NEGOTIATION
NEGOTIATION
CONCEPT OF NEGOTIATION
Negotiation: It is a process in which two or more individuals or groups having common or conflicting goals, state and discuss proposals for specific terms of a possible agreement.
Types of Negotiation:
Distributive:
Often referred to as a fixed pie or fixed sum. Also known as competitive or hard bargaining negotiation.
A win – lose situation.
Example: Purchasing a car or a house. Interest of both the parties are self – serving.
CONCEPT OF NEGOTIATION
Integrative:
Often described as the win-win situation.
Parties form a long term relationship for mutual
gains,
ELEMENTS OF NEGOTIATION-
negotiating essentials – carrel,heavrin
1. The parties and their interests: The parties to a
negotiation can be friends trying to agree on what
movie to see or world leaders trying to avoid war.
2. Interdependency
3. Common goals
4. Flexibility
5. Ability to make a decision.
NATURE OF NEGOTIATION-lewicki,
saunders
A negotiation situation is one in which
1. Two or more parties must make a decision about
their interdependent goals and objectives.
2. The parties are committed to peaceful means for
resolving their dispute.
3. There is no clear or established method or
procedure for making the decision.
FEAR OF NEGOTIATING-lewicki,
saunders
Very often parties shun negotiation. But the fact is
we all negotiate. The basis of most negotiations is
some form of conflict and people are afraid of
conflict.
The concerns are –
Sharing a scarce resource.
If we truly fear conflict, we avoid taking any position
and not get what we want and we take an
unrealistic position and still not get what we want.
CHARACTERISTICS OF NEGOTIATION-
the essence of negotiation hiltrop, udall
1. Negotiation is a voluntary activity: either party can
break away from or refuse to enter into
discussion at any time.
2. A negotiation usually starts because at least one
of the parties wants to change the status quo and
believes that a mutually satisfactory agreements
is possible.
3. Timing is a critical factor in negotiation and
affects the ultimate outcome of the discussion.
4. The progress is strongly influenced by the
personal values, skills, perceptions and emotions
of the parties.
TACTICS OF DISTRIBUTIVE
BARGAINING-negotiation-lewicki, saunders,
minton 1. Delay
2. Silence and Bracketing. Bracketing is directing the concentration to a specific area of negotiation and then listen aggressively.
3. Limited Authority
4. The Bottom Line- This is the point below which you will not go.
5. No
6. Nibbling- Ability to withdraw and then return and then keep the pressure on.
7. Expectation and Control-This is where you say, this part is not negotiable but that part is.
8. Auctions- eg. I can get it cheaper somewhere else.
9. Concessions
10. Rationale
11. Message Sending
12. Deadlines
TACTICS OF INTEGRATIVE BARGAINING-
p112, lewicki, saunders, minton
1. Ostrich Approach: To postpone making a decision for as long as possible and hope the problem will go away.
2. To take side with one or more of the parties (in case of multiple parties).
3. Hands off, let the experts decide: To rely on legal or expert advisers for decision making.
4. Traditional approach: Holding public hearings in which interested parties can raise their concern. But this often raises community expectations beyond what public officials can deliver. It often leads to less than satisfactory solutions, which are often not accepted by the public.
TACTICS OF INTEGRATIVE BARGAINING-
p112, lewicki, saunders, minton
5. Collaboration: It is a process through which
parties who see different aspects of a problem
can explore their differences and search for
solutions that go beyond their limited vision of
what is possible. To assemble a representative
sample of the stakeholders and let them work out
on an agreement among themselves.(in the given
example). This option has the advantage of
dealing with interrelated issues. It allows for a
solution that is acceptable to all.
NATURE OF COLLABORATIVE
PROBLEMS
The problems for which Collaboration offers an advantage over other methods are:
1. The problems are ill defined or there is a disagreement about how they should be defined.
2. Several stakeholders have a vested interest in the problems and are interdependent.
3. These stakeholders are not necessarily organized.
4. There may be a disparity of power/resources among the stakeholders.
5. Technical complexity can be present.
6. Existing processes have been insufficient
STRATEGY-negotiating essentials-
carrell, heavrin
Negotiation strategy can be defined as the overall
approach chosen when confronted with a
bargaining situation. It is very often confused with
tactics which are the techniques used at the
bargaining table. It does not include the efforts that
occur away from the bargaining table, to set up the
most promising situation.
