
100%
up front
25% up
front, 25%
years 1,2,3
100%
up front
100%
up front
Culture and Strategy for Negotiating Deals 67
by conceding on price, going from $70,000 to $65,000, and on
runs, moving from four to five. By not conceding on financing—
payment is still at 100 percent in the first year—the seller is
signaling the seller’s preference structure for financing. When the
offer chart reveals that the counterpart is not making concessions
on one particular issue, or is substantiating one issue more than
others, the inference should be “that issue must be important to
the counterpart.” Although it may take you more than two rounds
of offers and counteroffers to understand your counterpart’s preference
structure, you might be surprised by how much you can
learn from plotting offers. Once you have a good idea about the
counterpart’s preference structure, you can make a multi-issue
offer incorporating the trade-offs, as in the buyer’s fifth offer in
Exhibit 3.3. Here is some advice about using offers:
• Post offers visually on a flipchart or board or write them on paper
that you can hand to the counterpart. Make it easy for the
counterpart to understand what you are offering. Visuals also
help if you are trying to anchor the negotiation.
• Don’t make offers that are unacceptable to you. Counterparts
assume that the offers you make are acceptable to you. If you
back away from an offer, you lose credibility and confuse your
counterpart who, too, is trying to make sense of the offer
pattern. Take the time to construct and check your offer.
• Plot your offers and your counterpart’s offer. If it is a single-issue
offer, assume that any offer on a previous issue remains the
same. Give the single-issue offer its own column. Evaluate the
set of offers and counteroffers from a holistic perspective.
You know what you are looking for: concessions, signaling
flexibility, and no concessions, signaling high-priority issues
and options.
If you are still having trouble getting information from offers, you
can try to use MESOs and contingent contracts.
MESOs
Exhibit 3.4 illustrates MESOs (multiple equivalent simultaneous
offers). MESOs are two or more multiple issue offers that are
68 Negotiating Globally
presented at the same time. Exhibit 3.4 pairs offer A with offer B.
Both offers need to be of equivalent value to you. This is very
important! If they are not of equivalent value to you, you will not
be able to interpret the counterpart’s choice. When the counterpart
chooses one of the equivalent-to-you offers, you can tell what
his priorities and interests are. By the way, be sure to anchor those
equivalent offers high. Even if the counterpart does not like either
choice, she should like the one that meets her interests better
than the other, and you have gained insight.
Equivalent offers are useful for getting information from
negotiators who are reluctant to share information and from
negotiators who don’t fully understand their own priorities. They
are also very useful for addressing negotiators whom you think
may be lying about their priorities and those who surprise you
with “Oh, there’s just one more thing!” when you thought the
negotiation was over. In either case, make one offer that you think
should be acceptable and another equivalent-to-you offer that
integrates the new issue or gives more on the issue for which you
think the other party has falsified a priority. Make sure the offers
are equivalent to you and anchored to give you a high value.
Whether the counterpart did not understand her own priorities
or was lying about them is really irrelevant because, once she has
made a choice between your equivalent offers, you understand her
priorities.
Consider these important cautions before using MESOs. First,
the counterpart may try to “cherry pick” the best options for
Exhibit 3.4. MESOs: A Seller’s Equivalent Offers
for a Cartoon Show.
Offer
Net Value
Buyer/Seller
(in millions)
Price of
Ultra
Rangers Runs Financing
A $2.67/$1.32 $45,000 8 80% up front, 20%
first year
B $2.76/$1.32 $43,200 8 100% up front
Culture and Strategy for Negotiating Deals 69
himself out of the multiple offers. To counter this you must make
clear that each offer is a package that cannot be taken apart.
Second, when you introduce MESOs, the counterpart will choose
the offer that generates higher joint gains, but all those gains will
go to the counterpart! This is the reason for the advice above to
anchor high when making multiple equivalent offers. Finally, be
aware that opening the negotiation with multiple equivalent
offers has some positive and some negative effects. First, the positive:
new research shows clearly that opening negotiations with
MESOs that are extreme in the favor of the offerer is better for
the offerer in terms of claiming net value than opening with a
single multiple issue offer (in the research one of the two or
three offers in the multiple offer package). This effect benefits
the party making the opening MESOs, and the reason is quite
interesting. Opening with an extreme set of MESOs led to less
aggressive counteroffers than opening with a single multi-issue
offer selected from the set of MESOs, because the multiple offers
were perceived as more legitimate than the single offer and led
recipients to see offerers as more cooperative. The study’s authors
believe that this is because recipients were given a choice, and
they could choose the offer that was best for them. This makes
sense, because recall that the offers in MESOs are equivalent to
the offerer but differentially configured for the counterpart, so
that one multi-issue offer in the set is likely to be of greater net
value to the recipient than the others. Second, the downside of
opening with MESOs is the same as opening a negotiation with
a single-issue offer. Opening with MESOs pretty much anchors
the negotiation to the joint value of the offer within the set that
is best for the recipient. MESOs are very “sticky” anchors, according
to the authors of this set of studies. MESOs seem to focus the
negotiation on value claiming and the S&O strategy.52 We don’t
yet have enough research to predict how opening with MESOs
might work in face or honor cultures. Can holistic thinking be
stimulated by MESOs in face cultures? It is certainly possible, but
given the penchant for S&O strategy, in both face and honor
cultures, and the stickiness of MESOs, it would seem unlikely that
MESOs would to lead to value creation in face and honor cultures,
either.
70 Negotiating Globally
Contingent Contracts
A contingent contract is an agreement to change the negotiated
outcome in a specific way on the basis of the occurrence of
a future event. For example, in May 2008 in the midst of
the financial crisis, Disney bought the kids Internet play site
called Club Penguin. Club Penguin is an online game in which
players use cartoon penguin-avatars to play in a virtual world.
The parties agreed to the price of $700 million, 50 percent down
and 25 percent each in 2009 and 2010, contingent on membership
growth goals being met, which, given the economy, they
were not.
Contingent contract offers can be based on the buyer’s and
seller’s differing expectations of the future, different time sensitivities,
and different risk propensities. Contingent contracts are
essentially a bet, and as such they are a good way to elicit information.
In the Club Penguin example, if Disney made the contingent
offer, Club Penguin’s response provided insight into the Club
Penguin creators’ confidence in their ability to grow under Disney’s
umbrella. Contingent contracts like this one essentially force
optimists to bet on deferred compensation, and pessimists to
share upside potential.
Here are a few cautions about contingent contracts:
• Contingent contracts affect the distribution value. They do not
directly create value in the same way that trading off a lowpriority
issue for a high-priority issue does. Contingent
contracts stipulate that if the future value is “x” it will be
divided according to one rule, if the future value is “y” it will
be divided according to another rule.
• Contingent contracts can indirectly affect value creation to the extent
that they align both parties’ interests. For example, it was in both
Disney’s and the Club Penguin creators’ interests to grow the
number of Club Penguin memberships. In many negotiations
interests are not so well aligned. For example, a party buying
patents to use new technology in its products is not likely to
want to enter into a contingent contract with the patent
seller, who is to have no involvement in the integration of the
patent technology into the buyer’s products.
Culture and Strategy for Negotiating Deals 71
• Contingent contracts become problematic when they are contingent
on a criterion that is not objective. When negotiations are
cross-cultural and companies have different accounting
methods, finding an objective factor on which to make
contracts contingent may be difficult. When contingent
factors are not objective, parties can legitimately have
different opinions on whether or not the contract has
been met, and a dispute can ensue. In general, it is unwise
to negotiate a deal that you fear may generate future
disputes. Club Penguin membership seems to be a pretty
objective criterion, so this contingent contract avoided the
criterion pitfall.
Using Offers Effectively
Here is summary advice:
• Open first; anchor high. There is a first mover advantage in
single-issue negotiations.
• Avoid being anchored by the counterpart’s offer. Recognize
the tendency to overadjust to the counterpart’s extreme
offers. Make sure to write down your first offer, so that
you can counter with it if the counterpart opens first.
• Make concessions reciprocally, not unilaterally. If the
counterpart is not satisfied with your offer, don’t
negotiate with yourself! Ask the counterpart what’s wrong
with your offer. Ask the counterpart to make an offer.
Don’t forget to chart those offers and look for insight in
the offer patterns!
• Avoid negative emotional spirals. Introduce data, logic,
and objective standards that could help break the
logjam. You do not have to respond to each of the
counterpart’s influence attempts. Here is where you do
not want to engage in reciprocity. Recognize that using
emotional tactics is normative in deal making in face
and honor cultures. It’s not personal. Understand that
there is a status contest going on. Protect your interests,
maintain your composure, do not compromise your
integrity!
72 Negotiating Globally
Using Substantiation
Substantiation is a broad category of negotiation influence tactics
that have in common the intent to elicit concessions. Substantiation
can be positive, extolling the benefits of conceding, but it
is generally negative information—the consequences of not
conceding.
When substantiation is emotional and positive it seems to be
effective in eliciting concessions and in motivating joint gains.
Setting a positive tone (in one study negotiators first watched a
funny movie) helps to build rapport, and promotes creative thinking
and innovative problem solving.53
When substantiation is emotional and negative, it may or may
not be effective in eliciting concessions. Effective substantiation
should influence the counterpart to reevaluate his BATNA and
your reservation price, and concede. The problem is that negotiators
routinely discount negative substantiation because they know
that the counterpart’s motive is to persuade and win concessions.
At its worst, substantiation can backfire, causing a negotiator who
was willing to make a concession to change his mind.
For negative substantiation, for example an expression of
anger, to elicit concessions, it needs to stimulate strategic inference
about the counterpart’s motives, for example, the idea that
you are reaching your reservation price.54 The very real risk is
that expressions of anger will backfire, discourage concession
making, and even lead to impasse, because the anger cues emotional
reactance. The research suggests that this can happen
when negotiating a new relationship in which negotiators are
looking to build a partnership, when negotiating the resolution
of a dispute in which the negative substantiation only reinforces
the underlying reasons for the dispute, or when negotiating a
deal in an Asian culture.55
It is not clear from the research that counterparts concede to
angry negotiators just to turn off the anger.56 The counterpart may
become reciprocally angry (“How dare you!”) and retaliate by
reducing concessions.57 What we know about reinforcement suggests
that conceding to anger would be counterproductive in that
it reinforces the angry behavior and encourages the angry party
to keep the pressure on. We do know that when anger does not
Culture and Strategy for Negotiating Deals 73
carry new information, but just reinforces old slights or prior
reputations, negotiators who are angry with each other are less
compassionate toward each other and generate fewer joint gains
than the negotiators who are not angry.58 This review of substantiation
research suggests three general principles:
• Using positive substantiation by setting a positive tone in
negotiation cannot hurt and might help negotiators build a
relationship, search for creative ideas, create joint gains, and
avoid impasse.
• For negative substantiation to elicit concessions, it needs to
cause a negotiator to infer that the counterpart is reaching
his reservation price.
• Negative substantiation is unlikely to elicit concessions when
(a) it provides no new information and (b) it causes
emotional reactance.
Summing Up Strategy for Deal-Making Negotiations
Negotiating deals is a dynamic process. Even when trust is
unlikely for cultural or other reasons, wise negotiators should
not give up on the opportunity to create joint gains. Understanding
that joint gains come from trading off interests and priorities
leaves negotiators free to find those trade-offs in a variety of ways.
Understanding cultural differences in use of Q&A and S&O
negotiation strategy and the reasons for those differences in
underlying trust and mindset means negotiators can use strategy
creatively to further their interests. It takes practice. It takes perseverance
in the face of counterparts from different cultural
backgrounds.
Intercultural Negotiations
Intercultural negotiations typically generate lower joint gains than
intracultural negotiations due to strategic misalignment between
the parties.59 This overall conclusion is consistent with what we
know conceptually from the model in Exhibit 2.4, which shows
that culture affects negotiators’ strategies and that the resulting
pattern of their interaction affects whether they actually are able
74 Negotiating Globally
to capture the potential value in their outcome. It is also consistent
with what we have learned in this chapter about how cultural
differences in trust and mindset affect reliance on Q&A versus
S&O, and the difficulty in realizing joint gains when negotiators
rely heavily on S&O.
Several other factors contribute to the poor outcomes of intercultural
negotiators. For one thing, intercultural negotiators are
less likely to be cooperative and more likely to be competitive than
intracultural negotiators, causing them to lack the motivation to
work cooperatively to identify joint gains.60 This difference in
motivation can be traced to the fact that intercultural negotiations
pit out-group members against each other, whereas intracultural
negotiations are between two in-group members. Since in-groups
confirm social identity,61 facing an out-group member in an intercultural
negotiation is more likely to threaten social identity than
facing an in-group member in an intracultural negotiation.
Intercultural negotiators also tend to start out further apart
in the way they view the negotiation than intracultural negotiators.
62 This gap may be due to cultural differences in holistic
versus analytic mindset and trust leading to different strategic
perspectives. Whatever the reason, the fact is that intercultural
negotiators have a bigger challenge than intracultural negotiators
in developing a common way of thinking about the negotiation.
Intercultural negotiators also have greater difficulty synchronizing
and reciprocating information exchange about preferences
and priorities than intracultural negotiators.63 This makes it
harder for them to share information, and it should be no surprise
that they are less likely to generate insight and understand
what the counterpart is trying to convey than are intracultural
negotiators.64
These performance gaps between inter- and intracultural
negotiators can be traced to negotiators’ cultural differences
leading to misalignments in their strategic approaches.
Strategic Misalignment Between Intercultural
Negotiators
A good place to start to identify strategic misalignments is to look
again at Exhibit 2.2, which describes how cultural factors such as
Culture and Strategy for Negotiating Deals 75
self-worth, power and status, sensitivity to insults, confrontation
style, trust, and mindset vary in dignity, face, and honor cultures.
All these factors are relevant to deal-making negotiations, but as we
have seen in this chapter, two are particularly important in influencing
strategy in deal-making negotiations: trust and mindset.65
The three columns on the right side of Exhibit 3.5 summarize
what we can expect in terms of trust and mindset when our three
types of cultures negotiate intra- and interculturally. (The lefthand
column carries forward information from Exhibit 2.2.)
Exhibit 3.5 summarizes what we have learned so far in this chapter
about which strategy, Q&A or S&O, is more likely to predominate
in negotiations and how much net value gain is likely. Remember
that the empirical studies on which these conclusions are based
describe central tendencies—prototypes—and there is always
variation around the mean. Just because the central tendency in
Exhibit 3.5. Trust and Mindset in Intra- and Intercultural
Negotiations: Dignity, Face, and Honor Cultures.
Cultural Prototype Dignity Face Honor
Dignity
Trust–swift
Mindset–analytic
Dominant
strategy–Q&A
Joint gains–high
(U.S. Israel,
Germany)
Face
Trust–slow
Mindset–holistic
Dominant
strategy–results
vary
Joint gains low
(U.S.–Japan,
U.S.–China)
Dominant
strategy–S&O
Joint gains–
variable
(Japanese high,
Chinese low)
Honor
Trust–slow
Mindset primarily
analytic
Dominant
Strategy–S&O
Joint gains–low
(U.S.–Spain,
Norway–Mexico)
Predicted
dominant
strategy–S&O
Predicted joint
gains–low
Dominant
strategy–
S&O
Joint gains–
low (India,
Qatar)
76 Negotiating Globally
India, an honor culture, is to rely on S&O and generate low joint
gains, does not mean all Indian negotiators rely exclusively on
S&O and generate low joint gains. All negotiators engage in a mix
of strategy.
The off-diagonal cells in Exhibit 3.5 summarize the even
more limited research on intercultural strategy and joint gains.
The cultural mismatch is substantial between dignity and face
culture. Joint gains in dignity-face negotiations are typically low
compared to intracultural negotiations.66 However, the research
is not entirely clear on what strategy is likely to dominate when
dignity and face negotiators are at the table. The Japanese-
United States and Hong Kong Chinese-Israeli data show face
culture negotiators using Q&A strategy but not integrating information
into offers and so leaving value on the table.67 We do not
have com parable strategy data for United States-China intercultural
negotiations, but it seems highly likely that S&O strategy
predominates and explains the data that do indicate low joint
gains.68
Two studies contrast dignity and honor cultures in terms of
strategies used and joint gains achieved in intracultural negotiations.
69 They report that negotiators from dignity cultures (United
States and Norway) use more Q&A and achieve higher joint
gains in intracultural negotiations than do negotiators from
honor cultures (Spain and Mexico), who rely on S&O in intracultural
negotiations. Intercultural joint gains were at the same low
level as the intracultural negotiations between Spanish and
Mexican honor culture negotiators. The Norway-Mexico study
does not report strategy, but the United States-Spain study reports
heavy use of S&O strategy, suggesting that the dignity culture
negotiators retreated from using their culturally dominant Q&A
strategy.
Because no one has yet systematically studied intercultural
negotiations between face and honor culture negotiators,
the entry for that cell in Exhibit 3.5 is only a prediction.
Given that S&O strategy dominates in both face and honor
cultures, it seems highly likely that it will also dominate in
intercultural face-honor negotiations. Joint gains are likely to
be low too.
Culture and Strategy for Negotiating Deals 77
High Joint Gains May Be Possible
Exhibit 3.5 suggests a pretty bleak prospect for joint gains in
intercultural negotiations, regardless of whether negotiators
across the table are from dignity, face, or honor cultures. But it
is worth taking a look at a few dignity-face studies that identify
factors that can promote joint gains in dignity-face intercultural
negotiations. Be advised, these studies were all conducted in
English, and the face culture negotiators were all Chinese or
Korean students who had been living, working, and studying in
the United States between three and five years.
The studies were quite varied but uniformly showed that high
joint gains are possible in intercultural negotiations between
dignity and face culture negotiators when the strategy turns to
information sharing about interests and priorities, and when
negotiators are motivated to reach interest-based agreements.
For example, social distance refers to the degree to which two
people are consciously aware and sympathetic to each other; and
one study reported that when intercultural Korean and U.S.
negotiators used the pronoun you in questions such as “What are
your priorities?” and “Why are you taking that position?” to
reduce social distance, their gains were higher than either the
Americans negotiating intraculturally or the Korean students
negotiating intraculturally, both groups of which used you
less frequently.70 Another study found that when communications
were clear (understood), responsive (reciprocating and
empathic), and comfortable (viewed as pleasant), students from
China studying in the United States were able to negotiate higher
joint gains with American students than either group could
achieve in intracultural negotiations.71 Both of these studies
reveal that bridging the strategic gap between dignity and face
culture requires communication between negotiators about
interests and priorities.
Another intercultural study, again using Chinese students
studying in the United States and American students, focused
more on negotiators’ motivation than their communications by
measuring need for closure and concern for face. “Need for
closure” refers to the motivation to reach conventional and stable
78 Negotiating Globally
judgments.72 “Concern for face” refers to the motivation to
enhance one’s self-image and avoid loss of reputation.73 In this
study intercultural negotiators who were high on need for closure
were less successful, but those who were high on concern for face
were more successful in negotiating high joint gains.74
Another intercultural negotiation study between Chinese students
studying in the United States and American students focused
on “cultural intelligence” (CQ), which is defined as a person’s
capability to successfully adapt to new cultural settings. People
whose CQ motivation is high are those who enjoy interacting with
people from other cultures and are confident that they can deal
with the stresses of living in another culture.75 Here joint gains
were predictable from knowing the CQ motivation of the least
motivated negotiator. When CQ motivation was high, negotiators
engaged in sequences of information sharing that led to joint
gains.76
Advice for Negotiating Interculturally
Fundamentally, to be successful negotiating joint gains interculturally
requires the same strategic focus and motivation as
negotiating joint gains intraculturally. Using one strategy or
another intercultural negotiators need to gain information about
each other’s interests and priorities. Q&A is the simplest strategic
approach when it can be done without exploitation, and the few
intercultural studies in which joint gains were high showed negotiators
using variants of the Q&A approach. But simply switching
to Q&A as the Japanese did in negotiating with the Americans is
not enough. The Q&A strategic approach needs a midpoint transition
at which information about interests and priorities is turned
into multi-issue offers with trade-offs.77 The intercultural negotiation
studies between Chinese or Korean students studying in
the United States and American students also suggest that the
more experience face culture negotiators have in a dignity
culture, the greater the likelihood that they will use the Q&A
strategy and generate joint gains.
It remains to be seen if negotiators in a low-trust environment
but with a holistic understanding of how to extract information
from offer patterns can turn the S&O strategy into one that
Culture and Strategy for Negotiating Deals 79
generates high joint gains in intra- and intercultural negotiations.
Simply switching defensively from Q&A to S&O as the Norwegians
likely did in negotiating with the Mexicans and the Americans
clearly did in negotiating with the Spanish in the studies reviewed
earlier is not enough. Once again, negotiators need to turn information
into multi-issue offers with trade-offs.
Moving on to Resolving Disputes
In the next chapter we leave deal making behind and move on
to a somewhat different type of negotiation, dispute resolution,
in which parties typically come to the table in a frame of mind
quite different from the one that deal makers typically bring.
Parties embroiled in a dispute quite frequently are emotionally
distraught, seeking to minimize losses, and have BATNAs that are
tightly linked. It is quite a different environment for negotiating
than deal making, and there is another big cultural divide for us
to understand: the difference between direct and indirect
confrontation.
Conflict is the experience of opposing interests. People experience
conflict when they are interdependent, need to share
resources, and perceive opposing interests concerning how those
resources should be distributed.1 Recall the example in Chapter
One of the TNK-BP failed joint venture set up in 2003 between
some Russian investors (AAR) and British Petroleum. In Chapter
One we mentioned that the joint venture was plagued from the
outset by “internal governance problems”—a euphemism for conflict.
Expats dominated the management team and tried to impose
BP’s corporate culture on the joint venture. Within a year, over
one-fifth of the Russian headquarters staff had left because of
mutual distrust between expat and resident managers, according
to a Russian member of the joint venture’s board.2 By 2008 the
conflict between these two different cultural groups, exacerbated
by an incentive system tailored to interests of the joint venture’s
expats, led to sixteen Russian VPs and directors filing a lawsuit
against the CEO, Robert Dudley, for labor law violations.3 When
a Russian board member demanded Dudley’s resignation, Dudley
refused. Now the conflict of interests between TNK-BP Russian
and other board members became a dispute, the claim for Dudley’s
resignation, which Dudley rejected. A dispute is a particular
form of conflict—a claim by one party rejected by another.4
81
4
Resolving Disputes
82 Negotiating Globally
No culture is immune to conflict and disputes. People everywhere
experience conflict, make and reject claims, and try to
resolve disputes. How they do so varies systematically with culture,
including what claims are made, the reasons why claims are
rejected, and the strategies people use to resolve conflict and
disputes. Global negotiators should be prepared to resolve disputes
regardless of where in the world they arise. To that end, this
chapter arms you with a fundamental understanding of conflict
and the process of dispute resolution and provides insight into
how to adjust that process to account for cultural differences.
We begin by explaining how dispute resolution negotiations
differ from deal-making negotiations, which were the focus of
Chapter Three. We then consider how the dignity, face, and
honor cultural prototypes introduced in Chapter Two influence
how direct or indirect dispute resolution negotiations are likely
to be. That brings us to the core of the chapter: a discussion of
three strategic approaches to resolving disputes (through assertion
of interests, rights, or power) and how to use each approach
more or less directly.
The Difference Between Negotiating Deals and
Resolving Disputes
Not all relationships set up through deal-making negotiations
turn into disputes, as the TNK-BP joint venture did. When deals
are negotiated, contracts should be carefully crafted and
relationships should be carefully cultivated to minimize misunderstandings
that generate conflict and disputes. Nevertheless,
in any relationship there are likely to be conflicts and disputes.
Claims are made and rejected because not every contingency
can be anticipated at the time a contract is signed and not all
relationships are strong enough to overcome the cost and disappointment
of unfulfilled expectations, much less changes in the
environment. Global managers need to know how to use negotiation
strategy to resolve conflict. The first step is to understand
three important differences between resolving disputes and negotiating
deals: BATNAs are linked, negotiators are (or should be)
focused on minimizing costs rather than maximizing gains, and
emotions are likely to be high and angry.
Resolving Disputes 83
BATNAs Are Linked
The TNK-BP dispute between CEO Dudley and his board illustrates
linked BATNAs. A board member asked Dudley to
resign—that was the claim. Dudley refused—that was the rejection
of the claim, which turned the conflict into a dispute. But
that was not the end of the negotiation. The miffed board then
began to make it impossible for Dudley to direct the joint venture
by refusing to approve the previous year’s financial statement.5
The point of linked BATNAs in dispute resolution is that your
BATNA is what the other party does after you reject its claim. In
the TNK-BP dispute, the board escalated the conflict and Dudley
ended up leaving Russia and trying to manage the joint venture
remotely from the United Kingdom.
The difference between BATNAs in deal making and dispute
resolution negotiations is that in deal making, BATNAs are independent
whereas in dispute resolution BATNAs are interdependent.
Take another example: when a potential buyer and seller reach
an impasse, each goes off to negotiate with a different buyer or
seller. BATNAs are independent; typically neither the buyer nor
the seller can interfere with the other’s alternatives. This is not so
in dispute resolution. When a claim is made and rejected, both
parties’ BATNAs depend on what the claiming party does next.
The TNK-BP board member could drop his claim, but he could
also escalate, which he did by refusing to approve an important
financial statement. A major error in planning a dispute resolution
strategy is failure to understand that BATNAs are linked. In
dispute resolution negotiations each party has to consider his
BATNA as being the worst thing the other party can do in the case
of impasse. Once my MBA students understood this distinction,
they came up with a new acronym for BATNA in the interdependent
disputing context: WATNA—Worst Alternative To a
Negotiated Agreement.6
Minimizing Costs
Although deal-making negotiations are all about maximizing
gains, linked BATNAs should make negotiators resolving disputes
focus on minimizing costs. The first step in the ultimate
84 Negotiating Globally
dissolution of the profitable TNK-BP joint venture came when
unresolved conflict within management escalated to the boardroom
and was not resolved. If you are the recipient of a claim and
you reject the claim, you have little control over what the claimant
does next, much less the costs to you of what the claimant does
next. The only way to manage the costs of dispute resolution is to
negotiate to resolve the dispute at the lowest possible cost to you.
If you negotiate to impasse, you not only lose control over the
claimant’s next step, you also lose control over the cost to you of
that next step.
Note how different this minimize-cost focus in dispute resolution
is from the maximize-gain focus in deal making. In deal-making
negotiations, negotiators scan their environments for potential
partners. They choose to negotiate with the one with whom they
think they can maximize their gains. The next best partner
becomes the BATNA.
In dispute resolution, there is no choice of partner. The
tangled web of interdependent relationships in dispute resolution
means that both claimants and respondents should weigh the
costs of a potential agreement against the costs of what might
happen if that agreement is rejected. This is why lawyers often
walk clients through elaborate decision trees that estimate the
costs and gains to be expected in different dispute resolution
venues. A major error in executing a dispute resolution strategy
is to focus on maximizing gains rather than on minimizing losses.
Emotions
Despite the advice to weigh the costs of a potential agreement
against the costs of what might happen if that agreement is
rejected, disputants often have difficulty taking such a cool rational
approach to dispute resolution. Deal making can become
emotional, but deal-making negotiations do not normally start
out with outraged, angry, hurt, unhappy negotiators. Dispute
resolution negotiations often do. People tend to take it personally
when they are the target of a claim or have their claim rejected.
They view claims and rejections as insults, as affronts to their selfworth.
Once an event is framed as an insult, people’s emotions
are engaged and negotiations not only have to resolve the issues
Resolving Disputes 85
in dispute but also restore the dignity, face, or honor of the disputants.
This leads us to the next section, which looks at the basis
for conflict and the normative responses to it in the three types
of culture introduced in Chapter Two.
Conflict and Confrontation in Dignity,
Face, and Honor Cultures
People in different cultures confront conflict rather differently.
The dignity, face, and honor framework we discussed in Chapter
Two is helpful in organizing and understanding these differences.
In this section we discuss how differences in self-worth
(dignity, face, honor) and social structures (egalitarian versus
hierarchical) lead to different thresholds for conflict and different
types of confrontation (direct versus indirect). A good way to
start to understand these differences is to consider how cultural
differences in self-worth are associated with different levels of
tolerance for insults and claims. (Remember that, as in Chapter
Two, we are talking here about cultural prototypes; not everyone
in a dignity, face, or honor culture is going to act in line with the
prototype.)
Conflict and Confrontation in Dignity Cultures
In dignity cultures (such as the United States), people tend to be
quite tolerant of conflict claims. Although people sometimes have
strong emotional responses to conflict claims, they may first try
to understand the claim and address it in an unemotional way.
Dignity theory in cultural psychology suggests that the threshold
for an emotional response to a conflict claim is relatively high
because self-worth is intrinsic, self-determined, and so not too
easily affected by conflict claims. In addition, dignity cultures’
generally egalitarian social structures, associated with beliefs that
“I’m as good as the next guy” and norms for direct confrontation,
provide the resilience people need to turn claims back upon the
claimant: “Who are you to say that to me?” To be sure, people in
dignity cultures care about being respected, and there are definitely
limits to how much abuse they will tolerate. But, because
claims do not necessarily threaten their intrinsically based
86 Negotiating Globally
self-worth, and the norm is to confront conflict directly, they are
relatively tolerant of conflict.
Conflict and Confrontation in Face Cultures
The situation is quite the opposite in face cultures, in which a
direct claim or rejection is a threat to self-worth because it implies
a failure to fulfill social obligations. This is why claims and rejections
of claims typically are made indirectly in face cultures. Recall
the rattling bicycle example in Chapter One? The claim was made
indirectly. After riding the rattling bicycles it was obvious to the
plant manager and the visiting buyer that the bicycles rattled. Yet
the buyer did not confront the plant manager directly, which
would have caused him to lose face by being called out for failure
to fulfill his obligations. The questions about customer reactions
were indirect confrontation in which no explicit claim was made that
the bicycles rattled and no direction was given as to what needed
to be done about the rattling bicycles. Importantly, too, no blame
was imposed. Leaving it up to the other party to identify the claim
and carry out the correct response is the hallmark of face-saving
indirect confrontation. Indirect confrontation preserves face
and social harmony, which are highly valued in stable social
hierarchies. Although direct versus indirect confrontation is a
continuum, this strong emphasis on indirect confrontation is
unique to face cultures.
Conflict and Confrontation in Honor Cultures
Expect a very different response to conflict in honor than in face
or dignity cultures. Research suggests that people in honor cultures
are aggressive, defensive, and direct in protecting honor.7
The dynamic and unstable social hierarchies of honor cultures
mean that people are constantly seeking social verification of
their status. A claim such as “You should not have done that”
threatens self-worth, because it implies that the person has violated
a social norm, not behaved according to his or her social
status, and so is no longer deserving of that status. To protect that
status people in honor cultures respond to claims or rejections
directly, aggressively, and defensively.
Resolving Disputes 87
Although honor and dignity cultures share the norm of direct
confrontation, beneath this surface similarity lies an important
difference: in dignity cultures, stable, intrinsic self-worth allows
the target of the insult or claim to turn the focus of direct confrontation
on the other party: “What’s your problem? Why this
insult? Why this claim?” In honor cultures, unstable extrinsic selfworth
means that targets turn the focus on themselves: “I haven’t
done anything to deserve this! How dare you!” This explains why
their response to conflict is likely to be direct, aggressive, and
defensive.
Now that we understand some reasons why people in dignity,
face, and honor cultures tend to confront conflict more or less
directly, we are ready to learn about three different strategic
approaches to resolving disputes—interests, rights, and power—
and how each approach can be used in a more or less direct
manner depending on culture.
Interests, Rights, and Power:
Three Strategic Approaches to Resolving Disputes
Regardless of culture, negotiators can choose among three strategic
approaches to resolving disputes: identify interests and
attempt to integrate them; try to determine who is right according
to some normative standard or rule, contract, law, or precedent;
or determine who has more power and expect the weaker party to
concede. Some limited empirical data suggest that disputants in
dignity cultures will rely more heavily on interests and rights,
while disputants in face and probably honor cultures will rely
more on power.8 The theory we have just reviewed suggests that
disputants in dignity and honor cultures will use interests, rights,
and power in a much more direct manner, while those in face
cultures will take an indirect approach. Let’s begin by developing
a deeper understanding of these three strategic approaches to
resolving disputes, and then turn to how they are used more or
less directly in different cultures.
Interests are the same concept in dispute resolution as in deal
making. They are the concerns, needs, and motivations underlying
the conflict or the reasons why the claim was made and the
reasons why it was rejected. Rights are the same as the standards
88 Negotiating Globally
of comparison that we talked about in Chapter One. In both
making deals and resolving disputes, people use standards of
comparison to substantiate their offers. Power in dispute resolution
is like BATNA in deal making—what will happen if there is
no agreement. However, remember that your BATNA in a dispute
is the worse thing the counterpart can do to you if you reach
impasse—that is, your WATNA.
Conflicts and disputes can be framed in terms of interests and
rights and power. Exhibit 4.1 shows these three approaches as
concentric circles, with interests embedded within rights and
rights embedded within power.9 All three strategic approaches
coexist such that a negotiation focused on interests occurs within
the context of rights standards, and a negotiation focused on rights
occurs within the context of which party is more powerful.
In trying to negotiate the resolution of disputes, negotiators
often cycle among the three strategic approaches. For example,
when we coded transcripts of simulated dispute resolution negotiations,
we found that people most often started out in the rights
circle but quickly realized they were getting nowhere. (Obviously,
if they agreed on who was right and who was wrong, there would
not have been a dispute in the first place.) Sometimes this early
Exhibit 4.1. Three Approaches to Resolving Disputes.
Power
Rights
Interests
Source: W. L. Ury, J. M. Brett, and S. B. Goldberg, Getting Disputes Resolved:
Designing a System to Cut the Costs of Conflict (Cambridge, Mass.: Harvard Program
on Negotiation, 1993). Reprinted by permission.
Resolving Disputes 89
impasse over rights would lead to power-based negotiations, but
more often—in negotiations that ultimately reached an
agreement—negotiators would turn to interests. Interestingly,
again in negotiations that ultimately reached agreement, there
was a tendency to return briefly to rights and power about threequarters
of the way through. We think that once negotiators were
confident about settling the dispute, they felt free to engage in
some relatively risky competitive negotiations that might further
minimize their costs.10
The next sections elaborate on these three strategic approaches
to resolving disputes. Each section discusses how the approach is
used in different cultures, gives advice for using each approach
to analyze and negotiate the resolution of the dispute, and proposes
types of settlements that fulfill the strategic intent of the
approach.
Interests
Interests are the reasons why claims are made and rejected. They
are the needs and concerns underlying parties’ positions on the
issues in dispute.
Uncovering Interests
Even in direct-confrontation cultures (dignity or honor), in which
claims are explicit, interests may be hidden and may take some
creativity to detect. In the indirect-confrontation culture (face),
both claims and their underlying interests may be difficult to spot.
Exhibit 4.2 provides some examples of how people use verbal,
nonverbal, and third-party approaches to uncover interests directly
and indirectly.
The direct approaches in the exhibit should be quite familiar
if you are from a dignity or honor culture, but my Western
culture students often have difficulty understanding indirect
ones. One of my Chinese students gave the following example to
help her classmates understand indirect confrontation. She said,
“I would never tell a friend that I didn’t like her dress. Instead I
would tell her I liked her shoes, omitting reference to her dress.
She would understand that I didn’t like her dress, because I
didn’t mention it.”
90 Negotiating Globally
Sharing an experience is a particularly useful indirect
approach for revealing your interests. One of my former students,
an American, wrote me from a semester abroad in Thailand. She
had bought a docking station for her iPod at a small shop in a
large Bangkok electronics mall. When she got it home, it didn’t
work. She wanted to take it back to the shop, but her Thai friends
said, “Don’t bother, it’s buyer beware in electronics malls, the
shopkeeper won’t take it back, he will lose face if he admits to
selling you shoddy goods.” Not one to be deterred, she devised
an indirect, face-saving move. She took the docking station back
to the shopkeeper, explaining she couldn’t figure out how to
use it and asking for his help. She intentionally did not take her
iPod. The shopkeeper tried the docking station with his iPod,
experienced the fact that it didn’t work, and exchanged the malfunctioning
station for one that he showed her was working. The
story of the rattling bicycles of course is another example of this
shared experience approach.
Third parties may also be used to help uncover interests. In
dignity cultures third parties typically are used late in the dispute
resolution process, only after disputants have failed to resolve the
conflict themselves using direct confrontation negotiations. In
indirect, face cultures, third parties are used early. Consider how
the Chinese woman in the example in Chapter One responded
Exhibit 4.2. Using Verbal, Nonverbal, and Third-Party
Approaches to Uncover Interests Directly and Indirectly in
Dispute Resolution.
Approach Direct Cultures Indirect Cultures
Verbal Ask or answer a why or
why not question
Tell a story
Share an experience
Nonverbal Use hard-to-miss signals
such as elevated voice
or enlarged postural
stance
Use subtle emotional signals
such as withdrawing, or
behavioral cues such as
crossed arms to convey
disagreement
Third party Send a message via a third
party
Resolving Disputes 91
to the American manager’s request for different data. She escalated
the request to her manager, in order to minimize her own
potential loss of face. In honor cultures, third parties also are used
rather early in disputes, but for a different reason, primarily
to minimize what otherwise might be an aggressive direct
confrontation.
An American manager shared this example of early thirdparty
intervention. His firm was doing business in China, and he
was baffled by the behavior of one of his high-potential Chinese
managers on temporary assignment in the United States. The
Chinese manager was working with a female American manager
on a marketing campaign. “Every time the Chinese manager disagreed
with her course of action, he came to me,” he said. “Why
doesn’t the Chinese manager just work through the different
perspectives with her,” he wondered. “Maybe he’s not as high
potential as we thought.” We spent some time discussing how the
Chinese manager was acting normally for indirect, hierarchical
Chinese culture, and that he probably had no idea that his American
boss viewed his behavior as inappropriate.
In contrast to the shared experience examples, the American
manager’s third-party example illustrates that early third-party
involvement helps to uncover interests, but doing so does not lead
directly to a resolution of the conflict. The American boss needed
to decide what to do about the Chinese manager’s requests for
intervention. He believed that the Chinese manager was going to
need to learn to work through differences directly with peer
American managers, if he was going to be successful in this American
company. At the same time the American boss came to realize
that if “going to the boss” was cultural, it would be difficult behavior
to change, and failing to involve the boss early would be
inappropriate behavior once the Chinese manager was back in
China. What to do?
Many biculturals, people who have deep experience with two
cultures and usually two languages, effectively manage such complexities
by switching cultural behaviors on and off as they move
from one cultural context to another.11 Growing up in two cultures,
these people have deep knowledge of the different norms
and behaviors that are functional in their different cultures.
Too, those most adept at switching seem high on a personal
92 Negotiating Globally
characteristic called identity integration. These people are comfortable
with their two, or sometimes more, cultural identities;
they do not experience conflict between their identities but
allow them to coexist in tandem with their co-existing languages.12
Without bicultural experience, global managers need to learn
how to anticipate and analyze interests regardless of their counterpart’s
culture.
Anticipating Interests
Awareness of dignity, face, and honor cultural prototypes may also
be helpful in anticipating interests in dispute resolution. For
example, if you know the counterpart is from an honor culture
in which social validation is important, sincere flattery may be an
effective opening to relationship building. If the counterpart is
from a face culture, make sure the compliment is directed at the
team, not the individual, who is likely to be embarrassed by being
singled out. Confusing? Think about analyzing interests this way:
people all over the world are concerned with realizing their goals
and being respected by others, as well as achieving the goals of
the social groups to which they belong and acting in ways that
reflect positively on those groups. Differences of interests across
cultures are therefore largely a matter of emphasis. In dignity
cultures, consistent with the intrinsic basis of self-worth, selfinterests
generally take precedence over collective interests. In
face cultures, collective interests generally take precedence over
self-interests, since self-worth depends on maintaining relationships
and social harmony within the collective. In honor cultures,
because self-worth is socially claimed, self-interest is likely to
dominate, and because validation of self-worth occurs in social
interaction, showing respect during the process of negotiation
will be important.
How interests vary with culture is illustrated by a dispute resolution
simulation study we did first with Hong Kong Chinese
managers and then with U.S. managers.13 The simulated dispute
was about hiring student summer interns. The fictional disputants
were the director of human resources (HR) at a heavy construction
company and the company’s director of engineering. In our
simulation, HR saw the summer internships as a way to gain information
it could use in making post-graduate offers for permanent
Resolving Disputes 93
employment, but engineering, needing relatively low-cost temporary
labor, went out and hired two interns before HR’s program
had started. This action on the part of engineering created two
immediate issues: Who would pay for their summer interns? And
would engineering’s summer interns be part of HR’s program? A
more fundamental issue was how to combine the engineering and
other departments’ short-term needs for temporary help and
HR’s need to recruit engineers.
Many of the Hong Kong Chinese managers were uncomfortable
in this face-to-face simulated negotiation. They told us they
would prefer to discuss the problem with their boss. But since we
did not provide a boss, they tended to resolve the two immediate
issues and direct the more fundamental issues to a committee of
peers who also used summer interns in their departments. Most
of the U.S. managers negotiated rather elaborate agreements,
often resolving how they were going to interact with each other
about summer interns in the future first and then deciding what
to do about engineering’s summer interns.
Different patterns of interests generate different outcomes.
Which outcome do you prefer, the Hong Kong Chinese managers’
agreements that took into account the collective interests of
those not at the table or the U.S. managers’ agreements that
resolved all the issues to the satisfaction of the two negotiators? It
depends a little on your perspective, doesn’t it? If you were the
engineering manager and your interests were met, the multifaceted
U.S. solution would be both expedient and best. If your
interests were not met, involving your peers in other departments
in a thorough evaluation of the program might result in a better,
if less expedient, outcome. If you were one of these managers’
peers and the resolution of their dispute set a precedent for your
future summer interns, would you prefer the U.S. or the Hong
Kong Chinese model?
Here is some advice about analyzing interests in a dispute that
crosses cultural boundaries.
• The fundamental questions for uncovering interests across
cultures are “Why?” and “Why not?”—as in “Why are you
rejecting my claim?” and “Why can’t you grant my request?”
But direct questioning is not the norm in every culture.
94 Negotiating Globally
• When the conflict involves someone from a face culture, look
for signs of collective interests in indirect verbal and
nonverbal signals.
• When the conflict involves someone from a face or honor
culture, do not be surprised if they involve a third party early
in the process. Use the third party to uncover interests, save
face, and reduce aggression.
• Use your knowledge of the dignity, face, and honor cultural
types to anticipate interests.
Using Interests to Resolve Disputes
Once you understand your own and the other disputant’s interests,
you have numerous ways to reach an interests-based
agreement. Exhibit 4.3 identifies six different types of interestbased
agreements. The first type, trade-off, is familiar from deal
making: disputants trade concessions on low-priority issues in
order to gain more on high-priority issues. Progressing down the
list in the exhibit, some disputes can be resolved with a nonprecedent-
setting agreement that focuses narrowly on the issues, but
Exhibit 4.3. Six Types of Interest-Based Agreements for
Resolving Disputes.
Trade-off Agreement in which parties make concessions on
low-priority issues in order to gain more on
high-priority issues.
Non-precedent
setting
Agreement that focuses on the surface issues
without addressing the underlying cause of the
dispute.
Broadly focused Agreement that focuses on the underlying cause
of the dispute.
Future-based Agreement that deals with the future before
dealing with the past.
Limited-duration Agreement to try something for a limited time
and then evaluate before continuing.
Contingent Agreement that depends on another event,
usually in the future.
Resolving Disputes 95
does not address the general principles underlying the dispute.
In the summer interns study discussed earlier, the Hong Kong
Chinese managers tended to reach narrowly focused agreements
and planned to ask a committee of peers to address the underlying
policy issues. A broadly focused agreement addresses both the
surface issues and the underlying problem. Often broadly focused
agreements come about when disputants, frustrated by trying to
resolve the surface issues, turn the discussion to how they might
work together in the future. Their future-based agreements often
generate sufficient understanding of each other’s interests that
disputants become more willing to make concessions on the
immediate issues. Sometimes disputants can reach an agreement
if it is based on a limited-duration experiment with evaluation criteria.
For example, some managers negotiated to put engineering’s two
summer hires temporarily into the HR summer interns program,
and make them permanent, if a background check showed that
they met the program’s academic criteria. Note that this limitedduration
agreement example also contained a contingency: an
agreement that depends on another, usually future event.
Rights
Rights are abstract, generalized principles embedded in the standards
people use to resolve disputes. For example, the standard
could be fairness, and the principle, equity or equality or need.
Alternatively, the standard could be a rule, or norm, or law, and
the principle seniority. Parties negotiating deals often sign contracts
that specify the conditions of their relationship and what
steps they will take if a dispute ensues. But, as mentioned previously,
it is difficult to anticipate and put in a contract all events
that may occur during a relationship. Circumstances may change.
Parties may interpret the contract differently, each relying on a
different principle, for example, equality versus equity, to interpret
the same standard, for example, fairness. It should not be a
surprise that the claimant will propose a rights standard and principle
that supports her claim and the respondent will propose an
alternative principle or even an alternative rights standard to
support his rejection of her claim. For these reasons it is frequently
quite difficult to resolve disputes using rights. It often
96 Negotiating Globally
requires a third party, for example a boss, arbitrator, or judge, to
decide whose rights standard and principle should prevail.
Uncovering Rights Standards
Some rights standards are explicit, such as laws and contracts
that result from prior deal-making negotiations in which parties
agreed to terms and conditions to govern their future interactions.
These explicit rights standards are codified, and compliance
is monitored and enforced by governments and other social
institutions. Other rights standards are implicit, for example, deference
to status or seniority, and fairness standards such as
equity, equality, and need. Implicit standards are embedded in
cultural norms and are monitored and enforced by social acceptance
and social ostracism. People who conform to implicit
standards receive social benefits, and those who defy them may
be punished.
It is important to uncover the rights standard that the counterpart
is relying on because sometimes conflict arises simply
because people are using different implicit standards or interpreting
the same standard differently. For example, some of the
conflict between the TNK-BP Russian and expat managers turned
on different interpretations of the fairness of the benefits that the
expat managers were receiving.14 Understanding that the two different
groups of managers were interpreting the expat’s benefits
differently gives a clue to underlying interests with which the
dispute might more easily be resolved.
Anticipating Rights Standards
Rights standards provide social structures that allow cultures all
over the world to function smoothly although, as discussed
in Chapter Two, cultures vary in the standards they rely on. Characteristic
differences in the three cultural types—particularly
differences regarding self-worth and power and status—provide a
basis for anticipating cultural differences in the type of rights
standards that may be used in dispute resolution.
Recall from Chapter Two that dignity cultures are quite loose,
meaning that norms are relatively flexible, allowing for quite a bit
of variation of behavior within culture; self-worth is relatively
independent of social status; and social structures are largely
Resolving Disputes 97
egalitarian. In such societies self-interest could run amok if it
weren’t for the strong rule of law and highly developed dispute
resolution systems that these cultures maintain. Dignity culture
negotiators typically finalize deal-making negotiations with rather
elaborate contracts that provide explicit rules as to how the parties
are to interact. These contracts also typically include dispute resolution
clauses that call for negotiation, mediation (nonbinding
third-party intervention), arbitration (binding third-party intervention),
or court, and specify venues and auspices under which
these procedures will take place. (We talk more about these thirdparty
procedures a little further on in this chapter.)
