Chapter 12 Cultural Conflict Management in International Business

Chapter 12 Cultural Conflict Management in International Business Negotiation

Learning Objectives By the end of this chapter, you will know: • Why cultural conflicts occur in international business negotiation. • What cultural conflicts may occur in international business negotiation. • How to resolve cultural conflicts in international business negotiation.

Lead-in Managing Cultural Conflict 1. Research shows that deal-making across cultures tends to lead to worse outcomes as compared with negotiations conducted within the same culture. 2. Cultural conflicts in negotiations tend to occur for two main reasons. First, when confronting cultural differences, we tend to rely on stereotypes. A second common reason for cross-cultural misunderstandings is that we tend to interpret others’ behaviors, values, and beliefs through the lens of our own culture. 3. Cultural differences can represent barriers to reaching an agreement in negotiation

Contents 12. 1 Cultural Conflict in International Business Negotiation 12. 2 Resolving Cultural Conflict in International Business Negotiation 12. 3 Cultural Preferences for Direct or Indirect Confrontation 12. 4 Third-party Approaches to Managing Conflicts

12. 1 Cultural Conflict in International Business Negotiation Cultural conflicts arise because of the differences in values and norms of behavior of people from different cultures. Cross-cultural misunderstandings or conflict may arise whenever there are cultural differences. p misunderstandings or conflict between different nationalities, religious or ethnic groups p cultural ignorance and insensitivity p lack of awareness of different societal lifestyle practices p differences in cultural practice p miscommunication and misinterpretation

12. 1 Cultural Conflict in International Business Negotiation Six fundamental patterns of cultural differences and these can all impact on negotiation p p p Different verbal communication styles Different non-verbal communication styles Different attitudes toward conflict Different approaches to completing tasks Different decision-making styles Different attitudes toward disclosure

12. 2 Resolving Cultural Conflict in International Business Negotiation 12. 2. 1 Three Approaches to Resolving Conflicts 1. Interests-based Approach 2. Rights-based approach 3. Power-based approach

12. 2 Resolving Cultural Conflict in International Business Negotiation Interests-based Approach • Self-Interests and Collective Interests. • Advice for Analyzing Interests. 1. Culture affects the relative importance of self-interests and collective interests, and the relative importance of these two different types of interests can lead to different outcomes. 2. Do not underestimate the importance of collective interests when negotiating with a negotiator from a collective culture or the importance of self-interests when negotiating with a negotiator from an individualist culture. 3. Why and why not (as in “Why are you rejecting my claim? ” and “Why can’t you grant my request? ” are the fundamental questions for interests across cultures. Negotiators from high-context cultures, however, may be uncomfortable with direct questions, and you may be better off making proposals to uncover their interests. • Integrative Agreements for Resolving conflicts

12. 2 Resolving Cultural Conflict in International Business Negotiation Rights-based approach • Determining Who is Right • Using Rights to Resolve conflicts. In thinking about rights and culture, keep the following in mind: 1. Culture affects how strongly negotiators rely on rights standards and the standards they prefer to use. 2. It is difficult to know which standard will be acceptable to the other negotiator. This is so because there are so many different rights standards and because different aspects of culture support different standards. 3. Rights standards are often suspect and therefore discounted. After all, negotiators are unlikely to propose a rights standard that does not benefit them. 4. The key to success in using rights standards to resolve conflicts is either to propose a fair standard accepted by the other party or to provide new credible information that makes the proposed standard appear fair. Without new credible information, argument is unlikely to work.

12. 2 Resolving Cultural Conflict in International Business Negotiation Power-based approach • Determining Who is More Powerful • Using Power to Resolve conflicts �BATNA as a source of power �Making Threats • Advice for Using Power 1. Power in disputing is different from power in deal making in one key respect: negotiators’ BATNAs are linked. 2. Culture affects the choice of which power tactics are used. When negotiating with a negotiator from a hierarchical culture, recognize that blaming and shaming tactics are reminding you of your social responsibilities; allusions to powerful people suggest power by association and potential social stigma if you do not concede. 3. If you have to use power it costs you. 4. When you “win” through power, you may also be losing in terms of an ongoing relationship or the potential for one.