NEGOTIATION STRATEGY-carrel,
heavrin
Following are the key elements to identify before
choosing a strategy.
1. Time (deadline). If you have a firm deadline, you
should chose one of the three strategies
a. Without revealing your deadline, work to reach a
settlement well in advance.
b. Declare an earlier deadline before your real
deadline.
c. Question negotiators on the other side about their
deadlines – and if you find out their deadline is
before yours, work to meet it. If it’s a deadline for
both sides, then neither has an advantage.
NEGOTIATION STRATEGY
2. Information: This is the heart of negotiations. It
shapes our appraisal of reality, our negotiation
strategy, our BATNA, our expectations of what
can be achieved and the outcome of a
negotiation. The most important information we
need is BATNA.
3. Power: In the words of Patrick J. Cleary, former
chairman of the National Mediation Board –
―More than anything else-yes even more than
money-the negotiation process is about power,
ego and saving face
STRATEGIES-negotiating essentials-
carrell, heavrin
. There are 5 strategies recommended for various negotiation situations. We can chose them on the basis of time, information and power.-page 155 negotiating essentials-carrel, heavrin
1. Increments of Concession( focus on the number)-
Example: one time purchase of a house or car-you make concession that enable you to achieve a price or cost according to your BATNA.
2. Principled Negotiation- If integrative bargaining is preferred, this strategy can be practiced. Roger Fisher and William Ury in their book, ―Getting to Yes‖ introduced the strategy of principled negotiation.
1. Principled negotiators openly discuss
the issues and interests that are
important. They separate positions
from interests
2. Separate the people from the
positions.
3. Develop mutual gain options.
4. Discuss on objective criteria such as
principles and facts
1. Position versus interest
A position may be defined as a
specific demand that the party has
chosen.
Interests include the needs desires
concerns and fears that caused the
party to chose that position.
Position versus interest of neighbours
smith and jones
Smith
Position-the dog must go.we will not
move
Interest-we need peace and quiet
place, our house is new and so we
prefer to stay in it.
Jones-
Positions-the dogs must stay, we will
not move.
Interests – we must let the dogs out in
our enclosed yards, we love the
neighbourhood and want to stay in the
same street near our friends.
2.Separate people from positions.
People conduct negotiations. They have feelings, ego, anger and other human emotions. Position is the specific demand that a party has chosen.human responses to the positions taken by other parties can easily derail a bargaining situation that might otherwise be successful. This is practically true if the parties can maintain a long term relationship.
Example- a wife and a husband
planning for a weekend. The husband
wants to gout to play golf with friends
and the wife to their farmhouse. The
issue is not where but how do they
want to spend the weekend and what
do they want.
Focus on objective criteria
Parties present offers based on
objective criteria such as facts,
principles or standards.
Develop mutual gain options- case
Page 150 west coast music inc
Page 161 explanation
2. Multiple Equivalent Simultaneous Offers(MESOs)
It provides for a creation of a scoring system to compare qualitatively different issues so that the best option can be defined.
3 steps-
1. Identify and then prioritize issues in the negotiation, determining their weights in relative values to the parties.
2. 2. identify the different outcomes or options available for each issue establishing one as the standard and thus worth 100 points and then consider the ralative value of each other option by comparison to that standard.
Create three different offers, three
because research indicates that
parties can effectively compare three
offers, without feeling overwhelmed by
too many options
STRATEGIES-CONT.
4. The Economic Matrix-It is applicable when a negotiation situation involves several issues of economic value and a fixed amount of resources available for the parties to negotiate.