Although contracts reduce self-interested behavior of parties
in otherwise normatively loose dignity cultures, social relationships
and social monitoring restrain behavior in the normatively
tighter face and honor cultures, in which self-worth is extrinsically
determined and social structures are hierarchical. There are of
course laws in such cultures, but rights-based dispute resolution
is less heavily relied on in face and honor cultures. In these
cultures social institutions such as family and community and
religious organizations, not so much legal institutions as in dignity
cultures, cast rather tight nets around social behavior. In face and
honor cultures, these local institutions are also the sources of
early-intervening third parties. Deal making in face and honor
cultures is negotiated over many cups of tea, during which time
the new relationship’s status hierarchy is determined. When conflict
arises in such relationships, a reminder of one’s relational
responsibilities as determined by the status hierarchy may be all
that is necessary to maintain harmony in an indirect (face) culture
or the status quo in a direct (honor) culture.15
Using Rights to Resolve Disputes
Disputants use rights to justify making and rejecting claims and
to substantiate their proposals for agreement. Rights standards
legitimize claims and so, in principle, make them easier to accept.
In actuality, three characteristics of rights standards make rightsbased
dispute resolution problematic. First, even when disputants
are using the same standard (such as fairness), they may use different
principles and so interpret the application of the fairness
standard in opposing ways. For another example from the summer
98 Negotiating Globally
interns simulation, the HR manager could argue that it was unfair
for engineering to flout policy and hire its own interns. But at the
same time, engineering could argue that it was unfair of HR to
delay hiring interns when engineering had immediate need for
temporary staff. Second, different interpretations of the same
rights standard may be equally relevant but point to very different
outcomes. Third, imposing a rights standard on a dispute—for
example, HR has the authority to hire, engineering does not—
generates a win-lose outcome. People resist agreeing to take a loss.
Instead, they agree to disagree about who is right and who is
wrong and escalate the dispute to another rights-based procedure,
for example, by going to the common boss. Or, they may
move to a power solution; for example, the engineering manager
could convince the other department managers to refuse summer
interns until the dispute between HR and engineering was
resolved.
For all these reasons, trying to use rights standards to resolve
disputes can be extremely frustrating. Often one standard is used
to justify a claim and another to justify rejecting it. Which standard
should prevail? If the two parties agreed on the rights
standard, they would not have a dispute in the first place. The
process of rights-based dispute resolution is one of searching for
a mutually acceptable rights-based standard. But any standard
suggested by one party will be viewed as self-serving by the other
party.16 So what to do?
• Realize when suggesting a rights standard for resolving a
dispute that standards are often suspect and therefore
discounted. After all, a disputant is unlikely to propose a
rights standard that does not benefit him.
• When weighing potential rights standards, think about what
the other party might consider fair.
• Remember that culture is likely to affect the rights standards
disputants will prefer to use.
• If a third party is involved, consider how persuasive your
rights standard is likely to be with the third party.
• Recognize that using a rights standard to resolve a dispute
ordinarily means that one party will win and the other will
lose. This makes it difficult for disputants to agree on what
Resolving Disputes 99
standard to apply. Consider agreeing to disagree and trying
to turn the negotiation to interests.
Rights-based approaches do resolve some disputes. Disputants
may withdraw claims or grant them when new credible evidence
generates doubt about the validity of a claim and/or its rejection
or clarifies the costs of failing to resolve the dispute. Intuitively,
substantiation (which we discussed thoroughly in Chapter Three)
would seem to be an appropriate way to convince the other party
that your standard, and therefore you, are right and he is wrong.
But if that argument does not contain new credible information,
it will likely be perceived as self-serving and consequently be ineffectual.
When one party withdraws or grants a claim after a fierce
argument in which no new information was exchanged, the concession
is as likely motivated by a recognition that pursuing the
claim was not worth the costs or by a desire to restore harmony
as by persuasion that the initial claim or its rejection was without
merit. The key to success in using rights to resolve disputes is
either to propose a standard that the other disputant will agree
is fair or to provide new credible information that makes the
proposed standard appear fair. Without new credible information,
argument is unlikely to work.
Power
Power is the ability to get what you want from a dispute—to have
your claim granted or your rejection upheld.
Uncovering Power
Theorists talk about power in terms of dependency. In general,
the more dependent you are, the less powerful you are. If you
have good alternatives, you are less dependent and therefore
more powerful.17 Understanding power in terms of dependency
makes it easier to see how status and BATNA are alternative indicators
of power. In dignity cultures, high-status parties are admired
for their accomplishments, but they are not necessarily viewed as
powerful, in the sense that they have greater access to resources
than do low-status parties.18 In face and honor cultures there
seems to be a tighter relationship between power and status.
100 Negotiating Globally
High-status parties can help low-status parties and culturally are
expected to do so. In return, low-status parties defer to high-status
parties.
In dispute resolution negotiations, figuring out who is more
powerful is not as easy as just determining who has the higher
status or better BATNA. In disputes especially, parties evaluate
their power through self-serving and cultural lenses. People do
not like to admit to themselves, much less to the other side, that
they are the low-power party in a negotiation. Self-serving or egocentric
biases affect people’s judgments in many situations.19
Egocentric bias means that disputants whose emotions are
engaged are likely to systematically overestimate their own power
and underestimate their counterpart’s power.
In analyzing power in disputes, remember too that BATNAs
are linked—my best alternative is a WATNA: the worst thing you
can do to me. Just saying no in dispute resolution negotiations
does not make the claim go away. The other party can continue
to press the claim—to a boss, to peers, to the press, to court—
and you have to deal with it. In deal-making negotiations, it is
wise to consider the counterpart’s BATNA in order to understand
his reservation price. In dispute resolution negotiations, it
is critical to understand the other party’s BATNA because that is
what she can do to you if there is no agreement. It affects you
directly.
Anticipating Power
Disputants from different cultures use power rather differently.
Although we do not have dispute resolution data from honor
cultures, we do have a study that contrasts how Japanese (face
culture), and Germans and Americans (dignity cultures) used
power in the summer interns simulation.20 These negotiations
were audio recorded and transcribed, and what negotiators said
to one another was coded. Exhibit 4.4 shows how we coded three
different power strategies: blaming and shaming, threats and ultimatums,
and involvement of powerful people.
Considering how we have emphasized that indirect confrontation
is the norm in face cultures, you may be surprised initially
that the Japanese used blaming and shaming more frequently
than did the Americans or Germans. Our research suggests that
Resolving Disputes 101
blaming and shaming are widely used in face cultures to encourage
a party to step up to his role and responsibilities in the social
hierarchy. Blaming and shaming also are bald attempts to engage
the counterpart’s emotions. According to one close observer of
Japanese dispute resolution style, the more emotional the appeal
the more likely it is to be persuasive, because to refuse to concede
in the face of such a plea, the recipient would have to ignore her
role in society.21
In this study the Japanese also referred to the support of powerful
others much more frequently than the Germans or the
Americans. This, too, is consistent with what we know about social
interaction in face cultures, with the emphasis in these cultures
on the collective interests of harmony and preservation of the
status quo. Alluding to the support of powerful others reminds
Exhibit 4.4. Coding Power Tactics in the Summer Interns Study.
Code Statement type Example Explanation
Blaming and
shaming
Accusatory,
disapproving
statement
“You make a
sham out of
this process.”
Used to shame
the other into
taking
responsibility or
making a
concession
Threats and
ultimatums
Statements that
suggest negative
consequences
associated with
continuing
current
behavior
“If it doesn’t go
as quickly as it
should, then
we are forced
to take things
into our own
hands.”
Used to
intimidate the
other into
making a
concession to
avoid threatened
negative
consequences
Involvement
of powerful
people
Suggesting that
powerful
people support
your position
“Besides us,
many other
departments
are unhappy.”
“Why don’t we
ask the board
what it thinks?”
Suggests
negative social
sanctions unless
a concession is
made
102 Negotiating Globally
the counterpart that this dispute is not an isolated event but
involves the interests of others in the organization.
Two aspects of face culture should help you see how blaming
and shaming and alluding to powerful others are actually consistent
with indirect confrontation. Recall that face cultures thrive
in stable social hierarchies. Disputes threaten the status quo;
blaming and shaming and alluding to powerful people are relatively
subtle ways of reminding people of the importance of
maintaining harmony and stability in the social hierarchy. Remember,
too, that indirect confrontation does not mean no
confrontation. It means that the confronting party does not tell
the counterpart what to do, but leaves it up to the counterpart to
determine what to do. Blaming and shaming and alluding to
powerful people are consistent with indirect confrontation.
Unfortunately, we do not have similar research using the
summer interns simulation with people from honor cultures. We
can ground some speculations in what we do know about honor
cultures. We know that honor cultures tend to have unstable
social hierarchies, with self-worth claimed from social interaction.
We know that people from honor cultures respond directly,
aggressively, and defensively to insult. It seems likely then that
people from honor cultures will use direct and very likely emotional
forms of power in dispute resolution negotiations.
Using Power to Resolve Disputes
An irony comes with using power: if you have to use power it
costs you, and often even when you win, you lose. Any time there
is a prior relationship between disputants or the potential for a
future, post-dispute relationship, winning a power contest is
likely to lose the relationship. Let’s go back to our summer
interns example: if the engineering manager involves the other
department heads and effectively takes control of the summer
interns program away from the HR manager, the latter is likely
to be very reluctant to cooperate with engineering on other
future employment matters. Using power to win may turn out to
be a rather empty victory when parties have to continue to work
together.
The key to using power effectively is not to have to use it. This
is what the indirect power confrontation approach tries to
Resolving Disputes 103
accomplish. By using the power of shaming or by alluding to the
interests of other parties, the disputant is hoping the counterpart
will act to resolve the dispute. Threats in direct confrontation
serve a similar purpose.
The key to using power effectively in direct confrontation
cultures is to make threats that you are willing to carry out, but
that you ultimately do not have to act upon because the counterpart
has conceded. An effective threat addresses the counterpart’s
interests. A credible threat is one for which the cost to you of
carrying out the threat is less than the damage carrying out
the threat will impose on the counterpart’s interests. If the cost
to you is more than the damage done to the counterpart, the
counterpart is likely to dismiss the threat as not credible. Since
the purpose of making a threat is to encourage the counterpart
to come to a negotiated agreement, before you act on your
threat, be clear about two things: what the counterpart needs
to do to avoid the threat being acted upon, and what benefits
will accrue to the counterpart if he accepts your proposal for
agreement. Here is some advice for making and using threats
effectively:
• Threaten the counterpart’s interests.
• Only make threats you are willing to carry out. Acting on the
threat should damage them more than it costs you.
• Be clear about what the other party needs to do to avoid the
threat being acted upon. “If you do not do , then I will
do .”
Remember before making threats:
• Power in disputing is different from power in deal making in
one key respect: disputants’ BATNAs are linked (WATNAs).
• Culture affects whether power tactics are indirect or direct.
Recognize that blaming and shaming and alluding to parties
not at the table are indirect-confrontation power tactics, just
as threats are direct-confrontation power tactics.
• If you have to use power, it costs you.
• When you “win” by power, you may also be losing in terms of
an ongoing relationship.
104 Negotiating Globally
There are really only two times to use a threat: when you
cannot seem to get the counterpart to the table to negotiate and
when negotiations with the counterpart have reached an impasse.
In both cases your BATNA/WATNA is looking better than the
status quo. People sometimes use threats at inappropriate times
during negotiations, for example, when they are quite sure there
will be an agreement but want to claim more value. But threats
at this stage of a negotiation can risk a fledgling agreement, if the
response is emotional—“How dare she threaten me at this stage
of the negotiation?”
There is one last bit of advice about using threats. People
often read threats in information that the counterpart communicates
regardless of whether or not the counterpart is trying to
threaten. For example, when we were studying union organizing
campaigns in the United States, we would ask employees what the
company spokesman had said in a meeting. We had transcripts of
those meetings because the U.S. labor law prohibits direct
threats—for example, “We’ll move the production facility to
Mexico if the union wins the election.”22 Companies are careful
not to make such explicit threats. Instead companies say things
such as, “Remember the employer who used to be down the
street? When his plant voted for union representation, he shut
his doors and moved production to Mexico.” When we asked
employees what was said in the meeting, they would tell us, “He
said that if we vote union, he’s going to move production to
Mexico.”
Frankly, it is difficult to talk about power in a purely informational
way when parties are disputing. Informational messages are
received emotionally. Remember that in disputing, emotions are
typically engaged from the time the claim is made and rejected.
If you really do need to communicate credible information that
the other disputant does not want to hear, it may be the time to
engage a neutral third-party mediator. Mediators can convey
information from you and help counterparts interpret the implications
of the information.
Now that we have discussed all the elements of strategic
planning for a dispute resolution negotiation—uncovering, anticipating,
and using interests, rights, and power—we can turn
to managing the dynamics of these emotionally charged
Resolving Disputes 105
negotiations by considering how to start a dispute resolution
negotiation, how to turn a dispute resolution negotiation that is
focused on rights or power to interests, and how to use third
parties in dispute resolution.
How to Start a Dispute Resolution Negotiation
Look back on Exhibit 4.1. Where should you start the negotiation,
with interests, with rights, or with power? This may come as a
surprise, but I want to caution you about opening dispute resolution
negotiations with interests. There are two related reasons,
one intuitive, the other based on empirical evidence. It makes
intuitive sense that if you open negotiations with interests, you
may be inadvertently sending a message of weakness. Our empirical
research shows that when parties open with interests, the
counterpart, perhaps thinking there is weakness to be exploited,
may turn the negotiations toward rights or power; then the
opening party, in self-defense, also turns to rights or power, and
conflict spirals. Once this occurs and rights and power are
reciprocated, it is quite difficult to turn the negotiation back to
interests, possibly because the party opening with interests feels
exploited and becomes defensive. In contrast, when negotiations
open with rights or power and go nowhere, parties seem to get
the rights and power posturing out of their systems, and are
relieved to turn to interests, with which there might be movement
toward an agreement.23
There may be some middle ground between opening with
rights or power and opening with interests. Disputes are often
about what happened—the facts of the situation. Disputants
seldom agree about the facts, so this opening is not likely to lead
to agreement (if there had not been disagreement about the facts
there may not have been a dispute in the first place). But talking
about the facts and agreeing to disagree may get the parties
working together and signaling each other: “This dispute is important
to me; you are going to have to participate to resolve it.”
Opening dispute resolution negotiations by focusing on rights
is unlikely to lead to a quick agreement unless you have new
credible rights information that the other party did not know
when rejecting your claim. In fact, because disputants tend to
106 Negotiating Globally
reciprocate each other’s rights arguments, opening with or directing
the negotiation toward such arguments may at least for a time
escalate the dispute rather than resolve it.24
About the only time you would want to open a dispute resolution
negotiation with power is when it took power to get the
counterpart to the negotiating table. This is one reason why
dispute resolution negotiations so often start out with both parties’
emotions running high.
Scholars actually know quite a lot about what happens to reasoning
when people become emotional, as they often do when
disputing.25 For one thing, they are likely to lose perspective and
become less cooperative and less receptive to other ideas. When
people feel threatened, anxiety reduces their capacity for rational
thinking, and when people become angry their focus may shift
from the task to retaliation.26 A study we did monitoring the
dispute resolution communications of eBay buyers and sellers
illustrates this dynamic. The angrier the party making the claim,
the angrier the counterpart and, no surprise, the less likely the
dispute was to settle.27 But, holding anger constant, we also found
that claimants who told their counterparts exactly what should be
done to resolve the claim reduced their chances for settlement of
their claim. It seems that even eBay disputants prefer indirect
confrontation! In contrast, counterparts who kept a cool head
and provided a causal explanation for what went wrong increased
the likelihood of settlement.28 In another recent study of dispute
resolution, we assessed the effects on concession making of one
party expressing anger. The results were clear. In dispute resolution,
expressing anger was counterproductive. It reduced the
counterpart’s concession making.29
Perhaps another reason why people do not make concessions
to angry negotiators is that they understand intuitively that if they
make concessions to angry counterparts, they are actually reinforcing
the counterpart for using anger strategically. If you make
a concession to an angry counterpart, you only encourage the
counterpart to use anger to negotiate! The more frequently you
and others make concessions to anger in negotiation, the more
anger becomes a learned negotiating strategy!
Whether the anger in dispute resolution negotiations is born
of frustration or strategy, the way to manage it is to refuse to make
Resolving Disputes 107
concessions and keep negotiating. Put an offer on the table. See
if you can change the focus. Here’s some advice about managing
a counterpart’s anger in dispute resolution negotiations:
• Don’t reciprocate an emotional outburst. Failing to confront anger
with anger does not make you appear weak. The effect is just the
opposite. Reciprocating the other disputant’s emotional
outburst draws you into her strategy and away from your own.
It makes you appear unable to sustain your own strategic
approach.
• Try not to take an emotional outburst personally. Blaming yourself
for the counterpart’s emotional outburst will only make you
defensive and distract you from your preferred strategic
approach. Depersonalize the situation, see the problem in
the situation, for example, staffing needs in the engineering
department, or in the culture, for example, it is appropriate
in China to take problems to the boss. Don’t view the
problem as the personality of the counterpart, for example,
“The engineering director is a bully.”
• Consider putting the other party’s behavior on the table. Tell the
counterpart directly that his emotional behavior is interfering
with dispute resolution. Ask if there is something you can do
to help reduce the emotional tension.
• Try apologizing for the other party’s emotional state. “I’m very
sorry you are so upset” goes a long way toward diffusing a hot
emotional standoff. Apologies are used successfully to defuse
tension around the world.30
• Call for time to cool off. Suggest taking a break from
negotiations. You may need it as much as the other party.
• Suggest involving a third party. Third parties can often act to
buffer disputants who seem to bring out the worst in each
other.
How to Change the Focus from Rights or Power
to Interests
Our advice above about defusing negative emotion at the negotiation
table is also useful for turning the focus of a negotiation away
from rights or power to interests. In addition, our research with
108 Negotiating Globally
U.S. negotiators suggests several other ways that negotiations can
be refocused from rights or power to interests:31
• Do not reciprocate rights or power. Refusing to echo or
reciprocate the other party’s rights or power
communications is an effective way to discourage the
counterpart from continuing to use rights or power. With
some insensitive disputants, it may be necessary to redirect
negotiations from rights or power several times before the
point is made.
• Declare the process ineffective. Disputants who recognize that
they are engaged in a rights or power contest can label the
process as counterproductive. It’s hard to disagree with such
a statement. In fact, concluding that “we’re getting nowhere”
may be the first thing that disputants actually agree about.
“Let’s agree to disagree and move on” frequently works to
change the focus of negotiations.
• Combine reciprocity with a change of focus. Some negotiators may
fear that by not reciprocating rights or power they are
signaling weakness. They may feel compelled to reciprocate
to maintain their power position in the negotiations. But
don’t be too sure. Our data indicate that at least among U.S.
negotiators, combining a counterthreat with a change of
focus to interests or a proposal for settlement is almost as
effective as the “do not reciprocate” strategy in refocusing
negotiations away from rights or power.32
Using Third Parties in Dispute Resolution
Third parties are used throughout the world to facilitate the resolution
of disputes. In this section we will consider the different
roles that third parties take in dispute resolution. We will also
revisit briefly cultural differences in the timing of third-party
intervention and advise you about how to locate and choose third
parties, when the choice is yours to make.
The first step in understanding third-party intervention is that
some third parties have the legal or moral authority to impose a
settlement on disputants and others do not. When third parties
Resolving Disputes 109
do have the authority to impose an outcome, disputants lose
control over their outcome. This can be a bad thing—disputants
can end up with an outcome that one or both of them dislike and
are reluctant to implement. Or, it can be a good thing—neither
disputant had to defer to the other, both are following the direction
of the third party.
Third parties with and without authority to impose outcomes
exist in all cultures. However, it is reasonable to expect that disputants
from hierarchical cultures (face and honor) are more
comfortable deferring to a third party with authority than are
disputants in egalitarian cultures (dignity). Some third-party simulation
study data collected in a hierarchical (China) and an
egalitarian (United States) culture suggest this. Bosses from the
egalitarian culture who had authority to impose an outcome on
disputing subordinates were much less likely to do so than bosses
in a hierarchical culture; the egalitarian culture bosses tried to
involve the disputants in fashioning their own settlement more
than the hierarchical culture bosses.33 Exhibit 4.5 identifies different
types of third parties by whether or not they have the
authority to impose settlements on disputants.
Exhibit 4.5. Third Parties With and Without Authority to
Impose Settlements on Disputants
Authority to Impose Settlements Examples
Roles with authority Judges
Arbitrators
Bosses
Roles without authority Mediators
Facilitators, ombudsmen
Peers
Roles that may or may not have authority Community leaders
Religious leaders
Family leaders
110 Negotiating Globally
Third Parties with Authority
When third parties have the authority to impose a settlement on
disputants, they are frequently operating in the rights circle of
Exhibit 4.1 and often are restricted to choosing between the disputants’
positions, resulting in a “winner take all” outcome. Judges
interpret laws, arbitrators interpret contracts, bosses interpret
company policy, religious leaders interpret protocol, family heads
interpret communal norms. Sometimes these third parties with
authority make their own assessment of the situation and identify
and interpret the relevant standard for decision making. These
are called non-adversarial procedures; the French court system is an
example. At other times, the disputing parties or their agents
(lawyers) present their views of the situation and their analysis of
the relevant standard for decision making. These are called adversarial
procedures; the U.S. court system is an example.
Global business relationships are typically formalized by contracts
that contain dispute resolution clauses. These clauses
typically specify the legal code governing the contract and—unless
there is an alternative dispute resolution (ADR) procedure in the
contract—the location of the court with jurisdiction over litigation
of contractual disputes. If there is an ADR procedure, it is
likely to culminate with arbitration.
The Arbitration Process
Litigation is an expensive, slow, and (in most countries) public
approach to dispute resolution. As a result, arbitration is a popular
alternative for resolving business-to-business disputes. Arbitration
is a private adversarial procedure. Its awards generally are not
published like judges’ decisions are. In other ways arbitration is
similar to adversarial litigation. Like the judge, the arbitrator
hears both sides’ arguments and then interprets the contract or
law in the context of the dispute. When parties agree to arbitration
clauses in contracts, they name the commercial code, for
example, the state of New York, under which arbitration will
occur. This gets around the problem that commercial law codes
and court enforcement of arbitration awards are rudimentary in
many developing countries. The parties may also specify an organization
from which they will select their arbitrator and a process
Resolving Disputes 111
for selecting one. Arbitration clauses alleviate the problem that
judges in some countries are not experienced in handling complex
civil litigation. Parties can select an experienced arbitrator, a
retired judge, or a lawyer who is from a third country and who
has a reputation for neutrality and expertise in the industry or
law involved in the dispute.
An arbitrator has authority to impose an outcome on the
disputants, and legal systems generally enforce an arbitrator’s
decisions within the system’s jurisdiction. Of course, disputants
from different national cultures do not share legal systems, which
is one reason for choosing arbitration in the first place. However,
there is potential legal recourse for enforcement of an arbitrator’s
award in local courts, if the country is a signatory to the 1958
United Nations Convention on the Recognition and Enforcement
of Foreign Arbitral Awards.34
Selecting an Arbitrator
Exhibit 4.6 gives advice for selecting arbitrators. Many international
organizations maintain lists of arbitrators.35 It is useful to
decide on a source when finalizing a contract with an arbitration
clause. Then if an arbitrator is needed, there is no conflict about
where to get one. To select an arbitrator, ask the source for the
résumés of several candidates with documented experience in
your industry or the area of law that your dispute involves. Ask
for a list of cases in which each one has served. Contact the lawyers
• Was the arbitrator a good listener?
• Did the arbitrator treat your side fairly?
• Did the arbitrator treat the other side fairly?
• Was the arbitrator knowledgeable in the [relevant] area of law?
• Was the decision handed down in a timely fashion?
• Was the decision written in language that the claimant could
understand? (This is especially important for employee
disputes.)
• Did your side win or lose?
• Would you use the same arbitrator again? Why or why not?
Exhibit 4.6. Some Questions to Ask Others
When Selecting an Arbitrator.
112 Negotiating Globally
representing both sides of each of the arbitrators’ cases, and
interview them about the arbitrator. You will receive more information
that is directly relevant to your decision if you ask questions
beyond whether your informant would use that third party again—
see Exhibit 4.6. If you can find a party who receives praise from
people on both sides of the dispute, chances are that he or she
will be a good choice for you.
Arbitration and Culture
Although arbitrators are presumably neutral in the sense of not
having an a priori preference for the perspective of one or the
other disputant, they are not unbiased. Culture matters. A recent
study gave Chinese and American commercial arbitrators three
different versions of an arbitration scenario. The scenario
described a dispute between a wool supply company and a clothing
manufacturer. The supplier was supposed to ship a certain
amount of wool to the manufacturer daily, but for two weeks it
failed to do so. The dispute focused on whether the supplier was
responsible for the failure of the shipment. The arbitrators were
told that there had been problems with the supplier’s electricity
supply during the two weeks in question.
Chinese arbitrators made higher awards to the manufacturer
than American arbitrators, because arbitrators from the different
cultures interpreted the information about the shut-off of electricity
differently. The Chinese arbitrators attributed the failure
to deliver to the supplier’s actions (or lack thereof). The American
arbitrators attributed the failure to deliver to the electricity
problem, over which the supplier had no control. The arbitrators’
decisions in this study are consistent with prior research that
finds that Chinese and Americans make different attributions to
explain failure when the actor is a company rather than an individual.
In this study cultural biases strongly affected arbitrators’
decisions.36
Third Parties Without Authority
When third parties are operating without authority to impose
outcomes on the disputants, they are called mediators or sometimes
facilitators. They are surprisingly successful in helping
Resolving Disputes 113
parties resolve disputes.37 Two factors seem to facilitate higher
settlement rates: training for mediators and familiarity with mediation
on the part of advocates.38 In research we completed some
years ago, mediation as practiced by the then four major U.S.
mediation companies resulted in a 78 percent settlement rate.39
We coded twenty-one different characteristics of each case to see
what might predict settlement. Only two characteristics distinguished
cases that did not settle: “a party in search of a jackpot”
or “a situation in which it was not in the financial interest of one
party to settle.” Among the case characteristics that did not predict
settlement rate were how much money was involved, whether
mediation was voluntary or mandatory, or what type of issue (personal
injury, contract, construction, environmental, and so forth)
was in dispute.
The Mediation Process
Mediators have excellent negotiation skills. They know all the
types of agreements shown in Exhibit 4.3. They know how to look
for and integrate interests, how to construct proposals that link a
future relationship to the resolution of the past dispute, and how
to expand the scope of the dispute and get to the underlying issue
or narrow the scope and construct a non-precedent-setting agreement.
Mediators get agreements by engaging in reality-testing
with disputants, making them focus hard and rationally on their
BATNAs.
Recent research suggests that the distinguishing characteristic
of mediators who are successful in the mediation marketplace,
meaning they get hired again and again, is their ability to
develop an empathic relationship with the claimant.40 They
appear to develop empathy by listening and showing respect for
the claimant and his or her reasons for making the claim and by
listening and showing respect for the respondent and his or her
reasons for denying the claim. In addition, the research indicates
that it is quite a bit easier for mediators to develop these
important empathic relationships with the disputants by meeting
with each separately before meeting with them jointly—an
approach that is quite at odds with standard mediation procedures,
which emphasize setting the ground rules in an opening
joint session.41
114 Negotiating Globally
Why is developing empathy so important? People make claims
because they think they deserve the outcomes they are claiming.
People reject claims because they do not think they have any
obligation to grant them. This means that when claims are made
and rejected, the conflict is often not limited to the issues but
extends to the people making and rejecting the claim. Having a
claim made against you or having your claim rejected is a threat
to self-worth. A mediator who reaffirms disputants’ self-worth by
expressing empathy gains their trust and increases their willingness
to cooperate.
The research discussed above that has identified the importance
of developing empathy between the mediator and each
disputant takes us one step beyond the literature on procedural
and interactional justice42 on which the practice of mediation in
dignity cultures is based. Procedural justice refers to disputants’
perceptions of the fairness of the process. The procedural justice
research finds that disputants rate procedures as more fair the
more they are involved in telling their side of things, in other
words, have voice. The interactional justice research finds that disputants
also rate procedures as more fair when third parties are
neutral and respectful. The more recent research identifies that
in addition, mediators will be more successful if they are able to
develop empathic relationships with each of the disputants
separately.
Selecting a Mediator
It is wise to have a contract clause calling for mediation and indicating
the source of potential mediators. This minimizes disputes
over how to select a mediator once one is needed. It is as easy to
find services on the web that will provide lists of mediators as it
is to find lists of arbitrators. What is more difficult is to know how
to pick one that has the skills to develop empathic relationships
with all parties to the dispute. Exhibit 4.7 suggests some questions
to ask.
Culture and Mediation
Not surprisingly, even though informal third-party intervention
into conflict occurs worldwide, the cultural context affects many
aspects of the third-party process. As we have discussed, culture
Resolving Disputes 115
affects the timing of third-party intervention. Culture also affects
the approach that mediators take.
Professor James Wall, who has studied community mediation
all over the world, suggests that mediators’ behaviors are affected
by three cultural factors: cultural norms, consistency between
the third-party’s role in society and the mediation role, and the
nature of institutional mandates for conflict management.43 For
example, Wall describes a community mediator in China intervening
in an authoritarian manner in a dispute between neighbors,
investigating the issue with the police, reporting the facts, and
directing one neighbor to apologize to another. In contrast, he
describes how Japanese neighbors disturbed by another neighbor’s
barking dog asked a respected elderly neighbor to intervene.
He did so by walking past the house with the barking dog until
one day the owner came out. He then commented that the dog
was certainly exuberant! Finally, Wall describes a community
intervention in a Middle Eastern culture when a girl and boy
from different villages met and fell in love while picking cotton.
Elders from the boy’s village met with elders from the girl’s village
• Was the mediator a good listener?
• Did the mediator treat your side fairly?
• Did the mediator treat the other side fairly?
• Did the mediator come to understand your side’s interests?
• Did the mediator help you to better understand the other side’s
interests?
• Did the mediator involve both sides in generating options for
agreement?
• Did the mediator provide an interpretation of the law or contract
relevant to the case? Was that interpretation requested by
the parties? Did it help the resolution of the case?
• Was the mediator able to put the appropriate amount of pressure
on the disputants to settle?
• Did the case settle?
• Would you use the same mediator again? Why or why not?
Exhibit 4.7. Some Questions to Ask Others
When Selecting a Mediator.
116 Negotiating Globally
to plan an intervention strategy and negotiate proper compensation
for the bride’s family.
Excellent Dispute Resolvers
Inevitably, people engage in conflict and disputes. Cultural
differences add misunderstandings, miscommunications, and
misattributions to conflicts of interests. Different cultures involve
third parties at different stages of the dispute resolution process.
The way third parties intervene and the decisions third parties
with authority make vary with culture. Global managers must be
well prepared to resolve disputes. Preparation requires understanding
cultural differences in why and how claims are made and
rejected and how disputes are resolved across cultures. Resolving
disputes requires respecting preferences for direct versus indirect
confrontation and facility with direct and indirect approaches to
addressing interests, rights, and power. Excellent dispute resolvers
in a global environment understand how interests, rights, and
power are construed in different cultures. They know when to
focus on interests, rights, or power and how to change the focus
and to deal with emotion.
Excellent dispute resolvers also understand the different roles
that third parties can play in dispute resolution. They know when
to involve a third party with authority to impose a settlement and
when to involve a third party without that kind of authority. They
know how to choose a third party of each type. Finally, they know
that third parties who show respect and give disputants opportunity
to exert control over the process and the outcome will
themselves be most highly respected.
The next chapter moves us to the setting of multiple parties
in conflict, in which there are opportunities to use deal making,
dispute resolution, and especially third-party skills.
We use negotiation skills to make team decisions more than
we realize. Whenever a team (three or more people) has
multiple issues to decide, and there is no majority opinion that
crosses all issues, team members have to negotiate to reach agreement.
Teams negotiate decisions regarding international
peacekeeping, relief, and development efforts for the United
Nations; to coordinate the strategy of global companies; to develop
software on a twenty-four-hour, seven-day-a-week schedule; to
prepare to negotiate deals and resolve disputes.
The proliferation of team decision making in organizations is
not the result of the latest fad in management but is due to the
complexity and the challenge of living and working in an increasingly
interdependent world. Individuals simply do not have the
breadth of knowledge and skills to accomplish multifaceted tasks,
the time to complete big tasks, or the relationships to ensure that
such tasks get done.
Giving a decision to a team increases the complexity of the
decision-making process. The whole point of having a team
making the decision rather than an individual is to have the requisite
variety of skills and viewpoints to apply to the complexity
of the decision. Team members with different skill sets and
worldviews are very likely to have different ideas about what
117
5
Negotiating in Teams
118 Negotiating Globally
information is relevant to the decision and different approaches
to how to go about decision making. Just as culture affects how
people negotiate deals and disputes, culture affects how people
approach the task of making decisions in teams.
The research shows that when teams bring essential resources
to big complex tasks, they can produce creative ideas, meet deadlines
with quality products, and make decisions that generate
growth and prosperity, but it is not easy. For teams to use their
diverse resources effectively, they need to listen to minority views
and engage in constructive debate that openly expresses doubts
and disagreements and seeks alternatives. If teams are going to
engage in open discussion of different perspectives, they need
norms and procedures to encourage information sharing and to
resolve the differences that surface as a result of information
sharing.1 Does this sound like a problem of negotiation strategy?
You are right, it is.
In fact, organizing a team for effective decision making is a
two-stage process. The first stage is to develop an effective teamwork
process. This stage is about how the team is going to approach
the task. Not surprisingly, when team members come from different
cultures, and sometimes even when they come from the
same culture, they have different approaches to teamwork.
Sometimes these differences are logistical—what hours the team
members are going to work—and sometimes these differences are
conceptual—how to analyze the problem, for example, holistically,
an approach with which face culture team members are
comfortable, or analytically and linearly, an approach more
comfortable to dignity culture members. The second stage is the
actual decision-making process. It occurs within the teamwork
process and generates the team’s ultimate decision. Reaching a
decision is no different from reaching an agreement in deal
making or dispute resolution. It involves understanding team
members’ positions, interests, and priorities on the issues associated
with the decision and then somehow integrating that
information into a decision that team members can support
through the implementation process.
Conflict and disputes may derail teamwork and decision
making. The next section describes how team members with
different approaches to teamwork may find themselves engaged
Negotiating in Teams 119
in procedural conflict about how the team should go about its
task. It suggests options for teamwork that should minimize
conflict and facilitate team decision making. Then we turn to
task conflict and how to use negotiation strategy to integrate
team members’ different interests. The final section addresses
interpersonal conflict. Procedural and task conflict may spill over
into interpersonal conflict, or team members for personal or
cultural reasons may simply be unable or unwilling to get along
with one another.
Managing Procedural Conflict in Teams
Procedural conflict occurs when team members have different
approaches to teamwork or how the team should go about its task,
which can often be traced to team members’ different cultural
approaches to doing teamwork. Look back at Exhibit 2.2, which
describes differences between dignity, face, and honor cultures in
terms of their underlying psychologies of self-worth; the social
structural implications of power and status; sensitivity to insults;
direct versus indirect confrontation style; levels of trust; and holistic
versus analytic mindset. Just as these different cultural
characteristics affect two-party deal making and dispute resolution
negotiations, as we discussed in Chapters Three and Four,
they also challenge teams. Here are some examples of procedural
conflict that we learned about when interviewing people about
their multicultural experiences on teams.2 Some of the examples
are within teams and others between teams, because procedural
conflict occurs in both situations.
A member of a team with U.S. and Latin American members
working remotely described the American team members’ frustration
when they learned Latin American team members would not
be available during the middle of the day—they took a two-hour
lunch away from their desks! Faced with the reality that they
couldn’t change cultural practices, the U.S. team members put
those two mid-day hours to good use, by consolidating information
and preparing for the afternoon meeting when both could
work together. In turn, the Latin American team members, who
it turned out worked two hours later in the evening, used that
time for a similar purpose. “Once we figured out how to use our
120 Negotiating Globally
different time orientations, we got more productive,” this team
member told us.
A Korean banker told us about a violation of hierarchy and
status that almost derailed an American company’s acquisition of
a Korean company. The American buyer’s analysts became frustrated
with the rate that due diligence information was being
provided by the Korean company’s bankers. The Americans set
up a meeting with the CEO of the Korean company to complain
about the lack of due diligence information. The Korean CEO
thought the meeting was to be a social call of respect. He was
totally unprepared for the American analysts’ direct confrontation
and complaints. The deal was only salvaged by the arrival in
Korea of the American buyer’s CEO, to make amends.
Another example of violations of procedural norms regarding
direct versus indirect confrontation was from an American
working in Great Britain on an audit team with British teammates.
He told us,
I definitely noticed some cultural differences between the British
and Americans, the first one being Americans are far more direct
than they are. So sometimes I kind of felt as though people were,
not really offended, but that I was much more to the point in my
conversations, both within the team and with the client, than they
were. I was getting a little frustrated by how indirect they could
be, kind of beating around the bush. So they might have
interpreted that as being kind of confrontational on my part.
This next example comes from a Mexican working in the
United States on a credit and underwriting project. It illustrates
how in that culture one is supposed to propose ideas indirectly
so as not to violate hierarchy.
In Mexican culture, you’re always supposed to be humble. So
whether you understand something or not, you’re still supposed
to ask it in the form of a question. You have to keep it open
ended . . . out of respect. I think that actually worked against me
because they [Americans] thought I really didn’t know what I was
talking about . . . so it made me feel like they thought I was
wavering on my answer.
Our final example comes from a frustrated Indian manager
running a global IT team from Singapore. He was working trying
Negotiating in Teams 121
to interpret a “yes” from his Japanese team members that really
meant “no”:
They never came out in the open or they never came forward with
what exactly their viewpoints were. In the conference room, they
would say, “Yes we believe in this, we agree” . . . but they would
come back on the phone and say “This is not really what is
working.”
This is a particularly good example of indirectness on the
part of the Japanese team members. The Indian manager finally
guessed that his Japanese team members wanted to do their part
of the project, but could not get the IT resources they needed
from the Japanese branch of the company to do it. To resolve
this, the manager took a culturally uncomfortable indirect
approach. He had the European members of the team put
together a presentation of their accomplishments. He then
invited the entire Japanese IT department to attend an update
on the project featuring the Europeans’ accomplishments. Then
he flew back to Singapore. The next day the Japanese team
members called the team manager and asked that their accomplishments
be featured in his next global update. The team
manager agreed. He inferred that his indirect approach had
worked. The Japanese IT department was now willing to commit
resources to the project.
The challenge of procedural conflict is not which is the right
versus the wrong teamwork approach. The challenge is to combine
different cultural approaches to teamwork synergistically and use
the different approaches to generate insight into the team’s task.
Because years of research on teams shows that unresolved procedural
conflict is pretty much universally associated with negative
team performance,3 we need to know how to manage it. The next
section presents three different models of teamwork: subgroup
dominance, hybrid, and fusion. Each of these approaches has its
own unique way of managing procedural conflict.
Three Models of Teamwork
Teams naturally jump into their tasks.4 Procedurally, members
rely on norms imported from other team experiences5 and use
122 Negotiating Globally
stereotypes and categorization (who looks like me, talks like me)
to make judgments about likely friends and foes on the team.
This approach only works well when the task is routine, members
know the old procedures, new procedures are not needed, and
cultural and individual differences are few. Such a teamwork
setting is relatively uncommon in today’s global work environment,
in which tasks assigned to teams are seldom routine and
individual and cultural differences will cause team members to
approach the very process of teamwork differently. Rather than
wait for procedural conflict to threaten team effectiveness, teams
need to select between subgroup dominance, hybrid, and fusion
structures to channel and organize different approaches to
teamwork.
Subgroup Dominant Teamwork
Subgroups form spontaneously in teams.6 People coalesce with
others who are similar, particularly those who have similar social
status, because, as we discussed in Chapter Two, social similarity
confirms self-worth.7 Subgroup dominance refers to the situation in
which a subset of team members dominates the team as a whole,
providing the team with a social structure and direction. The
subgroup may be the majority of the team or a small group, or
even a single member. It can be composed of team members from
a single national culture, team members from corporate headquarters,
team members from direct-confrontation cultures, or
team members with the greatest facility with the team’s common
language.
What distinguishes subgroup dominance teamwork is its
power to impose its procedural norms on team members who are
not part of the subgroup. It is no surprise that subgroup dominant
teamwork is common when there are large power and status differences
among team members. This model is also more prevalent
in cultures that are structurally more hierarchical than in cultures
that are structurally more egalitarian.
There are some real benefits of subgroup dominant teamwork.
These social structures, based on power and status, reduce
uncertainty about teamwork and align team members’ efforts.
This means that subgroup dominant teamwork can be expedient!
Negotiating in Teams 123
There also should be little debilitating procedural conflict in
teams dominated by subgroups. At the same time, subgroup dominant
teamwork may suppress important and conflicting
perspectives about procedures that otherwise would have led to
more creativity. In a recent study, Susan Crotty and I collected
survey data from 246 members of thirty-seven multicultural teams
from eleven large multinational corporations. The survey included
ten agree or disagree statements about subgroup dominance and
two statements about team creativity: “My team has developed
novel solutions to problems” and “My team’s ideas will be useful
to the organization.” (See Exhibit 5.1.) Using proper statistical
controls for the fact that individuals were in groups, we found no
statistical relationship between the extent of subgroup dominance
and creativity in these multicultural teams.8
1. The team uses the norms and practices of a dominant subgroup
of members.
2. Team members are expected to give up their own cultural
norms and practices and follow those of the dominant
subgroup.
3. The team is intolerant of multiple approaches to decision
making and problem solving.
4. The team’s norms and practices were given to the team by
the manager.
5. Some dominant team members decide on the norms and
practices of the team.
6. The team follows the approach that is used by some dominant
team members.
7. The team tolerates some members not speaking very much
in meetings.
8. A few team members dominate the discussions.
9. Not all team members have a chance to express their
opinions.
10. Some team members find it difficult to express their opinions
in meetings.
Exhibit 5.1. Survey Statements to Measure
Subgroup Dominance.
124 Negotiating Globally
Hybrid Teamwork
Hybrid teamwork refers to a model that mixes different team
members’ cultural or personal approaches to teamwork into a
coherent, unique, and stable approach to teamwork. A manager
described the process of creating a hybrid teamwork model
when he was first assigned to lead a financial services research
team with members located in the United Kingdom, the United
States, and continental Europe. Prior to his appointment, the
three subgroups had been working very independently. They
only met face-to-face a few times a year. Yet the manager knew
he needed to get them to work interdependently, sharing
best practices and information. His solution was to hold some
face-to-face team meetings with a facilitator. The facilitator challenged
the team to generate a set of operating values, which
ultimately included integrity, teamwork, creativity, and innovation.
These values served as a set of overarching team goals,
gave the team identity, and gave the team and its manager a
set of criteria for evaluating procedures, ideas, and performance.
However, almost three years went by before the manager
was satisfied that the team was working effectively together.9
Hybrid teamwork typically takes some time to develop; however,
once in place it provides a simplified but explicit and stable set
of rules, norms, expectations, and roles that team members
share and enact.
Hybrid teamwork models require team members to set aside
their own approach to teamwork and conform to the team
model.10 After the financial services research team had its hybrid
model in place, it broke down old habits of information sharing
and imposed new ones on the team. For example, prior to becoming
hybrid, when the subgroups were each operating with their
own teamwork norms, when one of the European members was
presenting and a non-European would raise some questions, the
other European members would jump in and start defending
their colleague. After becoming hybrid, the U.S. members confronted
the Europeans, saying, “Don’t start defending him . . . just
let him finish . . . we have questions for him.” The manager considered
it a successful application of the hybrid teamwork model
when the European members just kept talking and addressing
Negotiating in Teams 125
questions instead of shutting down or jumping in to support each
other.11
Hybrid teamwork seems most likely to evolve when members
are culturally highly heterogeneous and at the same time highly
concerned with task accomplishment.12 When everyone is different,
or when there are multiple distinct subgroups, as was
true of the financial services research team, it is hard to miss
culturally different approaches to teamwork. Out of concern
for getting their work done, these teams actively try to understand
each other’s approaches to teamwork and construct a
process that will integrate their differences. This overarching
concern for accomplishment of the team’s task provides a justification
for sublimating individual concerns to a common
team identity, which appears to be necessary if hybrid teamwork
is to be successful.13 Team identity also may serve as a standard
against which members can evaluate whether their teamwork
behavior is or is not appropriate. Procedural conflict, if it
occurs, in a hybrid team is managed by asking the question that
evokes the team’s overarching goal: “What is best for the team
as a whole?”
Fusion Teamwork
Fusion teamwork involves preserving different, sometimes seemingly
opposed procedural approaches to teamwork.14 A good
example of fusion teamwork comes from an interview with the
American member of a multicultural marketing team that was
charged with advising a U.S. retail company about the pros and
cons of expanding to Japan. The Japanese team members were
marketing consultants, a male partner in the consulting firm, and
three female analysts. The American members of the team quickly
learned that when the Japanese partner was in the room the analysts
would never speak up, but that it was the analysts who were
more likely to know the answers to the Americans’ questions or
how to get those answers. What to do? The Americans set up a
strategy subgroup and three working subgroups. The Japanese
partner joined the strategy subgroup and the Japanese analysts
each joined a working subgroup. The analysts participated fully
in the subgroups, whose work was then presented to the strategy
126 Negotiating Globally
group. In this way cultural differences in status and communication
norms were respected and fused.15
This marketing team’s fusion teamwork model used different
procedural approaches with different members of the team at
different times during the team’s life cycle. Fusion teamwork is
dynamic. The fusion teamwork model is likely to change over
time as the team moves into different elements of its task. What
is stable about fusion teamwork is its two core principles: co –
existence of different approaches to teamwork and meaningful
participation.
Coexistence depends on recognizing and respecting team
members’ different approaches to teamwork and combining
those different approaches in ways that preserve their unique
qualities. There are basically three ways to do this, although each
is just a different way of mixing cultural teamwork norms:
1. Substitute one cultural teamwork norm with another. For example,
for some decisions replace the practice of formal voting with
polling team members at coffee breaks—a much more private
approach.
2. Signal respect by introducing the unexpected. For example, embed
a story or metaphor to communicate an idea holistically in an
otherwise linear PowerPoint presentation.
3. Use norms from different cultures simultaneously. For example,
make sure that team members have sufficient time in advance
of a decision so that those who need to consult with peers and
superiors can.
Meaningful participation refers to enabling people to contribute
ideas to the team whenever they have relevant new or
supporting information.16 One of the problems with teams is that
a few people do all the talking.17 A second problem is that teams
tend to spend the bulk of their time talking about commonly
held information rather than unique information.18 A norm of
meaningful participation is intended to counter both of these
tendencies. The norm is not a panacea, it will not make these
problems go away, but it will allow team members and leaders to
keep the team focused on generating new, unique information
Negotiating in Teams 127
and getting team members who have access to such information
to share it with the team. Here are some norms for meaningful
participation:
• Enter the discussion as your knowledge, expertise, or contacts
become relevant to defining or acting on the team’s task.
• Enter the discussion when you harbor doubts about the
direction the team is taking or the feasibility of the team’s
plan.
Meaningful participation was originally conceived to encourage
individuals to participate in team deliberations. However,
dividing the team into subgroups may be another way to encourage
meaningful participation. Recall the UN peacekeeping team
example in Chapter One. When it became clear that the team
was too culturally segmented to work together effectively, the
leader set up multicultural subgroups with one Russian, one
Turk, one German, and one American officer in each. Meaningful
participation took place in the small subgroups. Of course,
the subgroups still had to present their recommendations to
the group to be integrated into final decisions, but like the marketing
team in Japan, the peacekeeping team’s subgroup structure
used the expertise of all the team members to generate those
recommendations.
Fusion teamwork is like hybrid teamwork in that it creates a
cultural mix of different approaches to teamwork, but unlike
hybrid teamwork’s stable process, fusion’s mix is unstable. It may
change as the team engages in different aspects of a task.
There are several reasons why a team might develop a fusion
model. It may just use a mix of procedures because it does not
have the time or understanding of teamwork to develop a hybrid
model that integrates different approaches. Recall it took the
financial services research team almost three years before their
manager thought they had stable and effective hybrid procedures.