12. 3 Cultural Preferences for Direct or Indirect Confrontation Direct confrontation in low-context cultures Indirect confrontation in high-context cultures Tips for choosing direct versus indirect confrontation: 1. Don’t take the procedural choice personally. 2. Know the other negotiator’s cultural orientation. Direct confrontation is consistent with the action-oriented and solution-minded communication that is consistent with low-context, individualistic cultures. Indirect confrontation is consistent with the concern for face and harmony characteristics of highcontext, collective cultures. 3. Develop the flexibility to negotiate directly and indirectly.

12. 4 Third-party Approaches to Managing Conflicts Roles Played by Third Party in Conflict Management in Negotiation Conditions Where Third-Party Intervention May Help -Intense emotions appear to be preventing a settlement. - Poor communication is beyond the ability of the negotiators to fix it. -Mis-perceptions or stereotypes hinder productive exchanges. - Repeated negative behaviors. (anger, name-calling, blaming others, etc. ) create barriers between the parties. -There is serious disagreement over the importance, collection, or evaluation of data. -There is disagreement as to the number or type of issues under dispute. -Actual or perceived incompatible interests exist that the parties are unable to reconcile. - Unnecessary (but perceived-as-necessary) value differences divide the parties. - There is an absence of a clear, agreed-on negotiation procedure or protocol, or established procedures (such as caucuses or cooling -off periods) are not being used to their best advantage. - Severe difficulties occur in getting negotiations started or in bargaining through an impasse. Source: Roy J. Lewicki, Bruce Barry, David M. Saunders, and International Business Negotiation (China：中国人民大学出版社，2016 P 321）

12. 4 Third-party Approaches to Managing Conflicts Types of Third-Party Intervention in Negotiation Conflict 1. Mediation is the use of a neutral third-party to help the disputing parties resolve the dispute on their own. 2. Arbitration is a process where a neutral third party is brought in to arbitrate - or resolve - your dispute. 3. Conciliation is a less formal form of arbitration. This process does not require an existence of any prior agreement. 4. Process Consultation --- is developed by Edgar Schein. In the Process Consulting model, the consultant immediately involves the client as a partner.

12. 4 Third-party Approaches to Managing Conflicts Culture and Third-Party in Conflict Management In third-party dispute resolution, culture may affect which roles are available; how early third parties intervene; and whether they focus on interests, rights, or power Third-Party Conflict Resolution Strategies Meet Face-to-Face Hold Pre-mediation Conferences Exercise Culturally Aware Mediation Use the Bridging Technique

Negotiation Dynamics 5 Steps to Better Cross-Cultural Negotiation 1. Define Your Terms 2. Know Who You're Talking To 3. Pay Attention to Nonverbal Communication 4. Time Zones and Other Scheduling Issues 5. Learn Their Language

Culture kaleidoscope Tips on negotiating in Poland • What is the key to negotiation in Poland？ • How do polish negotiators usually approach a negotiation? • What kind of body language is used in Poland more often than in other countries? Why do Polish people prefer such body language ?

Key Terms Cultural conflict management 文化冲突管理 Verbal Communication 言语交际 Non-verbal communication 非言语交际 Interest-based approach 基于利益的解决途径 Rights-based approach 基于对错的解决途径 Power-based approach 基于权力的解决途径 Direct or indirect confrontation 直接或间接对抗 Third-party intervention 第三方干预 Mediation 调解/斡旋 Arbitration 仲裁/公断 Conciliation 调停/调解 Process consultation 过程咨询 Bridging technique 沟通技巧（纽带作用）

Chapter Summary • Misunderstandings happen due to differences in values and norms of behavior of people from different cultures. Negotiators should be highly cautious about the six fundamental patterns of cultural differences. • To be well aware of the cultural differences is the precondition for negotiators to effectively resolve the cultural conflicts through three commonly-applied approaches, namely, interested-based approach; right-based approach; power-based approach. • Third-party approach comes into play if no other approaches are appropriate. Third party plays an essential role in resolving negotiation conflicts through various types of intervention-mediation, arbitration, conciliation and processes consultation.

Exercises I. Review and Critical Thinking Questions II. Case Study III. Suggested Reading