5. 3-D Negotiation- Negotiators David A.Lax and James K Sebenius developed this unconventional tactics. The first dimension consists of the tactics used at the bargaining table. The second dimension is the deal design i.e. specifics of a proposal. The third dimension is the set up of the negotiation- the parties involved, the issues, the sequence of issues to be decided, outside influences and the timing of negotiation. They suggest that the negotiators will be more successful, if they involve all three dimensions in bargaining
NEGOTIATION STRATEGY-
P23,essence of negotiation,hiltrop,udall
Key points in developing strategy:
1. What points should we ask in the first session?
2. What questions are the other party, likely to ask?
3. How will we answer these questions?
4. What is our opening position?
5. Do we have enough factual data and information
to support this position?
6. If not, what extra information could be available?
NEGOTIATION STRATEGY
When negotiating as a team, following points
should also be considered.
1. Who will lead the discussion?
2. Who will verify facts?
3. Who will ask what questions? Who answers the
other side’s questions?
4. Who will work to reduce tension? (optional,
according to the situation)
NEGOTIATION STRATEGY
In addition to determine the strategy, the style to
adopted should also be decided. According to
Thomas and Kilmann the approaches can be
grouped into five categories:
1. Collaborating: To manage by maintaining
interpersonal relationships and ensuring that both
parties to the conflict achieve their personal goals.
2. Compromising: This approach assumes that win-
win solution is not possible. The objective is to
find mutually acceptable solution which partially
satisfies both the parties.
NEGOTIATION STRATEGY
3. Accomodating: It refers to maintaining the
interpersonal relationship at all cost, with little or
no concern for goals of the parties involved:
4. Controlling: The focus is to take steps for goals of
the parties, whatever the cost to the relationship.A
power oriented approach.
5. Avoiding: the avoider views conflict as something
to be shun at all costs. The style might take the
form of diplomatically diverting an issue,
postponing or withdrawing from a threatening
situation.
STRATEGIES-CONT.
The MESO technique involves three basic steps:
1. Identify and then prioritize three or more issues in
the negotiation, determining their weights and
relative values to the parties.
2. Identify the different outcomes or options,
available for each issue, establishing one as the
standard and then consider the relative value by
comparing with the standard value.
3. Create three different offers, three because
research indicates that parties can effectively
compare three offers, without feeling
overwhelmed by too many options.
PLANNING FOR NEGOTIATION-the
neg handbook Patrich j. cleary
Collect your facts – It is critical to accumulate as much
information as you can. If you are buying a car you can
get the information on price and on the dealer’s actual
cost. These are the empirical facts. Facts include a
person’s background, history, drive and goals.
Know your principles – Knowing your own principles is
important. It should be reaffirmed periodically.
Know your priorities – You should divide your priorities
into two lists. One should contain the items you would
like to have from negotiation (what you want) and the
other list should have items you must have as part of
the final deal(what you have got).
PLANNING-negotiating essentials-
carrell and heavrin
1. Clearly define the expected goals i,e, what exactly do you expect to gain from the process.
2. Clearly decide upon your BATNA-Best Alternative to a Negotiated Agreement.
3. Identify the issues-
a. The greater the number, the better.
b. Intangible issues should be listed as well as tangibles like price and quantity. Intangibles could include things like timing of payment, mode of payment etc.
c. Add throwaways i.e. issues which have little or no value to you but could be of value to the other party.
PLANNING
4. Set Priorities- This can be done by
a. Ranking all the issues from the highest priority to the lowest priority.
b. Assigning percentage weights (relative importance ) to the items –the total weight must be 100% and throwaway items can be given a 0% weight.
c. Dividing the items into four broad categories-
Essential items that must be gained for a settlement.
Important items that you would like to gain but are willing to trade to achieve essential or other important items.
Desirable items that have secondary value.
Throwaway items that may have value only to the other party.
PLANNING
5. Develop Support Arguments- Why about each
issue should be thought of supported with facts
logic and argument which could be based on
certain data or a similar deal.