More often, fusion results when team members’ cultural teamwork
models, like those of the Japanese marketing associates, are
sufficiently strong that the team members cannot sublimate their
own cultural approaches as required by the hybrid model. For
128 Negotiating Globally
example, the Japanese associates knew they would continue to
work with the same partner in their marketing consulting firm,
long after the American marketers had left Japan. The risk to
them of his losing face was much greater than the importance of
speaking out on a single assignment. In contrast, knowing they
were going to be working together into the future, the U.K., U.S.,
and European members of the financial services research team
came to know and trust each other and their hybrid teamwork
model enough to engage in real debate over ideas.
Teams with members who are “culturally metacognitive” are
also more likely to develop fusion teamwork.19 Cultural metacognition
is a dimension of cultural intelligence (CQ), which
measures an individual’s ability to deal effectively in situations
of cultural diversity.20 People with high CQ are generally able
to develop and sustain positive working relationships with
those who have different cultural backgrounds, work effectively
on multinational task forces, adjust successfully to short- and
longer-term assignments overseas, and function effectively in
jobs with international contacts and responsibilities.21 The cultural
metacognition dimension of CQ is the individual’s level
of cultural consciousness and awareness during social interaction.
22 People who are culturally metacognitive recognize
culturally driven behavior in others, and proactively create coexistence.
Exhibit 5.2 lists survey statements we used to identify
cultural metacognition.
1. I test my cultural knowledge to ensure it is correct in crosscultural
interactions.
2. I check the accuracy of my cultural knowledge as I interact
with people from different cultures.
3. I adjust my cultural knowledge as I interact with people from
different cultures that are unfamiliar to me.
4. I work hard to understand the perspectives of people from
other cultures.
5. I am conscious of the cultural knowledge I use when interacting
with people from other cultures.
Exhibit 5.2. Questions to Measure Cultural Intelligence—
Cultural Metacognition.
Negotiating in Teams 129
Fusion teamwork is supposed to facilitate creativity, and there
is evidence that it does! In that same survey study of members of
thirty-seven multicultural teams in which Susan Crotty and I could
find no evidence of a relationship between creativity and subgroup
dominant teamwork, we did find a relationship between
creativity and fusion teamwork. Exhibit 5.3 shows the questions
we asked about fusion teamwork. This time, again with all appropriate
statistical controls, we found a strong relationship between
fusion teamwork and creativity.23
Using Negotiation Strategy to Manage
Task Conflict and Make Decisions in Teams
Now that we have a sound understanding of how to manage procedural
conflict by developing subgroup dominant, hybrid, or
fusion teamwork to channel and structure procedural differences,
we are ready to address task conflict and how to use negotiation
strategy to facilitate the team’s actual decision-making process.
Task conflict generally stems from team members’ functional or
geographical or cultural differences. It can bring different
1. The team uses a combination of norms and practices from
different members’ cultures.
2. The team tolerates members following their own cultural
norms and practices.
3. The team accepts that members from different cultures have
different ways of expressing themselves.
4. The team’s norms and practices are a cultural hybrid, that is,
a mix of the different cultural practices of its members.
5. The team uses some norms and practices from some members
and some norms and practices from others.
6. Team members participate in team discussions openly and
freely.
7. Each team member participates in decision making.
8. All team members are encouraged to participate in team
discussions.
Exhibit 5.3. Survey Statements to Measure Fusion.
130 Negotiating Globally
expertise, insight, and interests to the team’s decision task. When
these differences are incompatible, the team experiences task
conflict, which if managed well can result in highly creative team
decisions that take into account these differences. If managed
poorly, task conflict can generate impasses in which teams fail to
reach agreements or reach poor agreements.24
Task conflict is easy to understand in the context of a multifunctional
team. For example, when a negotiating team—a team
on the same side of the table representing a single negotiating
party—tried to develop a multiproduct offer for a customer, it
experienced intra-team task conflict between the sales member
who wanted to try to make up for reduced margins with volume
and the various product managers who were each trying to protect
their own product’s margins.25
Reaching decisions in teams can be like a multiparty negotiation,
if the team is using a hybrid or fusion model of teamwork.
If the team is using a subgroup dominant teamwork model, then
what follows in this section is probably not relevant to team decision
making, since dominant subgroup members may have little
interest in the input of other team members. At the same time,
team members who are not part of the dominant subgroup may
be unwilling to risk sanctions associated with speaking up, unless
they have nothing to lose.
Teams using hybrid or fusion teamwork should have the
opportunity to use negotiation strategy to make decisions that
integrate different team members’ positions, interests, and priorities
on the issues into a decision that team members can support
through the implementation process. There is likely to be task
conflict in these teams, because the first challenge of using negotiation
strategy in team decision making is to generate task-relevant
information from members. The second challenge is to integrate
that information into decisions that capture synergies and can be
implemented. In subsequent sections we discuss techniques for
generating information in teams and for negotiating to integrate
information and reach decisions. Before exploring these team
decision-making techniques, it is worth revisiting and slightly
rephrasing the criteria discussed in Chapter One for evaluating
negotiated agreements.
Negotiating in Teams 131
Using Negotiation Concepts to Evaluate Team Decisions
Is Our Agreement Better Than Our BATNA?
Teams making decisions have BATNAs. For example, a team of
Canadian and U.S. accountants were charged by management
to come up with a single accounting procedure. The Canadians
liked their approach best; the Americans liked their approach
best. Neither subgroup would concede to the other. Neither
subgroup was interested in coming up with a hybrid accounting
model. The team failed; top management stepped in and
imposed a common accounting strategy that neither the Canadian
nor American subgroup liked. Here the team’s BATNA was
that top management would step in, and as in dispute resolution,
this BATNA meant that the team lost control over the
outcome.26
Individual team members may be affected differently by the
team’s BATNA. If top management to which this accounting team
reported was Canadian, the Canadian members of the team might
have thought that top management would choose their approach,
and so be very reluctant to concede to the Americans. Had the
American team members thought about their BATNA, they might
have conceded to the Canadians during team deliberations,
instead of forcing an impasse, and at the same time they might
have negotiated resources to help them manage the change to
the Canadian system.
Does the Agreement Meet My Interests and Those of My Teammates?
In the negotiating team example earlier, each team member had
interests: volume for sales, margin for product managers. An
agreement that met the interests of all team members would need
to make trade-offs across products that balanced team members’
competing interests regarding volume and margin.
What Are the Transaction Costs of Continuing to Deliberate?
Team decision making is an expensive use of human resources.
What we see in team decision making is similar to what we see in
two-party negotiation. Team members who hold out the longest
get concessions just to allow the team to move on. A more rational
132 Negotiating Globally
approach to deciding when to finalize a team’s decision is to
analyze the team’s BATNA and how it affects different members,
as well as how well the options for agreement that are under discussion
meet the interests of team members. When there are
options on the table that are better than the BATNA and go at
least some way toward meeting team members’ interests, it is
probably time to finalize the team’s decision. (We’ll suggest a
second agreement strategy a little later to minimize the costs of
an agreement that falls short of meeting some members’
interests.)
These three criteria are highly relevant to decision making
in teams. By their multiparty nature, teams can generate high
transaction costs. These costs need to be defrayed by very highquality
decisions. A team decision that is innovative may capture
synergies, and so forth, but it is still only as good as its acceptability
to the team’s members and the members’ constituents. Teams
need to be attentive not just to the synergistic beauty of their
decisions but also to whether those decisions can reasonably be
implemented.
Generating Information in Teams
Teams are assigned to tasks that are too technically or politically
complex to be done by individuals. If team members are chosen
appropriately, they will have the diversity of technical and political
skills to accomplish the task. But these different team members
also will very likely have different perspectives on the task and
different interests in the outcome. Before a team can even address
members’ conflicts of perspectives and interests, it will need to
understand what those perspectives and interests are. The goal is
to generate a multiparty Negotiation Planning Document. To
accomplish that goal, teams may need to overcome language,
cultural, structural, and psychological barriers.
Negotiation Planning Document
The same basic form of Negotiation Planning Document introduced
in Chapter One is as relevant for intra-team or multiparty
negotiations as it is for two-party negotiations. Create a column
for every team member and a row for every issue. Fill in
Negotiating in Teams 133
positions, interests, and priorities. Identify what is minimally
acceptable to each member. Consider whether there is one
overall BATNA or whether different team members have different
BATNAs.
Exhibit 5.4 shows a planning document for a team preparing
to negotiate a new software contract for its company with
an important customer. Note that unlike how we used planning
documents in previous chapters, this Team Planning
Document illustrates the different positions and interests of
team members that need to be reconciled before the team can
generate a planning document for across-the-table negotiations.
This planning document shows four issues: volume,
price, hours per week of free tech support, and price the customer
will pay for hourly tech support. Team members
recognize that they have a common BATNA—to sell the software
to another customer. As you can see, they also have set
broad numerical limits on individual issues, reflecting concerns
about margins and precedent (not wanting to give this customer
benefits that they cannot give to other customers).
Completing the document thus far reveals individual team
members’ priority rankings (ranging from 1 to 4) and interests.
For example, the financial manager has rated both volume
and price as number 1 priorities, suggesting that there is more
than one way to meet her interests. Sales is more focused on
volume because of the company’s commission structure.
Because marketing is evaluated on market share, its number 1
priority is price. Not surprisingly the tech support manager is
concerned about providing too much free tech support and
on reaping a high hourly fee for paid support.
When team members represent different functional areas,
anticipating their positions, interests, and priorities should be
relatively straightforward. Then if team members trust each
other to be cooperative and not take advantage, and there are
no language, cultural, or structural barriers to information
sharing, the team should be able to jump right into evaluating
alternative options for agreement. The problem of course is that
there are frequently all of the barriers above to information
sharing. What follows is a set of suggestions for overcoming those
barriers.
134 Negotiating Globally
Exhibit 5.4. A Planning Document for a Team
Issue Financial Manager Marketing Manager Sales Manager
Tech Support
Manager
Key Position Position Position Position
Priority Interests Priority Interests Priority Interests Priority Interests
Units
volume of
installations
500–1,000?
2 Market
share
1 Commission
on volume
3 Utilize staff
Price $250–
$375?
1 Profit
from
volume
1 Profits on
margins
1 Market
share
2 Commission
on volume
4 Support low
if increase #
of
installations
Free tech
support
hours 40,
60, 80 per
week?
High High High High
High Low Low No strong opinion
Low High High Low
Hourly paid
tech
support
$120–$180?
High Low Low High
4 Reduces
profits
4 Increase
likelihood
of larger
volume
sale
3 Increase
likelihood of
larger
volume sale
1 Pay for tech
support
3 Profits 3 Increase
likelihood
of larger
volume
sale
3 Increase
likelihood of
larger
volume sale
2 Profit
center
BATNA? Sell product and services elsewhere
Meaningful Participation
The first barrier to address is whether the team can use meaningful
participation. As we discussed in the teamwork section, meaningful
participation is one of the two principles of fusion teamwork, but
it is also a potential fit with a hybrid teamwork model. Meaningful
Negotiating in Teams 135
participation could be one of the common values or norms
guiding cooperation and information sharing in a hybrid team.
Meaningful participation is generally a poor fit with the subgroup
dominance model of teamwork or for that matter any team that
is embedded in a strong social hierarchy, unless, like the marketing
research team in Japan, the team engages in some creative
restructuring of its teamwork model. The norm for meaningful
participation is that each member participates in sharing information
and decision making when that member’s information or
perspective is unique.27
Language Barriers
Language can be a powerful tool to exclude or include particular
team members and thereby reduce meaningful participation.
Language-based power practices may involve personal remarks
made in a language some members do not understand or refusals
to attend a meeting that will be conducted in another
language. One of our interviewees told a pretty funny story. His
team was in Korea to buy product for Latin American customers.
During the negotiation, the Korean side would caucus at the
table, speaking Korean. This annoyed the buyers, but knowing
that Korea is an indirect-confrontation culture, the buyers did
not complain about the caucuses, they just began to have caucuses
of their own in Spanish. Members of the buyer’s team who
did not speak Spanish pretended to, much to the Spanishspeaking
team members’ amusement and to the Korean team’s
bewilderment. By common, implicit consent, the caucuses
diminished.28
Language and its translation can also be a source of misunderstanding.
English was the working language of a pharmaceutical
team, but not all team members were equally fluent. A native
French-speaking team member who addressed a U.S. team
member by saying “I demand . . .” was perceived as rude until
136 Negotiating Globally
both members realized that the French speaker was erroneously
using a cognate translation of je demande, a perfectly polite way of
saying “I am asking . . .” in French.
Lack of fluency or full command in the language of the team
can breed frustration and anger. As one manager explained how
she felt trying to work in her second language, “You feel like
you’ve lost half of your body, you feel intellectually hampered,
you get frustrated, and your emotion blocks your facility with the
language; you get angry.”
Teams need to confront their language problems. Failing to
get information from members because they are not fluent in the
team’s lingua franca threatens the viability of the team’s project.
One manager of a software team told us what he does to defuse
misunderstandings due to his accented English.
Almost everyone on my team speaks English with an accent of
some kind or another. I’m Indian, and I know people have
trouble understanding my accent, and yet because I’m the team
leader some are reluctant to ask for clarification. I’ve learned to
put my accent on the table. When I start with a new team, I tell
them, I know I have an accent, and some of you will have
difficulty understanding me. Believe me, I’ve tried to get rid of
the accent, no success. So if you don’t understand me, please stop
me and ask.29
Here are some other ways to handle language barriers to
sharing information:
• Create subgroups that can discuss an issue in their own
language; then have each subgroup’s best speaker present its
ideas.
• Discourage jargon and make available glossaries with
translations of key terms.
• When presenting information to the team, use visuals.
Pictures, graphs—mathematics is a common language, simple
slides with lots of white space, main points, and brief but
adequate text help get the points across.
• Take notes and arrange information on a board or flipchart
in the form of a planning document.
Negotiating in Teams 137
• Arrange frequent breaks to let team members discuss what
was going on in the meeting in their own language. Follow
breaks with a question-and-answer session.
• Adopt a team-endorsed way to stop a meeting and ask for
clarification. For example, some teams give members flags to
wave when they do not understand.
Regarding this last point, one European manager working
on a different multicultural team in the same pharmaceutical
company which was the source of the je demande example described
an incident in which humor eased misunderstanding and led to
a clarification norm:
I was in a meeting with both French- and English-speaking
colleagues, and we listened to a presentation by an American
colleague. She’s a very bright woman, and when she got into her
story, she started talking very fast. My other colleagues and I were
starting to have difficulty in following her when suddenly she
started to regularly use “LOE.” Now I was completely lost. I raised
my hand, “What does that mean, ‘LOE’?” “Oh,” she said, “lack of
efficiency.” A few minutes later, I was lost again. I raised my hand
again, saying, “LOU.” “LOU?” she asked. “Yes,” I said, “lack of
understanding.” We started to laugh. From then on, LOU became
“ell-o-you,” “hello you,” our way of expressing ourselves when we
don’t understand anymore.30
If this manager had not intervened and asked for an explanation,
the team would have de facto developed a norm that tolerated
misunderstanding. Instead this manager promoted a norm of
understanding. His first polite intervention communicated, “I
respect you, but I need to understand you.” His second humorous
intervention communicated “We need a way to alert each other
when we don’t understand.” “Ell-o-you” or “hello you” became the
group’s norm.
Cultural Barriers
The cultural differences associated with status, trust, and
mindset in deal making that we discussed in Chapter Three,
and those associated with indirect versus direct confrontation,
discussed in Chapter Four, also act as barriers to information
138 Negotiating Globally
sharing in team settings. Here are some ideas that may help
facilitate information sharing regardless of whether or not the
team is multicultural:
• Charge someone with monitoring meaningful participation. The
team leader can do this, but the team leader is also trying
to get the team to move ahead with its task. Someone else
might be better, both because the team leader will be
occupied with other matters and because the team leader
may need to be reminded not to dominate the dialogue.
The monitor can remind the team as a whole of its
norms or take individuals aside and encourage them to
participate.
• Have the whole team brainstorm about not only the positive
implications of an idea or approach but also the negative
implications. This makes dissenting opinions the responsibility
of the whole team, not just a few members.
• Gather information by email. Email has important limitations,
but it also has benefits. An email environment minimizes
status differences. People are less inhibited by social norms
when they communicate by email. Although this can be a
problem, it can also encourage participation of all team
members regardless of status, fluency, or culture.31
• Find out if the annoying behavior is cultural. If it is, be culturally
metacognitive about it.
Structural Barriers of Distance, Time, and Part Time
In many teams, distance, time-zone differences, and part-time
assignment to the team are the primary structural barriers to
meaningful participation. Some teams have members assigned to
them full time, but many teams are composed of part-timers—
members whose full-time jobs and other team assignments are
vying for their time and attention. Negotiating team members
are typically part timers. When we were interviewing managers
about the challenges of leading negotiating teams, they told us
that a major structural barrier to sharing information among the
members was logistics.32 Some team leaders we interviewed, who
had been burned by team members who did not have the time to
devote to the negotiating team, advised screening prospective
Negotiating in Teams 139
team members for their availability and their enthusiasm for the
negotiating team.
When the dispersal of team members across time zones
becomes a structural challenge to meaningful participation,
teams need to experiment with alternative electronic communication
media to learn when and how to use email, computer
conferencing, and teleconferencing effectively, and when to
insist on face-to-face interaction.33 A case in point: the members
of the top-management team of a high-tech company hated
their weekly meetings and loved email, so they decided to make
most of their decisions via email, meeting face-to-face only to
confront tough problems.34 The unfortunate result was that
face-to-face meetings became like hand-to-hand combat. Email
had eliminated the easy issues as well as the social manners
that previously had made face-to-face meetings tolerable, if not
enjoyable.
The major problem with electronic communication is that
it increases social alienation. People working electronically do
not identify with their groups as strongly as people working
face-to-face. When we had students from Canada, Mexico, and
the United States working by email on a joint North American
Free Trade Agreement (NAFTA) project, instructors in all
three cultures received frequent complaints that team members
from the other cultures were not motivated, were holding up
the project, and were therefore responsible for poor quality.35
When we do not get regular communications from remote
team members, we tend to assume that they are not working.
When our email is not answered promptly, we conclude that
they just don’t care enough about the project or, even worse,
that people from their culture are lazy. On the other hand, a
delayed response may mean you can expect a more thoughtful
and researched response, rather than a short note tapped out
on a smartphone. We tend to attribute inactivity to willful
negligence, not to environmental factors, such as holidays,
weather, or other factors that are beyond the others’ immediate
control.
The timing of events is cultural. Much of the world operates
on clock time, but even so, teams develop their own norms about
starting meetings on time, five minutes late, or ten minutes late.
140 Negotiating Globally
But other parts of the world, particularly in the honor cultures of
the Arabic-speaking Middle East, operate on event time—the
most obvious example being the timing of Muslim prayers linked
to sunrise and sunset.36
By attributing inaction to willful activity rather than to environmental
factors, we exacerbate interpersonal animosity.37
Teams that produced the best NAFTA projects were the ones that
overcame their structural barriers to communication by developing
norms for electronic communication. They recognized the
potential pitfalls of email and developed proactive strategies
for dealing with coordination and logistical problems. Successful
teams not only alerted each other about deadlines but also
consistently confirmed receipt of material, keeping everyone up
to date.
Here is some advice for surmounting barriers to information
exchange in electronic communication:
• Set norms for use of email. For example, decide if receipt of
correspondence needs to be acknowledged, even when no
substantive answer is necessary. Decide if all correspondence
should go through the team leader or whether team
members are expected to copy the whole team. Decide within
what time frame email should be acknowledged. Set up
means for alerting others when a team member is
unavailable.
• Don’t oblige certain team members to repeatedly participate in
conference calls in the middle of their night. One multicultural
team rotated its monthly conference by time zone, not by
how many people on the team were in a time zone.
• Build relationships among team members. Recent research
shows that when team members have good relationships,
there is no performance disadvantage to working
electronically. When teams are new and members do not
yet know and trust one another, face-to-face meetings
generate higher performance than electronic meetings.
Ironically, when relationships among team members are
poor, electronic meetings are more productive than
face-to-face meetings.38
Negotiating in Teams 141
Psychological Barriers
There are at least two major psychological barriers to efficient
information sharing that can be grounded in culture or just based
on individual experience: lack of trust, which generates too little
information, and concern about social affiliation, which generates
too much common information and too little unique information
sharing.
Setting norms for meaningful participation is the first step
toward building trust within a team. In addition, all the techniques
for developing trust that we discussed in Chapter Three
are relevant in the team setting. To reiterate,
• Develop a relationship outside the team by identifying
interpersonal similarities and respecting differences.
• Share task-relevant information with the team, even
information that could make you vulnerable. Ask for
information from others in return.
• Set a norm of confidentiality.
• Focus on common goals
• Set norms for cooperation, not competition.
The problem of too much social affiliation is often called
“groupthink.” The term was coined to describe the Kennedy cabinet’s
mismanagement of the Bay of Pigs military operation to
invade Cuba in 1961. Some members of the Kennedy cabinet had
serious doubts about the wisdom of the invasion and of the planning
that went into it. Yet their concerns about being accepted by
other more hawkish members of the cabinet led them to keep
their doubts to themselves. They were right, as it turned out: the
invasion was a fiasco.39
Many structures and norms have been suggested to help teams
avoid groupthink.40 Meaningful participation with its built-in
expectations for sharing different information than what is currently
available to the team will go a long way toward avoiding
groupthink. So will trust that members will not be socially ostracized
from the team for stating a dissenting opinion. Finally,
having one or more team members with transactive memory will
help. Transactive memory is knowledge of who on the team knows
142 Negotiating Globally
what. Teams tend to spend too much time discussing information
that they all know.41 A member with transactive memory can call
on another team member to share her different perspective or
knowledge. Being called on to share your knowledge provides
social legitimacy for different points of view and encourages
members to speak up. Keep in mind, though, that in some cultures
smaller groups or informal conversations over tea may be
the best setting for some members to share their unique information.
When one or more team members have transactive memory,
they can encourage the participation of these experts at the right
time and in the right context. When no one knows who is the
expert, and the expert for whatever reason is unwilling to speak
up, expertise is lost.
Negotiating to Integrate Information and Reach
Decisions
People do not always think about group decision making as a
negotiation. They may think that once the information has been
generated, the team leader or the dominant subgroup should
make the decision, or that the team should vote or engage in
dialogue until they reach a consensus. These are all legitimate
procedures for decision making, and there are certainly times
when each is appropriate or expedient.42 Some teams’ tasks are
limited to idea generation. They are not given the responsibility
to make the final decision and are not involved in implementation.
Other teams are expected to make decisions, but are not
responsible for carrying out those decisions. But when teams are
expected to integrate different perspectives into a decision and
then implement it, as is the case in many global organizations,
negotiating the decision is likely to be the best procedure. Negotiating
decisions is the procedure most likely to take different
interests into account and so generate a decision that team
members own and understand, and so are motivated to implement.
Think about what we have learned about negotiating in
dyads. Deciding one issue at a time in a team decision-making
context is no different from deciding one issue at a time in a
dyadic deal-making or dispute resolution context. It inevitably
generates win-lose outcomes, leaving value out of the decision.
Negotiating in Teams 143
Negotiating multiple-issue team decisions has the potential to
capture this value to the benefit of the team and the organization
that it serves.
Negotiating in the team context means using the information
in the Team Planning Document to develop options for agreement
that integrate team members’ diverse interests and priorities.
A Team Planning Document should reveal members’ top priority
issues, coalitions that may form across issues, and issue-by-issue
shifts in coalitions. The document in Exhibit 5.4 illustrates these
points. For example, sales, marketing, and finance agree on the
top two most important issues, but disagree on whether volume
or price is most important. Here the team should be asking
finance to run some models to understand the price-volume
trade-off. The document also suggests that the tech support
manager is really alone in her interests. However, she may have
important information about how much tech support this type of
customer is likely to need that will get finance’s attention. With
this information, finance can run some three-issue models that
may uncover options that bring tech support back into a stronger
position in the team. Whatever alternatives the team decides to
propose to the customer, team members will need to keep in
mind that in the long term it is tech support that will generate
customer satisfaction and loyalty. Although tech support is not a
high priority of finance, marketing, or sales, these team members
are still going to have to pay attention to the tech support manager’s
interests.
What follows is specific advice for negotiating in the
team environment, comprised of structuring issues, evaluating
BATNAs, using decision rules, setting norms for negotiated
decisions, making multi-issue offers, and proposing second
agreements.
Structuring the Issues for Negotiation
Generate the Team Planning Document as a team. The visual that
the Team Planning Document generates helps team members see
that (1) there are issues that are relevant to their teammates that
they had not considered, (2) their priorities and interests are
spread across multiple issues, and (3) a negotiated agreement
that takes into account their different priorities and interests is
144 Negotiating Globally
going to require trade-offs. If issues are few or team members’
priorities are focused on just a few options, reaching a negotiated
agreement may not be possible, even if the team fully shares
information. In this case consider whether you can add issues or
subdivide issues to get more issues involved so that trade-offs are
possible.
Evaluating BATNAs
Remember that teams, like deal makers and dispute resolvers, also
have BATNAs, and that a team’s collective BATNA may have vastly
different implications for different team members. Reaching no
agreement may be a better outcome for some team members than
for other team members. Team members whose interests will be
hurt the most by no agreement will be the most motivated to
reach agreement and likely the most cooperative and flexible.
Team members whose interests will be hurt the least by no agreement
are likely to be the least cooperative and make the most
demands on the group. This means that any decision will need to
be better than no agreement for the team as a whole and for each
member individually, unless the team is prepared to sacrifice a
member. Trying to satisfy everyone motivates the search for an
interests-based agreement.
Using Decision Rules
Decision rules prescribe what proportion of the team must agree
before a decision can be made. Such rules influence how carefully
the team is likely to consider the opinions of minorities and
members with different interests. There are many choices for
group decision rules: authoritarian, majority, consensus, unanimity.
Determining what decision rule the team is going to use is
another procedure that will help channel conflict into effective
team decisions. Here are some decision rule options and their
strengths and weaknesses.
An authoritarian decision rule imposes the interests of the
dominant party, which could be an individual or a subgroup, on
the team. This decision rule discourages minority input and is not
likely to lead to an agreement that integrates interests and priorities
across team members.
Negotiating in Teams 145
A majority decision rule may have almost the same effect as an
authoritarian rule. Majority rule requires one half of the team
plus one to agree. Often large factions or coalitions with common
interests exist before the start of the information-sharing phase
of team decision making. These a priori majorities discourage the
expression of minority views. “Why bother to speak up?” thinks
the minority member. “Our faction does not have the strength to
prevail.” Yet the research is clear that attention to minority views
causes majority views to diversify.43 Teams that allow the majority
to rule are less likely to integrate interests than teams that must
reach a unanimous agreement.44
One way to preserve majority rule, but minimize the impact
of the majority’s decision on the minority is to require a two-thirds
majority. A two-thirds majority requires that the simple majority
gain members. This often forces the majority to pay attention to
the views of minority members in order to gain at least some of
their support.
Consensus, too, should force the majority to pay attention to
minority views. Consensus is a form of majority rule in which the
team continues to talk until no team member still actively opposes
a decision. There are several problems with this approach. Dissenters
from some cultures will not actively dissent; a subgroup
may so dominate the discussion that the disenfranchised minority
simply gives in, but with no intention of supporting the implementation
of the decision. When consensus decision making is
effective, team members with doubts have shared their concerns,
the team has addressed those concerns as much as possible, and
everyone agrees it is time to move ahead with the decision despite
concerns.
A negotiated decision requires unanimity—100 percent
active support. This may be difficult to achieve in teams
because, with multiple issues and multiple parties, some team
members are likely to have doubts about some aspects of the
team’s decision. When unanimity cannot be achieved, majority
rule may be a better alternative than consensus.45 The reason
is that at this point majority rule preserves differences. Having
an identifiable minority gives different interests legitimacy
and gets decisions made. Although some team members will
146 Negotiating Globally
be on the winning side and others on the losing side, the concerns
of the losing side have increased legitimacy and may be
able to be incorporated into a second agreement (discussed
further on).
Voting, of course, has its own pitfalls.46 When the decision rule
requires a simple majority, the order in which alternatives are
voted can affect the outcome. This is why it may be preferable to
rank alternatives rather than vote on them according to some
sequence. Ranking has problems, too. Team members may engage
in strategic manipulation to make sure some undesirable option
will lose.
Our understanding of the implications of different decision
rules comes from research done in dignity culture. There may be
different degrees of experience with these rules among team
members from face and honor cultures. In addition, people in
different cultures may use these decision rules differently. For
example, Japanese companies are known to use an inverse cascading
consensus decision-making rule called ringi decision-making in
which lower-level managers circulate an idea among peers and
then submit the idea to their manager, who has authority to
accept or reject the idea.47
Setting Norms for Negotiating Decisions
Teams have a tendency to set up agendas to organize their
work. This means they tend to address and decide one issue at
a time. As we know from the dyad literature, this approach is
unlikely to produce trade-off agreements that integrate interests
and priorities. In fact this approach may produce no agreement
at all, because by the time the team reaches the last few agenda
items, there is no way to meet the interests of some team
members and, disgruntled, they force an impasse.48 To set a
team on a course of negotiating decisions, it is useful to propose
some norms for decision making. In this section we discuss two
decision-making norms: generalized reciprocity and discuss before
decide.
Generalized reciprocity refers to an exchange available to all
members of the team. Reciprocity is an exchange between two
people, say A and B. Generalized reciprocity could be an
exchange such that A defers to B on the first issue, B defers to
Negotiating in Teams 147
C on the second, and C defers to A. The trade-offs involved
in this example are easy to capture if the team is considering
multi-issue proposals, but not so easy to accomplish when the
team is following an agenda and deciding one issue at a time.
In one of our studies we found that teams whose members were
cooperatively oriented—that is, looking out for the interests of
the team as a whole as well as for their own interests—were able
to use generalized reciprocity to reach agreements when
restricted to deciding one issue at a time. These cooperative
teams outperformed teams composed of exclusively self-interested
members, because they engaged in generalized reciprocity.
However, when teams used multi-issue offers, performance was
equivalently good regardless of whether the team was cooperative
or self-interested.49
This research suggests that to facilitate negotiated decisions
you should either
• Select team members who are all cooperative
• Set a norm of generalized reciprocity
• Insist that the team only consider multi-issue offers
Generalized reciprocity takes advantage not only of the fact
that team members have different priorities but also that some
priorities are stronger than others. Teams whose members are
cooperative, that is, concerned for both their own and others’
interests, operate with the implicit understanding that members
whose interests are least affected by the decision should concede
when they can. In return for their concessions on less important
issues these team members can expect to prevail on a subsequent
more important issue. Setting a norm of generalized reciprocity
should engage even self-interested team members in a process
that leads to trade-offs that integrate interests and priorities across
team members.
Discuss before decide is a norm to talk about the pros and cons
of the options associated with each of the issues before deciding
any single issue or proposing a multi-issue offer. Following this
norm will probably be much easier for team members from holistic
cultures with their reliance on associative analysis and spiraling
logic and more difficult for team members from analytic cultures
148 Negotiating Globally
with their penchant for linear logic and analysis.50 In one of our
interviews a U.S. manager told us about a negotiation with a
Korean supplier. “At the end of the first day,” he said, “my boss
was elated. He thought because we’d talked about four of our six
issues that we were going to be able to tie this negotiation up
quickly and go home early. On the second day the Koreans started
over discussing the first issue. My boss almost had an attack!”51 It
seems likely that this negotiation foundered on mindset differences.
The Koreans were looking at the issues holistically with the
perspective that nothing is resolved until everything is resolved.
The Americans were looking at the issues linearly, with the perspective
of checking items off an agenda.
Making Multi-Issue Offers
All six types of agreements for resolving disputes that are
described in Exhibit 4.3 also apply to negotiating decisions in
teams. The obvious way to integrate interests is to agree to a set
of complex trade-offs that take into account all team members’
interests. Proposals to experiment for a limited period and then
evaluate give those team members who have reservations about
a decision an important role in monitoring its progress. Nonprecedent-
setting decisions preserve future flexibility and let
teams take unique circumstances into account. Decisions to minimize
costs to team members who are going to suffer losses build
widespread commitment even among those who will bear the
costs.
If these approaches to generating an agreement fail, it may
be necessary to seek a minimum agreement and then try to improve
upon it. To generate a minimum agreement, team members
need to share their least acceptable position, or reservation
price, on their most important issues, and they need to do so
honestly, which is the problem. As we have seen, team members
have conflicting self-interests. While they may be willing to share
their top priority issues, they are less likely to be willing to share
how much they can concede on those issues. For this reason,
going for the minimum agreement should probably be put off
until other options have failed and the team has discussed its
BATNA.
Negotiating in Teams 149
Proposing Second Agreements
Second agreements can be used to improve upon first agreements.
The rule for second agreements is that the first agreement will
stand unless all members agree that the second agreement is an
improvement. If the first agreement is a multi-issue trade-off or
a minimum agreement, team members may be able to juggle
some trade-offs and improve upon it in a second agreement. If
the first agreement resulted from a majority vote, the second
agreement should protect the interests of the majority and
address the minority’s concerns with the first agreement. With
the first agreement in place, the idea behind the second agreement
is that now both majority and minority have nothing to
lose in revealing their interests and priorities. From this more
open sharing of interests, it is hoped that a second agreement
can be constructed to preserve the interests of the majority while
also paying more attention to the minority’s interests than the
first agreement was able to do. One good way of building second
agreement is by adding issues that address the concerns of the
minority.52
Second agreements are not without their own problems.
Team members may be reluctant to share more information
because they will look greedy, or because they fear other team
members will take revenge or try to take unfair advantage. Team
members may be so frustrated by the difficulties in reaching the
first agreement that they may not be motivated to keep negotiating.
They also may not believe that there is a better option. And
they may be constrained from more creative thinking by the
structure of the first agreement. But because second agreement
deliberations encourage more open information sharing and
force teams to negotiate multi-issue offers that can be compared
to the first agreement, there are some reasons to believe second
agreements can be successful at integrating interests. Here are
some questions to ask when considering making a second
agreement:53
• What problems does the first agreement raise for group members?
Why?
150 Negotiating Globally
• Are there implications of the first agreement that may have a negative
effect on the interests of individuals or groups not represented?
• What assumptions does the first agreement make about
implementation?
• Is there an alternative that better meets the interests of some group
members without hurting the interests of others?
Minimizing and Managing Interpersonal Conflict
Even after having chosen a hybrid or fusion teamwork model and
selected negotiation as the method of decision making, teams
may experience interpersonal conflict. These teamwork processes
are intended to surface conflicts of interests, and people are, not
surprisingly, rather sensitive about protecting their interests. Subgroup
dominant teamwork and authoritarian decision making
may not surface as many conflicts of interest, but just because
differences are not discussed does not mean that team members
are in agreement.
Interpersonal conflict sometimes occurs because team
members just do not like each other, but more often interpersonal
conflict arises because team members do not understand
or appreciate other members’ approach to teamwork, or are
offended when their ideas, and therefore they, are not treated
with respect. The research is clear. Interpersonal conflict should
be minimized and managed. It is destructive to team performance.
54 Challenges that may be focused on task or procedure
but that are interpreted by team members as negative assessments
of their abilities and competencies threaten self-worth.
Threats to self-worth may cause the individual stress and anxiety,
and motivate defensiveness and hostility directed toward the
source. It is difficult to participate fully in the complex process
of negotiating team decisions in a state of interpersonal
conflict.
Minimizing Interpersonal Conflict
All the suggestions in this chapter for norms that support hybrid
and fusion teamwork and negotiating team decisions should help
Negotiating in Teams 151
minimize interpersonal conflict. Here’s a summary of that advice
that is especially relevant to teams:
• Develop a common understanding of the team’s task.
• Accept that all team members have legitimate interests.
• Recognize that no team member’s approach is necessarily
superior to any other.
• Treat all team members with dignity and respect.
• Build trust.
• Set norms for negotiating team decisions.
This advice promotes a team environment that is similar to
the environment fostered by well-regarded third parties in
dispute resolution. Such norms of interaction reduce gratuitous
and unnecessary interpersonal conflict by recognizing the inevitability
of differences and encouraging toleration. They also
provide a basis for trust that is depersonalized or group-based
rather than individually based. Finally, norms such as these
channel conflict toward an interest-based resolution of conflicts
of interest.
One multicultural team in our study developed the following
set of interaction norms:55
Don’t
• Assume that the best ideas come from your own country or
organization.
• Reject ideas that come from another place in the
organization.
• Treat people from other parts of the company as second-class
citizens.
Do (willingly!)
• Listen to others’ ideas.
• Share your own ideas.
• Change opinions.
• Consider alternatives.
• Admit there may be more than one right way.
• Admit uncertainty.
152 Negotiating Globally
• Work together to reduce uncertainty.
• Compromise (split the difference).
• Reciprocate (your way this time, my way a future time).
• Confront and talk through differences.
I would encourage them to add:
• Don’t assume that just because team members have
conflicting interests that there is no way to satisfy everyone.
• Do work together to meet all parties’ interests. Be willing to
make trade-offs.
Managing Interpersonal Conflict Constructively
What to do when dysfunctional interpersonal conflict turns into
shouting matches or withdrawal or both? Team members we
interviewed told us that when the behavior was withdrawal and
the team was temporary, teams often ignored interpersonal
conflict and got along as best they could without that member’s
input. When the team was ongoing and the behavior was
outbursts—not just an isolated event—management usually got
involved.
An extreme example is the story of Heavy. Heavy was an
inmate in a maximum security prison who didn’t get along very
well with his fellow prisoners; he had an anger management
problem. As his name implies, Heavy was a big guy, and if
another inmate crossed him Heavy would “deck” (that is,
punch) him. This behavior landed Heavy in solitary more than
once. In an effort to reduce violence among inmates, and at the
same time make the prison safer for guards, the prison hired
some conflict management consultants to develop a grievance
system and train inmates to use it. In the words of one of the
consultants,
When we got this thing going, Heavy got the training. Sometime
after it started a grievance clerk said, ‘I can’t believe it. Yesterday
Heavy got into an argument and I thought he was going to drop
the sucker right in his tracks. Heavy just kept talking to him!’ I
don’t know how much of this you can attribute to the training,
Negotiating in Teams 153
but the guy who told us was attributing all of it to the fact that
Heavy had learned that he didn’t have to drop people in their
tracks, he could talk to them and get something out of that.56
It is possible to intervene successfully in groups experiencing
dysfunctional conflict and get them working together effectively,
but it is not easy. It takes putting in place the structures and norms
for interaction that we have been discussing in this chapter. But
it also takes team members with the skills and motivation to
manage conflict, and a team environment that is supportive of
conflict management.
Skills, Motivation, and Environments
To be effective, teams need teamwork models that encourage
information sharing and interest-based decision making. Yet just
having the model and norms is often not enough. Team members
need the skills and the motivation to use the model. They also
need support from the organizational environment in which the
team is embedded.57
Skills
People often simply do not know how to use negotiation skills to
manage conflict, much less apply them to team decision making.
Give people a little interest-based negotiation training and help
them apply it to their setting, and you might be surprised at how
quickly they learn to use the skills effectively. Skeptical of the
Heavy story? I would be too, if I hadn’t heard a similar story myself
when doing follow-up focus groups to evaluate the effectiveness
of a labor-management training program. In this case it was a
union leader with a reputation for table pounding, ranting and
raving, and using foul language in grievance hearings who learned
interest-based negotiation. At the six-month post-training follow-up
focus group, management told me, “He’s a new man. He comes
to a grievance hearing, sits down, and says ‘Let me explain our
interests in this case, and then I’ll listen to yours.’” When I spoke
with him later the same day, he volunteered that prior to the
154 Negotiating Globally
training the only way he believed he could get management’s
attention was to, as he said, “act out.” Now, he said, “We talk about
interests.”
The skills that team members need to negotiate team decisions
are the deal-making skills discussed in Chapters One and
Three, and the dispute resolution skills addressed in Chapter
Four. If the team is multicultural, members will also benefit from
being culturally metacognitive, discussed in the procedural conflict
section of this chapter. A good way for team members to
acquire those skills is training for the team as a whole. Team
training avoids singling out particular team members who for
cultural or other reasons may not be very good at negotiating or
sensitive to culture. Team training not only generates skills, it
also helps build interaction norms that travel elsewhere in the
workplace.
Motivation
Acquiring skills is one hurdle; using them is another. Team
members have to be motivated to use their skills to participate
meaningfully and seek high-quality interests-based decisions.
Culture complicates motivation because what is motivating in one
culture may not be in another. Consider the following two incidents
that occurred in two executive programs on different
continents in the space of a week. A U.S. manager asked me for
some advice. He said that his team was using his ideas but he was
not getting any recognition. He was tired of “doing all the work
and not getting any of the credit.” He described a team that typically
generated multiple alternatives, considered the pros and
cons of each, and then selected the alternative that had the most
team support. “By the time the team members reach a decision,
they all own my alternative,” he complained.
That this group appeared to be using a pretty effective process
was not what this man wanted to hear. He wanted me to tell him
how to get the team to recognize his contribution. I suggested
that he start recognizing others’ contributions, assuring him that
the team would soon begin to model his behavior by giving him
credit when credit was due. The point is not what advice I gave
but rather the contrast with this next story. I sent materials for a
Negotiating in Teams 155
four-day negotiation course to China two months in advance so
that they could be translated. The young woman who was assigned
to assist me had done a great job by any standard in organizing
all the materials. Yet when I praised her in front of other staff
members, I could tell that she felt very uncomfortable. “I’m just
doing my job, Professor,” she said. The public recognition that
was so embarrassing to my Chinese assistant was exactly what the
American manager required to maintain his meaningful participation
in his team!
Some very general advice about motivating multicultural team
members is to pay attention to each member’s culture. The team
member is going to be more motivated to participate in an environment
with which he or she is culturally comfortable and in
which he or she feels culturally competent. Here are some questions
to consider:
• What is the likely basis of self-worth of each member of the team?
• How comfortable will each team member be in an egalitarian team
environment?
• Will this team member confront directly or indirectly?
• What kind of mindset, holistic or analytic, is this team member likely
to have?
Environments
Teams are embedded in organizations or, in the case of joint
ventures and alliances, in interorganizational relationships. Most
discussions of teams and their organizational contexts focus on
acquiring team resources, such as members’ time, team space,
and capital and assets. There is no question that these are important
resources if a team is to be successful.
A more subtle resource is organizational support for the
team’s mission and teamwork model. Organizations tend to use
and reinforce the use of particular approaches to teamwork.
One of the reasons teams may experience procedural conflict
is that members from different parts of the organization or different
organizations in the alliance have learned and are
importing different teamwork norms. Recall the example of the
156 Negotiating Globally
conflict between native Russian and expat managers directing
the TNK-BP joint venture. A team using a hybrid or fusion
model to negotiate interests-based decisions may find it difficult
to sustain its approach when embedded in an organization or
alliance that relies heavily on procedures in which subgroups
dominate.
Powerful organizational actors need to buffer teams from
inhospitable environments. Ideally, these are managers whose
subordinates are team members and whose areas of responsibility
are likely to be affected by team decisions. These managers
need to be kept apprised of the team’s progress, both its successes
and its failures. The purpose of keeping powerful actors
in the information loop is not to prepare them to intervene if
the team has difficulties, but rather to build their trust in and
support for team activities. The rule of no surprises works well
for multicultural teams managing multifaceted interfaces with
their environments.
Teams Need Guidance
Teams cannot be left alone to deal with procedural, task, and
interpersonal conflict as best they can. Teams need guidance in
developing teamwork models that neutralize procedural conflict.
Team members need to learn how to negotiate task conflict by
sharing information and negotiating interests-based decisions.
They also need to know how to prevent gratuitous and unnecessary
interpersonal conflict and to have norms for dealing with
interpersonal conflict when it occurs. Finally, team members need
the skills, motivation, and environmental resources and protection
to use their teamwork model.
Managing teams is extremely challenging. Multiple cultures
increase the challenge because culture affects team members’
interests, the procedures that they know and feel comfortable
using, and their motivation. When a team, whether multi- or
monocultural, encounters a serious internal problem, its manager
needs to avoid the trap of expediency—simply telling the
team what to do.58 Although this may solve the immediate
problem it does not allow for team learning or insight into why
the problem occurred in the first place. Smart team managers
Negotiating in Teams 157
intervene early and help the team set norms, and then en –
courage the team to find creative solutions to their cultural
problems.
In the next two chapters we begin to focus on the broader
environment in which global negotiations are embedded. Chapter
Six takes up the problem of social dilemmas—multiparty situations
that require negotiation skills to manage incentives to
compete and cooperate. Chapter Seven discusses the role of government
in global negotiations.
“Plastic bags are not indigenous to the Pacific Ocean” reads
the picture caption in a National Geographic article.1 The
North Pacific Subtropical Gyre covering more than seven million
square miles between California and Hawaii is full of plastic—
big pieces such as water, milk, and juice bottles that have not
yet broken down; plastic bags that fish take for jellyfish; and tiny
bits of broken-down plastic the size of a grain of rice. An ocean
gyre is an area of circular current formed by wind patterns
created by the rotation of the Earth. Its rotation draws debris
into its relatively calm center where the debris is trapped. That
the North Pacific gyre is full of plastic is of course our own
fault, our failure as a civilization to manage the social dilemma
of individually using and improperly disposing of convenient,
lightweight, and see-through plastic packaging and polluting
our planet.2
A social dilemma is a situation in which a party’s pursuit of
self-interest conflicts with the common good of a collective to
which the party belongs.3 The self-interest that led to the great
plastic gyre is our personal use of lightweight, presumably convenient
but in fact not easily disposable plastic that took the
place of heavier, less convenient but disposable paper and glass
packaging. The collective interest of the world population that
159
6
Social Dilemmas
160 Negotiating Globally
relies on oceans to provide resources is not to contaminate our
oceans.
This challenge of balancing self-interests with collective
interests, called a social dilemma by psychologists, is called a
commons problem in economics.4 In 1968 economist Garrett
Hardin described a group of herdsmen grazing their cattle on
a common pasture. Each herdsman has the incentive to maximize
profits by increasing the size of his herd, but if all do so,
the pasture will deteriorate and be unable to sustain any of the
herds. If one herdsman increases his herd, others will follow,
so as not to be exploited, and this will cause the pasture to
deteriorate even faster, leading to the tragic destruction of the
common.
Social dilemmas are ubiquitous. They are not limited to the
preservation of global environmental resources, such as clean air
and water, animal populations, energy, and fisheries. Whenever
collective interests and self-interests are misaligned, you are in a
social dilemma. Some mundane examples are free riding in teamwork,
failing to pay taxes or for the use of intellectual property,
or ignoring opportunities for recycling. If our global society is to
preserve critical common resources, individuals, community decision
makers, and representatives of nations must know how to
negotiate resource use that places common interests ahead of
local self-interests.
The chapter begins by discussing the two-party version of a
social dilemma that is called a prisoner’s dilemma. It then describes
two different types of social dilemmas. Cooperative social dilemmas,
for example, teamwork or recycling, are those in which the
collective interest is for the parties to cooperate. Competitive
social dilemmas, for example, price fixing, are those in which the
collective interest is for the parties to compete. In discussing both
of these types of social dilemmas, we’ll talk about what scholars
suggest can be done, and practitioners are doing, to encourage
cooperation in the one type and competition in the other. The
theme of this chapter is using negotiation strategy to manage
social dilemmas.
Social Dilemmas 161
Prisoner’s Dilemmas and Social Dilemmas
In a prisoner’s dilemma (PD), two parties get locked in a competition
pitting self-interests against collective interests. A typical PD
example involves two suspects (let’s call them Joe and Ed) who
are picked up by the police on charges, say, of insider trading.
The police would like to make a felony charge against them, but
do not have enough evidence to do so unless one of them gives
evidence (squeals) on the other. To encourage squealing, the
police separate the two suspects and make them each the offer,
illustrated in Exhibit 6.1.