UNIT 2
PERCEPTION, COGNITION, AND
EMOTION IN NEGOTIATION
The basic building blocks of all social encounters are:
Perception
Cognition
Emotion
PERCEPTION
Perception is:
The process by which individuals connect to their
environment.
A complex physical and psychological process
A ―sense-making‖ process
THE ROLE OF PERCEPTION
THE ROLE OF PERCEPTION
The process of ascribing meaning to messages
and events is strongly influenced by the perceiver’s
current state of mind, role, and comprehension of
earlier communications.
◦ People interpret their environment in order to
respond appropriately
◦ The complexity of environments makes it
impossible to process all of the information
◦ People develop shortcuts to process information
and these shortcuts create perceptual errors
THE ROLE OF PERCEPTION
Negotiators approach each negotiation guided by
their perceptions...
Determine exactly what is being said and what is
meant.
Defined as ―the process of screening, selecting,
and interpreting stimuli so that they have meaning
to the individual.‖
PERCEPTUAL DISTORTION
Four major perceptual errors:
◦ Stereotyping
◦ Halo effects
◦ Selective perception
◦ Projection
STEREOTYPING
One individual assigns attributes to another solely
on the basis of the other’s membership in a
particular social or demographic group.
◦ For example
Age
Gender
Race
Religion
HALO EFFECTS
People generalize about a variety of attributes
based on the knowledge of one attribute of an
individual.
◦ For example
Positive halo effect
Smiling person is honest.
Negative halo effect
Frowning person is dishonest.
HALO EFFECTS CONTINUED...
Halo Effects Occur in Perception when...
◦ Very little experience with the party
Generalization occurs based on knowledge of
the party in other contexts
◦ Party is well known
◦ Qualities have strong moral implications
SELECTIVE PERCEPTION
Occurs when the perceiver singles out certain
information that supports or reinforces a prior
belief, and filters out information that does not
confirm that belief.
◦ For example
Smiling
Frowning
PROJECTION(PERCEPTUAL
DISTORTION)
Occurs when people ascribe to others the
characteristics or feelings that they possess
themselves.
◦ For example
Frustration
Delays
COGNITION
Cognition refers to mental processes that include
attention, remembering, producing and
understanding, solving problems, and making
decisions.
Cognitive psychology is the branch of psychology
that studies mental processes including how
people think, perceive, remember and learn.
As part of the larger field of cognitive science, this is
related to attention, memory, perception, problem
solving, decision making, judgement
COGNITIVE BIASES IN NEGOTIATION
Negotiators have a tendency to make systematic
errors when they process information. These
errors, collectively labeled cognitive biases, tend to
impede negotiator performance.
COGNITIVE BIASES
Irrational escalation of commitment
Mythical fixed-pie beliefs
Anchoring and adjustment
Issue framing and risk
Availability of information The winner’s curse Overconfidence The law of small numbers Self-serving biases Endowment effect Ignoring others’ cognitions Reactive devaluation
COGNITIVE BIASES
Irrational escalation of commitment
◦ Negotiators maintain commitment to a course of
action even when that commitment constitutes
irrational behavior
Mythical fixed-pie beliefs
◦ Negotiators assume that all negotiations (not just
some) involve a fixed pie
COGNITIVE BIASES CONT.
Anchoring and adjustment
◦ The effect of the standard (anchor) against which
subsequent adjustments (gains or losses) are
measured
◦ The anchor might be based on faulty or
incomplete information, thus be misleading
Issue framing and risk
◦ Frames can lead people to seek, avoid, or be
neutral about risk in decision making and
negotiation
COGNITIVE BIASES CONT.
Availability of information
◦ Operates when information that is presented in
vivid or attention-getting ways becomes easy to
recall.
◦ Becomes central and critical in evaluating events
and options
The winner’s curse
◦ The tendency to settle quickly on an item and
then subsequently feel discomfort about a win
that comes too easily
COGNITIVE BIASES CONT.
Overconfidence ◦ The tendency of negotiators to believe that their
ability to be correct or accurate is greater than is actually true
The law of small numbers ◦ The tendency of people to draw conclusions from
small sample sizes
◦ The smaller sample, the greater the possibility that past lessons will be erroneously used to infer what will happen in the future
COGNITIVE BIASES CONFIDENCE
OR OVERCONFIDENCE? We came to Iceland to advance the cause of peace. .
.and though we put on the table the most far-reaching arms control proposal in history, the General Secretary rejected it.
President Ronald Reagan to reporters,
following completion of presummit arms control discussions
in Reykjavik, Iceland, on October 12, 1986.
I proposed an urgent meeting here because we
had something to propose. . .The Americans came to this meeting empty handed.
Secretary General Mikhail Gorbachev,
Describing the same meeting to reporters.
COGNITIVE BIASES CONT.
Self-serving biases ◦ People often explain another person’s behavior
by making attributions, either to the person or to the situation
◦ The tendency, known as fundamental attribution error, is to: Overestimate the role of personal or internal factors Underestimate the role of situational or external
factors
Endowment effect ◦ The tendency to overvalue something you own or
believe you possess
Managing Misperceptions and
Cognitive Biases in Negotiation
The best advice that negotiators can follow is:
Be aware of the negative aspects of these biases
Discuss them in a structured manner within the
team and with counterparts
Mood, Emotion, and Negotiation
The distinction between mood and emotion is
based on three characteristics:
◦ Specificity
◦ Intensity
◦ Duration
Emotion, and Negotiation
Aspects of the negotiation process can lead to
positive emotions
◦ Positive feelings result from fair procedures
during negotiation
◦ Positive feelings result from favorable social
comparison
◦ Emotions can be used strategically as
negotiation gambits
Emotion and Negotiation
Aspects of the negotiation process can lead to negative emotions
◦ Negative emotions may result from a competitive mindset
◦ Negative emotions may result from an impasse
EMOTION-neg counselling-
chandel,chhabra,puneet mohan Emotions play an important role in the process of negotiation.
Affect effect: Disposition of mind or affectivity influences the various stages of the negotiation process. We divide it into two parts.
Positive Affect- It says that happy people are more likely to exchange information and be creative in negotiations. Its drawback is that it distorts perception of self performance, such that performance is judged to be relatively better than it actually is.
Positive emotions generally have positive consequences for negotiations
◦ They are more likely to lead the parties toward more integrative processes
◦ They also create a positive attitude toward the other side
◦ They promote persistence
EMOTION
◦ Negative Affect-It has detrimental effects on various stages in the negotiation process. The most researched negative emotion is, ―Anger‖. Anger disrupts the process of negotiation and angry negotiators cooperate less.
◦ Negative Emotions-
◦ They may lead parties to define the situation as competitive or distributive
◦ They may undermine a negotiator’s ability to analyze the situation accurately, which adversely affects individual outcomes
◦ They may lead parties to escalate the conflict
◦ They may lead parties to retaliate and may thwart integrative outcomes
CONDITIONS FOR INFLUENCE OF
EMOTION IN NEGOTIATION
There are two conditions for emotional effect-
1. Identification of the Affect
2. Determination that the affect is relevant and
important for the judgement
COMMUNICATION
COMMUNICATION
Communication is the process of passing information and understanding from one person to another. Communication processes, both verbal and nonverbal, are critical to achieving negotiation goals and to resolving conflicts.
What Is Communicated during Negotiation?
Offers, counteroffers, and motives
Information about alternatives
Information about outcomes
Social accounts
◦ Explanations of mitigating circumstances
◦ Explanations of exonerating circumstances
◦ Reframing explanations
Communication about process
Basic Models of Communication
Communication is an activity that occurs between two people: a sender and a receiver
A sender has a meaning in mind and encodes this meaning into a message that is transmitted to a receiver
A receiver provides information about how the message was received and by becoming a sender and responding to, building on, or rebutting the original message (processes referred to as ―feedback‖)
What Is Communicated
during Negotiation?