Looking at Exhibit 6.1, we see that if neither Joe nor Ed gives
evidence against each other (confesses) (cell A), each gets two
years on a lesser charge. If both give evidence against the other
(cell D); each gets the longer, five-year sentence. The incentive
comes in cells B and C. In cell B, if Ed does not give evidence
and Joe does, Ed gets ten years and Joe gets off free. In cell C it
is the opposite. Rational self-interest is to give evidence against
the other party, hoping that the other party will not give evidence
against you so that you get no prison term. But if giving
evidence is in Joe’s self-interest, then it is also in Ed’s self-interest,
Exhibit 6.1. A Prisoner’s Dilemma.
Joe’s Choices
Do not confess Confess
Ed’s Choices
Do not confess
A
Joe = 2 years
Ed = 2 years
B
Joe = 0 years
Ed = 10 years
Confess
C
Joe = 10 years
Ed = 0 years
D
Joe = 5 years
Ed = 5 years
162 Negotiating Globally
meaning that rational self-interest leads to the worst collective
outcome—both go to prison for five years. The best solution is
to trust the other party not to give evidence and not to give evidence
yourself, but then if you trust the other party not to give
evidence, the rational choice is to give evidence yourself and get
out of jail free!
Prosecutors in insider trading cases have been using PD offers
to get parties to turn in each other. For example, Dr. Sidney
Gilman, a neurology professor, allegedly provided SAC Capital
trader Mathew Martoma inside information about the results of
clinical trials of an Alzheimer’s drug being jointly developed by
pharmaceutical companies Elan and Wyeth. Federal prosecutors
accused Mr. Martoma of trading on that information to make
more than $276 million in illegal profits and avoid losses for SAC
Capital. They negotiated a non-prosecution agreement with Dr.
Gilman for his testimony against Mr. Martoma. They have also
reportedly offered a deal to Martoma, if he will implicate SAC
Capital head Steven Cohen, by providing evidence about the
contents of a twenty-minute phone call he had with Cohen on the
night before SAC Capital started selling off shares of Elan and
Wyeth. If convicted, Martoma could face up to twenty-five years
in prison.5
Social dilemmas are multiparty prisoner’s dilemmas. If you
think PDs are difficult for two parties to manage, consider coordinating
the self- and collective interests of the twelve member
countries of OPEC, the Organization of Petroleum Exporting
Countries. OPEC produces about 40 percent of the world’s oil
and accounts for about 60 percent of oil traded in global
markets. Controlling OPEC is a social dilemma. It is in the selfinterest
of individual OPEC countries to pump as much oil as
possible, because the more they pump, the more revenue they
generate, and these countries’ national budgets depend on oil.
But when all OPEC countries increase their production, the
price of oil drops because supply becomes greater than demand.
When the price drops, volume does not increase fast enough to
make up for lost margin and all OPEC countries lose. OPEC’s
collective interest is to restrict the supply of oil by self-imposing
quotas and thereby increasing the price and OPEC members’
revenues.
Social Dilemmas 163
The organization has been reasonably successful in managing
the price of oil over the years. Take a look at Exhibit 6.2. It shows
the relationship between OPEC’s production targets (the vertical
bars) and the West Texas Intermediate Crude Oil benchmark for
crude oil prices (WTI) (the curved line).6 You’ll see there is a lag
between lowered production targets and increases in the WTI
price. Prices plummeted in 2008 due to lack of demand associated
with the onset of the global financial crisis. OPEC’s reaction was
to reduce production targets. Doing so had the effect of increasing
prices by 2010. Note that production targets didn’t change
again until the end of 2011 when OPEC increased production
targets, legitimizing “freewheeling production” that member
states were engaged in.7 In other words, member states were
failing to stay within their production quotas. Whether OPEC will
continue to hold the same sway over oil prices in the future that
it has in the past depends on three hard-to-control factors. One
is growth in the world economy and so demand for oil. Another
is supply by non-OPEC members; for example, in 2012 there was
increased production from Canadian and U.S. oil sands and shale,
from Kazakhstan, and from off-shore Brazil. The third is the
ability of OPEC to reign in members such as Iran and Iraq, who
tend to go their own ways.
Now that we understand what a social dilemma is, let’s delve
into the differences between dilemmas when the public interest
is for parties to cooperate and those when the public interest
is for the parties to compete. OPEC is an example of a competitive
social dilemma, in which the public interest is for the
parties to compete, pump oil, and so hold down global oil
prices. The Pacific gyre is an example of a cooperative social
dilemma, in which the public interest is for the parties to cooperate
and not use disposable plastic in order to protect natural
resources.
Competitive Dilemmas
Competitive social dilemmas, when the public interest is
compete and the private interest is cooperate, are posed by
cartels—groups of parties that combine for the purpose and
with the effect of raising, lowering, or stabilizing the price of a
Source: U.S. Energy Information Administration, Thomson Reuters. Updated quarterly; last updated
March 29, 2013.
–6
6
Million barrels per day change (year on year)
2001 2013
Year
Changes in OPEC production targets and WTI crude oil prices
–4
–2
0
2
4
–150
150 Percent change (
year on year)
–100
–50
0
50
100
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
WTI crude oil price
OPEC production targets
Exhibit 6.2. The Lagged Relationship Between OPEC Production Targets
and Crude Oil Prices.
164
Social Dilemmas 165
commodity. Some cartels such as OPEC are perfectly legal
because they operate between national boundaries. Other
cartels, for example the companies that fixed prices on LCDs
(liquid crystal displays for phones and TVs), are not, because
they operate within national boundaries, for example, the
United States or the EU.
Legal Cartels
Market forces govern decision making in legal cartels. For
example, if OPEC nations’ restrictions on production are too
tight, oil prices increase, and people look for alternatives to oil as
sources of energy, use more of less desirable oil (oil that is more
expensive to refine), drive less, and turn down their heat. When
OPEC nations make decisions about production quotas, there is
no representative of the oil-consuming countries at the table.
OPEC has to judge how much it can restrict production and
increase prices before oil-consuming countries and consumers
react. Consumers are not without power vis-à-vis a legal competitive
cartel, but they have to coordinate their actions by reducing
their reliance on the resource or product provided by the cartel,
and that may be difficult and take time. Meanwhile, if the cartel
holds, it reaps windfall profits.
Illegal Cartels
The goal of antitrust regulation is to encourage fair competition
to benefit consumers with lower prices. There are many recent
examples that have run up against U.S. and European regulators.
One is a “crystal display” cartel of Asian companies including AU
Optronics, Toshiba, LG, Hitachi, Sharp, and Samsung, found by
the U.S. justice system to have colluded to fix prices of those LCD
display screens on our televisions, computer monitors, and
phones. The last of these lawsuits finally settled in the spring of
2013. AU Optronics had held out for a jury trial, which it lost.
Testimony and evidence convinced the jury that top executives of
these six Asian companies met more than sixty times to set prices.
AU Optronics’ fine was $500 million. Its former president and
executive vice president each drew three years in federal prison.
166 Negotiating Globally
Fortunately for them the U.S. federal judge rejected the prosecutors’
demands for ten-year sentences. Her reasoning: they did not
act for personal gain but out of their belief that they were aiding
a troubled industry plagued by overproduction and plummeting
prices.8
A Steve Jobs’s authorized biography described the e-book
collusion among five major publishers and Apple to wrest
control over pricing from Amazon as Apple’s “aikido move”:
“you set the price, we get 30%, and the customer pays a little
more.”9 All five publishers settled, leaving Apple alone to lose
the antitrust case on e-books. The judge found that Apple had
taken advantage of publishers’ “fear and frustration” over
Amazon.com’s control of e-book pricing to get the publishers
to agree to its terms.10
Last but not least of our recent examples is the alleged potato
cartel. In the spring of 2013, the Association of Wholesale
Grocers claimed that American potato producers, responsible
for 80 percent of potato acreage, had used OPEC as a model for
conspiring to fix prices. The grocers’ lawsuit cites data (seventy
thousand fewer acres of potatoes planted in 2006 than 2005,
price increases of 48 percent) and communications from the
United Potato Growers of Idaho (see Exhibit 6.3). To win the
lawsuit the grocers are going to have to prove that the potato
producers are not a cooperative because U.S. law permits agricultural
cooperatives to do things otherwise forbidden by
antitrust laws.11
The nature of the competitive dilemma makes cartel involvement
risky for its conspiring members: someone is likely to tip off
the regulators. The tip may come from consumers angry because
they get the same price quote no matter what supplier they
contact, as was the case for LCDs. It can come from an outbreak
of dissent among conspirators, since defecting from the price
arrangement is in the self-interest of the colluders. It may come
from senior executives who know the activity is illegal and want
to save their own careers.
Involvement in a competitive dilemma is risky also for
senior executives because, as we saw in the LCD example, in the
United States convicted price fixers can go to jail while their
Social Dilemmas 167
companies pay huge fines. It is rare for executives caught in a
price-fixing scheme to serve jail time in the EU, because EU
regulators do not have the legal rights to go after individuals in
the same way U.S. regulators do. But the EU does impose substantial
fines. In the LCD case, the EU fined LG Display, AU
Optronics, Chimei InnoLux, Chunghwa Picture Tubes, and
HannStar Display nearly 649 million euros. Samsung was also
cited, but immunized itself from fines by being “the first to
provide information about the cartel.” Someone is always likely
to tip off the regulators!12
YOU HAVE PROVEN THAT WE CAN CONTROL WHAT WE
PLANT. WE CAN AND MUST BALANCE THE MARKET IN
2006 OR RISK WATCHING BAD HISTORY REPEAT ITSELF!
In the past, the way you prospered was to plant with no real
analysis of national supply and demand fundamentals and then
hope for the best. But this year, YOU HELPED CREATE A
GOOD MARKET BY PLANTING ONLY ACRES THAT WILL
SUPPORT A GOOD MARKET! The strategy of “over-planting”
so you can get “lucky” and prosper in ’06 will create the same
disaster we have had in recent years . . . overproduction of
+10–12 MILLION cwt. This will again result in rock bottom,
cut-throat pricing and $1.00-$3.00 returns to growers. WE
CANNOT LET THIS HAPPEN! Instead, we must REMEMBER
THE PAST, LEARN FROM IT AND MAKE OUR OWN LUCK
and CONTROL WHAT WE PLANT! [Capitals and ellipses in
complaint.]
Exhibit 6.3. Excerpt of a 2005 Letter from the United Potato
Growers of Idaho CEO to Members, Quoted in “Complaint
Filed in Federal Antitrust Complaint” by the Association of
Wholesale Grocers.
Source: http://www.courthousenews.com/2013/04/22/56909.htm.
168 Negotiating Globally
Here are some things you can do to manage illegal
collusion:
• Watch the market. Buyers figured out the LCD cartel.
Amazon figured out the e-book cartel, retailers watching
potato prices looked into communications among association
members and blew the whistle with the U.S. government.
• Make it clear that within the company whistleblowers will be
protected and colluders punished.
• Just say no when invited.
Cooperation Among Competitors That Comes in Under
the Law
The legal side of the antitrust line is dominated by companies that
signal price information but do not actually meet in fancy hotels
(like the LCD cartel) or restaurants (like the e-book conspiracy)
or communicate about prices via email (again like the e-book
conspirators). The airlines are well-known competitive signalers.
For example, an airline may announce a new fare or fee increase
and then see what its competitors do. If the competitors match
the increased fare or fee, all share the market with higher margins.
If the competitors do not match the increase, the initiator can
roll the price back and continue competing for market share at
lower margins. Alternatively, competitors may match the increased
fare for a limited time, implying that they do not want to raise
prices.13
Here is some advice about signaling to manage competitive
dilemmas:
• Signal your strategy into the marketplace.
• Keep your strategy simple. You want your competitors to
understand it!
• Do not be the first to defect; signal your willingness to
cooperate.
• Focus on your own payoffs, not your payoffs relative to
others. (This gains margin, but not market share.)
• Consult your lawyers to make sure you are not crossing the
line of illegal collusion.
Social Dilemmas 169
Cooperative Dilemmas
Cooperative dilemmas, in which the public interest is for the
parties to cooperate but the private interest of the parties is to
compete, come in two forms depending on whether parties are
taking from or contributing to the common resource pool.
Taking Dilemmas
Taking dilemmas are social dilemmas in which parties take
resources from the commons. Industries that extract or use
notably depletable resources—fishing, forestry, energy—have to
make decisions in the context of a social dilemma. If they extract
too much, the resource will be over-depleted, but while they are
depleting it they are profiting greatly. This is OPEC’s long-term
problem. OPEC nations are extracting a resource that cannot be
replenished. How much should they extract to serve current
interests versus conserve for future generations? In contrast, the
fishery and forestry industries are extracting resources that can
be replenished, if self-interests can be sublimated to collective
interests.
Contributing Dilemmas
Contributing dilemmas are social dilemmas related to adding to
public goods: paying taxes, contributing to public radio and television,
doing your share of teamwork. The main dilemma is what
to do about free riders. A free rider is a person who does not personally
contribute but benefits from the contributions of others.
Tax evaders, despite paying no taxes, benefit from public services:
they are free riders. In the United States, public radio
listeners and public television viewers who use the resource but
do not make financial contributions during membership drives
are free riders. The same can be said of some team members.
Free-rider team members who do not contribute nevertheless
share in the team’s rewards along with team members who do
contribute. If the team is successful, the free rider benefits the
same as the team members who did all the work. If the team is
unsuccessful, the free rider, unlike other members of the team
170 Negotiating Globally
who contributed, will not feel exploited. The first challenge in
managing free riders is identifying who they are. The second
challenge is instilling in them a sense of responsibility to contribute
to the public good. Managing social dilemmas takes excellent
negotiation skills.
Using Negotiation Strategy to Generate Cooperation
in Taking and Contributing Social Dilemmas
When the public interest of cooperation is not being met, a social
dilemma is in disequilibrium. The next three sections apply what
we have learned about negotiation strategy in prior chapters to
the challenge of turning a cooperative social dilemma in disequilibrium
into one in which the collective interest is being met. The
nature of social dilemmas—multiple parties with self-interests that
exist in tension and conflict with collective interests—makes them
inherently difficult, but not necessarily impossible to manage. A
good standard for determining whether a social dilemma is under
control is whether the collective good is sufficiently available to
meet public needs: clean air and adequate water, or public entertainment
or the arts. When a social dilemma is meeting the
interests of the collective, an equilibrium balances self-interests
with collective ones.
Chapter Four introduced three ways to resolve disputes:
interests-based approaches, rights-based approaches, and powerbased
approaches. The same framework provides a way of
organizing potential interventions to manage cooperative social
dilemmas. Just as we saw that interests, rights, and power
approaches were not all equally acceptable across cultures, in
managing social dilemmas some approaches may be more acceptable
to parties from some cultures than others.
Power-Based Approaches to Negotiating Cooperative Social Dilemmas
Not all parties to a social dilemma are equal. Some parties are
more powerful than others and can lead the way to cooperation
in social dilemmas, if they only will. Corporate sustainability
efforts are a major example of powerful parties trying to reduce
their negative environmental footprints without hurting profits.
One can be cynical about these efforts as mere public relations
Social Dilemmas 171
ploys and opportunities to squeeze suppliers, or one can be grateful
for lip service that might eventually turn into actual sustainability
gains. For example, Walmart is now rating its suppliers on sustainability.
At the same time it is motivating its buyers to pay attention
to the suppliers’ sustainability ratings by making 5 percent of their
performance pay contingent on their sustainability work.14
Unilever only started on the sustainability track in 2010, but
its three goals are impressive: to improve health and well-being,
to reduce environmental impact, and to enhance livelihoods.
Impressive, too, are its seven initiatives to achieve those goals by
2020. It also publishes its scorecard and admits that not every
initiative is on target.15 What is particularly interesting about Unilever
is that it is defining its sustainability work as a test of
leadership. Its CEO, Paul Polman, is quoted in the 2013 report
of the GlobeScan and SustainAbility survey as saying, “If we achieve
our sustainability targets and no one else follows, we will have
failed.”16
Whether you work for a powerful company such as Walmart
or Unilever or one of their suppliers, for an environmental organization
such as the World Wildlife Fund, or for a government
organization, you may find yourself negotiating as or with a powerful
party to increase cooperation in sustainability social
dilemmas. The following key principles for such negotiations are
the same as those discussed in Chapter Three, on deal making,
Chapter Four, on dispute resolution, and Chapter Five, on negotiating
in multiparty situations.
• It is essential to understand all parties’ interests.
• It is important that all parties know the issues and options in
advance and have time to negotiate with their constituencies
so that they can make commitments when they meet as a
group.
• It is important to put multi-issue proposals on the negotiating
table that build in trade-offs that capture differences in
interests.
• Stand up and take a hit! Commit publicly to cooperation.
Alternatively, if you are a low-power party, you may be able to
use power to convince powerful parties to cooperate. For example,
172 Negotiating Globally
in the wake of the spring 2013 tragedies in Bangladesh and Gap
and Walmart’s refusal to join the European apparel companies
such as H&M in their initiative to help make Bangladesh factories
safer, Gap had picketers outside its corporate headquarters and
stores.17 Ultimately, Gap and seventeen other American retailers
including Walmart announced their own plan to improve safety
in Bangladeshi garment factories.18
Rights-Based Approaches to Negotiating Social Dilemmas:
Using Norms
A norm, as we learned in Chapter Two, is a standard of appropriate
social interaction—what one ought to do in a given situation.
Norms are useful in regulating people’s behavior in social dilemmas
because they provide a means of self-regulation and do not
require infrastructure for monitoring and enforcement. People
know what they are supposed to do and they do it. Research has
identified three norms that seem to regulate behavior in social
dilemmas: commitment, reciprocity, and equity and equality.19 In
addition, in local environments unique and elaborate norms can
emerge to regulate social dilemmas.
Norms of Commitment. When we make public commitments, we
signal our intentions. This gives others a basis for forming expectations
of us and for acting according to those expectations.
Assuming we follow through on our intentions, coordinated
action ensues. If we fail to follow through, we not only disrupt
social equilibrium but also generate distrust, lose face, and accrue
other social sanctions. For all these reasons, the norm of commitment
works to generate cooperation in social dilemmas.
Our research indicates that in all cultures it is very important
to create a norm of cooperation and then communicate commitment
to it. In executive programs on negotiation, we
frequently run a social dilemma exercise concerning fish harvesting
(Shark Harvesting and Resource Conservation, or SHARC).
SHARC involves four parties who are harvesting different
amounts of shark from the Atlantic Ocean: the large commercial
fishers (big boats, the most powerful party in economic terms);
the small commercial fishers (smaller boats, fishing closer to
shore); and two economically less powerful parties, namely,
Social Dilemmas 173
recreational competition fishers (“compete to see how big a
shark you can catch”) and recreational tour fishers (“come out
with us and catch a shark to mount on your family room wall”).20
To maintain the resource these fishers have to reduce the overall
harvest by one half, from five thousand to twenty-five hundred
metric tons of shark per year. How to do so is the social dilemma.
We assign participants to one of the four roles, give them time
to prepare and ask them to make a decision about how much
they will reduce harvesting, and how much they expect others
to reduce their harvesting. Then we put them in a group with
the three other fishers, encourage them to discuss the problem
for thirty minutes, and bring them back to once again make
separate decisions.
Exhibit 6.4 shows that communication (the thirty-minute discussion)
significantly reduced the overall level of fishing, regardless
of whether discussants were American, Korean, Japanese, or
Chinese managers. The biggest reduction was in the American
data, since prior to discussion American managers were not very
willing to reduce their harvesting. Post-discussion fishing levels
are not significantly different across cultures. A few groups in all
cultures do reach the twenty-five hundred metric ton level, which
Exhibit 6.4. Cultural Differences in Group-Level Harvest,
Pre- and Post-Discussion.
5,000
4,500
0
United States
Pre-Discussion Post-Discussion
Korea Japan China
4,000
3,000
2,000
1,000
Current
Harvest
Sustainable
Harvest
Metric Tons
3,500
2,500
1,500
500
174 Negotiating Globally
is sustainable. The data suggest this is most likely to happen when
the powerful party cooperates.21
We use commitment norms almost unconsciously in many
situations. For example, when working in teams at the end of the
meeting, we go around the table and get everyone to openly
commit to what he or she is going to do. Commitment norms
work!
Norms of Reciprocity. The norm of reciprocity is the social imperative
to give benefits to others that are equivalent to the benefits
they give you.22 As we saw in the Chapter Five example of
team decision making using agendas, generalized reciprocity
of cooperation allows a multiparty team to develop integrative
agreements.
Reciprocity works in a similar way in social dilemmas, so
long as trust is not violated. The strategy that generates the
highest levels of cooperation in a multiple-round prisoner’s
dilemma is a reciprocity strategy called “tit for tat.”23 The rules
of tit for tat are to start cooperative and then always reciprocate
the other party’s move. (Also see the earlier “Some advice about
signaling to manage competitive dilemmas.”) The tit-for-tat
decision maker almost never gains more than his or her counterpart,
but because the counterpart understands that the
tit-for-tat player will reciprocate a cooperative move, the tit-fortat
player is typically able to entice the counterpart to play
cooperatively.
Norms of Equity and Equality. An equity norm distributes resources
according to a standard of fairness, usually in proportion to contributions,
inputs, or costs.24 The problem with the equity norm
in social dilemmas when participants are from different cultures
is that what is perceived to be fair in one culture may not be perceived
to be fair in another culture. For example, in the SHARC
exercise, the large commercial fishers are more powerful economically
than the others. This party has the capacity to harvest
more fish than the others, and makes a large profit from doing
so. We found that the powerful party seems to be using a different
equity norm in U.S. and Chinese groups than in Korean or Japanese
groups.
Social Dilemmas 175
Exhibit 6.5. Perceptions of the Powerful Party: What Is Fair
for the Powerful Party to Harvest Minus What Is Fair
for the Two Weaker Parties to Harvest, by Culture.
1,000
0
Americans Koreans Japanese Chinese
Differences in What Is Fair for
Parties to Harvest (in Metric Tons)
800
900
600
400
200
700
500
300
100
Exhibit 6.5 shows the difference between what the powerful
party (large commercial fishers) in the SHARC dilemma harvested
and what that party thought the two weakest parties should
harvest. (Note that the vertical scale is not the same as the one
in Exhibit 6.4.) The difference in these allotments is almost one
thousand metric tons when Americans take the powerful party’s
role and almost eight hundred metric tons when Chinese take
this role. The American and Chinese managers’ decisions illustrate
an equity norm: it is fair for the powerful party to harvest
more fish and the weaker parties to harvest fewer. In contrast,
the Japanese and Korean managers’ decisions illustrate an equality
norm: it is appropriate for the more powerful party to make
a bigger reduction and the weaker parties to make a smaller
reduction in harvesting. The differences between the powerful
party and the weaker parties in these two cultures are five
hundred metric tons or less. This means that if you are the lowpower
party you might care about the culture of the high-power
party. You might be better off with a Japanese or Korean highpower
counterpart than an American or Chinese high-power
counterpart.
176 Negotiating Globally
Local Norms. So far we have been discussing norms of commitment,
reciprocity, equity, and equality that are general and can
be observed directing and controlling people’s behavior in many
different cultures. In addition to these general norms, very specific
norms emerge in local communities for the purpose of
resource conservation and management. These emergent local
norms have two characteristics. First, allocations are based on
local cultural definitions of fairness. Second, the sustainability
of the norm is based on the ability and willingness to bar outsiders.
25 Examples range from forest and meadow management
in Japan and Switzerland to irrigation of farmland through the
use of common water canals in Spain; the Philippines; and Bali,
Indonesia.
Bali’s unique system of water management combines Hindu
religious values dictating equal sharing with elaborate social structures
and complex engineering.26 Balinese rice farmers belong to
community organizations called subaks. All subak members have
the same right to irrigation water in return for free communal
work on subak activities. The water is allocated by dividing the
total amount of water available by the number of subak members
and their needs. Work obligations are directly proportional to the
amount of water farmers receive. Members can participate in the
manual labor necessary to maintain the complex irrigation system
or provide financial compensation in lieu of manual labor.
Upstream and downstream participants cooperate in this system
because the flow of water also affects the population dynamics of
rice pests. If downstream fields are not sown because of lack of
water, pests will move upstream!
An important factor in developing and maintaining local
norms is keeping control of the resource out of the hands of
outsiders. The subak system in Bali has successfully done so for
over one thousand years. So long as the need for water in Bali was
primarily agricultural, the subak system worked extremely well.
However, increasing land values because of tourism have caused
Balinese in some subaks to sell their land for hotel development.
Other areas have effectively reinforced their commitment to the
use of land only for agricultural purposes, and the subaks continue
to control the allocation of water.27
Social Dilemmas 177
Advice for Using Norms to Regulate Behavior in Social Dilemmas. Assuming
that people affected by the social dilemma share a common
set of norms to regulate behavior, as do the subaks in Bali, there
is still the problem of adherence to norms. Adherence to norms
works on several levels. Commitment and reciprocity norms align
self- and collective interests. Equity norms provide a standard for
judging one’s own and others’ behavior, and so minimize defection
from cooperation. Barring local area norms from incursions
by outsiders sustains local norms and reduces defection. Here is
some advice for using rights-based approaches to generate cooperation
in social dilemmas:
• Make commitments that you are willing to follow through on.
• Ask for others to make similar commitments.
• Ask for generalized reciprocity and indicate when you are
willing to engage in it.
• Find out whether equity or equality dominates social
interaction in the cultures with which you are interacting.
• When local norms are working to generate equilibrium, try
to buffer those local areas from incursions by outsiders.
Because it is extremely difficult to buffer local norms from
external pressures and social change, we also need to consider
more formal, rights-based solutions to social dilemmas that are in
the form of government regulation.
Rights-Based Approaches: Using Legal Regulation, Monitoring, and
Enforcement
Regulatory solutions to social dilemmas range from privatizing
commons to capping use to setting up tradeable permits programs.
Each of these different approaches to regulating behavior
in social dilemmas has strengths and weaknesses. They also
appeal differently and at different times to people from different
cultures.
Privatization of Commons to Regulate Behavior in Social Dilemmas.
Privatization works by defining boundaries within which an
entity—person, organization, or community—has the sole right
178 Negotiating Globally
to use the resource. For example, each subak in Bali has total
control over allocation of water within its own watershed area.
Although this area is not private property, it is treated as such.
Privatization works to conserve resources (the public interest)
because it aligns self-interests with the public interest: resource
users who control their resource (such as the Balinese subaks)
conserve the resource.
Privatization is appropriate for managing resources such as
meadows and forests that do not move. But as we saw in the
opening example of the Pacific gyre, many natural resources
move in unpredictable paths through air, water, and soil. Managing
these resources requires negotiating harvesting caps and
monitoring and enforcement.
Cap and Trade Programs to Regulate Behavior in Social Dilemmas. Cap
and trade systems are designed to motivate polluters such as power
plants to reduce greenhouse gas emissions. A government entity,
for example the EU, sets a limit on how much of a pollutant can
be emitted. It then generates emissions permits equivalent to the
cap. Power plants buy and trade permits. Plants that have reduced
their emissions can sell their excess permits; plants that need
excess permits buy them in a market. The idea behind these
systems is to provide an economic incentive to power plants and
other polluters to reduce their actual emissions by investing in
emissions control initiatives. These systems seem to be successful
when demand for permits exceeds supply, but many systems have
been stymied in recent years as the global recession has reduced
demand, and high oil prices have motivated the switch to natural
gas, which burns cleaner than coal or oil. This has meant that
there have been more permits available in markets than buyers,
which reduced the value of the cap and trade system’s incentive
to reduce greenhouse gases.28
Regulation can be controversial. If you want to see the kind
of discussion that parties generate about cooperation in a social
dilemma, just review the articles and postings on the web concerning
the U.S. Clean Air Act. The National Resources Defense
Council suggests that new carbon pollution standards, which it
argues can be generated under existing authority in the Clean Air
Act, will cut existing power plant emissions 26 percent by 2020
Social Dilemmas 179
(relative to peak emissions in 2005).29 But then for a different
opinion, see the Wall Street Journal.30 It is difficult to reach consensus
about what is the appropriate rights-based standard. As in
every other type of negotiation we’ve studied, rights-based
approaches, whether normative or legal, often generate conflict,
with one side advocating the rights-based approach that benefits
its interests and the other side advocating a different rights-based
standard that benefits its interests. Maybe interests-based
approaches are worth considering.
Interests-Based Approaches to Negotiating Social Dilemmas
An interests-based approach to managing a social dilemma
involves realigning self-interests so that they are consistent with
collective interests. This either requires reframing the situation
or shifting people’s social identity from the self to the group
coping with the social dilemma.
Reframing the Situation. Give different people the same social
dilemma situation, such as the fish-harvesting problem, and you
will be surprised at the variation in their behavior. For example,
the powerful party in our SHARC dilemma exercise can harvest
between four hundred and two thousand metric tons of fish.
American managers playing this role use the full range; but even
so, 50 percent of them harvest less than sixteen-hundred metric
tons, which leaves them with a loss of profits no matter what other
parties do. Why do they do so? In class discussions they take the
moral high ground: “It was the right thing to do.” Several different
research studies suggest that reframing a social dilemma as a moral
or ethical problem is more likely to engender cooperation than
framing it as a business or economic problem.31 The moral, ethical
frame stimulates a cooperative and possibly even an altruistic
knowledge structure. The economic or business frame stimulates
a competitive and defensive structure. Thus, the advice is
• Reframe the social dilemma as an ethical or moral dilemma,
not an economic one.
Shifting Social Identity from the Self to the Collective. The way to shift
social identity from the self to the collective interests is to make
180 Negotiating Globally
group identity salient.32 This requires developing a group to
which all the parties belong and whose goals they can identify
with. One of the easiest ways to accomplish this is to identify a
common competitor or adversary, much as the early environmental
protesters in Taksim Square in Istanbul, Turkey, did as
their masses swelled in the early summer of 2013 (described
further on).33
There are three techniques for making social identity salient.
The first is setting collective goals. A collective goal is a goal that all
group members agree to. A collective goal may help parties recognize
that their self-interests can be promoted by cooperating
with others. A major factor motivating OPEC members to renegotiate
quotas and stick to them is their individual economic
problems caused by low oil prices. In this situation OPEC
members’ collective goal of improving their individual economic
situations is aligned with their self-interests.
A second technique for making social identity salient is
increasing contact, ideally through face-to-face meetings. Contact
places dispersed parties to a social dilemma in personal communication
with one another. Contact works if it generates respect
for differing interests and leads to trust that cooperation will be
reciprocated and commitments to quotas will be kept. The hierarchical
structure that links the different Balinese subaks provides
contact among subaks responsible for different watershed areas.
Without the Balinese subaks’ thousand years of history of cooperation,
it is necessary to build trust between parties who are
interdependent but who previously have had little contact with
each other. The way to do this is to signal cooperation, much the
same way the airlines engage in competitive dilemmas do when
raising prices: one or all parties take small cooperative steps that
are easily monitored. Once there is an initial basis for trust, larger
cooperative steps may be possible. The psychologist Charles
Osgood called this approach GRIT, or “graduated and reciprocated
initiatives in tension reduction.” His idea was that one party
can stimulate tension reduction by making a small unilateral concession
and indicating that the counterpart should reciprocate. If
the counterpart does reciprocate, the party initiating GRIT can
make a second concession, and so on. If the first concession isn’t
reciprocated, Osgood advises not to give up too easily, as some
Social Dilemmas 181
counterparts take longer to get the idea of cooperating than
others. He advises trying again.34
A third technique for making social identity salient is recategorization.
Recategorization involves encouraging parties to a social
dilemma to see themselves not as separate entities but as a single
group confronting a common problem. This often involves invoking
a superordinate category. For example, in dealing with
oil-consuming nations, Saudi Arabia might represent itself as
Saudi Arabia, the largest oil-producing country in the world, or
as OPEC member Saudi Arabia. The distinction is subtle but
important because the difference signals the priority of collective
interests over self-interests.
Cultural Differences and Making Social Identity Salient. The three
techniques for making social identity salient may work somewhat
differently for people from dignity, face, and honor
cultures. In face cultures, as we discussed in Chapter Two, the
unit of social perception is the group, the self is viewed as interdependent
with social identity groups, in-group goals have
primacy over personal goals, and in-group harmony is valued. In
contrast, in dignity cultures the unit of social perception is the
individual, the self is viewed as an independent rather than a
socially interdependent entity, personal goals are primary,
in-group goals are secondary, and in-group confrontation is
acceptable.35 We do not have data on managers from honor cultures
participating in the SHARC social dilemma exercise;
however, the honor culture profile suggests that they are likely
to act more like the dignity culture managers (strongly protective
of self-interest) than like the face culture managers—at least
those from Japan and Korea.
The implications of these cultural differences and our research
suggest that people from face cultures should find it easier to
align self- and collective interests than people from dignity or
honor cultures. Exhibit 6.4 showed that U.S. managers confronted
with a decision to reduce harvesting from the current rate of
5,000 metric tons of fish to the sustainable 2,500 metric tons
reduced their harvesting only from 5,000 to 3,988 metric tons
when simply confronted with the problem, while Korean (3,581),
Japanese (3,637), and Chinese (3,416) managers reduced
182 Negotiating Globally
significantly more. But given the opportunity for discussion—
when commitments could be made to harvesting levels—the
overall level of harvesting evened out.
Perhaps the reason for this greater need for communication
in dignity than in face cultures has to do with the cultural differences
discussed in Chapter Two associated with explicit versus
implicit communication, independent versus interdependent
norms, and egalitarian versus hierarchical social structures.
People from dignity cultures, because self-worth is relatively independent
of social constraints, may need to hear others’ explicit
communication of commitment to cooperation before they feel
comfortable cooperating themselves. People from face cultures,
in which self-worth is interdependent with social roles and
responsibilities that determine social status and behavior is constrained
by social monitoring and sanctions, should know what
their own behavior is expected to be in the social dilemma and
be able to predict what others will do on the basis of their social
status.
Cooperation also may result simply from hearing others
articulate the logic for harvesting patterns that are different
from one’s own self-serving interests. This may lead parties to
reassess their judgments of fairness. It is also possible that just
meeting as a group enhances group identity, leading to recategorization
and cooperation, regardless of what parties talk
about!36
In-Groups and Out-Groups: Risks in Making Social Identity Salient.
Increasing social identity using collective goals, contact, or recategorization
works by redefining the boundaries of in-groups—that
is by broadening the membership of the in-group to include those
who previously did not belong and did not identify with the
in-group. Doing so successfully still leaves at least one, more likely
many, out-groups to which in-group members do not belong or
identify. The out-group serves as a reference to what the in-group
does not stand for and so contributes to in-group solidarity and
identity. One of the most effective ways to use recategorization is
to increase the salience of the in-group by creating a contrast with
an out-group. Group members making decisions in social dilemmas
are twice as likely to cooperate with other in-group members
Social Dilemmas 183
when there is an out-group to compete against, than when there
is no out-group.37
Increasing social identity by distinguishing people’s membership
in in-groups and out-groups entails its own risks by hardening
divisions within a society, which can lead to escalation of violence.
In such situations social dilemmas can occur within and between
groups. As I am writing this chapter, in June 2013, a very vivid
intergroup social dilemma is occurring in Turkey. The initial protests
were about an environmental issue, saving Gezi Park in
Taksim Square in Istanbul. The peaceful sit-in protests escalated
after riot police used tear gas and water cannons to try to disperse
the protestors. At this point the makeup of the protest group
quickly broadened to include a diverse set of other anti-government
groups uniting under the banner of grievances against Prime
Minister Recep Tayyip Erdogan’s authoritarian style. On the
Turkish side was the government of Prime Minister Erdogan,
which was strongly supported by the conservative religious majority
in Turkey. After the second week of protests spreading to more
than sixty cities with violent clashes with the police that led to
three deaths and almost five thousand injuries, an opening
appeared on the government side suggesting a social dilemma
within the cabinet: how to address the protests cooperatively or
competitively. Bulent Arinc, a deputy prime minister and government
spokesman, announced after a seven-hour cabinet meeting
to discuss the protests held Monday, June 10, 2013, that the prime
minister had offered to meet with some of the protest leaders and
that he anticipated the meeting would be held Wednesday, June
12, 2013. One can just imagine some of the discussions that took
place in that cabinet meeting: concerns about human rights
abuses, Turkey’s bid to enter the EU, and Istanbul’s petition for
the 2020 summer Olympics; discussions about the implications of
the Turkish currency losing value, borrowing rates rising and currency
flight affecting sustained economic growth in the wake of
the political crisis; and of course the right of a democratically
elected government to move policy to support the interests of the
majority. Then on Tuesday, June 11, 2013, Prime Minister Erdogan
in addressing his political party called the protest movement “an
uprising against the democratic administration” and the groups
protesting in the square “terrorist organizations.” That evening
184 Negotiating Globally
riot police once again tried to disperse protestors in Taksim
Square with tear gas and water cannons.38
There is quite a bit of recent research on intergroup social
dilemmas that can be used to understand how the structures of
these situations, which typically involve two groups with heterogeneous
values and their representatives, affect cooperation. In
general, individuals gain more than noncooperative groups, and
it is better to be an individual facing a noncooperative group than
two individuals facing each other. Facing a noncooperative group
provides an opportunity to take advantage of the group, which
given its nature it is having difficulty coordinating.39 In our
example of the events in Taksim Square, clearly the prime minister
acting as an individual has the upper hand against the diverse
group of protesters. The fact that both groups, protesters and
government, share a common fate makes them less cooperative
because they have very different views of what that common future
looks like.40 And then there are individual differences in how
representatives of groups act, or social motives. Some people have
individualistic social motives—that is, they are out for themselves;
others have cooperative social motives—that is, they put the interests
of the group first; still others have competitive social motives—that
is, they promote their interests at the expense of others. It should
not be a huge surprise that collectivists negotiate as competitively
as individualists when just the counterpart, not their own group,
will benefit from the concessions. But when their own group and
the counterpart’s group both benefit, collectivists are willing to
self-sacrifice in order to provide benefits for their group as well
as the counterpart’s group.41
Keep in mind though that the research above has been conducted
in Israel, the Netherlands, and the United States—all
dignity cultures—and that, as we have seen in the research
reported earlier in this chapter about people participating in
social dilemmas in face cultures, there are likely to be face and
honor cultural effects. For example, culture may differently affect
the boundaries parties draw between in-groups and out-groups.42
In addition, members of face cultures tend to make sharper distinctions
between in-groups and out-groups than do members of
dignity cultures.43 Finally, members of face cultures tend to cooperate
more with members of their in-groups and compete more
Social Dilemmas 185
strenuously with members of out-groups than do members of
dignity cultures.44
Here is some advice for avoiding risks when making social
identity salient:
• Identify potential in-groups and out-groups. Be sure to build
in sufficient buffers between them (for example, the
geographical buffers between Balinese subaks) so as to
minimize out-group competition when you increase in-group
salience and cooperation.
• If you cannot build in buffers, consider contact or
recategorization to enlarge the size of the in-group.
• Choose representatives with collective social values.
• Send a representative with collective values to negotiate with
a competitive outgroup.
• Consider culture!
Negotiating Individual and Collective Interests in
Social Dilemmas
The first step in becoming more effective in negotiating cooperation
in social dilemmas is to recognize that all dilemmas are a
balance between self-interests and collective interests. The requirement
to balance those interests will not disappear no matter how
effectively the dilemma is managed. The challenge is to negotiate
solutions that keep self-interests and collective interests in equilibrium.
Regulation may be the obvious approach, but there are
more subtle and more psychological approaches, using norms
and interests, that may limit the need for regulation and have
been shown to work effectively when regulation and enforcement
are not practical. If regulation is necessary, then experience with
caps and tradable permits suggests that negotiating a combination
of government regulation and free markets is an effective way to
manage social dilemmas, even across national boundaries. Finally,
it is important to realize that culture matters in managing social
dilemmas. Putting collective interests first is simply more acceptable
in face than dignity cultures. Market solutions fit better with
social structures in dignity cultures and possibly in honor cultures
than in some face cultures. Powerful parties may be more willing
186 Negotiating Globally
to take the lead in cooperation in face cultures; in dignity cultures
they may need to be shamed into cooperation (such as picketing
Gap) or legally sanctioned when their cooperation means that
the collective interests are ignored (for example, the LCD
colluders).
In this chapter we have just begun to see the role of governments
in negotiating global solutions to social dilemmas. In the
next chapter we delve into the role of government in negotiating
foreign investment.
Foreign direct investment (FDI) is a major engine of globalization,
economic development, and often cultural change.
Companies seek access to resources, markets, and low-cost labor,
while governments seek infrastructure, technology, job creation,
and economic development. Sound like a win-win negotiation?
That is certainly the intent, but integrating the profit-making
goals of global companies with the economic development goals
of government policymakers is a major negotiation challenge.
This chapter draws attention to issues and interests that make FDI
negotiations complex and challenging. It begins by identifying
and contrasting the interests of foreign direct investors with the
interests of governments and moves on to the types of challenges
that surface when you actually try to make FDI work, including
the following:
• Protecting legal rights when the rule of law is weak
• Dealing with corruption and coming face-to-face with your
own ethical standards
• Navigating complex layers of government bureaucracy
• Protecting the safety of your own people
• Avoiding entanglement with human rights abuses
187
7
Negotiations Between
Governments and Foreign
Direct Investors
188 Negotiating Globally
Investors and Governments’ Interests in FDI
To begin to understand the complexities and challenges of FDI,
we need to understand the interests of both the foreign direct
investor and the government of the nation in which the investment
is to be made. The investor’s interests are already familiar
to us—an opportunity to make money—but governments’ interests
are much more complex, and as the examples further on
illustrate, governments’ interests are typically quite different from
those of other private companies with which the investor is likely
to have had the most experience negotiating deals. Government
interests are also likely to be multifaceted, requiring a negotiation
among government parties that the foreign direct investor may
have little influence over.
FDI Interests
The business news is full of examples of major new FDIs that
illustrate the breath of FDI interests. Some investors are looking
for opportunities to invest excess cash in return for access to
resources or technology not otherwise available. Others have a
successful business model that they are interested in extending.
Still others are looking for inexpensive labor and opportunities
for global sourcing.
Chinese companies in particular are on a buying spree for
various types of resources. The state-run China National Offshore
Oil Corporation (CNOOC, pronounced SEE-nook) recently purchased
Nexen, a Canadian oil producer that also has properties
in the Gulf of Mexico. The deal’s approval by both the Canadian
and U.S. governments suggests that government regulators are
now more willing to accept Chinese ownership of strategic assets
than they were seven years ago when CNOOC tried and failed to
get U.S. government approval to buy Unocal.1 What has changed?
Apparently, three important strategic concerns on the part of the
Canadian government. First, Canada is looking beyond the United
States for energy markets, particularly given that the United States
has delayed approval of the Keystone XL pipeline project to take
Canadian oil to Gulf of Mexico refineries. Second, extracting oil
from sands is enormously expensive, and the Chinese have the
Negotiations Between Governments and Foreign Direct Investors 189
resources to do it. Finally, CNOOC plans to keep Nexen management
and establish Calgary, Alberta, as its headquarters for North
and Central America.2
In another example, Club Med is looking for new markets.
A buyout by a Chinese conglomerate, Fosun International, and
an investment unit of the French insurer, ASA, may be the first
step in a major expansion of Club Med’s tourism model in Asia.
China is the world’s biggest source of foreign tourists; Club Med
is currently reeling from the euro crisis.3 But will the French
government approve? France has been notably defensive about
its cultural icons. The French Minister of Industrial Renewal
recently blocked Yahoo! from buying a majority stake in French
video website Dailymotion, saying he did not want 75 percent
of the rare French web-success company to be sold to the
American giant.4
The spring 2013 tragedies of factory fires and factory collapse
in Bangladesh have placed global attention on the compromises
beyond cheap labor that are made to reduce the costs of garment
production. Cheap labor makes a significant difference in price.
The cost of cutting and making a dress shirt is $1 to $1.50 in
Bangladesh compared to $3 to $4 in China. But now some manufacturers
are questioning the wisdom of manufacturing in
countries including Bangladesh, Pakistan, and Venezuela, where,
historically, cheap labor goes hand in hand with cutting corners
on safety.5
What Governments Want from FDI
Governments generally are interested in FDI for contributions to
infrastructure they otherwise cannot afford, for technology that
they otherwise lack access to, and jobs that they otherwise cannot
create domestically. But they want all this without compromising
their political power, their national security, and their cultural
hegemony.
India is seeking investments equal to $1 trillion by 2018
to modernize its infrastructure. The government estimates that
one-third of India’s production of fruit and vegetables is lost
annually due to spoilage. There is cold storage capacity for
only 11 percent of production, and on the crowded, potholed,
190 Negotiating Globally
always-under-construction highways of India where trucks share
space with donkeys, horse carts, bicycles, and sometimes even
camels, a truck is lucky to average 186 miles per day compared to
500 miles per day in the United States.6 To that end the Indian
government finally opened the door to big-box retailers in the
fall of 2012, but only after being pushed to do so by business
executives wanting to jumpstart India’s sagging economy. What
the big-box retailers, Walmart and Carrefour, know best is what
India lacks: logistics. The trade-off India negotiated with them for
access to India’s $450 billion retail sector that is projected to grow
10 to 12 percent annually is an investment of $100 million in
capital, with at least 50 percent going to infrastructure such as
cold storage and transportation.7
Yet the decision to open India to big-box retailers in return
for infrastructure investment did not come without political
fallout. It almost toppled Prime Minister Singh’s coalition government
in the fall of 2012. Protests against it brought legislative
sessions to a standstill. Singh’s coalition partner, Mamala Bannerjee,
withdrew her party’s support of Singh’s Congress Party and
joined the opposition, claiming that the big-box retailers would
throw small shopkeepers out of work, impoverish farmers, and
hurt consumers. Prime Minister Singh was forced to put the new
policy regarding multibrand retail up to a vote, which he narrowly
won only because Ms. Bannerjee’s party and a second opposition
party walked out, refusing to vote.8
BP’s joint venture, TNK-BP, despite its woes, is an example
of a successful transfer of technical know-how. In Chapter Four
we discussed BP’s unfortunate and frustrating experience trying
to manage TNK-BP. Recall that in November 1997 the Russian
government opened its oil and gas industries to foreign investment,
primarily to get cash and know-how to revive this ailing
sector. At the time the Russian oil industry, though privatized,
was producing less oil than during the Soviet era.9 In 2003 BP
combined its various ventures in Russia with those of a group of
Russian businessmen to form the joint venture TNK-BP. By 2008,
when the Russian government had changed its outlook on
foreign and private ownership of the oil sector and begun reestablishing
government control over its oil and gas industry, BP
seemed to have accomplished the Russian government’s goals:
Negotiations Between Governments and Foreign Direct Investors 191
TNK-BP production was up by 41percent.10 Job creation and economic
development via tourism are what lured Spain (where
unemployment in 2013 was about 25 percent) to the idea of
EuroVegas, the giant resort that Sheldon Adelson’s Las Vegas
Sands’ company has proposed to build on the outskirts of Madrid:
twelve hotels with thirty-six-thousand rooms, six casinos with
eighteen-thousand slot machines, and three golf courses. According
to a Boston Consulting Group report (underwritten by
Sands), the venture would create 260,000 jobs in the greater
Madrid area, 160,000 of them directly associated with the completed
project, as well as thousands of jobs for Spain’s heavily
unemployed construction industry.11 As of this writing the
EuroVegas deal was ongoing but those opposing it argued that
there was no precedent for believing that a casino complex
could revive a national economy and that the economic impacts
of casinos are not uniformly positive, giving Atlantic City in the
United States as an example.12
Identifying Governments’ Vulnerabilities and Interests
These examples may have suggested to you already that although
investor interests in FDI may be quite straightforward, government
interests seldom are. Governments contemplating FDI need
to balance the competing interests of many constituencies inside
and outside the government. At a minimum, to facilitate FDI,
governments have to engage in the complex multiparty negotiations
discussed in Chapter Five involving different layers and
divisions of government. They may also have to negotiate with
protest groups, unwelcome at the table or unwilling to come to
the table, and work through compromises.