Offers, counteroffers, and motives
Information about alternatives
Information about outcomes
Social accounts
◦ Explanations of mitigating circumstances
◦ Explanations of exonerating circumstances
◦ Reframing explanations
Communication about process
How People Communicate
in Negotiation
Use of language ◦ Logical level (proposals, offers)
◦ Pragmatic level (semantics, syntax, style)
Use of nonverbal communication ◦ Making eye contact
◦ Adjusting body position
◦ Nonverbally encouraging or discouraging what the other says
How People Communicate
in Negotiation
Selection of a communication channel • Communication is experienced differently
when it occurs through different channels
• People negotiate through a variety of communication media – by phone, in writing and increasingly through electronic channels or virtual negotiations
• Social presence distinguishes one communication channel from another.
• The ability of a channel to carry and convey subtle social cues from sender to receiver
Four Biases that Threaten
E-mail Negotiations
1. Temporal synchrony bias
◦ Tendency for negotiators to behave as if they are in a synchronous situation when they are not
2. Burned bridge bias
◦ Tendency to do risky things during e-mail that would not be used in a face-to-face encounter
3. Squeaky wheel bias
◦ Tendency to use a negative emotional style
4. Sinister attribution bias
◦ Overlooking the role of situational factors
How to Improve
Communication in Negotiation
Use of questions: two basic categories
◦ Manageable
Cause attention or prepare the other person’s thinking for further questions:
―May I ask you a question?‖
getting information
―How much will this cost?‖
generating thoughts
―Do you have any suggestions for improving this?‖
How to Improve
Communication in Negotiation
Use of questions: two basic categories
◦ Unmanageable questions
Cause difficulty
―Where did you get that dumb idea?‖
give information
―Didn’t you know we couldn’t afford this?‖
bring the discussion to a false conclusion
―Don’t you think we have talked about this enough?‖
How to Improve
Communication in Negotiation
Listening: three major forms
1. Passive listening: Receiving the message while providing no feedback to the sender
2. Acknowledgment: Receivers nod their heads, maintain eye contact, or interject responses
3. Active listening: Receivers restate or paraphrase the sender’s message in their own language
How to Improve
Communication in Negotiation
Role reversal ◦ Negotiators understand the other party’s
positions by actively arguing these positions until the other party is convinced that he or she is understood
◦ Impact and success of the role-reversal technique 1. Effective in producing cognitive changes and
attitude changes
2. When the positions are compatible, likely to produce acceptable results; when the positions are incompatible, may inhibit positive change
3. Not necessarily effective overall as a means of inducing agreement between parties
Special Communication Considerations
at the Close of Negotiations
Avoiding fatal mistakes ◦ Keeping track of what you expect to happen
◦ Systematically guarding yourself against self-serving expectations
◦ Reviewing the lessons from feedback for similar decisions in the future
Achieving closure
◦ Avoid surrendering important information needlessly
◦ Refrain from making ―dumb remarks‖
BEST PRACTICES IN
NEGOTIATION AND BATNA
TEN BEST PRACTICES FOR
NEGOTIATORS
1. Be prepared
— Understand and articulate your goals and interests
— Set high but achievable aspirations for negotiation
2. Diagnose the fundamental structure of the negotiation
— Make conscious decisions about the nature of the
negotiation: is it a distributive or integrative
negotiation or blend of the two
— Choose strategies and tactics accordingly
TEN BEST PRACTICES FOR
NEGOTIATORS
3. Identify and work the BATNA
— Be vigilant about the BATNA
— Be aware of the other negotiator’s BATNA
4. Be willing to walk away
— Strong negotiators are willing to walk away
when no
agreement is better than a poor agreement
— Have a clear walkaway point in mind where
you will
halt the negotiation
BEST PRACTICES
5. Master the key paradoxes of negotiation
— Claiming value versus creating value