The EuroVegas investment provides an excellent example of
how investors’ interests engage many segments of the potential
host county—all with different interests. Las Vegas Sands wants to
borrow two-thirds of the investment (some of that from the
Spanish banks and guaranteed by the Spanish government). Las
Vegas Sands seems to have asked about special income and
employment tax rates, as well as lifting restrictions on visas for
foreign workers. Las Vegas Sands also wants restrictions on indoor
smoking lifted. Thus at least two layers of government, national
192 Negotiating Globally
and local, are involved, as are many different ministries overseeing
issues ranging from banking and taxation to labor to health.13
And this is only the beginning. Large complexes such as EuroVegas
require real estate, which means displacing people who
frequently do not want to leave family land.
As we learned in Chapter Four, in all negotiations, parties’
interests make them vulnerable to threats and power plays. Governments
are no exception. Just as governments’ interests are not
necessarily the same as those of a private enterprise, neither are
governments’ vulnerabilities. Private companies are vulnerable to
the opinions of financial markets that normally value growth and
change. Governments are vulnerable to the opinions of their
political supporters: religious organizations, labor unions, and the
military—all groups that frequently prefer the status quo and
strenuously resist change.
All this should make it clear that whenever you negotiate on
behalf of FDI you need to begin with the assumption that government
interests are going to be multiple, complex, conflicting,
and supported by a variety of different constituencies within
and outside the government. In evaluating sites for FDI, you
need to analyze the parties and their interests—both those who
are going to support, but especially those who are going to
resist your investment. Here are some questions to ask when
doing this:
• Economic policy statements. What is the government saying
about FDI to its domestic constituents? What is the
government saying in world forums? Read the local press.
Who is resisting?
• Economic development plans. How controlled is the economy?
Can you frame your investment as a contribution to the
country’s economic development plan?
• Economic legislation. What laws have been passed to encourage
FDI? Are those laws enforced?
• Recent history of foreign investment. Who has and who has not
been investing? How have they been treated? What has been
the public response to recent FDI—protests, willingness to
negotiate, support?
Negotiations Between Governments and Foreign Direct Investors 193
• The press. A free press is powerful in generating economic
transparency. Is there a free press in the country? What is the
free press saying as opposed to the press that is the
mouthpiece for the government? What are the Internet sites
saying about current economic, political, and social
conditions? Are there Internet sites discussing your particular
investment? What are they saying?
• Other sources. What are global information sources such as the
World Heritage Foundation saying about the political,
economic, and social conditions of the country?
Organize your information and analysis in a Negotiation Planning
Document (see Chapter One) that identifies all these parties
across the FDI table, their issues, and their interests. Identify
which parties are going to be able to provide you with explicit
political and economic support and which ones are not. Make
sure you understand the motivation behind support and opposition.
Consider what can be done to address the interests of the
opposition.
Anticipating that government interests are going to be multifaceted
is just one predictable challenge of FDI. There are others
as well, including the nature of the legal system, the level of corruption,
the complexity of the bureaucracy, and the stability of
the government.
Predictable Challenges
to Foreign Direct Investment
Even when welcomed, foreign direct investors have to expect and
be prepared to navigate many predictable challenges: protecting
legal rights in a foreign country, especially where rule of law is
weak; corruption and their own ethical standards; complex layers
of government bureaucracy; keeping their employees safe; and
avoiding entanglement with human rights abuses. In this section
we discuss these challenges and how negotiation skills can be used
to address them. In the following section we address unpredictable
challenges posed by government and political and economic
instability.
194 Negotiating Globally
Rule of Law: Legal Interests and Risks
The rule of law refers to whether or not a government exercises
its power in accordance with well-established and clearly written
rules, regulations, and legal principles.14 Some governments have
more clearly established, systematically functioning legal systems
with laws and courts than others. The World Bank Governance
Indicators report provides good information on the strength of
nations’ reliance on rule of law.15
A major reason to be concerned about rule of law in a country
in which you are a foreign direct investor is that despite the goodwill
and good intentions generated at a negotiation table,
implementation of negotiated agreements is likely to strain relationships.
If parties are unable to resolve disputes through
negotiations, even if their contract has a dispute resolution procedure
with a provision for off-shore arbitration, they are likely to
get caught up in a local legal system that is probably innately
biased against the foreign investor. Keep in mind that sovereign
states have the power to take property, cancel contracts, and halt
business activity, and they occasionally do. For example, as we’ll
discuss in more detail later in the chapter, the Argentine government
of President Christina Fernández de Kircher expropriated
51 percent of the Spanish energy company Repsol’s stake in the
Argentine oil and gas company, YPI, in May 2012.16 If you are not
willing to cut your losses and leave, if you want to be compensated,
who will make the decision?
Example: Danone Versus Wahaha
The Danone company’s experience with its Chinese partner
Wahaha is an important example of how rule of law can affect a
joint venture (JV) relationship gone bad. Along with its Hong
Kong partner, Baifu, Danone set up a joint venture with Hangzou
Wahaha Group in 1997 to produce, distribute, and sell food and
beverage products under the Wahaha brand in China.17 Danone
and Baifu made a 500,000,000 RMB cash contribution to set up
the JV. Each owned 25.5 percent. Wahaha got a 49 percent interest
in exchange for the use of its well-known trademark and for
agreeing that it would not “use the trademark for any independent
business activity, it would not transfer the trademark to any
Negotiations Between Governments and Foreign Direct Investors 195
other entity, and it would not allow any other entity to make use
of the trademark.” In 1998 Danone bought out its partner Baifu
and became the 51 percent owner of the JV—an action that
appears to have been perfectly legal, but a surprise to Zong
Qinghou, the head of Wahaha, who was running the JV’s day-today
business but was now clearly no longer the majority
shareholder.
The original JV agreement called for Wahaha to transfer its
trademark brand name to the JV. This required the approval of
the Chinese government trademark office, but in 1999 that office
refused, deciding that the trademark belonged to the state. Rather
than dissolve the JV in lieu of this setback, the partners decided
to enter into an exclusive license agreement for the trademark
brand. This, too, needed to be registered with the Trademark
Office; however, apparently the parties did not register the full
license agreement with the Trademark Office. Instead they registered
an abbreviated license, apparently knowingly leaving out
key elements that might not have been acceptable to the Trademark
Office.
Subsequently, Mr. Zong ran a very successful joint venture,
which by 2007 held a 15 percent share of the very large Chinese
market for bottled water. The only problem was that at the same
time Mr. Zong was running the JV, he was also setting up a series
of competing companies, selling the same products as the JV and
using the Wahaha trademark. Danone, apparently enjoying its
profits and not paying too much attention to business, did not
learn of these companies until 2005, at which point Danone
offered to buy 51 percent of the competing companies from Mr.
Zong. He refused.
Dispute resolution ensued. Per the arbitration clause in the
May 2007 JV agreement, Danone filed for arbitration in Stockholm,
claiming that Zong and his parallel companies had siphoned
off as much as $100 million from the JV. Danone next filed suit
in presumably more friendly California against a company with
offices there apparently owned by Mr. Zong’s daughter, a California
resident, seeking to enjoin that company, Ever Maple, and
other companies from selling product in China under the Wahaha
name. Then on June 13, 2007, Wahaha Group applied for arbitration
before the Hangzhou Arbitration Commission, seeking to
196 Negotiating Globally
have the trademark license agreement declared void. Interestingly,
the basis for the claim in this Hangzhou arbitration was that
“the license was illegal at the time it was granted because it was
intended to avoid the requirements of Chinese law.”
The dispute became public and personal. Danone had Mr.
Zong and his family investigated and accused him and his relatives
of fraud. Mr. Zong and his executives struck back in news conferences
denouncing Danone executives by name and pointing out
that they had played no operating role in the company. Indeed,
at one point Danone executives apparently were barred from
entering the JV offices.
Finally, more than two years into the dispute, in September
2009, wiser heads prevailed and Danone and Wahaha withdrew
their arbitrations and lawsuits and dissolved their joint venture.
Though the terms of the settlement were not made public, analysts
estimated that Danone would receive at least $500 million
for its share of what had become a $2 billion Chinese company.18
How did the rule of law as it was practiced in China affect the
Danone-Wahaha joint venture? In the first place the Chinese
Trademark Office had the authority and apparently a sufficiently
flexible process for interpreting its standards that it refused to
allow the Wahaha trademark to be transferred to the joint venture.
It seems highly likely that both Wahaha and Danone entered into
the JV believing that this transfer would be easily forthcoming.
Second, thwarted, the JV partners seemed to have taken the risk
that the Trademark Office, being in the business of granting
trademarks, would not be inclined to monitor how the JV partners
used the license. Both partners for their own reasons were willing
to go ahead with the JV, while recognizing that the JV did not
legally hold the trademark.
What should Danone have done differently? Retrospect suggests
a little less trust and a lot more monitoring in this situation.
Danone must have known that the JV did not own the trademark.
Nevertheless, Danone agreed to go ahead with an exclusive
license arrangement, which they also must have known was not
legally binding. They apparently trusted their partner and did
not closely monitor their partner’s day-to-day running of the
business. One good thing about the Danone-Wahaha JV is that it
had an arbitration clause. Although the complexity of arbitrating
Negotiations Between Governments and Foreign Direct Investors 197
this dispute is mind boggling, the time, cost, and risk of arbitrating
the dispute may have had the positive effect of encouraging
settlement.
Hedging Legal Risks
Contracts that cross national boundaries should have explicit
dispute resolution clauses. Among other things, these clauses
should specify the jurisdiction to which the contract terms are
subject. English common law dominates international business,
but any legal system that has a well-specified commercial code
will do.19 The clause should state that in the event of a dispute,
the parties should endeavor to negotiate a resolution. The clause
should provide also for neutral third-party assistance, in the form
of mediation and arbitration that is outside the influence of
either of the disputing parties. When parties hope to continue
their relationship, mediation is the preferred third-party procedure,
as a mediator may be able to help the parties negotiate an
interests-based settlement. When the relationship has ended and
the claim is for damages, arbitration may be preferable because
it is binding.
Corruption
A major issue in dealing with bureaucracies is corruption. Corruption
is behavior that departs from what is legally, ethically, or
morally correct.20 The global standard for defining corruption
seems to be the U.S. Foreign Corrupt Practices Act (FCPA)
passed in 1977. This act makes it unlawful for any American to
bribe a foreign official either directly or through an agent for
the purposes of obtaining or retaining business.21 The U.S.
Department of Justice’s website provides an easy-to-read explanation
of the act.22 It clarifies the definition of “any American” as
an individual or a representative of a firm, including such a
person authorizing or assisting a third party. It defines intent and
points out that the act need not be completed; an offer or a
promise is sufficient to violate the act. It defines a foreign official
as any public official and points out that the role of the foreign
official is less important than the intent of the payment. The
business purpose test is whether the act was intended to obtain
198 Negotiating Globally
or retain business. The definition of bribery in U.S. law is specific
and its reach is broad.
• It focuses on intent to provide a “gift” to a foreign official for
the purpose of gaining or keeping business.
• The gift can be almost anything—money, expensive watches
or other jewelry, luxury trips, or children’s tuition at
prestigious universities around the world.
• The law is not limited to what American nationals do, but
extends to the actions of their local agents.
Extent of Corruption
Corruption is a growth business, according to a survey by Ernst &
Young of managers in thirty-six countries in Europe, Africa, India,
and the Middle East. The perception of corruption in the form
of “cooking the books” and bribery is widespread in Southern
Europe (Greece, Portugal, Spain); pervasive in Eastern Europe
except for the Baltic states; and rife in the Middle East and India,
with the exception of the U.A.E.23 The World Bank, however, cautions
that some developing economies have less corruption than
some wealthy countries, and that, even where corruption is high,
governments vary in how much they tolerate it. Nevertheless, the
World Bank estimates bribes paid for licenses, regulations, and
contracts from the private to the public sector at $1 trillion
annually.24
Implications of Getting Caught
U.S. companies routinely brief their negotiators not to pay bribes,
give in to extortion, or accept or offer personal gifts, and coach
them to explain to their agents, who are frequently not U.S.
nationals, that these same rules apply to them as well. The U.S.
Department of Justice is more active than ever in enforcing the
American act. Firms are fined, individuals lose their jobs and
sometimes have criminal charges brought against them. For such
reasons, company compliance departments are playing an increasingly
important role in overseeing firms’ global businesses. For
example, since the April 2012 New York Times article alleging that
a former Walmart executive in Mexico, Eduardo Castro-Wright,
used millions of dollars in bribes to facilitate the company’s rapid
Negotiations Between Governments and Foreign Direct Investors 199
expansion in Mexico,25 Walmart has trained employees and introduced
new compliance procedures for obtaining licenses, which
have slowed down its expansion in India. For example, it is requiring
its Indian landlords to attest that they have not paid bribes
for land deals and licenses.26
The costs to Walmart of the Mexico scandal have gone
beyond these new compliance measures. In a March 2013 filing
with the U.S. Securities and Exchange Commission (SEC),
Walmart explained that, between October 2012 and March 2013,
it had spent $157 million in legal costs associated with its investigation
and expected those costs to increase. “We could be
exposed to a variety of negative consequences as a result of these
matters . . . and we can provide no assurance that these matters
will not be material to our business in the future,” Walmart told
the SEC.27
In one of the most surprising recent examples of getting
caught, IBM paid $10 million to settle civil charges that to obtain
contracts worth millions of dollars to IBM, over one hundred of
its employees had handed out bags of cash to South Koreans and
arranged trips with no business purpose for Chinese government
officials. The SEC in its complaint alleged that IBM’s internal
controls weren’t sufficient to spot or prevent the alleged bribes,
in some cases recording the payments as legitimate business
expenses. IBM neither admitted nor denied the allegations, but
it paid the fine.28
Criminal charges associated with violations of the FCPA often
go hand in hand with money laundering or tax evasion charges.
For example, a former and current executive of the U.S. subsidiary
of Alstom, the French power equipment maker, have been
charged with bribery and money laundering in association with
contract negotiations in Indonesia. The former executive pleaded
guilty to conspiracy to violate the FCPA in November 2012; the
current executive was arrested on similar charges when he arrived
at Kennedy airport in April 2013.29
Global Anti-Corruption Initiatives
The United States is not alone in trying to minimize corrupt
practices in global business. Forty countries that are members of
the Organization for Economic Cooperation and Development
200 Negotiating Globally
(OECD) have signed the “Convention on Combating Bribery in
International Business Transactions.” The OECD targets the
offering side of the bribery transaction in an effort to eliminate
the supply of bribes to foreign officials. Signatories take responsibility
for the activities of companies registered in their countries
by passing, implementing, and sanctioning tough legislation
against bribery and corruption. OECD opposes the tax deductibility
of bribes and makes recommendations for combating
corruption in aid-funded procurement and ending money
laundering.30
Transparency International takes a different approach. It is an
independent, nonpartisan, nonsectarian international organization
that works with government, business, and civil society to
build coalitions to combat corruption. Of particular use to FDI is
Transparency International’s research, which includes reports
such as the Bribe Payers Index, an annual global corruption
report that provides country-by-country information, and the
organization’s interactive Corruption Perceptions Index map.31
Generating Your Own Ethical Standards
The definition of corruption does not stop with what is legally
correct; corruption can also be failure to abide by what is ethically
and morally correct. How do you know if a business activity is
ethically or morally correct? There is guidance in corporate codes
of business ethics, but ultimately you need to have your own internal
code of ethics.
Negotiators who find themselves in situations in which legal
or corporate standards do not provide a basis for ethical judgments
must determine their own ethical course. To act unethically
means to violate the legal, social, and/or personal norms of
conduct in your own culture. To act ethically you need a personal
standard that gives you guidance.
Here is some advice:
• Have a personal standard that focuses on your reputation. Would
you want your act announced on the front page of your
hometown newspaper? Would you want your proud parent or
mentor to know you did this? This “reputation” standard
rules out “game” standards such as “Everyone knows the
Negotiations Between Governments and Foreign Direct Investors 201
rules” or “No one is being forced to play, so anything goes”
or “Don’t worry, there’s no future anyway.” The reputation
standard recognizes there is always a future and that it is a
small global world. Your reputation will precede you.
• In responding to another party’s unethical act, be imaginative and
restrained. An indirect response, like those we discussed in
Chapter Four, using stories and metaphors, may help the
other understand he has violated your ethical standards
without so much loss of face that the relationship is
irreparably damaged.
• Have some ideals. Believe that an ethical basis for interaction is
a fundamental structural imperative for a democratic society
and a free economy. Act accordingly.
• Know the limits of your standard. There are situations of survival
that can test anyone’s ethical standards. Thankfully, these do
not occur very often in global business negotiations.
• Have someone you respect to talk to outside your industry. It is
important that the respected someone be outside your
industry. Organizations and even industries may slip into a
phase of unethical and illegal behavior where “everyone is
doing it, and nobody is being questioned about it.” It seems
likely given how many employees were involved that there
was a “culture of bribery” in IBM in Asia and Walmart in
Mexico.
What to Do When Confronted with Corruption
The decision whether to engage in or reject corrupt practices is
ultimately a social dilemma. If all parties engage in corrupt practices,
trust will be low, transaction costs will be high, and integrative
potential will go unrealized. If all parties refuse to engage in corrupt
practices, trust will be high, transaction costs will be low, and
integrative potential should be realized.
The interesting case is when some parties reject corrupt practices
and others engage in them. Research and theory suggest that
in large groups in which some parties are ethical and others
unethical, over time the ethical parties will choose to interact with
each other, ultimately generating an environment for which
unethical parties are unfit.32
202 Negotiating Globally
Cooperation in social dilemmas is philosophically a long-term
utilitarian response. Utilitarianism judges the morality of an act by
the consequences it produces, and those consequences are evaluated
either against a “greatest good” criterion or against a set of
principles.33 In the short term, being ethical costs. While “Just say
no” (the strategy suggested by a Mexican government official
when questioned about corruption at a Latin American business
conference at my school) may satisfy your own ethical standards,
it does nothing to change the practice of corruption and may
mean that you will lose the business opportunity. (Caving in to
extortion, of course, reinforces the practice and may cause it to
escalate.)
Still, negotiators willing to apply moral imagination can sometimes
generate strategies that may actually stymie an unscrupulous
opponent, even in the short run. Like the wicked witch of the
West in The Wizard of Oz who could not tolerate water and disappeared
in a cloud of steam when doused from Dorothy’s bucket,
corruption usually cannot sustain itself in the spotlight of publicity.
Corruption thrives in environments in which information is
controlled and withers in the light of public scrutiny. The World
Bank is trying to put the spotlight on global corruption hotspots
with its Governance Indicators report that evaluates government’s
control, or lack thereof, of corruption in 215 economies around
the world.34 In 2012 India topped the list.35
Choosing to expose corruption and holding people accountable
for actions that have inflicted harm on others is a negotiation
strategy itself. Confronted with corruption and being unwilling
to acquiesce, the global negotiator must consider the costs and
benefits of whistle-blowing. Exposing corruption takes moral
courage. It is much easier to simply cut your losses and walk away
from corruption than to face it down in situations in which government
is weak and itself deeply involved. Confronting
corruption may require a collective response. For example, there
has been an effort in Uganda since 2009 to develop a joint
response to corruption. A recent evaluation of that effort reveals
the complexity of the problem and mixed results. The biggest
joint response success seems to have been in addressing widespread
corruption in the management of GFATM, the Global
Fund for AIDS, Tuberculosis, and Malaria. Ultimately, the GFATM
Negotiations Between Governments and Foreign Direct Investors 203
Board and its inspector general along with help from development
partners, the government of Uganda, and the anti-fraud
units of the United Kingdom and the EU were able to convict
five people and recover 63 percent of the missing funds.36 Parties
who would not confront corruption on their own may be willing
to engage in joint action, both because it is more powerful and
difficult to ignore, and in a group they will be more difficult to
prosecute.
Companies that find themselves facing corruption in global
negotiations have at least the following options:
• Publicize the corruption. Corruption generally thrives in the
dark and has trouble sustaining itself in the public spotlight.
But when corruption is pervasive and public and the
government is helpless to or won’t act against it, stronger
measures than publicity are needed.
• Unite with other firms to resist the corruption. Joint action is more
effective than working alone. It is also more difficult for a
country to prosecute its major foreign investors for defying a
country’s law than to prosecute a single foreign investor
acting alone.
• Promote NGOs and other institutions that are fighting corruption in
the regions where you are investing.
• Leave or choose not to invest at all, and make public your reason
for doing so. Operating in an environment of corruption
significantly increases costs of doing business and protecting
personnel.
Bureaucracy
In many countries the politicians come and go but the bureaucracy
remains. It is the bureaucracy that implements political
initiatives, and it is the bureaucracy with which foreign investors
will have to negotiate for permits, tax rates, and infrastructure
access to power, water, sewage disposal, and other essentials.
There are two major pitfalls in dealing with bureaucracy when
negotiating globally: failure to understand the bureaucracy’s
interests and failure to understand how to work with bureaucracy’s
power.
204 Negotiating Globally
Understanding Bureaucracies’ Interests
One can usually assume that bureaucrats will resist change that
might threaten their lifestyle. One can also expect the presence
of competing factions within bureaucracies, either between ministries,
and sometimes even within or between national and local
agencies. Thus, when negotiating globally, it is wise to learn about
the bureaucracy at all levels of the government. What you are
seeking is information that will help you discover bureaucratic
interests relevant to negotiating the deal, but particularly to
implementing it. To find out about the country’s bureaucratic
structure, ask the following questions:
• Are policy decisions made or only implemented by the
bureaucracy?
• What decisions are implemented at what level of the
bureaucracy?
• How do bureaucrats get their jobs? Are they elected,
appointed, hired on merit? How well and regularly are they
paid relative to private sector employees in the country?
• What are the relationships between various agencies and
between national and local levels of the bureaucracy?
• Is there a climate of corruption and extortion?
Understanding Bureaucracies’ Power
Bureaucracies are powerful because they generate the permits,
documents, and licenses and carry out the inspections that firms
need in order to do business. The challenge is how to get them
to do this in a timely and fair manner. As a foreign investor you
are not going to change a bureaucracy. Count on the bureaucracy
to outlast the terms of elected officials and your own
international assignment. Figure out how to work with the
bureaucracy.
A thorough analysis of interests is the place to start. Then,
when you run into roadblocks, you have the same strategic options
as discussed in the chapter on dispute resolution (Chapter Four).
Alternatively, you could try to use rights to get a bureaucracy to
move at your pace rather than theirs. For example, you might ask
the ministry that facilitated your FDI to intervene and speed
things up. But keep in mind that government bureaucrats do not
Negotiations Between Governments and Foreign Direct Investors 205
like to invade each other’s turf. You could try power also, for
example, broadcasting to the international business press that a
country in which you have just made a major investment is
unfriendly to FDI, although that is likely to make everyone, including
your company, look bad.
So interests are a better approach. Either working alone if you
have the language skills or with a local partner if you do not, you
can learn about bureaucrats’ interests by asking for their help and
advice. Appeal to their expertise. See if they will introduce you to
others in their vast network of contacts who can also help you
understand and navigate through and around barriers. An
interests-based approach does three things to facilitate working
with bureaucrats: it signals your respect, it acknowledges their
expertise, and it reaffirms their power.
Remember, too, that bureaucracies are mainstay structures in
hierarchical cultures. We learned that in hierarchical cultures,
when you acknowledge the other party’s power over you, that
party is socially obliged to help you in order to affirm that the
party actually has power! Try this approach with bureaucrats.
Keeping Your Employees Safe in Global Assignments
One thing that a good relationship with the local bureaucracy
of a country can do is help you keep your employees safe while
on global assignment. Remember, political leaders come and go,
and with them their top ministers, but the bureaucrats that keep
the infrastructure going are much more stable. They can provide
interpretations of current events that no analyst monitoring news
reports over the Internet can match. And the bureaucrats’ interests
in safety and well-being of their own families and your
interests in the safety and well-being of your employees are
aligned. Build relationships with bureaucrats for this specific
reason!
The risk of violence or kidnapping of foreign workers is an
important consideration in deciding to do business in a country
or to continue to stay in a country. The World Bank Governance
report includes a section on violence that will give a foreign direct
investor a good sense of the risks to employees. When risks are
high there is no substitute for strong relationships with locals who
206 Negotiating Globally
can interpret events, and a contract with a private agency responsible
for continuously monitoring risk to employees and able to
mobilize their evacuation. It is also essential to have a single, offsite
point of contact within the company who is responsible for
monitoring safety conditions for employees working in that
country. Among this point person’s responsibilities should
be keeping in touch with on-site employees, who themselves are
keeping in touch with their local contacts, monitoring outside
reports of safety conditions, and making the call and arrangements
to pull people out if necessary. This person should be
positioned to coordinate the company’s response to events such
as kidnapping. In the event of kidnapping, this person needs to
have the support of professionals as well as direct access to the
CEO.
Some Advice About Negotiating with Hostage Takers
Police and military in many parts of the world use violence to deal
with hostage takers, but hostage or kidnap situations frequently
can be negotiated by knowledgeable professionals. Begin by identifying
such a person to try to get a conversation going. From
there, proceed as in any negotiation by understanding interests—
yours and theirs.
Kidnappers’ interests are frequently financial and sometimes
political—revolutionaries need money to sustain their revolution.
Negotiating a politically motivated hostage or kidnap
situation is substantially more difficult than negotiating the
financially motivated hostage or kidnap situation, because to
address politically motivated hostage takers’ interests requires
involving an array of governments, each with its own complex
interests. Coordinating a response is difficult enough when the
“only” parties on the team are the companies, their insurers, and
their consultants.
After identifying interests, analyze BATNAs on both sides. The
hostage takers or kidnappers’ BATNA is to kill or maim the hostages,
which they may do but only reluctantly, since their hostage
is their leverage. Remember from Chapter Four that if one party
opts for power, the other is likely to reciprocate, and that the goal
of using threats is not to have to follow through on them. On the
corporate side, a SWAT-team-type response to the kidnapping
Negotiations Between Governments and Foreign Direct Investors 207
of your employees in a foreign country is not a good BATNA. In
the first place it’s too risky; your employees might get killed.
In the second place, you may not know where your employees
are being held, and even if you do, they may be moved. An analysis
of your own and the other party’s BATNA in hostage or kidnapping
situations strongly implies that negotiations with a generous
reservation price are in order. Following is some hostage negotiation
advice:
• Make contact as quickly as possible, to get a demand, make a
counteroffer, and settle quickly. Moving quickly helps prevent
anchoring, and it keeps kidnappers’ hopes alive that money
will be forthcoming. The hostage is worth nothing to the
kidnappers dead, and is usually not a threat alive and
released, because the kidnappers are pros and cover their
faces.
• Understand the market. Initial demands for cash are typically
three to four times what the final settlements are. Overpaying
is bad because it doesn’t seem to reduce the number of
incidents, but rather raises the ante. The FBI and private
consulting firms generally are quite good at helping identify
where the market is.
• Keep understandably terrified family members off the negotiating
team. At the same time, the family needs a single point of
contact into the negotiating team, who will keep them
informed of events and strategy. Without such
communication family members may try to initiate a second
negotiation channel, use the media, or otherwise jeopardize
the negotiation strategy.
Avoiding Human Rights Abuses
One use of foreign investment is to produce goods and services
more cheaply than can be produced at home. And by outsourcing
production, jobs are created, giving developing economies a
boost. But there is a trap. Governments of developing countries
may not have sufficient labor and work safety laws to protect
workers, or they may not have the ability to enforce such laws, or
they may simply turn a blind eye to worker exploitation and safety
208 Negotiating Globally
infractions. The conditions under which low-cost goods have been
produced have caused substantial negative publicity for global
retailers in the wake of the series of tragedies in Bangladesh in
2012–2013.
What can be done? This problem, as we discussed in Chapter
Six, is a social dilemma. A manufacturer that cuts corners on
safety and exploits labor can bid more cheaply, and so is motivated
to do so. A retailer that outsources manufacturing to
factories in developing countries has no legal authority to
impose safety and labor standards. As Walmart and Gap pointed
out in the wake of the Bangladesh tragedies, they neither owned
nor managed any of the Bangladesh factories where lives were
lost. Have these retailers then no moral or ethical obligation
concerning working conditions in factories where the shoes and
clothing they sell are produced? Have they no power to enforce
change?
In the wake of the Bangladesh tragedies there are two very
interesting debates or negotiations concerning the moral and
ethical obligations of retailers such as Walmart and Gap and Carrefour
and H&M toward the workforce that produces the apparel
that they sell. One debate is about whether to continue to outsource
manufacturing to countries where worker safety and labor
standards are lax. The other question is, if we stay, what is the
extent of our moral, ethical, and financial responsibility for the
conditions under which merchandise is manufactured?
At least one major American company, Disney, has decided to
end the production of branded merchandise in Bangladesh. But
the government of Bangladesh, with 3.6 million garment workers,
desperately needs the jobs associated with filling the orders of
Western retailers.37 If all the Western retailers previously having
apparel manufactured in Bangladesh left as Disney intends to do,
the cost to the Bangladeshi economy and to people’s livelihood
would be devastating.
Other retailers in both America and Europe say they will continue
to contract manufacturing in Bangladesh, but they are
taking rather different approaches. The European plan, called
the Accord on Factory and Building Safety in Bangladesh, is supported
by H&M (the Swedish firm that is the top buyer in
Bangladesh), Carrefour (the world’s second largest retailer),
Negotiations Between Governments and Foreign Direct Investors 209
other European retailers, and a few American ones. This plan
calls for rigorous independent inspections of the Bangladesh factories
and a binding obligation on the part of the signatories to
help finance improvements for fire and building safety that are
estimated to cost on average $500,000 per factory or $1 billion
over the next several years. Many American retailers, including
Gap, Macy’s, Target, and Walmart, have refused to join the European
plan, arguing that its financial obligations could make them
legally liable in the United States for damages in the event of
another factory tragedy and that its governance and dispute resolution
mechanisms (there is an arbitration clause) impose
restrictions on supply chain management that are best left to
retailers and their suppliers. Activists have protested in front of
the American retailers’ corporate headquarters and stores, and
postings have poured onto Facebook urging them to join the
European plan.38 Rather than joining the European plan, the
American retailers have announced their own, called the Alliance
for Bangladesh Worker Safety. It commits $42 million for inspections
and $100 million for loans and financing to help factory
owners address safety problems. Unlike the European Accord,
retailers joining the American Alliance are not legally committed
to finance safety upgrades in Bangladesh factories.39
There are both ethical and economic issues to consider when
deciding to operate in a country where rights violations (at least
from a Western perspective) are rampant. The ethical issue is
the morality of contributing to the economy and thereby supporting
a government that does not protect human rights.40 The
economic problems need not only occur in the country where
the violations occur, they may occur at home, where rightsmonitoring
interest groups organize public opinion using the
press, shareholders’ meetings, social media, and publicized visits
to individual members of the corporate board and the executive
committee.
The Walmarts and Carrefours of retailing are big enough to
do much on their own to improve working conditions in individual
factories and in countries where dangerous working
conditions are widespread and government seems incapable of
fostering change. But seeing the situation in Bangladesh as a
social dilemma, we can also see that the retail sector working
210 Negotiating Globally
together has the potential to cooperate and coordinate a solution
that addresses problems not only in Bangladesh but in other
developing countries as well.
Unpredictable Challenges
Political and economic instability are two unpredictable challenges
to foreign direct investment. Once again the World Bank’s
Governance Indicators report provides insight into nations’ political
and economic stability. A major concern of foreign direct
investors, particularly those that do business directly with the
government, is expropriation. Other unpredictable challenges
include currency fluctuations and ripple effects from regional or
global political and economic forces beyond the control of governments
and the foreign direct investors.
Expropriation
Expropriation refers to any changes in the FDI agreement on the
part of the government that were not part of the original agreement.
Expropriation usually is in the form of additional taxes or
nationalization of assets. A recent example of nationalization is
the May 2012 expropriation by the Argentine government of
President Christina Fernández de Kirchner of the Spanish energy
company Repsol’s 51 percent stake in the Argentine oil and gas
company, YPI.41 The events leading up to this expropriation are
interesting and provide some insight into the factors that may, but
probably should not, motivate a government to expropriate rather
than renegotiate.
Repsol bought a 75 percent stake in YPI in 1999 during the
Argentine financial crisis. (Argentina defaulted on its debt in
2001.) To try to boost economic activity in Argentina, then President
Néstor Kirchner froze prices for oil and gas. As the economy
recovered, consumer energy prices remained fixed, with the effect
of encouraging consumption, discouraging investment and
development of new resources, and ultimately the need to start
importing oil and gas at world market prices. By 2011 the government’s
bill for importing oil and gas was $9.4 billion—equal
to about 20 percent of the Central Bank’s foreign-exchange
Negotiations Between Governments and Foreign Direct Investors 211
reserves.42 And then there was one more development: oil shale
technology and a newly identified shale basin in Argentina.
Clearly, there were significant pressures on the Argentine government
to act.
What is interesting is why the government expropriated Repsol’s
share rather than opening negotiations with Repsol to
restructure pricing in the industry. One consideration may have
been whether Repsol commanded the technological know-how
to develop Argentina’s oil shale reserves. The government subsequently
signed a $1.5 billion exploration agreement for that
with Chevron in May 2013.43 Still, Argentina might have negotiated
with Repsol to bring in Chevron or another partner to
explore shale production; to raise the price of oil and gas to
consumers, as it ultimately did; and to avoid the fallout of
expropriation.
The fallout of expropriation is significant and is a major
reason why it actually doesn’t occur very often. Sovereign states
do have the right to seize capital and resources, and the foreign
direct investor’s only recourse is through the state’s own court
system. It has no recourse via the World Trade Organization
because investment interests are not covered by that pact. The
World Bank does have an International Center for Settlement of
Investment Disputes, but it lacks clout to enforce its arbitrators’
decisions. For example, when Venezuela lost an arbitration in a
dispute with ExxonMobil, it simply announced it would no longer
participate in the World Bank’s arbitration system.44
Expropriation in the form of nationalization as in the Repsol
example is extremely rare for several reasons.45 Nationalization
sends shock waves through the FDI community already doing
business in the country and strongly discourages other investors
who were considering investing. Also, nationalization does not
seem to have the desired effect of increasing production: just the
opposite, probably because of the loss of skilled workers. In one
study in mining, expropriation in the form of nationalization or
taxes decreased production by six percent.46 How well did things
turn out for Argentina? In the third quarter of 2012, after the
Repsol expropriation, production of oil was flat; gas was off by 2
percent and profits down a third.47 Argentina may have wanted
oil sand technology that Repsol may not have had, but they
212 Negotiating Globally
needed management and know-how to run their current oil and
gas industry.
Currency Fluctuations and Economic Instability
When a country becomes economically unstable its currency may
collapse, leading to rampant inflation, as was the case in Thailand
in the Asian financial crisis of 1997.
How to hedge against currency fluctuations depends on
whether the country’s money is movable or immovable. Movable
money is currency that is easily converted (dollars, yen, euros).
Immovable money is currency that is not easily converted. It’s
the money of governments that “regulate the entry to, possession
in, and exit from their territories of both foreign and local
currencies.”48
There are several ways to protect against currency fluctuations.
One is to limit the length of contracts. Another is to include
contingent contracts in agreements, such as discussed in Chapter
Three. A contingent agreement might foresee inflation and
call for parties to return to the table and renegotiate the agreement
if there is a predefined level of change in currency valuation.
A third approach is to hedge in the futures markets, which
essentially shifts the risk to a third party.49 Whatever approach
negotiators choose, they need to prevent themselves from being
locked into prices that make no sense for either party after currency
changes in value.
What can happen without such renegotiation provisions?
Fresh examples are scarce because of low inflation that resulted
from the recent global financial crisis. For a good example, we
reach back to the 1990s Asian financial crisis. Consider the fate
of a Thai company producing athletic shoes for a U.S. company.
Negotiated in 1996, the agreement provided that the Thai
company be paid at a rate that at the time provided it with profits
over its costs. But the rate was set in Thai baht. This seemed reasonable
for both companies when the contract was signed.
However, when the baht lost its value in the summer of 1997, the
U.S. company began making extraordinary excess profits. It
was able to buy many more baht for the same amount of dollars.
This made the shoes cost the U.S. company less, but it was still
Negotiations Between Governments and Foreign Direct Investors 213
selling the shoes for the same price in dollars as before the baht
decreased in value. Because of inflation that accompanied the
drop in the baht, the Thai company was no longer making money
on the shoe contract. The buyer and supplier needed to reopen
negotiations.
Why would negotiators, especially ones from countries whose
currencies are stable, enter into contracts that have renegotiation
clauses that essentially rule out excess profits due to currency
fluctuations? The question itself is cultural. Negotiators from hierarchical
cultures might not even consider it a question. They are
likely to presume that risk must be shared and accept that unforeseen
circumstances are legitimate reasons for reopening
negotiations. When cultures value relationships and are based on
status hierarchies, negotiators are more likely to think that windfall
profits due to currency fluctuations are to be made in the
currency markets, not at the cost of the viability of your business
partner. High-status parties will naturally take care of their weaker
partners. It is the negotiator from the egalitarian culture (such as
the United States), in which all parties look out for their own
interests, who may find it difficult to contemplate a renegotiation
clause.
Ripple Effects
Even when well-managed, governments and economies are not
immune to regional political shocks. Consider the cascade of
political change associated with the Arab Spring, or the global
financial shocks, such as the U.S. banking crisis in 2007–2008 that
led to a global recession and contributed to the European
sovereign-debt crisis, or the 1997 Asian financial crisis kicked off
by overwhelming foreign debt. In crisis situations there are two
priorities. Keeping your people—both expat and domestic—safe,
and protecting your assets.
Negotiating Globally with Government
Government plays an important role in global negotiations. When
government is not directly at the table as a party to the negotiations,
it is still a major part of the political, social, and legal
214 Negotiating Globally
environment that affects global negotiations. Understanding
this environment may make the difference between an agreement
and an impasse. It may allow a deal that is profitable for the
private company and that meets the government’s social and
political standards. It may make the difference between a dispute
that can be resolved in private, where a relationship can be preserved,
and a dispute that is argued in a public forum, where
relationships are irrevocably broken. Such understanding does
not come without effort and investment. It requires study and
planning; it requires time, patience, and creativity; it requires
weighing the advice of legal and cultural experts; and sometimes
it requires moral courage to confront corruption and human
rights abuses.
When parties negotiate, culture matters. Yet as global business
and technology make our world smaller and smaller,
some argue that we are moving rapidly toward one culture, especially
in the context of business. Isn’t it just a matter of time until
the culture of negotiation is the dignity model of information
sharing in deal making and direct confrontation in dispute resolution
negotiations, in which negotiators are motivated by
self-interests and BATNAs underlie reservation prices? The
answer is probably no. In this final chapter we first discuss why
negotiators cannot expect a standardized global negotiation
culture and then reprise some of the advice throughout the
book for adjusting strategy without compromising outcomes or
integrity when negotiating globally.
Why Not to Expect a Global Negotiation Culture
Based on the Dignity Model
A standardized global negotiation culture is unlikely. Cultural
differences in negotiation strategy are not trivial. Cultural institutions
of family, church, and state monitor, sanction, and reward
normative behavior. And people carry their culture with them.
Although people may change countries and cultures, either
215
8
Will the World Adjust,
or Must You?
216 Negotiating Globally
temporarily or permanently, and ultimately they may become
quite adept at switching cultural hats, being comfortable and
effective in navigating the norms of a new culture does not mean
that people completely abandon all behaviors and mindsets of
their original cultures. People do adjust toward the negotiation
norms of a new culture. We saw that at the end of Chapter Three
in the review of the intercultural negotiation studies, when face
culture negotiators adjusted to negotiating in dignity culture
and dignity culture negotiators adjusted to negotiating in honor
culture.1 But would you predict that they would continue to
use those negotiation strategies upon returning home? Of
course not!
In a variety of contexts, we have seen differences in how
dignity, face, and honor culture negotiators strategize. In deal
making, we saw major differences in use of the Q&A strategy
versus the S&O strategy associated with cultural differences of
interpersonal versus institutional trust, and between cultures
of holistic versus analytic mindsets. In dispute resolution, we
described major differences in reliance on interests, rights, and
power that were associated with cultural factors such as status
hierarchies and direct versus indirect confrontation. We saw
similar cultural differences in reliance on interest, rights, and
power when we considered when and why people cooperate in
social dilemmas. Direct versus indirect confrontation and status
hierarchies were also powerful cultural factors influencing behavior
in multiparty decision making.
Overall, we have learned that just as different cultures develop
different greeting behaviors, so do they also develop different
negotiation strategies. People’s use of negotiation strategy is generally
similar to that of others within their culture and therefore
functional, but differs between cultures. What this means is there
is more than one effective way to negotiate.
In any social interaction, functionally successful strategic
behavior is likely to replicate and reinforce itself. This becomes
one source of the stability and continuance of separate cultural
patterns of negotiation. Another stabilizing and perpetuating
factor is the degree of cultural tightness or looseness. In Chapter
Two we discussed how, in tight cultures, institutions such as family,
government, and religion reflect cultural values; reward everyday
Will the World Adjust, or Must You? 217
behavior that is consistent with their norms; and monitor, sanction,
and thereby constrain everyday behavior that is inconsistent
with those norms.
The tightness-looseness dimension reveals two reasons why
we should not expect a single global negotiation culture. First,
as we know, cultural tightness reduces behavioral variation within
a culture. But second, cultural tightness may also affect people’s
flexibility and their speed of adjustment when changing cultures.
This is because institutional monitoring in tight cultures makes
situations strong. Strong situations limit the range of people’s
behavior and leave little room for individual discretion.2 In contrast,
a “weak situation” challenges people to figure out the limits
on appropriate behavior, and the culture allows them to do so by
testing those limits. From this flows a pair of insights: one is that
a lifetime or even a childhood of behavioral restraint from living
in a tight culture may cause people to be cautious about testing
limits; the other is that people in tight cultures may be less skilled
at behavioral flexibility and testing normative limits simply due to
lack of practice. This is not to say that people from tight cultures
cannot adjust and learn to test limits in a loose culture or, for that
matter, that people from loose cultures cannot learn to constrain
their more freewheeling behavior to the norms of a tight culture,
just that either adjustment may take time and certainly will take
effort. We’ve reviewed several studies indicating that the dimensions
of cultural intelligence (CQ), particularly motivation and
cultural metacognition, may facilitate this effort in the context of
negotiations.3
In social interaction strategic behavior that is functional is
likely to replicate and reinforce itself. In addition to functionality,
cultural tightness-looseness contributes to the stability of cultural
differences in strategic behavior. In Chapter Two we discussed
how in tight cultures the norms of institutions such as family,
government, and religion reflect cultural values, but also reward
everyday behavior that is consistent with norms and sanction
behavior that is inconsistent with those norms.
There are two implications of these conclusions about tight
and loose cultures and adjustment of negotiation strategy. First,
negotiators from loose dignity cultures should have experience
with a wider range of negotiation strategy than people from tight
218 Negotiating Globally
face and honor cultures. Second, experience experimenting with
adjusting behavior to the situation should make negotiators from
loose dignity cultures more adept at flexible strategic approaches
than negotiators from tighter face and honor cultures. Thus it
may be easier in the short term for negotiators from dignity cultures
to adjust their strategy at the negotiation table than it is for
people from tighter face or honor cultures. This suggests that
the initial tendency in an intercultural negotiation would be
for the dignity culture negotiator to move away from direct confrontation,
Q&A, and interest-based dispute resolution to indirect
confrontation, S&O, and a more subtle power-based dispute resolution
with the involvement of third parties.
For all these reasons a global negotiation culture based on the
dignity model seems unlikely. And although strategic change may
be easier for the dignity culture negotiator than for those from
face or honor cultures, they all must confront the same challenge:
make the necessary strategic adjustments without compromising
interests or integrity.
Toward Becoming a More Effective
Global Negotiator
At the heart of becoming a more effective global negotiator is the
challenge of accommodation versus self-compromise. To be effective
in a global environment, negotiators need to develop a facility
with different negotiation strategies so that they can adjust to
accommodate the strategy used by counterparts globally without
compromising their own interests or integrity. Global negotiators
will be able to accommodate to the extent that they understand
culture and negotiation strategy as it applies in different negotiation
contexts such as deal making, dispute resolution, multiparty
decision making, and social dilemmas and in different parts of
the world, whether in dignity, face, or honor cultures. They need
to understand and be able to use creative approaches (including
the ones we’ve discussed in this book) for handling challenges to
cooperation in different negotiation contexts and especially when
interacting with government officials. They need to continuously
cultivate tolerance and respect for the positions, interests, and
priorities that people from different cultures bring to the
Will the World Adjust, or Must You? 219
negotiating table. They need to know when not to accommodate
but rather to maintain their personal and their organization or
government’s integrity and protect their people. And they need
to have an ethical standard that meets personal, corporate, and
legal criteria and will carry them through situations of corruption,
bribery, and extortion.
Effective global negotiators accommodate to a degree. They
are willing to adjust their strategy to the cultural situation that
they find themselves in, so long as they do not compromise their
interests or their integrity. To avoid such compromises requires
first having a very clear idea of one’s own interests and ethics.
Second, it requires learning about the counterpart’s interests
and respecting them, even as they differ and clash with one’s
own interests. As a negotiation progresses, effective global negotiators
never lose sight of interests and BATNA as criteria for
evaluating agreements. At the same time, they do not lose sight
of their own ethics, the ethical standards of the organization or
government they represent, and what ethical compromises are
being sought by the counterpart. They understand that an ethical
basis for global business practice is a social dilemma. When
people treat each other ethically, cooperation ensues and all
profit from lower transaction cost and higher joint outcomes.
When people treat each other unethically, some agreements that
are possible do not get made. Agreements that do get made
come with costs: costs of monitoring counterparts’ compliance
with the agreement, and costs of forgone joint gains that were
undiscovered during low-trust negotiations. Negotiators know
the long-range benefits of managing social dilemmas for cooperation
by using interests, rights, and power. They know what can
be done in the short term to combat corruption, ranging from
just saying no to explaining limitations to shining a spotlight to
engaging in joint action.
Deals, Accommodation, and Safeguards for Dignity
Negotiators
The effective global deal maker knows why, when, and how to use
Q&A and S&O deal-making strategies. What might accommodation
entail in deal making, especially on the part of the possibly
220 Negotiating Globally
more flexible, and potentially more vulnerable, dignity culture
negotiator interacting with a face or honor culture negotiator?4
• Spending more time developing trust and reputation prior to
the negotiation than one might do in dignity culture.
• Using all the techniques suggested in Chapter Three to test
for trust, develop trust, and negotiate effectively in the
absence of trust.
Negotiating deals effectively in the absence of trust means
using offers much earlier in the negotiation than is normative in
a dignity culture. At the same time, when doing so, the dignity
culture negotiator needs to avoid three traps: being anchored by
a counterpart’s offers, being lured into a reciprocal display of
negative emotion, and giving up on negotiating joint gains. Some
safeguards are in order:
• To protect from being anchored, make opening offers that
exaggerate self-interests and focus on goals; write down
opening offers; do not be afraid of what would seem in your
own culture to be a huge gap to close between opening
offers.
• To avoid being lured into a reciprocal display of negative
emotion, initially ignore it; ask interest-based questions about
substantiated offers; counter with multi-issue offers and
explain why they are good for the counterpart, what they will
allow you to do; ask for a multi-issue offer in return and for it
to be explained. Chart those offers!
• To avoid losing sight of the potential for joint gains when
engaged in S&O strategy, use and update your planning
document; be vigilant about searching for differences in
interests, in risk, and in short- versus long-term time
perspectives.
• Chart offers and write down what offers get substantiated, ask
why and why not questions, look for trade-offs in the
counterpart’s concession patterns; jump in to make counter
multi-issue offers, possibly use MESO, and consider the risks
to you of proposing a contingent contract.