— Sticking by your principles versus being resilient to
the flow
— Sticking with the strategy versus opportunistic pursuit
of new options
— Facing the dilemma of honesty: honest and open
versus closed and opaque
— Facing the dilemma of trust: trust versus distrust
TEN BEST PRACTICES FOR
NEGOTIATORS
6. Remember the intangibles
— ―See what is not there‖
— Ask questions
— Take an observer or listener with you to the
negotiation
7. Actively manage coalitions
— Coalitions against you
— Coalitions that support you
— Undefined coalitions that may materialize for or
against you
TEN BEST PRACTICES FOR
NEGOTIATORS
8. Savor and protect your reputation
— Start negotiation with a positive reputation
— Shape your reputation by acting in a consistent and
fair manner
9. Remember that rationality and fairness are relative
— Question your perceptions of fairness and ground
them in clear principles
— Find external benchmarks of fair outcomes
— Engage in dialogue to reach consensus on fairness
TEN BEST PRACTICES FOR
NEGOTIATORS
10. Continue to learn from the experience
— Practice the art and science of negotiation
— Analyze each negotiation
Plan a personal reflection time after each
negotiation
Periodically take a less from a trainer or a
coach
Keep a personal diary on strengths and
weaknesses and develop a plan to work on
weaknesses
BATNA
BATNA=best alternative to negotiated agreement
◦ The alternative that negotiators can turn to if no
agreement is reached in negotiation
examples of BATNAs in
◦ Car Sale Negotiation
◦ Salary Negotiation
◦ Union-Management Negotiation
BATNA
ELEMENTS OF BATNA 1. Deadlines
2. Alternatives
3. One’s resources
4. Other party’s resources
5. Information
6. Experience
7. Knowing the interests of negotiation
BATNA
DISCOVERING BATNA Prepare a list of all possible actions that you will
take if no agreement is reached
Focus on some of the bright options
Select the one most suited
BATNA
Following points have to be kept in
mind while determining one’s BATNA
Cost
Feasibility
Impact
Consequences
UNIT 3
INTERNATIONAL AND
CROSS CULTURAL
NEGOTIATION
INTERNATIONAL AND CROSS-
CULTURAL NEGOTIATION
Factors of International Negotiation-
Environmental context
◦ Political and legal pluralism
◦ International economics
◦ Foreign governments and bureaucracies
◦ Instability
◦ Ideology
◦ Culture
◦ External Stakeholders
FACTORS OF INTERNATIONAL
NEGOTIATION
Immediate Context
◦ Relative bargaining power (not just investment)
◦ Levels of conflict
◦ Relationships between negotiators
◦ Desired Outcomes
◦ Immediate Stakeholders
THE CONTEXTS OF
INTERNATIONAL NEGOTIATIONS
HOW DO WE EXPLAIN INTERNATIONAL
NEGOTIATION OUTCOMES?
International negotiations can be much
more complicated
Simple arguments cannot explain conflicting international negotiation outcomes
The challenge is to:
◦ Understand the multiple influences of several factors on the negotiation process
◦ Update this understanding regularly as circumstances change
Conceptualizing Culture
and Negotiation
Culture as learned behavior
◦ A catalogue of behaviors the foreign negotiator
should expect
Culture as shared values
◦ Understanding central values and norms
Individualism/collectivism
Power distance
Career success/quality of life
Uncertainty avoidance
DIMENSIONS OF CULTURES
Hofstede studied 50 cultures and found four
main dimensions to explain differences:
◦ Individualism/collectivism
◦ Power distance
◦ Career success/Quality of life
◦ Uncertainty avoidance
INDIVIDUALISM/COLLECTIVISM
Definition: the extent to which the society is organized around individuals or the group
Individualism/collectivism orientation influences a broad range of negotiation processes, outcomes, and preferences
◦ Individualistic societies may be more likely to swap negotiators, using whatever short-term criteria seem appropriate
◦ Collectivistic societies focus on relationships and will stay with the same negotiator for years
POWER DISTANCE
Definition: ―The extent to which the less powerful
members of organizations and institutions (like the
family) accept and expect that power is distributed
unequally‖
Cultures with stronger power distance will be more
likely to have decision-making concentrated at the
top of the culture.