Will the World Adjust, or Must You? 221
Resolving Disputes in Direct- and Indirect-
Confrontation Cultures
The effective global dispute resolver understands the differences
between deal making and dispute resolution and does not treat
BATNAs, costs, or emotions in the same way in the two contexts.
The effective global negotiator understands that direct confrontation
is expedient for limiting the escalation of costs of disputing,
both financial and motivational. He knows, when confronted,
how to use interests, rights, and power to address conflict and
disputes.
The global negotiator realizes that different cultures emphasize
different strategies when resolving disputes. Disputants in
some cultures emphasize interests, in others power. The type of
rights, for example emphasis on equity, equality, or need, that are
put forth to justify claims will vary with culture, as will how early
in the process third parties get involved and with what authority.
All this the expert negotiator should be able to handle in directconfrontation
cultures.
The bigger challenge, particularly for the dignity or honor
culture negotiator, would seem to be recognizing and responding
without offending indirect-confrontation initiatives made by
honor or face culture disputants. Recall that in indirect confrontation
the claimant neither makes the claim explicitly nor explicitly
states what an acceptable response would be, but signals the issue
and respects the counterpart to act appropriately. Aside from the
fact that negotiators from direct-confrontation cultures may have
little experience reading indirect-confrontation signals, the signals
of indirect confrontation vary so much from one culture to
another that even a dispute resolver skilled at reading the signals
of indirect confrontation in his own culture may fail to correctly
interpret signals in another culture. This is one of those times
when the effective global negotiator cannot rely on her knowledge.
Part of being an expert is knowing the limits of your
expertise. Most cultural outsiders need help interpreting and
responding appropriately to indirect confrontation, and a teammate
with local knowledge; an uninvolved local acquaintance, for
example an alum of your school; or a legitimate third party in
222 Negotiating Globally
that culture should be able to explain what you are experiencing
across the negotiation table, and may be able to intervene for you
by acting as a shuttle diplomat.
Using Negotiation Strategy to Make Team and
Multiparty Decisions
The effective multiparty negotiator understands that the two fundamental
elements of multiparty (team) decision making are the
same as in two-party deal making or dispute resolution: the strategy
(what process we are going to use to make the decision) and
the outcome (what the decision is going to be). The complexity
comes with the additional parties. Rather than one strategy, in
multiparty, multiculture decision making, there could be as many
different strategies as there are parties.
Recall the strategic distinction between accommodating to a
subgroup dominant process versus a hybrid or fusion process. The
subgroup dominant process may lead to an expedient decision,
but is less likely than hybrid or fusion processes to lead to a creative
decision that integrates members’ interests and thereby is
relatively easy to facilitate. Both hybrid and fusion processes
respect members’ differing approaches to teamwork.
The hybrid process is time consuming and carries some risks.
It requires that the team come up with its own unique approach
to teamwork, which may be a hybrid of the approaches that team
members were originally comfortable with. Because this approach
may take time to develop, it may be reserved for teams that will
be working together full time for a long period. The risk with
hybrid teamwork is that in the process of developing it, social
identity shifts to the team. This may be a good thing, because it
should facilitate cohesiveness and productivity. It may be bad if it
isolates the team or erects strong in-group versus out-group
boundaries for a team that needs to process information across
those boundaries.
Fusion teamwork is no panacea, either. Resting on its principles
of coexistence and meaningful participation, it does not
require team members to accommodate a single integrated
process as do both subgroup-dominant and hybrid teamwork.
Fusion allows differences to coexist, sometimes simultaneously
Will the World Adjust, or Must You? 223
(subgroups approach the task using different processes) and
sometimes dynamically and sequentially (the teamwork process
shifts as the group works on the task). When it works, fusion
requires a lot of tolerance on the part of team members, but
it can produce creative outcomes.5 The risk with fusion teamwork
is procedural chaos, or as Janssens and Brett put it, the
fusion dish in which differences fail to come together “tastes
like mud.”6
The most direct application of negotiation strategy to team
decision making, or preparation for team-on-team negotiation, is
to extend the Negotiaton Planning Document by adding columns
for every team member and rows for all their issues; this practice
can generate both the common and the unique information that
the team members have that is relevant to the decision. There are
barriers of culture, time, distance, and psychology (such as trust)
to sharing information in teams. But working through a common
planning document should help to overcome some of these barriers.
Although team members might not be willing to share their
targets on issues, they may be willing to share their minimums,
and their interests underlying those minimums. If those minimums
have been stated honestly, they provide the basis for a first
agreement from which the team can then try to improve by engaging
in second agreement negotiations in which they seek more
creative trade-offs, or set up monitoring to minimize costs to those
whose interests are not well met by the first agreement. The
team’s goal should be to reach high-quality decisions that creatively
meet the interests of members, minimize interpersonal
conflict, and, importantly, address the interests of the organizations
in which the teams are embedded. The team is more likely
to reach those goals if it understands its BATNA and the pros and
cons of alternative decision rules, and especially if it engages in
second agreements.
Generating Cooperation in Social Dilemmas
The biggest challenge of social dilemmas is fostering cooperation
when self-interest continuously lobbies for competition. Yet we
know that cooperation is possible, albeit sometimes not involving
all parties. Although we are threatening our planet by our
224 Negotiating Globally
population size and excesses, many parts of our global society are
working together in small local ways to preserve it. What we
learned in Chapter Six is that managing social dilemmas involves
the same negotiation strategies of interests, rights, and power that
we used in Chapter Four to manage disputes. And, just as we
learned in Chapter Four to navigate among rights, power, and
interests when negotiating the resolution of disputes, it may be
necessary to try multiple strategies either simultaneously or
sequentially to generate cooperation in social dilemmas.
People all over the world live communally, so they actually
have very strong interest-based skills for managing the social
dilemmas of everyday life. Where people lack skills is in bridging
the gaps between a series of local solutions. For example, some
local solutions to recycling require that the consumer carefully
sort recyclable discards into categories; other solutions just require
sorting garbage from recyclable trash. When people change communities
they need to learn and abide by the new rules. When
communities change recycling companies they, too, have to
change to new rules. I love the story told me by one executive
who has been an expatriate in Japan and intentionally rented a
house in a Japanese, not an expat, community. He found that the
recycle rules were pretty complex, and his family tried to follow
them. They learned that they were not quite achieving neighborhood
standards when he observed neighbors re-sorting the
family’s recyclables prior to pickup. He said he watched what they
were doing, tried to model it, and after a few weeks the neighbors
were still checking, but not re-sorting. He figured he had learned
and was trusted to continue to do it right when even the checking
tailed off. Bridging those gaps between different local practices
often requires learning and accommodation. This is what helpful
neighbors at the local level, and governments and international
agencies at a higher level, are for, and why they need the dispute
resolution skills of Chapter Four and the multiparty negotiation
skills of Chapter Five.
Avoiding the Pitfalls of Foreign Direct Investment
Foreign direct investment, too, can be viewed as a social dilemma—
the investor’s self-interest to generate profits, tempered by the
Will the World Adjust, or Must You? 225
collective interests of what a host country will allow, or given the
power differential between the investor and the developing
country, tempered by the investor’s own ethical and moral standards,
those of the other countries in which it does business, and
those of its customers and clients.
We saw this struggle of differential interests most graphically
in the aftermath in 2012–2013 of the tragedies in the Bangladesh
garment factories. American consumers picketing outside of Gap
headquarters and stores tried to shame Gap and other large
American retailers into doing more than just committing to
inspections, providing a pool of low-interest loans for improvements,
and threatening to remove orders from Bangladesh if
improvements were not made. They wanted Gap and the others
to join the EU consortium, which was willing to make direct
investments to improve safety and was not threatening to withdraw
business. Notably, such public shaming was not sufficiently
powerful to get many American retailers to join their European
counterparts, perhaps because it was not accompanied by a strong
enough economic boycott of the retailers’ stores.7
Chapter Seven is full of advice for the foreign direct investor,
from how to identify host governments’ interests and work with
their complex, entrenched, and sometimes corrupt bureaucracies
to how to protect legal rights when the rule of law is weak and
protect employees when the political environment is unstable.
Perhaps the most important takeaway of Chapter Seven is vigilance.
Setting up an FDI is complex, often requiring vigilance to
limit accommodations that overly compromise the investor’s
interests and integrity in order to get the investment approved.
Running an FDI also requires careful vigilance and careful attention
to what is changing, not just in the economic but also the
local and regional political and social environments, and thereby
threatening to compromise safety, interests, and integrity.
Why Me?
One of the questions that managers often ask is, “Why me? Why
do I have to do all the adjusting? Why do I have to tolerate coexistence?
Why do I have to pay seemingly unrelated ‘social fees’
for the privilege of being a foreign direct investor?”8 There are
226 Negotiating Globally
two answers to this question. The first is that it isn’t just them.
Cultural accommodation is not just one-sided. Host countries
make many accommodations to adapt to the needs of the investor:
case in point, Madrid’s accommodations to attract the Las
Vegas Sands company.9 The second is that the party that wants the
deal, that wants the dispute resolved, that needs to bring together
multiple parties in the context of a team or a social dilemma to
move ahead is in a better position to be flexible on the process
than the party that has neither these motivations nor the skill set
to do so.
In the end, having the skill set makes the difference. If you
know how and why people in different cultures use negotiation
strategy differently, you are well positioned to accommodate their
strategy without compromising interests or integrity. Creating
agreements that integrate parties’ interests brings stability to
foreign direct investments because such agreements generate
more value to share among the parties.
Excellent Global Negotiators
Excellent global negotiators know that to make deals, resolve
disputes, and reach decisions across cultural boundaries, they
must exercise strategic flexibility and engage in cultural accommodation.
Although culture will very likely affect negotiators’
interests and priorities, negotiators need do nothing out of the
ordinary to integrate those interests once they understand them.
It is the process of understanding negotiators’ interests that is
likely to require strategic flexibility when negotiating across cultures.
So long as strategy stays within ethical boundaries, excellent
global negotiators are less concerned about the negotiation
process than that their interests ultimately are met.
Acknowledgments
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Psychology, 2011, 96(4), 774–789.
3. M. Kern, S. Lee, Z. Aytug, and J. Brett, “Bridging Social Distance in
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International Journal of Conflict Management, 2012, 23(2), 173–191.
4. W. Adair and J. Brett. “The Negotiation Dance: Time, Culture, and
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5. R. Swaab and J. Brett, Caucus with Care: The Impact of Pre-Mediation
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Center Northwestern University working paper 446.
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227
Notes
228 Notes
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Chapter One
1. Interview as part of the Multicultural Teams project, K. Behfar, M.
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Teams,” Harvard Business Review, 2006, 84(11), 84–91 (AN 22671287);
K. Behfar, M. Kern, and J. M. Brett, “Managing Challenges in Multicultural
Teams,” in E. Mannix and Y. Chen (eds.), Research on
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2. G. Hardin, “The Tragedy of the Commons,” Science, 1968, 162,
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3. Thucydides, History of the Peloponnesian War, R. Crowley (tr.) (London:
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5. Darren Wee, interview with author, October, 26, 2005.
6. J. Brett, L. Pilcher, and L.-C. Sell, A New Approach to China: Google
and Censorship in the Chinese Market, Kellogg School of Management,
Case 5-211-255, 2011.
7. R. Fisher, W. Ury, and B. Patton, Getting to Yes: Negotiating Agreement
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8. Although BATNA is a major source of power in negotiation, it is
not the only source. As we shall discuss in the next chapter, on
culture and negotiation, status, or standing in the social hierarchy,
also confers power to parties in some cultures because of social
deference.
9. But there are situations, which we discuss in the dispute resolution
and multiparty decision-making chapters (Four, Five, and Six), in
which parties are not free to turn to their best alternative. In these
situations when parties are not free to just walk away from the
negotiation, their BATNA is out of their control! It is what
the counterpart does next! BATNAs in these situations are
interdependent—each party has to consider his or her BATNA as
being the worst thing the other party can do in the case of impasse.
Once my students understood this, they came up with a new
acronym for BATNA in such situations: WATNA—Worst Alternative
To a Negotiated Agreement.
Notes 229
10. As we will see in Chapter Three, when talking about using precedents
or standards as influence, “objective” is rather a misnomer.
Negotiators subjectively choose standards that support their
arguments.
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4. Geography probably came first, but it’s rather a chicken-and-egg
problem of whether political, economic, and social solutions preceded
or succeeded the challenge of demography.
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230 Notes
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Notes 231
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232 Notes
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39. Leung and Cohen, “Within- and Between-Culture Variation.”
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of Conflicts,” International Journal of Conflict Management, 2003, 14(2),
75–94; P. Bourdieu, Outline of a Theory of Practice, (Cambridge, U.K.:
Cambridge University Press, 1977); Cohen, Nisbett, Bowdle, and
Schwarz, “Insult, Aggression, and the Southern Culture of Honor”;
H. Ijzerman, W. W. van Dijk, and M. Gallucci, “A Bumpy Train Ride:
Notes 233
A Field Experiment on Insult, Honor, and Emotional Reactions,”
Emotion, 2007, 7(4), 869–875; P. M. Rodriguez Mosquera, A.S.R.
Manstead, and A. H. Fischer, “Honor in the Mediterranean and
Northern Europe,” Journal of Cross-Cultural Psychology, 2002, 33(1),
16–36; P. M. Rodriguez Mosquera, A.S.R. Manstead, and A. H.
Fischer, “The Role of Honour Concerns in Emotional Reactions to
Offences,” Cognition & Emotion, 2002, 16(1), 143–163.
42. Miller, “The Norm of Self-Interest.”
43. R. E. Nisbett, and D. Cohen, Culture of Honor: The Psychology of Violence
in the South (Boulder, Colo.: Westview Press, 1996); Pitt-Rivers,
“Honor”; P. M. Rodriguez Mosquera, A. H. Fischer, A.S.R.
Manstead, and R. Zaalberg, “Attack, Disapproval, or Withdrawal?
The Role of Honour in Anger and Shame Responses to Being
Insulted,” Cognition & Emotion, 2008, 22(8), 1471–1498; H. C. Triandis,
“The Self and Social Behavior in Differing Cultural
Contexts,” Psychological Review, 1989, 96(3), 506–520; F. Harinck, S.
Shafa, N. Ellemers, and B. Beersma, “The Good News About
Honor Culture: The Preference for Cooperative Conflict Management
in the Absence of Insults,” Negotiation and Conflict Management
Research, forthcoming.
44. Interview as part of the Multicultural Teams project, K. Behfar, M.
Kern, J. M. Brett, 2005. For more information about this project, see
Brett, Behfar, and Kern, “Managing Multicultural Teams”: K. Behfar,
M. Kern, and J. M. Brett, “Managing Challenges in Multicultural
Teams,” in E. Mannix and Y. Chen (eds.), Research on Managing
Groups and Teams pp. 233–262 (Oxford: Elsevier Science Press,
2006).
45. “Gas Natural and E.On Bids: The Chronology of the Battle for
Endesa,” El Mundo, http://www.elmundo.es/mundodinero/2006
/02/03/economia/1138964384.html. Kellogg students Josep Casas
Perez, Theophilus Engela, and Sameer Tyagi provided research on
the Endesa acquisition.
46. M. Bustillo, “Wal-Mart Bids $4.6 Billion for South Africa’s Massmart,”
Wall Street Journal, September 28, 2010, http://online.wsj.com
/article/SB10001424052748704654004575517300108186976.html.
47. “It’s Time for Africa: Ernst & Young’s 2011 Africa Attractiveness
Survey,” Ernst & Young, 2011, http://www.ey.com/Publication
/vwLUAssets/2011_-_Africa_Attractiveness_Survey/$FILE/Attrac
tiveness_africa_low_resolution_final_WEB.pdf.
48. A. Crotty, “Massmart’s Supplier Fund Should Double,” Business
Report, October 10, 2012, http://www.iol.co.za/business/companies/
massmart-s-supplier-fund-should-double-1.1399706#.UKJ6pZEbiVo.
234 Notes
49. R. J. Hottovy, “Wal-Mart Looks Abroad for Growth,” Seeking Alpha,
January 25, 2011, http://seekingalpha.com/article/248326-wal
-mart-looks-abroad-for-growth.
50. “Walmart Fight Has Cost Govt,” All Africa, April 10, 2012, http://
allafrica.com/stories/201204101112.html. Kellogg students Sean
Moran and Tiffany Yeh provided research on Walmart in South
Africa.
Chapter Three
1. L. R. Weingart, L. L. Thompson, M. H. Bazerman, and J. S. Carroll,
“Tactical Behavior and Negotiation Outcomes,” International Journal
of Conflict Management, 1990, 1, 7–31.
2. B. Gunia, J. Brett, A. Nandkeolyar, and D. Kamdar, “Paying a Price:
Culture, Trust, and Negotiation Consequences,” Journal of Applied
Psychology, 2011, 96(4), 774–789.
3. D. G. Pruitt and P.J.G. Carnevale, “The Development of Integrative
Agreements in Social Conflict,” in V. J. Derlega and J. Grzelak (eds.),
Living with Other People: Theories and Research on Cooperation and
Helping Behavior, pp. 152–181 (New York: Academic Press, 1980); D.
G. Pruitt and S. A. Lewis, “The Psychology of Integrative Bargaining,”
in D. Druckman (ed.), Negotiations, Social Psychological Perspectives,
pp. 161–192 (Beverly Hills, Calif.: Sage-Halsted, 1977); R. E. Walton
and R. B. McKersie, A Behavioral Theory of Labor Negotiations: An
Analysis of a Social Interaction System (New York: McGraw-Hill, 1965);
Weingart, Thompson, Bazerman, and Carroll, “Tactical Behavior”;
L. R. Weingart, J. M. Brett, M. Olekalns, and P. L. Smith, “Conflicting
Social Motives in Negotiating Groups,” Journal of Personality and
Social Psychology, 2007, 93(6), 994–1010; C.K.W. De Dreu and L. R.
Weingart, “Task Versus Relationship Conflict, Team Performance,
and Team Member Satisfaction: A Meta-Analysis,” Journal of Applied
Psychology, 2003, 88(4), 741–749.
4. M. P. Follett, “Constructive Conflict,” in H. C. Metcalf and L. Urwick
(eds.), Dynamic Administration: The Collected Papers of Mary Follett, pp.
30–49 (New York: Harper and Brothers, 1940); D. G. Pruitt, Negotiation
Behavior (New York: Academic Press, 1981).
5. P.J.D. Carnevale, D. G. Pruitt, and S. D. Britton, “Looking Tough:
The Negotiator Under Constituent Surveillance,” Personality and
Social Psychology, 1979, 5(1), 118–121; M. J. Kimmel, D. G. Pruitt, J.
M. Magenau, E. Konar-Goldband, and P.J.D. Carnevale, “Effects of
Trust, Aspiration, and Gender on Negotiation Tactics,” Journal of
Personality and Social Psychology, 1980, 38(1), 9–22; S. A. Lewis and W.
R. Fry, “Effects of Visual Access and Orientation on the Discovery of
Notes 235
Integrative Bargaining Alternatives,” Organizational Behavior and
Human Performance, 1977, 20(1), 75–92; Pruitt, Negotiation Behavior;
D. G. Pruitt, and S. A. Lewis, “Development of Integrative Solutions
in Bilateral Negotiation,” Journal of Personality and Social Psychology,
1975, 31(4), 621–633; J. W. Schultz and D. G. Pruitt, “The Effects of
Mutual Concern on Joint Welfare,” Journal of Experimental Social Psychology,
1978, 14(5), 480–492; Weingart, Thompson, Bazerman, and
Carroll, “Tactical Behavior.”
6. J. M. Brett and T. Okumura, “Inter- and Intracultural Negotiation:
U.S. and Japanese Negotiators,” The Academy of Management Journal,
1998, 41(5), 495–510; Gunia, Brett, Nandkeolyar, and Kamdar,
“Paying a Price”; M. Olekalns and P. L. Smith, “Testing the Relationships
Among Negotiators: Motivational Orientations, Strategy
Choices and Outcomes,” Journal of Experimental Social Psychology,
2003, 39, 101–117; M. Olekalns and P. L. Smith, “Social Motives in
Negotiation: The Relationships Between Dyad Composition, Negotiation
Processes and Outcomes,” International Journal of Conflict
Management, 2003, 14(3/4), 233–254; M. Olekalns and P. L. Smith,
“Moments in Time: Metacognition, Trust, and Outcomes in Dyadic
Negotiations,” Personality and Social Psychology Bulletin, 2005, 31(12),
1696–1707; Pruitt, Negotiation Behavior; L. Thompson, “Information
Exchange in Negotiation,” Journal of Experimental Social Psychology,
1991, 27(2), 161–179; L. Thompson and R. Hastie, “Social Perception
in Negotiation,” Organizational Behavior and Human Decision
Processes, 1990, 47(1), 98–123; Weingart Thompson, Bazerman, and
Carroll, “Tactical Behavior.”
7. Kimmel and others, “Effects of Trust.”
8. J. K. Butler, “Trust Expectations, Information Sharing, Climate of
Trust, and Negotiation Effectiveness and Efficiency,” Group & Organization
Management, 1999, 24(2), 217–238.
9. Kimmel and others, “Effects of Trust”; Pruitt and Lewis, “Development
of Integrative Solutions.”
10. Pruitt and Carnevale, “The Development of Integrative Agreements”;
Pruitt and Lewis, “The Psychology of Integrative
Bargaining”; Walton and McKersie, A Behavioral Theory of Labor
Negotiations.
11. W. L. Adair, T. Okumura, and J. M. Brett, “Negotiation Behavior
When Cultures Collide: The United States and Japan,” Journal of
Applied Psychology, 2001, 86(3), 371–385; J. M. Brett, and M. J.
Gelfand, “A Cultural Analysis of the Underlying Assumptions of
Negotiation Theory,” in L. Thompson (ed.), Frontiers of Negotiation
Research, pp. 173–201 (New York: Psychology Press, 2006).
236 Notes
12. M. Sinaceur, G. A. Van Kleef, M. A. Neale, H. Adam, and C. Haag,
“Hot or Cold: Is Communicating Anger or Threats More Effective
in Negotiation?” Journal of Applied Psychology, 2011, 96(5), 1018–
1032; G. A. Van Kleef, C.K.W. De Dreu, and A.S.R. Manstead, “The
Interpersonal Effects of Anger and Happiness in Negotiations,”
Journal of Personality and Social Psychology, 2004, 86(1), 57–76; G. A.
Van Kleef, C.K.W. De Dreu, D. Pietroni, and A.S.R. Manstead, “Power
and Emotion in Negotiation: Power Moderates the Interpersonal
Effects of Anger and Happiness on Concession Making,” European
Journal of Social Psychology, 2006, 36(4), 557–581.
13. Olekalns and Smith, “Moments in Time”; Weingart, Thompson,
Bazerman, and Carroll, “Tactical Behavior.”
14. Pruitt, Negotiation Behavior.
15. Weingart, Brett, Olekalns, and Smith, “Conflicting Social Motives”;
L. R. Weingart, E. B. Hyder, and M. J. Prietula, “Knowledge Matters:
The Effect of Tactical Descriptions on Negotiation Behavior and
Outcome,” Journal of Personality and Social Psychology, 1996, 70(6),
1205–1217.
16. Gunia, Brett, Nandkeolyar, and Kamdar, “Paying a Price”; S. Aslani,
J. Ramirez-Marin, J. J. Yao, Z. Semnani-Azad, J. M. Brett, Z. X. Zhang,
C. Tinsley, L. Weingart, and W. Adair, “Honor, Face, and Dignity
Cultures: A Tri-Cultural Study of Negotiations,” paper presented at
the International Association for Conflict Management annual
meeting, 2013, Kyoto, Japan.
17. L. L. Thompson, The Mind and Heart of the Negotiator, 5th ed. (Boston:
Pearson, 2012).
18. G. A. Van Kleef, “How Emotions Regulate Social Life: The Emotions
as Social Information (EASI) Model,” Current Directions in Psychological
Science, 2009, 18, 184–188.
19. Van Kleef, “How Emotions Regulate Social Life”; H. Adam and J. M.
Brett, “The Social Effects of Anger Depend on the Competitiveness
of the Situation,” manuscript under review.
20. A. D. Galinsky and T. Mussweiler, “First Offers as Anchors: The Role
of Perspective-Taking and Negotiator Focus,” Journal of Personality
and Social Psychology, 2001, 81(4), 657–669; B. Gunia, R. Swaab, N.
Sivanathan, and A. Galinsky, “The Remarkable Robustness of the
First-Offer Effect: Across Culture, Power, and Issues,” Personality and
Social Psychology Bulletin, in press.
21. W. Adair, J. Brett, A. Lempereur, T. Okumura, P. Shikhirev, C.
Tinsley, and A. Lytle, “Culture and Negotiation Strategy,” Negotiation
Journal, 2004, 20(1), 87–111; W. L. Adair, and J. M. Brett, “The
Negotiation Dance: Time, Culture, and Behavioral Sequences in
Notes 237
Negotiation,” Organization Science, 2005, 16(1), 33–51; Gunia, Brett,
Nandkeolyar, and Kamdar, “Paying a Price.”
22. Adair and Brett, “The Negotiation Dance”; Gunia, Brett, Nandkeolyar,
and Kamdar, “Paying a Price”; C. Zhang, J. M. Brett, Z. X.
Zhang, “Chinese Managers and Negotiation Strategy: An Actor-
Partner Interdependence Model,” paper presented at the Academy
of Management annual meeting, 2013, Dispute Resolution
Research Center Northwestern University working paper 444,
http://www.kellogg.northwestern.edu/research/drrc/research
/working-papers.aspx; Aslani and others, “Honor, Face, and Dignity
Cultures.”
23. Butler, “Trust Expectations.”
24. Kimmel and others, “Effects of Trust”; Pruitt and Lewis, “Development
of Integrative Solutions.”
25. D. T. Kong, K. T. Dirks, and D. Ferrin, “Interpersonal Trust Within
Negotiations: Meta-Analytic Evidence, Critical Contingencies, and
Directions for Future Research,” Academy of Management Journal,
forthcoming.
26. H. H. Tan and D. Chee, “Understanding Interpersonal Trust in a
Confucian-Influenced Society: An Exploratory Study,” International
Journal of Cross Cultural Management, 2005, 5(2), 197–212; M. Nishishiba
and L. D. Ritchie, “The Concept of Trustworthiness: A
Cross-Cultural Comparison Between Japanese and US Business
People,” Journal of Applied Communication Research, 2000, 28(4), 347–
367; J. Bürger, M. Luke, and H. Indeláová, “Interpersonal Trust in
German-Czech Work Relations: Mutual Expectations and Suggestions
for Improvment,” Journal of Organizational Transformation and
Social Change, 2006, 3, 173–199; S. Wasti, H.H.T. Arzu, H. H. Brower,
and Ç. Önder, “Cross-Cultural Measurement of Supervisor Trustworthiness:
An Assessment of Measurement Invariance Across Three
Cultures,” The Leadership Quarterly, 2007, 18(5), 477–489; Gunia,
Brett, Nandkeolyar, and Kamdar, “Paying a Price”; M. Tillmar,
“Swedish Tribalism and Tanzanian Entrepreneurship: Preconditions
for Trust Formation,” Entrepreneurship and Regional Development, 2006,
18(2), 91–107; T. M. Kühlmann, “Formation of Trust in German-
Mexican Business Relations,” in K. M. Bijlsma-Frankema and R.
Klein Woolthuis (eds.), Trust Under Pressure: Empirical Investigations of
Trust and Trust Building in Uncertain Circumstances, pp. 37–53 (Cheltenham,
U.K.: Edward Elgar, 2005).
27. For a thorough review, see D. L. Ferrin and N. Gillespie, “Trust Differences
Across National-Societal Cultures: Much to Do, or Much
Ado About Nothing?” in M. Saunders, D. Skinner, G. Dietz,
238 Notes
N. Gillespie, and R. J. Lewicki (eds.), Organizational Trust: A Cultural
Perspective, pp. 42–86 (Cambridge, U.K.: Cambridge University Press,
2010).
28. M. J. Gelfand, L. H. Nishii, and J. L. Raver, “On the Nature and
Importance of Cultural Tightness-Looseness,” Journal of Applied Psychology,
2006, 91(6), 1225–1244; M. J. Gelfand, J. L. Raver, L. Nishii,
and others, “Differences Between Tight and Loose Cultures: A
33-Nation Study,” Science, 2011, 332, 1100–1104. See also E. D. Boldt,
“Structural Tightness and Cross-Cultural Research,” Journal of
Cross-Cultural Psychology, 1978, 9(2), 151–165; E. D. Boldt, “Structural
Tightness, Autonomy, and Observability: An Analysis of Hutterite
Conformity and Orderliness,” The Canadian Journal of Sociology /
Cahiers canadiens de sociologie, 1978, 3(3), 349–363; E. D. Boldt and
L. W. Roberts, “Structural Tightness and Social Conformity,” Journal
of Cross-Cultural Psychology, 1979, 10(2), 221–230; J. Ford, D. Young,
and S. Box, “Functional Autonomy, Role Distance and Social Class,”
The British Journal of Sociology, 1967, 18, 370–381.
29. K. T. Dirks, R. J. Lewicki, and A. Zaheer, “Repairing Relationships
Within and Between Organizations: Building a Conceptual Foundation,”
Academy of Management Review, 2009, 34(1), 68–84; D.
Meyerson, K. E. Weick, and R. M. Kramer, “Swift Trust and Temporary
Groups,” in R. M. Kramer and T. R. Tyler (eds.), Trust in
Organizations: Frontiers of Theory and Research, pp. 166–195 (Thousand
Oaks, Calif.: Sage, 1996); J. M. Weber, D. Malhotra, and J. K.
Murnighan, “Normal Acts of Irrational Trust: Motivated Attributions
and the Trust Development Process,” Research in Organizational
Behavior: An Annual Series of Analytical Essays and Critical Reviews,
2005, 26, 75–101.
30. F. Fukuyama, Trust: The Social Virtues and the Creation of Prosperity
(London: Hamish Hamilton, 1995). T. Yamagishi and M. Yamagishi,
“Trust and Commitment in the United States and Japan,” Motivation
and Emotion, 1994, 18(2), 129–166; T. Yamagishi, “Micro-Macro
Dynamics of the Cultural Construction of Reality: A Niche Construction
Approach to Culture,” in M. J. Gelfand, C.Y. Chui, and Ying-yi
Hong (eds.), Advances in Culture and Psychology, vol. 1 (New York:
Oxford University Press, 2010.
31. The World Values Survey’s measure of trust is “Do you think most
people would try to take advantage of you if they got a chance, or
would they try to be fair?” R. Inglehart, and C. Welzel, “Changing
Mass Priorities: The Link Between Modernization and Democracy,”
Perspectives on Politics, 2010, 8(2), 551–567. See also http://
www.worldvaluessurvey.org. The Pew Global Attitudes survey’s
Notes 239
measure of trust is “most people in society are trustworthy,” http://
www.pewglobal.org/2008/04/15.
32. R. J. Robinson, R. J. Lewicki, and E. M. Donahue, “Extending and
Testing a Five Factor Model of Ethical and Unethical Bargaining
Tactics: Introducing the SINS Scale,” Journal of Organizational Behavior,
2000, 21(6): 649–664.
33. T. Yamagishi, “Trust in China and Japan: Findings from ‘Joint-
Cultural’ Experiments,” keynote address at the International
Association for Conflict Management annual meeting, Kyoto,
Japan.
34. Gunia, Brett, Nandkeolyar, and Kamdar, “Paying a Price”; Kong,
Dirks, and Ferrin, “Interpersonal Trust Within Negotiations.”
35. R. E. Nisbett, K. Peng, I. Choi, and A. Norenzayan, “Culture and
Systems of Thought: Holistic Versus Analytic Cognition,” Psychological
Review, 2001, 108(2), 291–310.
36. Adair, Okumura, and Brett, “Negotiation Behavior When Cultures
Collide”; Brett and Okumura, “Inter- and Intracultural Negotiation”;
W. L. Adair, L. Weingart, and J. M. Brett, “The Timing and
Function of Offers in U.S. and Japanese Negotiations,” Journal of
Applied Psychology, 2007, 92(4), 1056–1068; W. L. Adair, “Integrative
Sequences and Negotiation Outcome in Same- and Mixed-Culture
Negotiations,” International Journal of Conflict Management, 2003,
14(3/4), 273–296.
37. To do this analysis we had the Japanese transcripts translated into
English. Coders unfamiliar with the purpose of the project identified
all subject verb phrases in each transcript. Coders trained on
identifying Q&A and S&O until they both could reliably code the
same transcript. Coders then categorized each subject verb phrase
in each transcript. We then analyzed the relative frequency of use
of Q&A and the frequency of use of S&O versus all other codes in
each transcript to reach our conclusions.
38. Brett and Okumura, “Inter- and Intracultural Negotiation”; Adair,
Okumura, and Brett, “Negotiation Behavior When Cultures Collide.”
39. E. T. Hall, Beyond Culture (Garden City, N.Y.: Anchor, 1976).
40. C. B. Gibson, “Do You Hear What I Hear? A Framework for Reconciling
Intercultural Communication Difficulties Arising from
Cognitive Styles and Cultural Values,” in P. C. Earley and M. Erez
(eds.), New Perspectives on International Industrial/Organizational Psychology,
pp. 335–362 (San Francisco: New Lexington Press, 1998).
41. Nisbett, Peng, Choi, and Norenzayan, “Culture and Systems of
Thought.”
42. Adair, Weingart, and Brett, “The Timing and Function of Offers.”
240 Notes
43. Adair, Weingart, and Brett, “The Timing and Function of Offers.”
44. Gunia, Brett, Nandkeolyar, and Kamdar, “Paying a Price.”
45. Adair, Weingart, and Brett, “The Timing and Function of Offers.”
46. Adair and Brett, “The Negotiation Dance.”
47. This approach is not used widely enough so as to give the Chinese
joint value that is similar to that of the Japanese.
48. M. Morris, J. Nadler, T. Kurtzberg, and L. L. Thompson, “Schmooze
or Lose: Social Friction and Lubrication in E-Mail Negotiations,”
Group Dynamics: Theory, Research, and Practice, 2002, 6(1), 89–100.
49. L. Balachandra, “Should You Eat While You Negotiate?” HBR Blog
Network, January 29, 2013, http://blogs.hbr.org/cs/2013/01
/should_you_eat_while_you_negot.html.
50. M. E. Schweitzer and J. L. Kerr, “Bargaining Under the Influence:
The Role of Alcohol in Negotiations.” Academy of Management Executive,
2000, 14(2), 47–57, http://search.ebscohost.com/login.aspx
?direct=true&db=buh&AN=3819305&site=ehost-live; M. E. Schweitzer
and L. E. Gomberg, “The Impact of Alcohol on Negotiator
Behavior: Experimental Evidence.” Journal of Applied Social Psychology,
2001, 31(10), 2095–2126, http://www.blackwell-synergy.com
.turing.library.northwestern.edu/doi/abs/10.1111/j.1559-1816
.2001.tb00165.x.
51. P.J.D. Carnevale and A. M. Isen, “The Influence of Positive Affect
and Visual Access on the Discovery of Integrative Solutions in Bilateral
Negotiation,” Organizational Behavior and Human Decision
Processes, 1986, 37(1), 1–13; J. P. Forgas, “On Feeling Good and
Getting Your Way: Mood Effects on Negotiator Cognition and Bargaining
Strategies,” Journal of Personality and Social Psychology, 1998,
74(3), 565–577; A. L. Drolet and M. W. Morris, “Rapport in Conflict
Resolution Accounting for How Nonverbal Exchange Fosters Cooperation
on Mutually Beneficial Settlement to Mixed Motive
Conflicts,” Journal of Experimental Social Psychology, 2000, 36, 26–50.
52. G. J. Leonardelli, J. Gu, G. McRuer, A. D. Galinsky, and V. Medvec,
“Negotiating with a Velvet Hammer: Multiple Equivalent Simultaneous
Offers,” Organizational Behavior and Human Decision Process, in
press; E. B. Hyder, M. J. Prietula, and L. R. Weingart, “Getting to the
Best: Efficacy Versus Optimality in Negotiation,” Cognitive Science,
2000, 24(2), 169–204.
53. Carnevale and Isen, “The Influence of Positive Affect”; Forgas,
“On Feeling Good”; Drolet and Morris, “Rapport in Conflict
Resolution.”
54. Van Kleef, De Dreu, and Manstead, “The Interpersonal Effects”; M.
Sinaceur and L. Z. Tiedens, “Get Mad and Get More Than Even:
Notes 241
When and Why Anger Expression Is Effective in Negotiations,”
Journal of Experimental Social Psychology, 2006, 42(3), 314–322; G. A.
Van Kleef, “How Emotions Regulate Social Life.”
55. H. Adam, A. Shirako, and W. Maddux, “Cultural Variance in the
Interpersonal Effects of Anger in Negotiations,” Psychological
Science, 2010, 21(6), 882–889; Adam and Brett, “The Social Effects
of Anger.”
56. Van Kleef, “How Emotions Regulate Social Life.”
57. Adam, Shirako, and Maddux, “Cultural Variance.”
58. K. G. Allred, J. Mallozzi, F. Matsui, and C. P. Raia, “The Influence
of Anger and Compassion on Negotiation Performance,” Organizational
Behavior and Human Decision Processes, 1997, 70(3), 175–187.
59. Adair, “Integrative Sequences and Negotiation Outcome”; N. J.
Adler and J. L. Graham, “Cross-Cultural Interactions: The International
Comparison Fallacy,” Journal of International Business Studies,
1989, 20, 515–538; Brett and Okumura, “Inter- and Intracultural
Negotiation”; J. Graham, “The Influence of Culture on the Negotiation
Process,” Journal of International Business Studies, 1985, 16, 81–96;
L. A. Liu, C. H. Chua, and G. K. Stahl, “Quality of Communication
Experience: Definition, Measurement, and Implications for Intercultural
Negotiations,” Journal of Applied Psychology, 2010, 95, 469–487;
L. A. Liu, R. A. Friedman, B. Barry, M. Gelfand, and Z.-X. Zhang,
“The Dynamics of Consensus Building in Intracultural and Intercultural
Negotiations,” Administrative Science Quarterly, 2012, 57, 269–304;
J. H. Natlandsmyr and J. Rognes, “Culture, Behavior, and Negotiation
Outcomes: A Comparative and Cross-Cultural Study of Mexican
and Norwegian Negotiators,” International Journal of Conflict Management,
1995, 6, 5–29; J. Ramirez-Marin, J. Brett, S. Aslani, C. Tinsley,
and L. Munduate, “Expectations and Emotions: Spanish Honor and
Anglo Dignity in Intercultural Negotiation,” paper presented at the
International Association for Conflict Management annual meeting,
2013, Kyoto, Japan.
60. Graham, “The Influence of Culture”; J. M. George, G. R. Jones, and
J. A. Gonzalez, “The Role of Affect in Cross-Cultural Negotiation,”
Journal of International Business Studies, 1999, 29, 749–772; K.-H. Lee,
G. Yang, and J. Graham, “Tension and Trust in International Business
Negotiations: American Executives Negotiating with Chinese
Executives,” Journal of International Business Studies, 2006, 37,
623–641.”
61. H. Tajfel, M. G. Billig, R. P. Bundy, and C. Flament, “Social Categorization
and Intergroup Behaviour,” European Journal of Social
Psychology, 1971, 2, 149–178; R. Brown, Group Processes: Dynamics
242 Notes
Within and Between Groups, 2nd ed. (Oxford, U.K.: Blackwell, 2000),
309–360.
62. Liu, Friedman, Barry, Gelfand, and Zhang, “The Dynamics of Consensus
Building in Intracultural and Intercultural Negotiations.”
63. Adair, “Integrative Sequences and Negotiation Outcome”; Adair
and Brett, “The Negotiation Dance”; C. Tinsley, J. Curhan, and
R. S. Kwak, “Adopting a Dual Lens Approach for Overcoming the
Dilemma of Difference in International Business Negotiations,”
International Negotiation, 1999, 4, 1–18; Liu, Friedman, Barry, Gelfand,
and Zhang, “The Dynamics of Consensus Building in Intracultural
and Intercultural Negotiations.”
64. Adair and Brett, “The Negotiation Dance”; Adair, Okumura, and
Brett, “Negotiation Behavior When Cultures Collide”; Liu, Friedman,
Barry, Gelfand, and Zhang, “The Dynamics of Consensus
Building in Intracultural and Intercultural Negotiations”; Adler and
Graham, “Cross-Cultural Interactions.”
65. As we will see in Chapter Four, strategic misalignment with respect
to sensitivity to insults and confrontation style are particularly important
in dispute resolution and conflict management negotiations.
Differences in self-worth and power and status are fundamental to
all negotiations.
66. Adair and Brett, “The Negotiation Dance”; Liu, Friedman, Barry,
Gelfand, and Zhang, “The Dynamics of Consensus Building in Intracultural
and Intercultural Negotiations,” although see Exhibit
3.1—the Israelis were able to generate higher joint gains negotiating
interculturally with the Hong Kong Chinese than the Hong Kong
Chinese were able to negotiate intraculturally.
67. Adair, “Integrative Sequences and Negotiation Outcomes”; Adair
and Brett, “The Negotiation Dance.”
68. Liu, Friedman, Barry, Gelfand, and Zhang, “The Dynamics of Consensus
Building in Intracultural and Intercultural Negotiations.”
69. Natlandsmyr and Rognes, “Culture, Behavior, and Negotiation Outcomes”;
Ramirez-Marin, Brett, Aslani, Tinsley, and Munduate,
“Expectations and Emotions: Spanish Honor and Anglo Dignity in
Intercultural Negotiation.”
70. M. Kern, S. Lee, Z. Aytug, and J. M. Brett, “Bridging Social Distance
in Inter-Cultural Negotiations: ‘You’ and the Bi-Cultural Negotiator,”
International Journal of Conflict Management, 2012, 23(2), 173–191.
71. L. A. Liu, C. H. Chus, and G. Stahl, “Quality of Communication
Experience: Definition, Measurement, and Implications for Intercultural
Negotiations,” Journal of Applied Psychology, 2010, 95,
469–487.
Notes 243
72. A. W. Kruglanski, Lay Epistemics and Human Knowledge: Cognitive and
Motivational Bases (New York: Plenum, 1980), 236.
73. F. M. Cheung, K. Leung, R. M. Fan, W. Z. Song, J. X. Zhang,
and J. P. Zhang, “Development of the Chinese Personality Assessment
Inventory,” Journal of Cross Cultural Psychology, 1996, 27,
181–199.
74. Lui, Friedman, Barry, Gelfand, and Zhang, “The Dynamics of Consensus
Building in Intracultural and Intercultural Negotiations.”
75. C. Earley and S. Ang, Cultural Intelligence: Individual Interactions Across
Cultures (Palo Alto, Calif.: Stanford University Press, 2003).
76. L. Imai and M. Gelfand, “The Culturally Intelligent Negotiator: The
Impact of Cultural Intelligence (CQ) on Negotiation Sequences and
Outcomes,” Organizational Behavior and Human Decision Processes,
2010, 112, 83–98.
77. Adair and Brett, “The Negotiation Dance.”
Chapter Four
1. P. J. Carnevale and D. G. Pruitt, “Negotiation and Mediation,”
Annual Review of Psychology, 1992, 43, 531–582.
2. Interview with German Kahn, Magazine Insight TN-BK, December
2003.
3. C. Belton, “Russian Roulette: How BP Is Falling Out with Its Partners
at TNK,” Financial Times, June 4, 2008, http://www.ft.com/cms/s/
0/7dba991e-3277-11dd-9b87-0000779fd2ac.html#axzz2hYFINWN4.
4. W.L.F Felsteiner, R. L. Abel, and A. Sarat, “The Emergence and
Transformation of Disputes: Naming, Blaming, and Claiming,” Law
and Society Review, 1980–1981, 15(3/4), 631–654.
5. Belton, “Russian Roulette.”
6. BATNAs are WATNAs in almost every type of intra-organizational
negotiation because of the hierarchical structure of organizations.
7. B. Beersma, F. Harinck, and M.J.J. Gerts, “Bound in Honor: How
Honor Values and Insults Affect the Experience and Management
of Conflicts,” International Journal of Conflict Management, 2003,
14(2), 75–94; D. Cohen, R. E. Nisbett, B. F. Bowdle, and N. Schwarz,
“Insult, Aggression, and the Southern Culture of Honor: An
‘Experimental Ethnography,’” Journal of Personality and Social Psychology,
1996, 70(5), 945–960; H. Ijzerman, W. W. van Dijk, and
M. Gallucci, “A Bumpy Train Ride: A Field Experiment on Insult,
Honor, and Emotional Reactions,” Emotion, 2007, 7(4), 869–875;
P. M. Rodriguez Mosquera, A.S.R. Manstead, and A. H. Fischer,
“Honor in the Mediterranean and Northern Europe,” Journal of
Cross-Cultural Psychology, 2002, 33(1), 16–36; P. M. Rodriguez
244 Notes
Mosquera, A.S.R. Manstead, and A. H. Fischer, “The Role of
Honour Concerns in Emotional Reactions to Offences,” Cognition
& Emotion, 2002, 16(1), 143–163.
8. C. H. Tinsley. “Models of Conflict Resolution in Japanese, German,
and American Cultures,” Journal of Applied Psychology, 1998, 83(2),
316–323.
9. W. L. Ury, J. M. Brett, and S. B. Goldberg, Getting Disputes Resolved:
Designing a System to Cut the Costs of Conflict (San Francisco: Jossey-
Bass, 1988).
10. A. L. Lytle, J. M. Brett, and D. L. Shapiro, “The Strategic Use of
Interests, Rights, and Power to Resolve Disputes,” Negotiation Journal,
1999, 15(1), 31–52.
11. Y. Y. Hong, M. W. Morris, C. Y. Chiu, and V. Benet-Martinez, “Multicultural
Minds: A Dynamic Constructivist Approach to Culture
and Cognition,” American Psychologist, 2000, 55(7), 709–720; Y. Y.
Hong, G. Ip, C. Y. Chiu, M. W. Morris, and T. Menon, “Cultural
Identity and Dynamic Construction of the Self: Collective Duties
and Individual Rights in Chinese and American Cultures,” Social
Cognition, 2001, 19(3), 251–268. Chapter Three gave another
example of the prowess of biculturals. The high joint gains negotiated
in intercultural deal-making negotiations were negotiated
between Americans and Chinese or Korean nationals who had
been studying or working in the United States for three to five
years.
12. V. Benet-Martinez, J. Leu, F. Lee, and M. W. Morris, “Negotiating
Biculturalism: Cultural Frame Switching in Biculturals with Oppositional
Versus Compatible Cultural Identities,” Journal of Cross-Cultural
Psychology, 2002, 33(5), 492–516.
13. C. H. Tinsley and J. M. Brett, “Managing Workplace Conflict in the
U.S. and Hong Kong,” Organizational Behavior and Human Decision
Processes, 2001, 85(2), 360–381.
14. Belton, “Russian Roulette.”
15. H. Triandis, Individualism and Collectivism: New Directions in Social
Psychology (Boulder, Colo.: Westview Press, 1995).
16. D. Messick and P. Sentis, “Estimating Social and Nonsocial Utility
Functions from Ordinal Data,” European Journal of Social Psychology,
1985, 15(4), 389–399.
17. R. M. Emerson, “Power Dependence Relations,” American Sociological
Review, 1962, 27(1), 31–41.
18. J. Magee and A. Galinsky, “Social Hierarchy: The Self-Reinforcing
Nature of Status and Power,” The Academy of Management Annals,
2008, 2, 351–398.
Notes 245
19. M. Ross and F. Sicoly, “Egocentric Biases in Availability and Attribution,”
Journal of Personality and Social Psychology, 1979, 37(3),
322–336.
20. Tinsley, “Models of Conflict Resolution”; C. H. Tinsley and M. Pillutla,
“The Influence of Culture on Business Negotiations in the U.S.
and Hong Kong,” Journal of International Business Studies, 1998, 29(4),
711–728; C. H. Tinsley, “How We Get to Yes: Predicting the Constellation
of Strategies Used Across Cultures to Negotiate Conflict,”
Journal of Applied Psychology, 2001, 86(4), 583–593.
21. R. M. March, The Japanese Negotiator: Subtlety and Strategy Beyond
Western Logic (New York: Kodansha International, 1990).
22. J. G. Getman, S. B. Goldberg, and J. B. Herman, Union Representation
Elections: Law and Reality (New York: Russell Sage Foundation, 1969).
23. M. Olekalns, J. M. Brett, and L. R. Weingart, “Phases, Transitions
and Interruptions: The Processes That Shape Agreement in Multiparty
Negotiations,” International Journal of Conflict Management:
Special Issue on Processes in Negotiation, 2004, 14, 191–211; A. L. Lytle,
J. M. Brett, and D. L. Shapiro, “The Strategic Use of Interests, Rights,
and Power to Resolve Disputes,” Negotiation Journal, 1999, 15(1),
31–52.
24. Lytle, Brett, and Shapiro, “The Strategic Use of Interests.”
25. G. V. Bodenhausen, L. A. Sheppard, and G. P. Kramer, “Negative
Affect and Social Judgment: The Differential Impact of Anger and
Sadness,” European Journal of Social Psychology, 1994, 24, 45–62.
26. M. Morris and D. Keltner, “How Emotions Work: The Social Functions
of Emotional Expression in Negotiation,” Research in
Organizational Behaviour, 2000, 22, 1–50.
27. R. Friedman, C. Anderson, J. Brett, M. Olekalns, N. Goates, and C.
C. Lisco, “The Positive and Negative Effects of Anger on Dispute
Resolution: Evidence from Electronically-Mediated Disputes,”
Journal of Applied Psychology, 2004, 89, 369–376.
28. J. M. Brett and others, “Sticks and Stones: Language, Face, and
Online Dispute Resolution,” Academy of Management Journal, 2007,
50(1), 85–99.
29. H. Adam and J. M. Brett, “The Social Effects of Anger Depend on
the Competitiveness of the Situation,” paper under review, 2012.
Interestingly, in the context of deal making, when negotiators were
in the process of negotiating a new business relationship, expressing
anger was also counterproductive. It was only in the one-shot dealmaking
situation, such as buying a car, when parties were unlikely
to have a future interaction, that expressions of anger increased the
counterpart’s concessions.
246 Notes
30. There is quite a lot of research on culture and apology. For example,
Japanese prefer to apologize very frequently but without explaining
the reason for their actions. Their apologies emphasize statements
of remorse, reparation, compensation, promises not to repeat the
behavior, and requests for forgiveness. Americans also apologize,
but less frequently than the Japanese, and they tend to offer explanations
for the behavior. N. Sugimoto, “Norms of Apology Depicted
in U.S. American and Japanese Literature on Manners and Etiquette,”
International Journal of Intercultural Relations, 1997, 22(3),
251–276; W. Maddux, P. Kim, T. Okumura, and J. M. Brett, “Cultural
Differences in the Function and Meaning of Apologies,” International
Negotiation Journal, 2011, 16(3), 405–425. For a review of
apology from the legal perspective, see J. K. Robbennolt, “Apologies
and Legal Settlement: An Empirical Examination,” Michigan Law
Review, 2003, December, 460.
31. J. M. Brett, D. L. Shapiro, and A. L. Lytle, “Breaking the Bonds of
Reciprocity in Negotiation,” Academy of Management Journal, 1998,
41(4), 410–424.
32. Brett, Shapiro, and Lytle, “Breaking the Bonds.”
33. J. M. Brett, C. Tinsley, D. L., Shapiro, and T. Okumura, “Intervening
in Employee Disputes: How and When Will Managers from China,
Japan, and the U.S. Act Differently?” Management and Organizational
Review, 2007, 3(2), 183–204.
34. United Nations, “Convention on the Recognition and Enforcement
of Foreign Arbitral Awards,” June 10, 1958, can be found at http://
www.uncitral.org/uncitral/en/uncitral_texts/arbitration/NYCon
vention.html.
35. J. M. Wenger, “Update to International Commercial Arbitration:
Locating the Resources,” May 24, 2004, can be found at www.llrx.com
/features/arbitration2.htm.
36. R. Friedman, W. Liu, S. Chi, and C. Chen, “Causal Attribution for
Inter-Firm Contract Violation: A Comparative Study of Chinese and
American Commercial Arbitrators,” Journal of Applied Psychology,
2007, 92(3), 856–864; T. Menon, M. W. Morris, C. Y. Chiu, and Y. Y.
Hong, “Culture and the Construal of Agency: Attribution to Individual
Versus Group Dispositions,” Journal of Personality and Social
Psychology, 1999, 76, 701–717.
37. It is difficult to pinpoint exact mediation settlement rates, because
there are so many different mediation programs around the world.
A quick review of settlement rate data available on the web shows
that although mediation does not settle every case, it settles many.
Rates of settlement in court-connected civil mediation in the United
Notes 247
States range from 18 to 80 percent, with most reports in the 30 to
60 percent range. For more information, see S. Cole, C. M. Rogers,
J. Coben, and P. Thompson, “Mediation: Law, Policy and Practice,”
in S. Goldberg, F.E.A. Sander, N. Rogers, and S. Cole (eds.), Dispute
Resolution: Negotiation, Mediation Arbitration and Other Processes, pp.
193–194 (New York: Wolters Kluwer Law & Business, 2012).
38. The Los Angeles Superior Court system attributed its improved
settlement rate from about 61 percent in the period of July 2003
through June 2004 to 80 percent in the period July 2008 through
June 2009 to mediator training and advocate familiarity. E. van
Ginkel, “Court-Annexed ADR in Los Angeles County,” can be found
at http://www.businessadr.com/EvG/Publications_files/Court-An
nexed%20ADR%20in%20LA%20County.pdf.
39. J. M. Brett, Z. I. Barsness, and S. B. Goldberg, “The Effectiveness of
Mediation: An Independent Analysis of Cases Handled by Four
Major Service Providers,” Negotiation Journal, 1996, 12(3), 259–270.
40. S. B. Goldberg, M. L. Shaw, and J. M. Brett, “What Difference Does
a Robe Make? Comparing Mediators with and Without Prior Judicial
Experience,” Negotiation Journal, 2009, 25(3), 277–305; R. Swaab
and J. M. Brett, “Face First: Pre-Mediation Caucuses and Face,”
paper presented at the International Association for Conflict Management
annual meeting, 2009, Kyoto, Japan. Also available as
working paper 399, at http://www.kellogg.northwestern.edu
/research/drrc/research/working-papers/archives.aspx.
41. C. W. Moore, The Mediation Process: Practical Strategies for Resolving
Conflict, 3rd ed. (San Francisco: Jossey-Bass, 2003).
42. R. J. Bies, “Are Procedural Justice and Interactional Justice Conceptually
Distinct?” in J. Greenberg and J. A. Colquitt (eds.), Handbook
of Organizational Justice, pp. 85–112 (Mahwah, N.J.: Lawrence
Erlbaum, 2005); R. J. Bies and J. S. Moag, “Interactional Justice:
Communication Criteria of Fairness,” Research on Negotiation in Organizations,
1986, 1(1), 43–55; J. A. Colquitt, “On the Dimensionality
of Organizational Justice: A Construct Validation of a Measure,”
Journal of Applied Psychology, 2001, 86(3), 386–400; R. Folger, D.
Rosenfield, J. Grove, and L. Corkran, “Effects of ‘Voice’ and Peer
Opinions on Responses to Inequity,” Journal of Personality and Social
Psychology, 1979, 37(12), 2253–2261; J. Greenberg and R. Folger,
“Procedural Justice, Participation, and the Fair Process Effect in
Groups and Organizations,” in P. Paulus (ed.), Basic Group Processes,
pp. 235–256 (New York: Springer, 1983); T. R. Tyler, and Y. J. Huo,
Trust in the Law: Encouraging Public Cooperation with the Police and
Courts (New York: Russell Sage Foundation, 2002).
248 Notes
43. J. A. Wall and T. C. Dunne, “Mediation Research: A Current Review,”
Negotiation Journal, 2012, 28(2), 217–244.
Chapter Five
1. F.R.C. de Wit, L. L. Greer, and K. Jehn, “The Paradox of Intragroup
Conflict: A Meta-Analysis,” Journal of Applied Psychology, 2012, 97(2),
360–390; D. van Knippenberg and M. C. Schippers, “Work Group
Diversity,” Annual Review of Psychology, 2007, 58, 515–541; L. R. Weingart
and C. De Dreu, “Task Versus Relationship Conflict, Team
Performance, and Team Member Satisfaction: A Meta-Analysis,”
Journal of Applied Psychology, 2003, 88, 741–749. Original research
papers include D. Gruenfeld, M. C. Thomas-Hunt, and P. Kim,
“Cognitive Flexibility, Communication Strategy, and Integrative
Complexity in Groups: Public Versus Private Reactions to Majority
and Minority Status,” Journal of Experimental Social Psychology, 1998,
34(2), 202–226; K. Eisenhardt and C. B. Schoonhaven, “Organizational
Growth: Linking Founding Team Strategy, Environment, and
Growth Among U.S. Semiconductor Ventures, 1978–1988,” Administrative
Science Quarterly, 1990, 35(3), 504–529; T. L. Simons, L. H.
Pelled, and K. A. Smith, “Making Use of Difference: Diversity,
Debate, and Decision Comprehensiveness in Top Management
Teams,” Academy of Management Journal, 1999, 42(6), 662–673; K.
Lovelace, D. L. Shapiro, and L. R. Weingart, “Maximizing Cross-
Functional New Product Teams’ Innovativeness and Constraint
Adherence: A Conflict Communications Perspective,” Academy of
Management Journal, 2001, 44(4), 479–493; D. Tjosvold, M. Poon,
and Z. Y. Yu, “Team Effectiveness in China: Cooperative Conflict for
Relationship Building,” Human Relations, 2005, 58(3), 341–367.
2. K. Behfar, M. Kern, and J. M. Brett, “Managing Challenges in Multicultural
Teams,” in E. Mannix and Y. Chen (eds.), Research on
Managing Groups and Teams, pp. 233–262 (Oxford, U.K.: Elsevier
Science Press, 2006); J. M. Brett, K. Behfar, and M. Kern, “Managing
Multicultural Teams,” Harvard Business Review, 2006, 11, 84–91.
3. de Wit, Greer, and Jehn, “The Paradox of Intragroup Conflict,”
2012.
4. J. R. Hackman, K. R. Brousseau, and J. A. Weiss, “The Interaction of
Task Design and Group Performance Strategies in Determining
Group Effectiveness,” Organizational Behavior and Human Performance,
1976, 16(2), 350–365.
5. K. L. Bettenhausen and J. K. Murnighan, “The Emergence of Norms
in Competitive Decision-Making Groups,” Administrative Science
Quarterly, 1985, 30(3), 20–35.
Notes 249
6. C. P. Earley and E. Mosakowski, “Creating Hybrid Team Cultures:
An Empirical Test of Transnational Team Functioning,” Academy of
Management Journal, 2000, 43(1), 26–49.
7. J. C. Turner, Rediscovering the Social Group: A Self-Categorization Theory
(Oxford, U.K.: Basil Blackwell, 1987); M. Hewstone and K. Greenland,
“Intergroup Conflict,” International Journal of Psychology, 2000,
35(2), 136–146.
8. S. K. Crotty and J. M. Brett, “Fusing Creativity: Cultural Metacognition
and Teamwork in Multicultural Teams,” Negotiation and Conflict
Management Research, 2012, 5(2), 210–234.
9. Interview as part of the Multicultural Teams project, K. Behfar, M.
Kern, J. M. Brett, 2005.
10. Earley and Mosakowski, “Creating Hybrid Team Cultures.”
11. Interview as part of the Multicultural Teams project, K. Behfar, M.
Kern, J. M. Brett, 2005.
12. Earley and Mosakowski, “Creating Hybrid Team Cultures.”
13. Earley and Mosakowski, “Creating Hybrid Team Cultures.”
14. M. Janssens and J. M. Brett, “Cultural Intelligence in Global Teams:
A Fusion Model of Collaboration,” Group and Organizational Studies,
2006, 31(1), 124–153.
15. Interview as part of the Multicultural Teams project, K. Behfar, M.
Kern, J. M. Brett, 2005.
16. M. Janssens and J. M. Brett, “Meaningful Participation in Transnational
Teams,” European Journal of Work and Organizational Psychology,
1997, 6(2), 153–168.
17. M. E. Shaw, Group Dynamics: The Psychology of Small Group Behavior,
3rd ed. (New York: McGraw-Hill, 1981), 170.
18. D. Gigone and R. Hastie, “The Common Knowledge Effect: Information
Sharing and Group Judgment,” Journal of Personality and
Social Psychology, 1993, 72(1), 132–140.
19. Crotty and Brett, “Fusing Creativity.”
20. C. P. Earley and S. Ang, Cultural Intelligence: An Analysis of Individual
Interactions Across Cultures (Palo Alto, Calif.: Stanford University
Press, 2003).
21. S. Ang, L. Van Dyne, C. Koh, and K. Yee Ng, “The Four Factor Model
of Cultural Intelligence: A Multisample Study of Effects on Performance
and Adjustment,” paper presented at the Academy of
Management, New Orleans, 2004.
22. The concept of “cultural intelligence” was introduced by Earley and
Ang (Cultural Intelligence). They identified four factors of cultural
intelligence: behavioral (what people do in multicultural situations),
motivational (what people are interested in doing in multicultural
250 Notes
situations), cognitive (what people know about norms and practices
in different cultures), and meta-cognitive (cultural consciousness
and awareness during social interaction). In a thorough, multisample,
construct validation study, they showed that the metacognitive
and cognitive elements were related to individuals’ performance,
the motivational element was related to their general adjustment,
and the behavioral element was related to individuals’ performance
and adjustment over and above the effects of demographic characteristics
and general cognitive ability. For more information see
Earley and Ang, Cultural Intelligence, and Ang, Van Dyne, Koh, and
Ng, “The Four Factor Model of Cultural Intelligence.”
23. Janssens and Brett, “Cultural Intelligence in Global Teams”; Crotty
and Brett, “Fusing Creativity.”
24. K. A. Jehn, “A Multimethod Examination of the Benefits and Detriments
of Intragroup Conflict,” Administrative Science Quarterly, 1995,
40, 256–282.
25. Interview as part of the Negotiating Teams project, K. Behfar, J. M.
Brett, and R. Friedman; see also J. M. Brett, K. Behfar, and R. Friedman,
“How to Manage Your Negotiating Team,” Harvard Business
Review, 2009, September, 105–109.
26. Interview as part of the Multicultural Teams project, K. Behfar, M.
Kern, J. M. Brett, 2005.
27. Janssens and Brett, “Meaningful Participation in Transnational
Teams”; Janssens and Brett, “Cultural Intelligence in Global Teams.”
28. Interview as part of the Multicultural Teams project, K. Behfar, M.
Kern, J. M. Brett, 2005.
29. Interview as part of the Multicultural Teams project, K. Behfar, M.
Kern, J. M. Brett, 2005.
30. M. Janssens, L. Kuenen, and J. M. Brett, “Valuing Cultural Diversity,”
unpublished report, 1998, p. 14.
31. S. S. Keisler and L. Sproull, “Group Decision Making and Communication
Technology,” Organizational Behavior and Human Decision
Processes, 1992, 52(1), 96–123.
32. Brett, Behfar, and Friedman, “How to Manage Your Negotiating
Team.”
33. R. I. Swaab, A. D. Galinsky, V. Medvec, and D. A. Diermeier, “The
Communication Orientation Model: Explaining the Diverse Effect
of Sight, Sound, and Synchronicity on Negotiation and Group Decision
Making,” Personality and Social Psychology Review, 2011, 20(10),
1–29.
34. L. L. Thompson, Making the Team (Upper Saddle River, N.J.: Prentice
Hall, 1999).
Notes 251
35. Z. I. Barsness, J. M. Brett, and L. Eden, “Developing Real-World
Skills: Managing Virtual Transnational Teams,” paper presented at
the annual meeting of the Academy of International Business,
Vienna, 1998.
36. I. Alon, and J. M. Brett, “Perceptions of Time and Their Impact on
Negotiations in the Arabic-Speaking Islamic World,” Negotiation
Journal, 2007, 23, 55–73.
37. There are cultural differences in attribution patterns. People in
dignity cultures tend to attribute others’ poor behavior to the individual,
whereas people in face cultures are more likely to attribute
the same behavior to events beyond the individual’s control. M. W.
Morris and K. Peng, “Culture and Cause: American and Chinese
Attributions for Social and Physical Events,” Journal of Personality and
Social Psychology, 1994, 67(6), 949–971.
38. Swaab, Galinsky, Medvec, and Diermeier, “The Communication Orientation
Model.”
39. G. Allison and P. Zelikow, Essence of Decision: Explaining the Cuban
Missile Crisis, 2nd ed. (New York: Longman, 1999).
40. I. L. Janis and L. Mann, Decision Making: A Pyschological Analysis of
Conflict, Choice, and Commitment (New York: Free Press, 1977).
41. D. Wegner, “Transactive Memory: A Contemporary Analysis of the
Group Mind,” in B. Mullen and G. Goethals (eds.), Theories of Group
Behavior, pp. 185–208 (New York: Springer, 1986).
42. For a discussion of when teams should make decisions, see V. H.
Vroom and P. W. Yetton, Leadership and Decision-Making (Pittsburgh,
Penn.: University of Pittsburgh Press, 1973).
43. Gruenfeld, Thomas-Hunt, and Kim, “Cognitive Flexibility.”
44. L. L. Thompson, B. Mannix, and M. H. Bazerman, “Group Negotiation:
Effects of Decision Rule, Agenda, and Aspiration,” Journal of
Personality and Social Psychology, 1988, 54(1), 86–95.
45. R. S. Peterson, “Can You Have Too Much of a Good Thing? The
Limits of Voice for Improving Satisfaction with Leaders,” Personality
and Social Psychology Bulletin, 1999, 25(3), 313–324.
46. R. Hastie and T. Kameda, “The Robust Beauty of Majority Rules in
Group Decisions,” Psychological Review, 2005, 112, 494–508.
47. M. Ala and W. P. Cordeiro, “Can We Learn Management Techniques
from the Japanese Ringi Process?” Business Forum, 1999, 24(1/2),
22–24.
48. L. R. Weingart, R. J. Bennett, and J. M. Brett, “The Impact of Consideration
of Issues and Motivational Orientation on Group
Negotiation Process and Outcome,” Journal of Applied Psychology,
1993, 78(3), 504–517.
252 Notes
49. Weingart, Bennett, and Brett, “The Impact of Consideration of
Issues.”
50. R. E. Nisbett, K. Peng, I. Choi, and A. Norenzayan, “Culture and
Systems of Thought: Holistic vs. Analytic,” Psychological Review, 2001,
108, 291–301.
51. Interview as part of the Multicultural Teams project, K. Behfar, M.
Kern, J. M. Brett, 2005.
52. This advice for second agreements is based on H. Raiffa, The Art and
Science of Negotiation (Cambridge, Mass.: Belknap Press, 1982). Raiffa
suggested that, after negotiating an agreement, negotiators go back
to the table and try to improve it. I did not discuss this tactic in
Chapters One or Three because I do not think it works very well in
the real world when dyads are negotiating. Negotiators think they
have found the best deal. They are tired. They do not want to reveal
the information that might be necessary to improve the agreement.
It is mainly in the classroom that post-settlement settlements work
well, when students are negotiating a quantified exercise and understand
the meaning of post-settlement settlement. Why then do I
advise the second agreement tactic for real-world groups such as
multicultural teams? The answer is that groups seem to be better at
surfacing information than are deal-making negotiators. This means
team members have little to hide in second agreement deliberations.
Also, the first agreement gives the dominant coalition
confidence that their approach is going to prevail. This may make
them a bit magnanimous; they may be more willing to listen to the
minority and act to minimize costs to the minority.
53. J. M. Brett, “Negotiating Group Decisions,” Negotiation Journal, 1991,
7(3), 291–310.
54. F. R. C. de Wit, L. L. Greer, and K. Jehn, “The Paradox of Intragroup
Conflict: A Meta-Analysis,” Journal of Applied Psychology, 2012, 97(2),
360–390.
55. Interview as part of the Multicultural Teams project, K. Behfar, M.
Kern, J. M. Brett, 2005.
56. W. L. Ury, J. M. Brett, and S. B. Goldberg, Getting Disputes Resolved:
Designing a System to Cut the Costs of Conflict (San Francisco: Jossey-
Bass, 1998).
57. Ury, Brett, and Goldberg, Getting Disputes Resolved.
58. Brett, Behfar, and Kern, “Managing Multicultural Teams.”
Chapter Six
1. National Geographic Education, “Great Pacific Garbage Patch,”
http://education.nationalgeographic.com/education/encyclo
pedia/great-pacific-garbage-patch/?ar_a=1.
Notes 253
2. See http://www.ted.com/talks/capt_charles_moore_on_the_seas_
of_plastic.html for Captain Charles Moore’s February 2009 TED
talk.
3. D. M. Messick and M. B. Brewer, “Solving Social Dilemmas: A
Review,” in L. Wheeler and P. Shaver (eds.), Review of Personality and
Social Psychology, pp. 11–44 (Beverly Hills, Calif.: Sage, 1983).
4. G. Hardin, “The Tragedy of the Commons,” Science, 1968, 162,
1243–1248.
5. P. Lattman, “Trial Date Set for Former SAC Trader in Insider
Case,” New York Times, June 5, 2013, http://dealbook.nytimes
.com/2013/06/05/ex-sac-trader-martoma-faces-nov-4-insider
-trading-trial.
6. U.S. Energy Information Administration, “What Drives Crude
Oil Prices?” http://www.eia.gov/finance/markets/supply-opec
.cfm.
7. C. Krauss, “OPEC Opts to Increase Its Level of Output,” New York
Times, December 14, 2011, http://www.nytimes.com/2011/12/15
/business/global/opec-sets-oil-production-target.html.
8. The Associated Press, “Taiwan Company Fined $500 Million for
Price-Fixing,” New York Times, September 20, 2012, http://
www.nytimes.com/2012/09/21/business/au-optronics-fined-500
-million-in-us-price-fixing-case.html.
9. W. Isaacson, Steve Jobs (New York: Simon & Schuster, 2011).
10. B. X. Chen and J. Bosman, “Fallout from Apple’s Loss on E-books,”
New York Times, July 10, 2013, http://www.nytimes.com/2013/07/11
/technology/judge-rules-against-apple-in-e-books-trial.html.
11. K. Koeninger, “Grocers Complain Potato Cartel Fixes Prices,” Courthouse
News Service, April 22, 2013, http://www.courthousenews
.com/2013/04/22/56909.htm.
12. The Associated Press, “Taiwan Company Fined $500 Million for
Price-Fixing,” New York Times, September 20, 2012, http://www
.nytimes.com/2012/09/21/business/au-optronics-fined-500
-million-in-us-price-fixing-case.html.
13. The Points Guy, “Higher Airline Change Fees Are Here to Stay—
United, US Airways, and Delta All Raise Prices,” May 1, 2013, http://
thepointsguy.com/2013/05/higher-airline-change-fees-are-here-to
-stay-united-us-airways-and-delta-all-raise-prices.
14. M. Gunther, “Game On: Why Walmart Is Ranking Suppliers on
Sustainability,” GreenBiz.com, April 15, 2013, http://www.greenbiz
.com/blog/2013/04/15/game-why-walmart-ranking-suppliers
-sustainability.
15. Unilever, “Unilever Sustainable Living Plan,” http://www.unileverusa
.com/sustainable-living/uslp.
254 Notes
16. Globescan and SustainAbility, “The 2013 Sustainability Leaders,”
April 28, 2013, http://www.sustainability.com/library/the-2013
-sustainability-leaders#.UbKMCfnVC88.
17. KTVU, Video, “San Francisco Protesters Picket Gap Over Bangladesh
Factory Safety,” http://www.ktvu.com/videos/news/san-fran
cisco-protesters-picket-gap-over/v3XnT.
18. The plan, criticized as less stringent than the European plan, calls
for $42 million for worker safety inspections and $100 million in
low-cost loans to help factory owners address safety problems. S.
Greenhause and S. Clifford, “U.S. Retailers Offer Plan for Safety at
Factories,” New York Times, July 10, 2013, http://www.nytimes.com
/2013/07/11/business/global/us-retailers-offer-safety-plan-for
-bangladeshi-factories.html?pagewanted=all.
19. N. L. Kerr, “Norms in Social Dilemmas,” in D. A. Schroeder (ed.),
Social Dilemmas: Perspectives on Individuals and Groups, pp. 31–47
(Westport, Conn.: Praeger, 1995).
20. K. Wade-Benzoni, A. Tenbrunsel, and M. H. Bazerman, “SHARC:
Competitive Version,” available from www.negotiationexercises
.com.
21. K. Wade-Benzoni, T. Okumura, J. M. Brett, D. Moore, A. Tenbrunsel,
and M. H. Bazerman, “Cognitions and Behavior in Asymmetric
Social Dilemmas: A Comparison of Two Cultures,” Journal of Applied
Psychology, 2002, 87, 87–95.
22. A. W. Gouldner, “The Norm of Reciprocity: A Preliminary Statement,”
American Sociological Review, 1960, 25(2), 161–179.
23. R. Axelrod, The Evolution of Cooperation (New York: Basic Books,
1984).
24. J. E. McGrath, Groups: Interaction and Performance (Englewood Cliffs,
N.J.: Prentice Hall, 1984).
25. E. Ostrom, Governing the Commons: The Evolution of Institutions for
Collective Action (New York: Cambridge University Press, 1990).
26. I. G. Suarja and R. Thijssen, “Traditional Water Management in
Bali,” LEIS Magazine, September 2003, 25–26.
27. T. Sertori, “A Thousand Years On, Can ‘Subak’ Survive?” The Jakarta
Post, April 18, 2013; UNESCO, “Cultural Landscape of Bali Province:
The Subak System as a Manifestation of the Tri Hita Karana Philosophy,”
World Heritage List, can be found at http://whc.unesco.org
/en/list/1194; S. Vaessen, “Bali’s Ancient Irrigation System,” Al
Jazeera, August 29, 2012; R. P. Lorenzen and S. L. Lorenzen, “A Case
Study of Balinese Irrigation Management: Institutional Dynamics
and Challenges,” presented at the Southeast Asian Water Forum,
2005; D. Roth, “The Subak in Diaspora: Balinese Farmers and the
Notes 255
Subak in South Sulawesi,” Human Ecology Interdisciplinary Journal,
2011, 39(1), 55–68.
28. M. Galluci, “Tougher Northeast CO2 Cap Seen Doubling Revenues
by 2020,” Bloomberg, February 11, 2013, can be found at http://
www.bloomberg.com/news/2013-02-11/tougher-northeast-co2-cap
-seen-doubling-revenues-by-2020.html.
29. Natural Resources Defense Council, “Using the Clean Air Act to
Sharply Reduce Carbon Pollution from Existing Power Plants,”
December 4, 2012, can be found at http://www.nrdc.org/air
/pollution-standards.
30. S. Power, “Why the Clean Air Act May Be Past Its Prime,” Wall Street
Journal, April 17, 2010.
31. C. D. Batson and T. Moran, “Empathy-Induced Altruism in a Prisoner’s
Dilemma,” European Journal of Social Psychology, 1999, 29(7),
909–924; A. E. Tenbrunsel and D. M. Messick, “Sanctioning Systems,
Decision Frames, and Cooperation,” Administrative Science Quarterly,
1999, 44(4), 684–707.
32. M. Hewstone and K. Greenland, “Intergroup Conflict,” International
Journal of Psychology, 2000, 35(2), 136–146.
33. T. Arango, “Park Defender Helped Set Off Turkey’s Crisis,” New York
Times, June 4, 2013, http://www.nytimes.com/2013/06/05/world
/europe/istanbul-protests-started-over-trees.html?pagewanted=all.
34. C. E. Osgood, An Alternative to War or Surrender (Urbana: University
of Illinois Press, 1962). There are also examples of GRIT in the
context of poltical disputes in T. Armstrong, “Introduction,” in
Breaking the Ice: Rapprochement Between East and West Germany, the
United States and China and Israel and Egypt, pp. 3–30 (Washington,
D.C.: United States Institute of Peace, 1993).
35. S. H. Schwartz, “Beyond Individualism/Collectivism: New Dimensions
of Cultural Values,” in U. Kim, H. C. Triandis, Ç. Kâğitçibaşi,
S-C. Choi, and G. Yoon (eds.), Individualism and Collectivism: Theory,
Method, and Applications, Cross-Cultural Research and Methodology
Series 18, pp. 85–119 (Thousand Oaks, Calif.: Sage, 1994).
36. P.A.M. Van Lange, W.B.G. Liebrand, D. M. Messick, and H.A.M.
Wilke, “Social Dilemmas: The State of the Art: Introduction and
Literature Review,” in D. M. Messick, W.B.G. Liebrand, and H.A.M.
Wilke (eds.), Social Dilemmas: Theoretical Issues and Research Findings,
pp. 3–28 (Oxford, U.K.: Pergamon Press, 1992); R. M. Dawes, J.
McTavish, and H. Shaklee, “Behavior, Communication, and Assumptions
About Other People’s Behavior in a Commons Dilemma
Situation,” Journal of Personality and Social Psychology, 1977, 35(1),
1–11.
256 Notes
37. G. Bornstein and M. Ben-Yosef, “Cooperation in Intergroup and
Single-Group Social Dilemmas,” Journal of Experimental Social Psychology,
1994, 30, 597–606.
38. S. Arsu and C. Yeginsu, “Turkish Leader Offers Referendum on Park
at Center of Protests,” New York Times, June 12, 2013, http://
www.nytimes.com/2013/06/13/world/europe/taksim-square
-protests-istanbul-turkey.html?hp.
39. T. Kugler and G. Bornsetin, “Social Dilemmas Between Individuals
and Groups,” Organizational Behavior and Human Decision Processes,
2013, 120, 191–205.
40. C. A. Insko, T. Wildschut, and T. R. Cohen, “Interindividual–Intergroup
Discontinuity in the Prisoner’s Dilemma Game: How Common
Fate, Proximity, and Similarity Affect Intergroup Competition,”
Organizational Behavior and Human Decision Processes, 2013, 120,
168–180.
41. H. Aalderin, L. L. Greer, G. A. Van Kleef, and C.K.W. De Dreu,
“Interest (Mis)alignments in Representative Negotiations: Do Pro-
Social Agents Fuel or Reduce Inter-Group Conflict?” Organizational
Behavior and Human Decision Processes, 2013, 120, 240–250.
42. T. M. Probst, P. J. Carnevale, and H. C. Triandis, “Cultural Values in
Intergroup and Single-Group Social Dilemmas,” Organizational
Behavior and Human Decision Processes, 1999, 77(3), 171–191.
43. H. Triandis, Individualism and Collectivism (Boulder, Colo.: Westview
Press, 1995).
44. K. Leung, “Some Determinants of Conflict Avoidance,” Journal of
Cross-Cultural Psychology, 1998, 19(1), 125–136.
Chapter Seven
1. S. Shengxia, “CNOOC Seals Nexen Acquisition,” People’s Daily Online,
February 27, 2013, http://english.peopledaily.com.cn/90778/8144
984.html.
2. See I. Austen, “Canada Clears $15 Billion Chinese Takeover of an
Energy Company,” New York Times, December 7, 2012, http://deal
book.nytimes.com/2012/12/07/canada-clears-15-billion-chinese
-takeover-of-an-energy-company.
3. E. Pfanner, N. Gough, and K. Bradsher, “Buyout Offer Brings China
into the Orbit of Club Med,” New York Times, May 27, 2013, http://
dealbook.nytimes.com/2013/05/27/club-med-targeted-in-700
-million-privatization.
4. France24, “French Minister Under Fire for Saying ‘Non’ to Yahoo!”
France24, February 5, 2013, http://www.france24.com/en/20130502
-french-minister-montebourg-block-yahoo-deal-dailymotion-usa.
Notes 257
5. S. Kapner, B. Mukherji, and S. Banjo, “Before Dhaka Collapse, Some
Firms Fled Risk, Wall Street Journal, May 8, 2013, http://online.wsj.com
/article/SB10001424127887324766604578458802423873488.html.
6. A. Sharma and B. Mukherji, “Bad Roads, Red Tape, Burly Thugs,
Slow Wal-Mart’s Passage in India,” Wall Street Journal, January 12,
2013, http://online.wsj.com/article/SB10001424127887323622904
578129294224588914.html.
7. Retail Sector in India Growing at Phenomenal Pace,” The Times of
India, June 25, 2012, http://articles.timesofindia.indiatimes.com
/2012-06-25/news/32408603_1_retail-sector-retail-industry-global
-retail-development-index; V Bajaj, “India Puts Wal-Mart Deal with
Retailer Under Scrutiny,” New York Times, October, 18, 2012, http://
www.nytimes.com/2012/10/19/business/global/india-opens
-inquiry-into-wal-mart.html.
8. Sharma and Mukherji, “Bad Roads, Red Tape.”
9. F. Hill and F. Fee, “Fueling the Future: The Prospects for Russian
Oil and Gas,” Demokratizatsiya, 2002, 10(4), 462–487, http://
www.brookings.edu/∼/media/research/files/articles/2002/9
/fall%20globalenvironment%20hill/200205_demokratizatsiya
.pdfI.
10. S. Reed, “Rosneft Completes Acquisition of TNK-BP,” New York Times,
March 21, 2013, http://www.nytimes.com/2013/03/22/business
/global/rosneft-finalizes-acquisition-of-tnk-bp.html.
11. J. Blitzer, “The Casino Is Coming to Town,” New York Times, September,
11, 2012, http://latitude.blogs.nytimes.com/2012/09/11/mad
rid-government-courts-a-mega-casino.
12. P. Tullis, “EuroVegas, Baby: Billionaire Sheldon Adelson’s Rescue
Plan for Spain,” Bloomberg Businessweek, March 1, 2013, http://
www.businessweek.com/articles/2013-03-01/eurovegas-baby
-billionaire-sheldon-adelsons-rescue-plan-for-spain.
13. E. Pinedo, “Spanish Casinos Bet on Rebirth Through Eurovegas,”
Reuters, October 15, 2012, http://www.reuters.com/article/2012/10
/15/spain-casinos-idUSL5E8LE4CR20121015; G. Tremlett, “‘Euro
Vegas’ Gambling Complex to Be Built Near Madrid After £8.3bn
Secured,” The Guardian, February 8, 2013, http://www
.guardian.co.uk/world/2013/feb/08/eurovegas-gambling-complex
-madrid.
14. Farlex, “Rule of law,” The Free Dictionary, http://legal-dictionary
.thefreedictionary.com/Rule+of+law.
15. See World DataBank, “Worldwide Governance Indicators,” http://
databank.worldbank.org/data/views/variableselection/select
variables.aspx?source=worldwide-governance-indicators.
258 Notes
16. “Feed Me, Seymour,” The Economist, April 16th, 2012, http://
www.economist.com/blogs/americasview/2012/04/argentinas-oil
-industry.
17. S. M. Dickinson, “Danone v. Wahaha: Lessons for Joint Ventures in
China,” China Law Blog, http://www.chinalawblog.com/Danone
WahahaLessons.pdf.
18. Dickinson, “Danone v. Wahaha”; D. Barboza, “Danone Exits China
Venture After Years of Legal Dispute,” New York Times, September
30, 2009, http://www.nytimes.com/2009/10/01/business/global
/01danone.html?_r=3&.
19. T. Buerkle, “U.K. Firms Lead as Law Goes Global,” International
Herald Tribune, July 13, 1999, pp. 11–12.
20. Editors of the American Heritage® Dictionary (ed.), Roget’s II: The
New Thesaurus, 3rd ed. (Boston: Houghton-Mifflin, 1995).
21. United States Government, Anti-Bribery and Books & Records Provisions
of The Foreign Corrupt Practices Act, 1977 (amended in
1998), can be found at http://www.justice.gov/criminal/fraud
/fcpa/statutes/regulations.html.
22. United States Department of Justice, “Foreign Corrupt Practices Act:
An Overview,” can be found at http://www.justice.gov/criminal
/fraud/fcpa.
23. F. Norris, “A Troubling Survey on Global Corruption,” New York
Times, May 17, 2013, http://www.nytimes.com/2013/05/18/busi
ness/economy/a-troubling-survey-on-global-corruption.html?_r=0.
24. The World Bank, “Six Questions on the Cost of Corruption with
World Bank Institute Global Governance Director Daniel Kaufmann,”
World Bank News & Broadcast, can be found at http://go.worldbank
.org/KQH743GKF1.
25. A. Martin, “Wal-Mart Vows to Fix Its Controls,” New York Times, April
24, 2012, http://www.nytimes.com/2012/04/25/business/wal-mart
-says-it-is-tightening-internal-controls.html?_r=0.
26. M. Bahree, “Wal-Mart’s Path to Power in India Hits Its Limits: The
Lawyers,” Wall Street Journal, April 1, 2013, http://online.wsj.com
/article/SB10001424127887324373204578373830411211410.html.
27. M. Stendahl, “Wal-Mart Says $157M FCPA Legal Tab Will Grow,”
Law360, March 27, 2013, http://www.law360.com/articles/427706
/wal-mart-says-157m-fcpa-legal-tab-will-grow.
28. J. Holder and S. Raice, “IBM Settles Bribery Charges,” Wall Street
Journal, March 19, 2011, http://online.wsj.com/article/SB10001424
052748704608504576208634150691292.html.
29. E. Pettersson, “Alstom Executives Charged in U.S. with FCPA
Crimes,” Bloomberg, April 16, 2013, http://www.bloomberg.com
Notes 259
/news/2013-04-16/alstom-executives-charged-in-u-s-with-fcpa
-crimes.html.
30. See OECD, “Convention on Combating Bribery of Foreign Public
Officials in International Business Transactions: Ratification Status
as of 20 November 2012,” http://www.oecd.org/daf/anti-bribery
/antibriberyconventionratification.pdf.
31. See Transparency International, http://www.transparency.org.
32. D. L. Messick and W.B.G. Liebrand, “Individual Heuristics and the
Dynamics of Cooperation in Large Groups,” Psychological Review,
1995, 102(1), 131–145.
33. In contrast, the philosophy of relativism judges the morality of an act
by its acceptability in the contest. Relativism justifies engaging in
corruption in corrupt environments, other things being equal. For
more information, see R. J. Lewicki, J. A. Litterer, J. W. Minton, and
D.M. Saunders, Negotiation, 2nd ed. (Burr Ridge, Ill.: Irwin, 1994).
34. To access the World Bank Governance Report, go to http://
info.worldbank.org/governance/wgi/index.asp. This Governance
Indicators report also evaluates governments on five other criteria
important to FDIs: voice and accountability, political stability and
absence of violence, government effectiveness, regulatory quality,
and rule of law.
35. T. Paulson, “World Bank Corruption & Transparency Index,”
Humanosphere, February 6, 2013, http://www.humanosphere.org
/2013/02/world-bank-corruption-transparency-index.
36. M. de Vibe, “A Joint Response to Corruption in Uganda: Donars
Beginning to Bite,” Chr. Michelsen Institute, 2012, 1, http://
www.cmi.no/publications/publication/?4396=a-joint-response
-to-corruption-in-uganda.
37. S. Greenhouse, “Some Retailers Rethink Role in Bangladesh,” New
York Times, May 1, 2013, http://www.nytimes.com/2013/05/02
/business/some-retailers-rethink-their-role-in-bangladesh.html
?pagewanted=all.
38. S. Greenhouse, “U.S. Retailers See Big Risk in Safety Plan for Factories
in Bangladesh,” New York Times, May 22, 2013, http://
www.nytimes.com/2013/05/23/business/legal-experts-debate-us
-retailers-risks-of-signing-bangladesh-accord.html?pagewanted=all.
39. S. Greenhouse and S. Clifford, “Retailers Offer Plan for Safety at
Factories,” New York Times, July 10, 2013, http://www.nytimes.com
/2013/07/11/business/global/us-retailers-offer-safety-plan-for
-bangladeshi-factories.html?pagewanted=all.
40. There are many sources of information about human rights practices.
The U.S. State Department publishes Human Rights Practices
260 Notes
reports. Organizations such as Amnesty International, PEN International
Writers’ Union, and Physicians for Human Rights publish
their own specialized reports. The American Association for the
Advancement of Science publishes a web-based directory of human
rights resources at http://shr.aaas.org/coalition/WG/5/Projects
/bibliography/index.shtml.
41. “Feed Me, Seymour.”
42. “Sparks in the Dark: A Half-Hearted Policy Retreat,” The Economist,
January 19, 2013, http://www.economist.com/news/americas/215
69705-half-hearted-policy-retreat-sparks-dark.
43. “Chevron Agrees Terms of Argentina Shale Investment: YPF,”
Reuters, May 15, 2013, http://www.reuters.com/article/2013/05
/15/us-ypf-chevron-idUSBRE94E16K20130515.
44. R. Minder and S. Romero, “Spain Weighs Response to Nationalization
of YPF,” New York Times, April 17, 2012, http://www.nytimes
.com/2012/04/18/business/global/spain-weighs-response-to
-nationalization-of-ypf.html.
45. R. Duncan, “Price or Political: An Investigation of the Cause of
Expropriation,” Australian Journal of Agricultural and Resource Economics,
2006, 50(1), 85–101.
46. R. Duncan, “Costs and Consequences of the Expropriation of FDI
by Host Governments,” 2006, can be found at http://ageconsearch
.umn.edu/bitstream/139524/2/2006_duncan.pdf.
47. “Sparks in the Dark.”
48. G. Salacuse, Making Global Deals (New York: Times Books, 1991),
137.
49. Professor Torben Andersen, my colleague at the Kellogg School of
Management, Northwestern University, comments that hedging
against currency fluctuations is straightforward in simple situations
but is typically much more difficult and sometimes almost intangible
in more complex settings. He suggests the following references: C.S.
Eun and B. G. Resnick, International Financial Management, 4th ed.
(New York: McGraw-Hill Irwin, 2007), especially Part Three, on
foreign exchange exposure and management; D. K. Eiteman, A. I.
Stonehill, and M. H. Moffett, Multinational Business Finance, 11th ed.
(Reading, Mass.: Addison-Wesley, 2007), especially Part Four, on the
foreign exchange exposure.
Chapter Eight
1. W. Adair, “Integrative Sequences and Negotiation Outcome in Same
and Mixed-Culture Negotiations,” International Journal of Conflict
Management, 2003, 14(3/4), 273–296; W. L. Adair, T. Okumura, and
Notes 261
J. M. Brett, “Negotiation Behavior When Cultures Collide: The United
States and Japan,” Journal of Applied Psychology, 2001, 86(3), 371–385;
N. J. Adler and J. L. Graham, “Cross-Cultural Interactions: The International
Comparison Fallacy,” Journal of International Business Studies,
1989, 20, 515–538; J. M. Brett and T. Okumura, “Inter- and Intracultural
Negotiation: U.S. and Japanese Negotiators,” The Academy of
Management Journal, 1998, 41(5), 495–510; L. Imai and M. Gelfand,
“The Culturally Intelligent Negotiator: The Impact of Cultural Intelligence
(CQ) on Negotiation Sequences and Outcomes,” Organizational
Behavior and Human Decision Processes, 2010, 112, 83–98; J. Graham,
“The Influence of Culture on the Negotiation Process,” Journal of
International Business Studies, 1985, 16, 81–96; L. A. Liu, C. H. Chua,
and G. K. Stahl, “Quality of Communication Experience: Definition,
Measurement, and Implications for Intercultural Negotiations,”
Journal of Applied Psychology, 2010, 95, 469–487; L. A. Liu, R. A. Friedman,
B. Barry, M. Gelfand, and Z-X. Zhang, “The Dynamics of
Consensus Building in Intracultural and Intercultural Negotiations,”
Administrative Science Quarterly, 2012, 57, 269–304; J. H. Natlandsmyr
and J. Rognes, “Culture, Behavior, and Negotiation Outcomes: A
Comparative and Cross-Cultural Study of Mexican and Norwegian
Negotiators,” International Journal of Conflict Management, 1995, 6,
5–29; J. Ramirez-Marin, J. Brett, S. Aslani, C. Tinsley, and L. Munduate,
“Expectations and Emotions: Spanish Honor and Anglo Dignity
in Intercultural Negotiation,” paper presented at the International
Association for Conflict Management annual meeting, 2013, Kyoto,
Japan; M. Kern, S. Lee, Z. Aytug, and J. M. Brett, “Bridging Social
Distance in Inter-Cultural Negotiations: ‘You’ and the Bi-Cultural
Negotiator,” International Journal of Conflict Management, 2012, 23(2),
173–191.
2. M. J. Gelfand, L. H. Nishii, and J. L. Raver, “On the Nature and
Importance of Cultural Tightness-Looseness,” Journal of Applied Psychology,
2006, 91(6), 1225–1244; M. J. Gelfand, J. L. Raver, L. Nishii,
and others, “Differences Between Tight and Loose Cultures: A
33-Nation Study,” Science, 2011, 332, 1100–1104.
3. Imai and Gelfand, “The Culturally Intelligent Negotiator”; S. K.
Crotty and J. M. Brett, “Fusing Creativity: Cultural Metacognition and
Teamwork in Multicultural Teams,” Negotiation and Conflict Management
Research, 2012, 5(2), 210–234. See also from a different perspective
W. W. Maddux, K. Y. Leung, C. Y. Chiu, and A. D. Galinsky, “Toward
a More Complete Understanding of the Link Between Multicultural
Experience and Creativity,” American Psychologist, 2009, 64(2),
156–158.
262 Notes
4. This is more vulnerable because dignity culture negotiators tend to
trust.
5. Crotty and Brett, “Fusing Creativity.”
6. M. Janssens and J. M. Brett, “Cultural Intelligence in Global Teams:
A Fusion Model of Collaboration,” Group and Organizational Studies,
2006, 31(1), 124–153, at 148.
7. S. Greenhouse and S. Clifford, “Retailers Offer Plan for Safety at
Factories,” New York Times, July 10, 2013, http://www.nytimes.com
/2013/07/11/business/global/us-retailers-offer-safety-plan-for
-bangladeshi-factories.html?pagewanted=all.
8. By “social fees” I do not mean bribes, which go to personal enrichment
for the purpose of obtaining or continuing business. Social fees
are contributions to social projects for the betterment of the population
of the country as a whole. For example, India’s 2012 law opening
access to big box retailers requires social fees in the form of infrastructure
investments that will provide benefits such as roads and cold
storage that go beyond the needs of the FDI site.
9. E. Pinedo, “Spanish Casinos Bet on Rebirth Through Eurovegas,”
Reuters, October 15, 2012, http://www.reuters.com/article/2012/10
/15/spain-casinos-idUSL5E8LE4CR20121015; G. Tremlett, “EuroVegas”
Gambling Complex to Be Built Near Madrid After £8.3bn
Secured,” The Guardian, February 8, 2013, http://www.guardian.co
.uk/world/2013/feb/08/eurovegas-gambling-complex-madrid.
Adversarial procedure A dispute resolution procedure in which
disputants or their agents investigate the facts and present their
own arguments to a third party; compare to non-adversarial or
inquisitorial procedure.
Anchor A reference point that holds negotiators’ attention.
Anchoring and insufficient adjustment Negotiators’ tendency to
fail to use information conveyed during the negotiation to
update their references points.
A priori majorities A faction or coalitions that involve more than
half the members of a group that exist before the informationsharing
phase of group decision making begins.
Arbitration A third-party dispute resolution procedure in which
the third party takes a rights-based approach and has the
authority to make a final and binding decision.
Authoritarian (decision) A procedure in which the decision
maker has absolute power.