CAREER SUCCESS/QUALITY OF LIFE
UNCERTAINTY AVOIDANCE
Definition: ―Indicates to what extent a culture
programs its members to feel either uncomfortable
or comfortable in unstructured situations‖
Negotiators from high uncertainty avoidance
cultures are less comfortable with ambiguous
situations--want more certainty on details, etc.
Hofstede’s Cultures Ranking
in the Top 10 TABLE 16.1
CONCEPTUALIZING CULTURE
AND NEGOTIATION
Culture as dialectic ◦ All cultures contain dimensions or tensions that
are called dialectics
Example: Judeo-Christian parables ―too many cooks spoil the broth‖ and ―two heads are better than one‖ offer conflicting guidance
This can explain variations within cultures
Culture in context ◦ No human behavior is determined by a single
cause
◦ All behavior may be understood at many different levels simultaneously
CULTURE AND NEGOTIATION
Cultural attribution error: tendency to
overlook situational factors in favor of
cultural explanations.
Culture as shared values.
THE INFLUENCE OF CULTURE ON NEGOTIATION:
MANAGERIAL PERSPECTIVES
Definitions of negotiation
Negotiation opportunity
Selection of negotiators
Protocol
Communication
Time sensitivity
Risk propensity
Groups versus individuals emphasis
Nature of agreements
Emotionalism
THE INFLUENCE OF CULTURE ON
NEGOTIATION: RESEARCH
PERSPECTIVES Negotiation outcomes
◦ Research suggests that culture has an effect on negotiation outcomes, although it may not be direct and it likely has an influence through differences in the negotiation process in different cultures
◦ Some evidence suggests that cross-cultural negotiations yield poorer outcomes than intracultural negotiations
THE INFLUENCE OF CULTURE ON
NEGOTIATION: RESEARCH
PERSPECTIVES Negotiation process ◦ Culture has been found to have significant effects
on the negotiation process, including: How negotiators plan
The offers made during negotiation
The communication process
How information is shared during negotiation
Effects of culture on negotiator cognition ◦ Accountability to a constituent influenced
negotiators from individualistic and collectivistic cultures differently
THE INFLUENCE OF CULTURE ON
NEGOTIATION: RESEARCH
PERSPECTIVES Effect of culture on negotiator ethics and tactics
◦ Differences exist in the tolerance of different negotiation tactics in different cultures
◦ Negotiators who trusted the other party were less likely to use questionable negotiation tactics
Effects of culture on conflict resolution
◦ Within collectivistic countries, disagreements are resolved based on rules, whereas in individualistic countries, conflicts tend to be resolved through personal experience and training
CULTURALLY RESPONSIVE
NEGOTIATION STRATEGIES
When choosing a strategy, negotiators should: ◦ Be aware of their own and the other party’s
culture in general
◦ Understand the specific factors in the current relationship
◦ Predict or try to influence the other party’s approach
Strategies are arranged based on the level of familiarity (low, moderate, high) that a negotiator has with the other party’s culture
LOW FAMILIARITY
Employ agents or advisers (unilateral strategy)
◦ Useful for negotiators who have little awareness of
the other party’s culture
Bring in a mediator (joint strategy)
◦ Encourages one side or the other to adopt one
culture’s approaches or mediator culture approach
Induce the other party to use your approach (joint strategy)
◦ The other party may become irritated or be insulted
MODERATE FAMILIARITY
Adapt to the other negotiator’s approach (unilateral
strategy)
◦ Involves making conscious changes to your
approach so it is more appealing to the other
party
Coordinate adjustment (joint strategy)
◦ Involves both parties making mutual adjustments
to find a common process for negotiation
HIGH FAMILIARITY
Embrace the other negotiator’s approach (unilateral strategy) ◦ Adopting completely the approach of the other negotiator
(negotiator needs to completely bilingual and bicultural)
Improvise an approach (joint strategy) ◦ Crafts an approach that is specifically tailored to the
negotiation situation, other party, and circumstances
Effect symphony (joint strategy) ◦ The parties create a new approach that may include
aspects of either home culture or adopt practices from a third culture