BATNA (best alternative to a negotiated agreement) What each
negotiator will do in a deal-making situation if no agreement
is reached; what will happen to negotiators if they fail to resolve
a dispute or reach an agreement.
Broadly focused An agreement that addresses both the surface
issues and the underlying problem.
Cap and trade systems In which a government entity sets a limit
on emissions of a pollutant and then generates permits to polluters
equivalent to the cap. Polluters with excess permits can
sell them, and those without sufficient permits can buy them.
Claim In dispute resolution, the demand for something due.
Claim value The amount of value (resources) a negotiator seeks
to receive in an agreement.
263
Glossary
264 Glossary
Coalition A subgroup or faction that accounts for less than a
majority of the members of the group.
Coexistence The process of recognizing and respecting team
members’ different cultural approaches to teamwork and combining
those different approaches in ways that preserve their
unique qualities.
Collective goal A goal that a group of people hold in common.
Competitive social motive The social motive that maximizes
one’s own outcome at the expense of the other party’s outcome.
Conflict The perception of opposing interests, involving scarce
resources, goals, or procedures.
Confrontation style How a person responds when faced with
defiance, opposition, or hostility.
Consensus A group decision rule in which no team members
publicly oppose a decision, though they may do so in private.
Contact Face-to-face interaction among diverse members of a
group intended to help them build mutual respect and trust.
Contingency An agreement to change the negotiated outcome
in a specific way on the basis of the occurrence of a future
event.
Contingent contract An agreement to change the negotiated
outcome in a specific way on the basis of the occurrence of a
future event.
Contributing dilemma Social dilemmas related to adding to
public goods, such as paying taxes, contributing to public radio
and television, doing one’s share of teamwork.
Cooperative social motive The social motive that maximizes
one’s own and the other party’s outcomes jointly.
Corruption Behavior that departs from what is legally, ethically,
or morally correct.
Create value The process of trying to increase the resources
available to negotiators jointly, usually by trading issues or identifying
compatible issues.
Cultural metacognition A dimension of cultural intelligence
(CQ), which measures an individual’s ability to deal effectively
in situations of cultural diversity.
Culture The unique character of a social group, including the
values and norms shared by members of the group and the
group’s social, economic, political, and other institutions.
Glossary 265
Decision rules The alternative ways that multiple parties can
reach an agreement, such as majority rule or consensus.
Dignity The prototype of Western society. Its key characteristic
is intrinsic self-worth as self-determined or independent from
social status.
Direct confrontation When negotiators identify the issue in
dispute and suggest the resolution.
Discuss before decide A norm to talk about the pros and
cons of the options associated with each of the issues
before deciding any single issue or proposing a multi-issue
offer.
Dispute Conflict in which a claim made by one party is rejected
by another.
Distributive A negotiation to allocate a fixed set of resources.
Egalitarian A culture that aspires to social equality, especially in
political, social, and economic affairs.
Equality A norm that distributes the same value of resources to
each party.
Equity A norm that distributes resources according to a standard
of fairness, usually in proportion to contributions, inputs,
or costs.
Expand the pie Slang for entering into integrative or valuecreating
negotiations.
Expropriation Refers to any changes in the FDI agreement on
the part of the government that were not part of the original
agreement.
Face The prototype of East Asian society. Its key characteristic
is extrinsic self-worth as determined from social status associated
and interdependent with the social groups to which the
individual belongs.
Faction A subgroup or coalition that accounts for less than a
majority of the members of a group.
Fixed pie Refers to the resources in a negotiation that can only
be divided or distributed; a mental representation of
negotiations.
Free rider A group member who does not contribute to the
group but benefits from the group’s efforts.
Fusion teamwork A group process that preserves cultural
differences.
266 Glossary
Future-based An agreement that addresses how parties are going
to interact after the dispute has been resolved.
Generalized reciprocity Refers to an exchange available to all
members of the team. Reciprocity is an exchange between two
people, say A and B. Generalized reciprocity could be an
exchange such that A defers to B on the first issue, B defers to
C on the second, and C defers to A.
Hai “Yes” in Japanese.
Hierarchical A culture that accepts social inequality in political,
social, and economic affairs.
High-context culture A culture in which meaning must be
inferred from the context or situation in which the information
was communicated.
Honor The prototype of Middle Eastern and North African and
Latin American societies. Its key characteristic is self-worth that
is both extrinsic as determined by social status and intrinsic as
contested for and claimed from social interactions.
Hybrid teamwork Refers to a team process that mixes different
team members’ cultural or personal approaches to teamwork
into a coherent, unique, and stable approach to teamwork.
Independent A cultural value that links social identity to characteristics
of the individual rather than to characteristics of the
groups to which that individual belongs.
Indirect confrontation When negotiators signal the issue in
dispute and leave it to the respondent to determine the
resolution.
Individualistic social motive The social motive that maximizes
one’s own gain regardless of the other party’s gains.
In-group A group to which an individual belongs and from
which that individual may derive social identity.
Inquisitorial procedure Process in which an agent of the court
investigates and presents an opinion and arguments to the
judge; compare with adversarial procedure.
Integrative A negotiation to expand the resources to be allocated
beyond those resources that would be available if one
party took all or two parties compromised (split their differences)
on all issues.
Integrative potential The maximum possible value available to
negotiators if they agree to all compatible issues and make all
efficient trade-offs. Also called outcome potential.
Glossary 267
Interactional justice Refers to disputants’ perceptions of fairness
of the third party.
Intercultural negotiations Negotiations between parties from
different cultures.
Interdependent A cultural value that links an individual’s social
identity to characteristics of the groups to which that individual
belongs.
Interests The reasons why negotiators take the positions they
do; negotiators’ needs, fears, and concerns.
Interpersonal conflict Conflict over personal responsibility and
blame.
Intracultural negotiations Negotiations between parties from
the same culture.
Joint gains The sum of the negotiating parties’ individual gains.
Limited-duration experiment with evaluation criteria An agreement
to try a solution to the dispute for a predetermined
length of time, with standards for evaluating whether the solution
is working or not.
Looseness Refers to the extent to which cultural norms are relatively
flexible, generating improvisation and interpretation and
greater variation of behavior within the culture.
Low-context culture A culture in which meaning can be inferred
from the message itself. It is not necessary to know the situation
in which the information was communicated in order to
understand.
Majority A decision rule whereby the alternative preferred by
more than half of the members of a group becomes the alternative
chosen by the group.
Meaningful participation Group discussion using the principle
that group members have an obligation to speak up when their
knowledge, expertise, or contacts become relevant as well as
when they harbor doubts about the direction the group is
taking or the feasibility of the group’s plan.
Mediation A third-party dispute resolution procedure in which
the third party does not have the authority to make a final and
binding decision.
MESOs (multiple equivalent simultaneous offers) A set of two
or more multiple-issue offers that are of equivalent value to the
party making the offer, but differentially configured so as to
possibly be of different value to the counterpart.
268 Glossary
Mindset Refers to the way people reason and process
information.
Minimum agreement Team members’ least acceptable position,
or reservation price, on their most important issues.
Negotiating team Two or more people representing a single
party to the negotiation.
Negotiation The process of conferring among two or more
interdependent parties to arrive at an agreement about some
matter over which they are in conflict.
Net value Gain greater than the return anticipated from settling
for the BATNA.
Non-adversarial procedure When third parties or their agents
make their own assessment of the situation and identify and
interpret the relevant standard for decision making.
Non-precedent setting An agreement that focuses narrowly on
the issues but does not address the general principles underlying
the dispute.
Norm A standard of appropriate behavior in social interactions
within a culture.
Objective standards Precedents or standards of comparison.
Offers Proposals or suggestions to resolve issues.
Outcome potential The maximum possible value available to
negotiators if they agree to all compatible issues and make all
efficient trade-offs. Also called integrative potential.
Out-group Any group in which an individual is not a member.
Position What a party wants in negotiation.
Power The ability to influence others to concede to your
wishes.
Precedents Standards of comparison, also called objective
standards.
Preferences Priorities among issues.
Priorities The order of importance of a set of issues.
Prisoner’s dilemma A two-party social dilemma; a situation in
which self-interests lead one to compete but collective interests
lead one to cooperate.
Procedural conflict A dispute over means, including the dispute
resolution process itself.
Procedural justice Refers to disputants’ perceptions of the fairness
of the process.
Glossary 269
Prototype The cultural pattern or model, based on the average
or modal characteristic of a culture.
Question-and-answer (Q&A) Information exchange regarding
interests and priorities.
Recategorization The process of changing social identity on the
basis of group membership rather than on independent attributes
of the self.
Reciprocity An equivalent exchange between two people.
Reservation price The most a negotiator is willing to offer or
the least a negotiator is willing to take and still reach
agreement.
Rights Standards of fairness or law that can be used to resolve
disputes; similar to fairness standards in making deals.
Ringi decision-making When lower-level managers circulate an
idea among peers and then submit the idea to their manager,
who has authority to accept or reject the idea.
Rule of law Refers to whether or not a government exercises its
power in accordance with well-established and clearly written
rules, regulations, and legal principles.
Satisficing In this context, the decision to reach an agreement
that is better than BATNA but might not be the best possible
outcome if you were willing to put forth more effort.
Second agreement An agreement entered into after a negotiated
agreement has already been reached. Patterned on
post-settlement settlements.
Self-worth Refers to a person’s sense of his or her own value in
society.
Sensitivity and response to insults Refers to the way a person is
affected by and responds to another’s offensive behavior.
Social dilemma A multiparty decision-making situation in which,
if everyone acts to maximize personal gain, everyone is worse
off than if everyone acts to maximize collective gain; yet acting
to maximize personal gain is always better for the individual.
Social distance Refers to the degree to which people are consciously
aware and sympathetic to each other.
Social identity A sense of one’s own reputation; the impression
one thinks one has made on others.
Social motives The types of choices that people make in situations
such as negotiation in which they are interdependent.
270 Glossary
Standards of comparison Precedents or objective standards.
Status Refers to a person’s position in a social hierarchy.
Stereotype A belief that everyone from a given culture will be
like that culture’s prototype.
Strategy An organized set of behaviors chosen because they are
thought to be the means of accomplishing the goal of
negotiating.
Subak Community organizations in Bali, Indonesia, that control
water resources.
Subgroup dominance A collaboration model in which a coalition
or faction controls group processes and outcomes.
Substantiation and offers (S&O) Attempts to influence the
counterpart to make concessions.
Taking dilemma A social dilemma in which parties take resources
from the commons, for example, depletable resources such as
fisheries and forests.
Target The components that would constitute an ideal settlement;
goals in negotiation and standards against which to judge
opening offers, concessions, and final offers.
Task conflict A dispute over goals and resources.
Thinking net Slang for the process of thinking about gains in
negotiations as greater than gains that should be available from
negotiating an agreement with BATNA.
Threat An expression of an intention to do harm; an if-then
statement about the other party’s actions and the consequences
if the party persists in them.
Tightness Refers to the extent to which cultural norms are relatively
inflexible and formal, generating little within-culture
variation.
Trade-off An agreement in which parties concede on lowpriority
issues in order to gain on high-priority issues.
Trade-off issues Multiple issues that are low priority to one party
and high priority to the counterpart and vice versa.
Transaction costs The costs of negotiating.
Transactive memory Knowledge of who on the team knows
what.
Trust The willingness to make oneself vulnerable to the other
party, and belief that the other party will not take advantage.
Glossary 271
Two-thirds majority A large coalition of two-thirds of group
members.
Unanimity A decision rule that requires agreement among all
team members.
Utilitarianism A judgment of the morality of an act by its
consequences.
Value A judgment of what is important in social interactions and
other aspects of life.
Voice The opportunity for disputants to tell their side of things.
WATNA (worst alternative to a negotiated agreement) The worst
outcome that the counterpart can impose on a negotiator if
parties do not reach agreement.
A
Aalderin, H., 184
Abel, R. L., 81
Adair, W., 37, 53, 55, 60, 61, 74, 76,
78, 216
Adair, W. L., 53, 55, 58, 73, 216
Adam, H., 53, 54, 72, 106
Adler, N. J., 73, 216
Ala, M., 146
All Africa, 47
Allison, G., 141
Allred, K. G., 73
Alon, I., 140
American Heritage® Dictionary,
197
Anderson, C., 106
Anderson, T., 212
Ang, S., 78, 128
Arango, T., 180
Aristotle, 7–8
Armstrong, T., 181
Arsu, S., 184
Arzu, H.H.T., 55
Aslani, S., 37, 53, 73, 76, 216
Associated Press, 166, 167
Austen, I., 189
Axelrod, R., 174
Ayers, E., 14, 31
Aytug, Z., 77, 216
B
Babcock, L., 12, 31
Bahree, M., 199
273
Name Index
Bajaj, V., 190
Balachandra, L., 64
Banjo, S., 189
Barak, M. M., 34
Barry, B., 73, 74, 76, 78, 216
Barsness, Z. I., 25, 113, 139
Batson, C. D., 179
Bazerman, M. H., 51, 52, 145, 174
Beersma, B., 37, 86
Behfar, K., 7, 36, 39, 119, 124, 125,
126, 130, 131, 135, 136, 138, 148,
151, 156, 39
Belton, C., 81, 83, 96
Ben-Yosef, M., 183
Benet-Martinez, V., 92, 105
Bennett, R. J., 146, 147
Bettenhausen, K. L., 121
Bies, R. J., 23, 31, 114
Bijlsma-Frankema, K. M., 55
Billig, M. G., 74
Blitzer, J., 191
Bodenhausen, G. V., 106
Boldt, E. D., 56
Bond, M. H., 33
Bornstein, G., 183, 184
Bosman, J., 166
Bourdieu, P., 37
Bowdle, B. F., 37, 86
Bowles, H. R., 12, 31
Box, S., 56
Bradsher, K., 189
Brett, J., 10, 37, 51, 52, 55, 61, 73,
74, 76, 78, 106, 216
274 Name Index
Brett, J. M., 6, 25, 36, 39, 52, 53, 54,
55, 57, 58, 59, 60, 61, 72, 73, 76,
77, 88, 89, 92, 105, 106, 108, 109,
113, 119, 123, 124, 125, 126, 128,
129, 130, 131, 135, 136, 137, 138,
139, 140, 146, 147, 148, 149, 151,
153, 156, 174, 216, 223
Brewer, M. B., 159
Britton, S. D., 52
Brousseau, K. R., 121
Brower, H. H., 35, 55
Brown, R., 74
Buarillo, M., 45
Buerkle, T., 197
Bundy, R. P., 74
Bürger, J., 55
Burt, R. S., 29
Butler, J. K., 52, 55
C
Camerer, C., 29
Carl, D., 37
Carnevale, P. J., 81
Carnevale, P.J.D., 52, 53, 55, 64, 72,
184
Carroll, J., 52
Carroll, J. S., 51
Chee, D., 35, 55
Chen, B. X., 166
Chen, C., 112
Chen, Y., 6, 36, 39, 119
Cheung, F. M., 78
Chi, S., 112
Chiu, C. Y., 91, 112, 217
Choi, I., 29, 33, 35, 58, 60, 148
Choi, S-C., 181
Chui, C. Y., 56
Chus, C. H., 77
Cimilluca, D., 23
Clifford, S., 172, 209, 225
Coben, J., 112
Cohen, D., 31, 33, 36, 37, 86
Cohen, T. R., 184
Cole, S., 112
Colquitt, J. A., 114
Cook, K. S., 35
Cordeiro, W. P., 146
Corkran, L., 114
Crotty, A., 46
Crotty, S. K., 123, 128, 223
Crowley, R., 7
Cummings, L. L., 25
Curhan, J., 22, 74
D
Dawes, R. M., 182
De Dreu, C., 118
De Dreu, C.K.W., 52, 53, 72, 184
de Vibe, M., 203
de Wit, F.R.C., 118, 121, 150
Dickinson, S. M., 194, 196
Diermeier, D. A., 139, 140
Dietz, G., 55
Dirks, K. T., 32, 55, 56
Donahue, E. M., 57
Dorfman, P. W., 36, 37
Drolet, A. L., 64
Druckman, D., 52
Dudley, R., 81
Duncan, R., 211
Dunne, T. C., 115
Dyer, N., 32, 34
E
Earley, C., 78
Earley, C. P., 60, 122, 128
Earley, P. C., 124, 125
Economist, The, 194, 211
Eden, L., 139
Eisenhardt, K., 118
Eiteman, D. K., 212
El Mundo, 44
Elfenbein, H. A., 22
Elgar, E., 55
Ellemers, N., 37
Emerson, R. M., 99
Erdogan, R. T., 183–184
Erez, M., 60
Ernst & Young, 45
Eun, C. S., 212
F
Fan, R. M., 78
Farlex, 194
Name Index 275
Fee, F., 190
Felsteiner, W.L.F., 81
Ferrin, D., 55
Ferrin, D. L., 55
Fischer, A. H., 37, 86
Fisher, R., 12
Flament, C., 74
Folger, R., 114
Follett, M. P., 52
Ford, J., 56
Forgas, J.P., 64
France24, 189
Friedman, R., 106, 112, 130
Friedman, R. A., 73, 74, 76, 78, 138,
216
Fry, W. R., 52
Fukumo, M., 32, 34
Fukuyama, F., 35, 56
G
Galinsky, A., 54, 99, 140
Galinsky, A. D., 54, 69, 139, 217
Gallucci, M., 37, 86, 178
Gelfand, M., 73, 74, 78, 216
Gelfand, M. J., 7, 23, 27, 32, 34, 53,
56, 76, 78, 217
George, J. M., 74
Gerts, M.J.J., 37, 86
Getman, J. G., 104
Gibson, C. B., 60
Gigone, D., 126
Gillespie, N., 55
Gilmore, D., 37
GlobeScan and SustainAbility, 171
Goates, N., 106
Goldberg, S., 112
Goldberg, S. B., 88, 104, 113, 153
Gomberg, L. E., 64
Gonzalez, J. A., 74
Gough, N., 189
Gouldner, A. W., 32, 174
Graham, J., 73, 74, 216
Graham, J. L., 73, 216
Greenberg, J., 114
Greenhause, S., 172
Greenhouse, S., 208, 209, 225
Greenland, K., 122, 180
Greer, L. L., 118, 121, 150, 184
Grove, J., 114
Gruenfeld, D., 118, 145
Gu, J., 69
Gunia, B., 51, 52, 53, 54, 55, 57, 61
Gunther, M., 171
Gupta, V., 36, 37, 140
H
Haag, C., 53
Hackman, J. R., 121
Hall, E. T., 59–60
Hanges, P. J., 37
Hardin, C., 159
Hardin, G., 7
Harinck, B., 37
Harinck, F., 37, 86
Hastie, R., 52, 126, 146
Heine, S. J., 33
Herman, J. B., 104
Hewstone, M., 122, 180
Hill, F., 190
Hofstede, G., 33
Holcombe, K., 32, 34
Holder, J., 199
Hong, Y. Y., 91, 112
Hong, Ying-yi, 56
Horowitz, R., 22, 31
Hottovy, R. J., 46
Hui, C., 34
Huo, Y. J., 114
Hyder, E. B., 53, 69
I
Ijzerman, H., 37, 86
Imai, L., 78, 216, 217
Indeláová, H., 55
Inglehart, R., 57
Insko, C. A., 184
Ip, G., 91
Isaacson, W., 166
Isen, A. M., 64, 72
J
Janis, I. L., 141
Janssens, M., 25, 125, 126, 129, 135,
137, 223
276 Name Index
Javidan, M., 36, 37
Jehn, K., 118, 121, 150
Jehn, K. A., 130
Jones, G. R., 74
Jowett, B., 8
K
Kâðitçibasi, Ç., 181
Kamdar, D., 51, 52, 53, 55, 57
Kameda, T., 146
Kapner, S., 189
Keisler, S.S., 138
Keltner, D., 106
Kern, M., 6, 36, 39, 77, 119, 124, 125,
126, 131, 135, 136, 148, 151, 156,
216
Kern, M. C., 6
Kerr, J. L., 64
Kerr, N. L., 172
Kim, D., 145
Kim, P., 106, 118
Kim, U., 181
Kim, Y. H., 31
Kimmel, M. J., 52, 55
Koeninger, K., 166
Koh, C., 128
Konar-Goldband, E., 52, 55
Kong, D. T., 55
Kramer, G. P., 106
Kramer, R. M., 32, 56
Krauss, C., 163
Kruglanski, A. W., 78
KTVU, 172
Kuenen, L., 137
Kugler, T., 184
Kühlmann, T. M., 55
Kurtzberg, T., 64
Kwak, R. S., 74
L
Lai, L., 12, 31
Lattman, P., 162
Lee, F., 92, 105
Lee, K.-H., 74
Lee, S., 77, 216
Lempereur, A., 55
Leonardelli, G. J, 69
Leu, J., 92, 105
Leung, A.K.Y., 12, 16, 31, 33, 36,
37
Leung, K., 78, 185
Leung, K.Y., 217
Lewicki, R. J., 32, 55, 56, 57, 202
Lewis, S. A., 52, 53
Liebrand, W.B.G., 182, 200
Lin, Y. C., 35
Lind, E. A., 31
Lisco, C. C., 106
Litterer, J. A., 202
Liu, L. A., 73, 74, 76, 77, 78, 216
Liu, W., 112
Lorenzen, R. P., 176
Lorenzen, S. L., 176
Lovelace, K., 118
Luke, M., 55
Lytle, A., 55
Lytle, A. L., 6, 25, 89, 106, 108
M
Maddux, W., 72, 106
Maddux, W. W., 217
Magazine Insight TN-BK, 81
Magee, J., 99
Magenau, J. M., 52, 55
Malhotra, D., 32, 56
Mallozzi, J., 73
Mann, L., 141
Mannix, B., 145
Mannix, E., 6, 36, 39, 119
Manstead, A.S.R., 37, 53, 72, 86
March, R. M., 101
Martin, A., 199
Matsui, F., 73
McGrath, J. E., 174
McKersie, R. B., 52-53
McRuer. G., 69
McTavish, J., 182
Medvec, V., 69, 139, 140
Menon, T., 91, 112
Messick, D., 98
Messick, D. L., 200
Messick, D. M., 159, 179, 182
Name Index 277
Meyerson, D., 32, 56
Miller, D. T., 32, 37
Minder, R., 211
Minton, J. W., 202
Moag, J. S., 31, 114
Moffett, M. H., 212
Moore, C. W., 113
Moore, D., 174
Moran, T., 179
Morris, M., 64, 106
Morris, M. W., 64, 91, 92, 105, 112,
140
Mosakowski, E., 122, 124, 125
Mosquera, P. M. Rodriguez, 37
Mukherji, B., 189, 190
Munduate, L., 73, 76, 216
Murnighan, J. K., 32, 56, 121
Mussweiler, T., 54
N
Nadler, J., 64
Nandkeolyar, A., 51, 52, 53, 55, 57
National Geographic Education,
159
Natlandsmyr, J. H., 73, 76, 216
Natural Resources Defense
Council, 179
Neale, M. A., 53
Ng, K. Yee, 128
Nicholson, C. V., 23
Nisbett, R. E., 10, 29, 33, 35, 37, 58,
60, 86, 148
Nishii, L. H., 27, 32, 34, 56, 217
Nishishiba, M., 35, 55
Norenzayan, A., 29, 33, 35, 58, 60,
148
Norris, F., 198
O
OECD, 200
Oetzel, J. G., 34
Ohbuchi, K., 32, 34
Okumura, T., 52, 53, 55, 58, 73, 74,
106, 109, 174, 216
Olekalns, M., 52, 53, 105, 106
Önder, Ç., 35, 55
Osgood, C. E., 180–181
Ostrom, E., 176
P
Patton, B., 12
Paulson, T., 202
Pelled, L. H., 118
Peng, K., 29, 33, 35, 58, 60, 140, 148
Peterson, R. S., 145
Pettersson, E., 199
Pfanner, E., 189
Pietroni, D., 53
Pilcher, L., 10
Pillutla, M., 100
Pinedo, E., 192, 226
Pitt-Rivers, J., 37
Points Guy, 168
Polman, P., 171
Poon, M., 118
Power, S., 179
Prietula, M. J., 53, 69
Probst, T. M., 184
Pruitt, D. G., 52, 53, 55, 81
R
Raia, C. P., 73
Raice, S., 199
Raiffa, H., 149
Ramirez-Marin, J., 37, 53, 73, 76, 216
Raver, J. L., 27, 56, 217
Reed, S., 191
Resnick, B. G., 212
Reuters, 211
Ritchie, L. D., 35, 55
Robbennolt, J. K., 106
Roberts, L. W., 56
Robinson, R. J., 57
Rodriguez Mosquera, P. M., 37, 86
Rogers, C. M., 112
Rogers, N., 112
Rognes, J., 73, 76, 216
Romero, S., 211
Rosenfield, D., 114
Ross, M., 99
Roth, D., 176
Rousseau, D. M., 10, 29
278 Name Index
S
Salacuse, G., 212
Sanchez-Burks, J., 34
Sander, F.E.A., 112
Sarat, A., 81
Saunders, D. M., 202
Saunders, M., 55
Schippers, M. C., 118
Schoonhaven, C. B., 118
Schultz, J. W., 52
Schwartz, G., 31
Schwartz, N., 86
Schwartz, S. H., 181
Schwarz, N., 37
Schweitzer, M. E., 64
Sell, L.-C., 10
Semnani-Azad, Z., 37, 53
Sentis, P., 98
Sertori, T., 176
Shafa, S., 37
Shaklee, H., 182
Shapiro, D. L., 89, 105, 106, 108,
109, 118
Sharma, A., 190
Shaw, M. E., 126
Shaw, M. L., 113
Shengxia, S., 188
Sheppard, L. A., 106
Shikhirev, P., 55
Shirako, A., 72
Sicoly, F., 99
Simons, T. L., 118
Sinaceur, M., 53, 72
Sitkin, S. B., 29
Sivanathan, N., 54
Skinner, D., 55
Smith, D., 53
Smith, K. A., 118
Smith, P. L., 52, 53
Song, W. Z., 78
Sproull, L., 138
Stahl, G., 77
Staw, B. M., 25
Stendahl, M., 199
Stonehill, A. I., 212
Suarja, L., 176
Sun, H. F., 34
Swaab, R., 54, 113, 140
Swaab, R. I., 139
T Tajfel, H., 74
Takahashi, C., 35
Tan, H. H., 35, 55
TED talk, 159
Tenbrunsel, A., 174
Tenbrunsel, A. E., 179
Thijssen, R., 176
Thomas-Hunt, M. C., 118, 145
Thompson, L., 19, 31, 52, 53
Thompson, L. L., 51, 54, 64, 139,
145
Thompson, P., 112
Thucydides, 7
Tiedens, L. Z., 72
Tillmar, M., 55
Times of India, The, 190
Ting-Toomey, S., 34
Tinsley, C., 37, 53, 55, 73, 74, 76,
109, 216
Tinsley, C. H., 25, 87, 92, 100
Tinsley, J., 37
Tjosvold, D., 34, 118
Transparency International, 200
Tremlett, G., 192, 226
Triandis, H., 97, 184
Triandis, H. C., 181, 184
Trompenaars, F., 7, 25
Tullis, P., 191
Turner, J. C., 122
Tyler, T. R., 31, 32, 56, 114
U
Unilever, 171
Ury, W., 12
Ury, W. L., 88, 153
U.S. Department of Justice, 197
U.S. Government, 197
V Vaessen, S., 176
van Dijk, W. W., 37, 86
Name Index 279
Van Dyne, L., 128
van Ginkel, E., 112
Van Kleef, G. A., 53, 54, 72, 184
van Knippenberg, D., 118
Van Lange, P.A.M., 182
Vroom, V. H., 142
W
Wade-Benzoni, K., 173, 174
Wall, J., 115–116
Wall, J. A., 115
Wall Street Journal, 179
Walton, R. E., 52, 53
Wang, F. X., 35
Wasti, S., 55
Wasti, S. A., 35
Watabe, M., 35
Weber, J. M., 32, 56
Wee, D., 10
Wegner, D., 142
Weick, K. E., 32, 56
Weingart, L., 37, 53, 58
Weingart, L. R., 51, 52, 53, 60, 61,
69, 105, 118, 146, 147
Weiss, J. A., 121
Welzel, C., 57
Wenger, J. M., 111
White, G. L., 23
Wildschut, T., 184
Wilke, H.A.M., 182
Woolthuis, R. Klein, 55
World Bank, 198
World DataBank, 194
X
Xu, H., 22
Y Yamagishi, K. S., 35
Yamagishi, M., 35, 56
Yamagishi, T., 35, 56, 57
Yang, G., 74
Yao, J. J., 53
Yeginsu, C., 184
Yetton, P. W., 142
Yoon, G., 181
Young, D., 56
Yu, S., 35
Yu, Z. Y., 118
Z
Zaheer, A., 32, 56
Zelikow, P., 141
Zhang, C., 55
Zhang, J. P., 78
Zhang, J. X., 78
Zhang, Z. X., 53, 55, 73, 74, 76, 78,
216
A
AAR group, joint venture between BP
and, 23
Abstract linear thinking, and Western
culture, 33
Adversarial procedures, 110
Agreements, 19. See also Potential
agreements
Alliance for Bangladesh Worker
Safety, 209
Alternative dispute resolution (ADR)
procedure, 110
Analytic mindset, and dignity
cultures, 33
Analytic reasoning, 60
Anchoring, 53–54
Apple, “aikido move,” 166
Arbitration: clauses, 111; and culture,
112; defined, 110
Arbitrator(s): authority of, 111;
selecting, 111–112
Association of Wholesale Grocers,
166
AU Optronics, 165–167
Authoritarian decision rule, 144
B
Bali, Indonesia, water management
system, 176
BATNAs, 9, 12–15, 22, 82, 131–132;
evaluating, 144; linked, 83; of
other party, identifying, 20; in the
planning document, evaluating
281
Subject Index
potential agreements against, 20;
reassessing, 43–44; and
reservation prices, 12–15; setting,
15; and stalled negotiations, 22
Blackstone, investment in Pátria,
22–23
Bottom line. See Reservation prices
Broadly focused agreement, 94–95
Bureaucracy, 203–205; and global
negotiations, 203–204; interests,
understanding, 204; power of,
204–205
C
Cap and trade systems, and social
dilemmas, 178–179
Carrefour, 190, 208, 209
Chevron, 211
Chimei InnoLux, 167
Chunghwa Picture Tubes, 167
Claim value, 3
Claims, rejection of, 82
Club Penguin (Disney), 70–71
Coexistence, 126
Collective goals, 180
Combining fundamentals, 16–19
Commitment, norms of, 172–174
Competitive social dilemmas,
165–168; illegal cartels, 165–168;
legal cartels, 165; risk of
involvement in, 167; signaling to
manage competitive dilemmas,
168; signaling to manage, 168
282 Subject Index
Competitive social motives, 184
“Concern for face,” defined, 78
Conflict: and cultures, 82; defined,
81; in dignity cultures, 85–86; in
face cultures, 85, 86; in honor
cultures, 85, 86–87; interpersonal,
119–121, 150–152; procedural,
119–121; task, 119, 129–130
Conflict management and dispute
resolution, 4–6
Confrontation style, 29–30
Consensus, 145
Contact goals, 180
Contingent agreement, 94–95
Contingent contracts, 70–71; offers,
using effectively, 71
Contributing dilemmas, 169–170
Contributing social dilemmas, using
negotiation strategy to generate
cooperation in, 170–185
Cooperative social dilemmas,
169–185; cap and trade systems,
178–179; contributing dilemmas,
169–170; enforcing, rights-based
approaches using, 177–179;
interests-based approaches to
negotiating, 179–185; legal
regulations, rights-based
approaches using, 177–179;
monitoring, rights-based
approaches using, 177–179;
negotiation strategy, 170–185;
norms, 172–177; power-based
approaches to negotiating,
170–172; privatization, 177–178;
reframing a situation, 179;
rights-based approaches to
negotiating, 172–177; shifting
social identity from the self to the
collective, 179–181; taking
dilemmas, 169; utilitarianism,
202
Cooperative social motives, 184
Corruption, 197–203; choosing to
expose, 202–203; defined, 197;
ethical standards, generating,
200–201; extent of, 198; global
anti-corruption initiatives,
199–200; in global negotiations,
203; implications of getting
caught, 198–199; U.S. Foreign
Corrupt Practices Act (FCPA),
197; Walmart example, 198–199;
what to do when confronted with,
201–203
Cross-cultural negotiations, 51
Cultural barriers, 137–138
Cultural differences, 181–182
Cultural intelligence (CQ), 78,
128
Cultural metacognition, 128
Cultural prototypes, 26
Culture, and arbitration, 112;
cultural boundaries, 28; cultural
looseness, 27, 56–57; cultural
overlap, example of, 27–28;
cultural prototypes, 26–27;
cultural tightness, 27, 56; defined,
25–26; dignity, 2, 29; emergence
and development of, 25–26; face,
29; gains within/across, 21; honor,
2; and negotiating deals, 49–79;
and negotiation, 2, 25–47; and
negotiation strategy, 2, 55–62;
norms guiding social interaction,
26; planning for effects of, 44–47;
prototypical, 28–31; in a two-party
negotiation, 41–42. See also
Dignity cultures; Face cultures;
Honor cultures
Currency fluctuations/economic
instability, 212–213
D
Deal making, 2–4; conflict
management and dispute
resolution, 4–6; distributive, 2–3;
governments, negotiations
between foreign direct investors
and, 8–9; integrative, 3–4;
multiparty negotiation and team
decision making, 6–7; negotiation
Subject Index 283
strategy, 51–55; social dilemmas,
7–8
Deal-making negotiations, advice for,
63
Decisions rules, 144–146;
authoritarian, 144; consensus,
145; majority, 145; unanimity,
145–146; voting, 146
Dignity cultures, 2; and analytic
mindset, 33; characteristics of,
29–32; conflict and confrontation
in, 85–86; egalitarian governments
and market economies,
characteristic of, 31; insulating
factors, 32; interactions in, 31–32;
key characteristic of, 31; as
prototype of Western society,
31–33; social independence of
dignity, 31; trust in, 32–33
Dignity cultures negotiators, deals/
accommodation/safeguards for,
219–220
Direct confrontation, 85
Direct-confrontation cultures,
resolving disputes in, 221–222
Discuss before decide (norm),
146–148
Dispute resolution, 4–6, 81–116;
compared to deal negotiations,
82–87; and emotions, 84–85;
excellent dispute resolvers, 116;
how to start a negotiation,
105–107; interests, 87–95; power,
87–88; rights, 87–88, 95–99;
strategic approaches to, 87–105;
using third parties in, 108–116
Disputes: and cultures, 82; defined,
81
Distributive negotiation, 2–3
E
Electronic communication,
surmounting barriers to
information exchange in, 140
Emotions, and dispute resolution,
84–85
Endesa: Acciona and Enel
acquisition of, 44; E.ON offer
for, 43–44; Gas Natural’s tender
offer, 43
Environments, 155–156; of global
negotiations, 155–156
Equality, norms of, 174–175
Equity, norms of, 174–175
Expropriation, 210–212
ExxonMobil, 211
F
Face cultures, 2, 33–36;
characteristics of, 29–30; conflict
and confrontation in, 85, 86; as
hierarchical social structures,
33–34; holistic mindset, 35–36;
interactions in, 34–35; as the
prototype of East Asian societies,
33; social interaction, 35; trust
in, 35
Facilitators, 112–113
Factions/coalitions, 145
Fixed pie, 3
Foreign direct investment (FDI),
8–9, 187–188; avoiding the pitfalls
of, 224–225
Foreign direct investment (FDI):
corruption, 197–203; Danone
company vs. Wahaha Group
(example), 194–197
Foreign direct investment (FDI):
governments’ interest in,
189–191; governments’
vulnerabilities and interests,
identifying, 191–193; interests,
188–189; investors and
governments’ interests in,
188–193; legal risks, hedging, 197;
predictable challenges to, 191–
203; rule of law, 194–197
Foreign workers, risk of violence or
kidnapping of, 205–206
Free riders, 169–170
Fundamentals, combining,
16–19
284 Subject Index
Fusion teamwork, 125–130, 222–223;
coexistence, 126; compared to
hybrid teamwork, 127; and
creativity, 129; cultural
intelligence (CQ), 128; cultural
metacognition, 128; fusion model,
reasons for developing, 127–128;
meaningful participation, 126;
risk of, 223; survey statements
related to fusion, 129
Future-based agreements, 94–95
G
Gap, 208, 209
Generalized reciprocity, 146–147
Getting to Yes: Negotiating Agreement
Without Giving In, 12–13, 16
GFATM (Global Fund for AIDS,
Tuberculosis, and Malaria),
202–203
Global assignments: hostage
negotiations, 206–207; keeping
employees safe in, 205–207; risk
of violence or kidnapping of
foreign workers, 205–206
Global managers, as dispute
resolvers, 116
Global negotiations: and
bureaucracy, 203–204;
currency fluctuations/economic
instability, 212–213; corruption
in, 203; environment of, 43–44;
expropriation, 210–212; with
government, 213–214;
planning for, 1–2; ripple effects,
213–214
Global negotiators: accommodation,
219; deals/accommodation/
safeguards for, 219–220;
effectiveness of, 218–219; and
ethics, 219; excellent, 226; and
social dilemmas, 219
Google, negotiations with the
Chinese government, 10
Governance Indicators (World Bank),
194, 202, 210
Governments, negotiations between
foreign direct investors and,
8–9
GRIT (graduated and reciprocated
initiatives in tension reduction),
180
Groupthink, 141; setting norms for
negotiating decisions, 146–148
H
High context communication, 60
Holistic mindset: and face cultures,
35–36; and S&O (substantiation
and offers) strategy, 58–61
Holistic reasoning, 60
Hong Kong Chinese intracultural
negotiations, 50–51
Honor cultures, 2, 36–39;
characteristics of, 29–30; conflict
and confrontation in, 85, 86–87;
defined, 36–37; hierarchical social
structures, 37; interactions in, 37;
mindset in, 38–39; and self-worth,
86–87; trust in, 37–38
Hostage negotiations, 206–207
Human rights abuses, avoiding,
207–210
Hybrid teamwork, 124–125,
222–223
I
Illegal cartels, 165–168
In-groups, 182–184
Indirect confrontation, 5, 86
Indirect-confrontation cultures,
resolving disputes in, 221–222
Individualistic social motives,
184
Insight, and S&O (substantiation
and offers) strategy, 59
Insufficient adjustment, 53–54
Integrative deal making, 3–4
Interactional justice, 114
Interactions: in dignity cultures,
31–32; in face cultures, 34–35; in
honor cultures, 37
Subject Index 285
Intercultural negotiation model,
41–44; outcome potential,
defined, 41
Intercultural negotiations, 50–51,
73–74, 73–79; advice for, 78–79;
high joint gains, possibility of,
77–78; strategic misalignment
between negotiators, 74–76
Intercultural negotiators, strategic
misalignment between, 74–76
Intercultural simulation data, 50–51
Interests, 87–95; anticipating,
92–94; of bureaucracies,
understanding, 204; changing
the focus from right to interests,
107–108; defined, 87; uncovering,
89–92; using to resolve disputes,
94–95
Interpersonal conflict, 119, 150–152;
causes of, 150; managing,
152–153; minimizing, 150–152
Israeli intracultural negotiations,
50–51
J
Japanese: communication norms, 60;
hai, use of term among, 59–60;
insight generation, 60; normative
negotiation, value of, 60–61; and
S&O (substantiation and offers)
strategy, 58–61; and trade-off
issues, 59
Joint gains, defined, 21
K
Kidnap situation, negotiating, 206
Kirchner, Christina Fernández de,
210
L
Language barriers, 135–137
Legal cartels, 165
LG Display, 167
Limited-duration agreement, 94–95
Linked BATNAs, and minimizing of
costs, 83–84
Local norms, 176
Loose cultures, 27, 56–57
Low context communication, 60
Low trust, and S&O, 57
M
Macy’s, 209
Majority decision rule, 145
Massmart, Walmart’s acquisition of,
46–47
Meaningful participation, 126–127,
135, 141–142
Mediation: and culture, 114–116;
process, 113–114
Mediators, 112–113; empathy of,
114; negotiation skills of, 115;
selecting, 114; training for, 113
MESOs (multiple equivalent
simultaneous offers), 67–69;
defined, 67–68; downside of
opening with, 69
Mindset, 29–30; and negotiation
strategy, 61–62
Motivation, 154–155
Movable currency, defined, 212
Multi-issue offers, making, 148
Multiparty decisions, using
negotiation strategy to make,
222–223
Multiparty negotiation, 6–7
N
“Need for closure,” defined, 77–78
Negative emotional spirals, avoiding,
71
Negative substantiation, 72–73
Negotiation: BATNA, 2; contexts for,
2–9; and culture, 25–47; deal
making, 2–4; defined, 1; global,
environment of, 43–44; interests,
2; strong relationships between
parties to, 23; in teams, 117–157
Negotiation Planning Document, 9,
17–19, 33, 44–45, 223; adding
parties to, 45; reading/using,
17–19
286 Subject Index
Negotiation strategy: BATNAs and
reservation prices, 12–15; building
blocks of, 9–16; and culture, 2;
and cultures, 55–62; deal making,
51–55; deal-making negotiations,
advice for, 63–71; defined, 51;
intercultural negotiations, 73–79;
interest of counterpart, 11–12;
issues, identifying, 11; model of,
6, 62; and outcome potential, 50;
parties, 9–11; positions, 11–12;
power, major source of, 12–13;
priority of an issue, 12; target
setting, 15–16
Negotiations, trust in, 56–57
Negotiators, interdependence of, 1
Non-adversarial procedures, 110
Non-precedent-setting agreement,
94–95
Normative negotiation, value of,
60–61
Norms, 172–177; of commitment,
172–174; of equity and equality,
174–175; local, 176; of reciprocity,
174; regulating behavior in social
dilemmas using, 177; setting for
negotiating decisions, 146–148
O
Objective standards, 16
OPEC (Organization of Petroleum
Exporting Countries), 162–166,
169, 180
Organization for Economic
Cooperation and Development
(OECD), 199–200
Other-insight, 59
Out-groups, 182–184
Outcome potential: defined, 41; and
negotiation strategy, 50
P
Parties, 9–11
Potential agreements: against the
BATNA, 20; against the
counterpart’s interests, 20;
evaluation criteria, 19–23
Power, 29, 87–88, 99–105;
anticipating, 100–102; of
bureaucracy, 204–205; defined,
88; major source, 12–13;
uncovering, 99–100; using to
resolve disputes, 102–105
Power/status, 29–30
Precedents, 16
Priority of an issue, 12
Prisoner’s dilemmas (PD), 160–165;
example, 161–162
Privatization, and social dilemmas,
177–178
Procedural conflict, 119–121
Procedural justice, 114
Prototypical culture, 28–31
Psychological barriers, 141–142
Q
Q&A (question and answer) strategy,
51–52, 55; defined, 51; and trust,
64–65
R
Recategorization, and social identity,
181
Reciprocity: and dignity cultures,
32–33; norms of, 174; and trust,
32–33
Relative insight, 59
Repsol, 210–212
Reservation prices, 9, 12–15; and
BATNAs, 12–15; defined, 14;
setting, 14–15
Rights, 87–88, 95–99; anticipating
rights standards, 96–97; changing
the focus from rights to interests,
107–108; defined, 87–88, 95;
uncovering rights standards, 96;
using to resolve disputes, 97–99
Ringi decision-making, 145
Ripple effects, 213–214
S
S&O (substantiation and offers)
strategy, 49, 53–55; defined, 51;
and generation of net value,
Subject Index 287
53–55; and holistic mindset,
58–61; and insight, 59; and
threats, 53; and trust, 65–67
Samsung, 167
Saticficing, defined, 20
Second agreements, proposing,
149–150
Self-insight, 59
Self-worth, 29–30
Sensitivity and response to insults,
29–30
Settlement rates, 113
SHARC dilemma, 172, 174–175, 179,
181
Shark Harvesting and Resource
Conservation (SHARC), defined,
172
Skills, 153–154; mediator’s
negotiation skills, 115
Social dilemmas, 7–8, 159–186;
competitive, 165–168; cooperative,
169–185; defined, 159; generating
cooperation in, 223–224;
negotiating individual and
collective interests in, 185–186;
and prisoner’s dilemmas (PD),
160–165; self-interests, balancing,
159–160
Social distance, defined, 77
Social identity, 74; cultural
differences, 181–182; in-groups/
out-groups, 182–184; increasing
by distinguishing in-group/
out-group membership, 183;
making salient, 181–183; and
recategorization, 181; risks when
making salient, avoiding, 185
Social motives, 184
South Africa, Walmart in, 45–47
Standards of comparison, 16
Status, 29–30
Stereotypes, 122
Structural barriers of distance, time,
and part time, 138–140
Subaks, defined, 176, 180
Subgroup dominant teamwork,
122–123
Substantiation, 64, 72–73;
believability of, 57; defined, 72;
negative, 72–73
T Taking social dilemmas, 169; using
negotiation strategy to generate
cooperation in, 170–185
Target (retailer), 209
Target setting, 15–16
Task conflict, 119, 129–130
Team decision making, 6–7, 222–223
Team management, challenge of,
156–157
Team negotiation, 117–157; BATNAs,
evaluating, 144; and conflicts/
disputes, 118–119; cultural
barriers, 137–138; decisions rules,
144–146; environments, 155–156;
generating information in teams,
132–142; guidance needed in,
156–157; interpersonal conflict,
119; interpersonal conflict,
minimizing/managing, 150–152;
language barriers, 135–137;
meaningful participation, 135;
minimum agreement, 148;
motivation, 154–155; multi-issue
offers, making, 148; multiple-issue
team decisions, 142–150;
Negotiation Planning Document,
132–134; procedural conflict,
119–121; psychological barriers,
141–142; second agreements,
proposing, 149–150; skills,
153–154; strategy, 129–150;
structural barriers of distance,
time, and part time, 138–140;
structuring issues for negotiation,
143–144; task conflict, 119; team
decisions, evaluating, 131–132;
Team Planning Document,
133–134, 143; teamwork models,
121–129; as two-stage process,
118
Team Planning Document, 133–134,
143
288 Subject Index
Teamwork models, 121–129; fusion
teamwork, 125–129; hybrid
teamwork, 124–125; subgroup
dominant teamwork, 122–123
Thinking net, use of term, 20
Third parties, using in dispute
resolution, 108–116
Third parties with authority, 110–
112; arbitration and culture, 112;
arbitration process, 110–111;
selecting an arbitrator, 111–112
Third parties without authority,
112–116; culture and mediation,
114–116; mediation process,
113–114; mediator selection, 114
Three-culture framework, 28–41;
value of, 39–41. See also Dignity
cultures; Face cultures; Honor
cultures
Tight cultures, 27, 56–57
TNK-BP, 23, 81
Trade-off, 94
Transaction costs, 22
Transactive memory, 141–142
Transparency International, 200
Trust, 29–30, 55–58; building outside
the negotiation, 64; in dignity
cultures, 32–33; in face cultures,
35; in honor cultures, 37–38;
information sharing,
reciprocating, 65; and multiple
issue offers, 65; in negotiations,
56–57; and offer patterns, 65; and
Q&A, 64–65; and S&O, 65–67;
setting a positive tone, 64; testing,
64, 65
Turkish protests (Taksim Square,
2013), 180, 183–184
Two-party negotiation, and culture,
41–43
Two-thirds majority, 145
U
Unanimity, 145–146
Unilever, 171
United Nations Convention on the
Recognition and Enforcement of
Foreign Arbitral Awards, 111
U.S. Energy Information
Administration, 163
U.S. Foreign Corrupt Practices Act
(FCPA), 197
Utilitarianism, 202
W
Walk away. See Reservation prices
Walmart, 49, 171–172, 190, 198–199,
201, 208, 209; Massmart
acquisition, 46–47; in South
Africa, 45–47
WATNA, 83, 88, 100, 103, 104
World Bank: International Center for
Settlement of Investment Disputes,
211
