How to Negotiate Effectively in Different Cultures

By Guido Stein and Kandarp Mehta

In a globally connected world characterised by diversity, there exist different approaches towards negotiation, which are dependent on people’s respective culture. In this article, the authors discuss the significant impact of culture to negotiation processes as expounded on three culture types – Dignity Culture, Face Culture and Honour Culture – with the aim of helping us understand one another better.

Executives in our negotiation programs quite often ask: “How should I negotiate with people from a very different culture?” Most negotiations in today’s globally connected world take place in a multinational context. While this has brought us all closer, at the same time it has added to the anxiety of business executives when they are dealing with cultures with which they are not very familiar. Most of the executives with whom we interact highlight culture as a very important factor as far as negotiations are concerned.

Why do cultures have a strong impact on negotiations? Before answering this question, let us try to understand what happens in a negotiation. A negotiation is primarily an interaction that someone has with one or more counterparts to satisfy a particular need and thereby gain an advantage or claim something. Negotiating is basically a relationship between an individual’s style of negotiation and that individual’s interpretation of the situation. Culture influences both the individual’s style of negotiation and the way negotiators interpret situations and their counterparts’ behaviour.

Negotiation Situations and Style

Negotiation literature identifies two paradigms to define very distinct negotiation situations and styles – namely, (1) distributive or competitive negotiations and (2) integrative or collaborative negotiations.

As the diagrams above suggest, a competitive situation is one where the negotiator has to get the best outcome at the cost of the counterpart’s position. For example, in a typical traditional vegetable market in rural India when you buy potatoes or onions, you bargain for a better price with the vendor. You will get a lower price only if the vendor reduces his or her price expectations. Competitive negotiations are also known as positional bargaining because of the excessive focus on positions during such negotiations. On the other hand, collaborative negotiations are also known as interest-based negotiations or integrative negotiations because the focus is not really on asking the counterpart to reduce his or her expectations but, rather, the focus is on finding the best solution that will actually improve the payoff of both parties.

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Cultures influence the way we behave and also the way we assess other people’s behaviour. Hence, culture has a strong impact on negotiations. Each culture has a cognitive component and a normative component. A culture’s cognitive component deals primarily with the different values that the culture espouses. These values affect our understanding and judgment of what is acceptable and what is not, what is right and what is wrong and so on. On the other hand, the normative component of a culture outlines common rules of behaviour: how to sit, how to greet people, how to eat, what to say, what not to say, etc. Rules and norms are outlined by culture. Let us try to understand in detail why and how culture influences negotiators.

Cultures influence negotiation strategies in two ways. Culture influences the way the negotiator prioritises his or her interests, and culture also dictates how the negotiator asks for what he or she is seeking. When negotiators are involved in the process of exchanging information, a range of behaviours is possible. However, these behaviours are deeply influenced by culture. For example, confrontation is a typical negotiation behaviour but, while in some cultures direct verbal confrontation is considered to be a normal part of negotiation behaviour, in others verbal confrontation is not an option. Similarly, some cultures influence the negotiator’s interests and priorities. For example, individualist cultures might inspire the negotiator to seek self-interest, while more collectivist cultures could inspire the negotiator to seek objectives that would satisfy the interests of not just the individual but also of the community as a whole.

The following table sets out different cultural prototypes and their impact: 

East vs. West and Beyond

Traditionally the world was seen as East vs. West. The Western hemisphere had a uniform concept of the East and vice versa. However, in the 20^th century this prototype was replaced by a more East-middle-West cultural prototype. Cultural psychologists divide the world into three prototypes and each one has a strong bearing on negotiations. These culture types are dignity culture (Western culture), face culture (East Asian culture) and honour culture (Middle Eastern, Southeast Asian and Latin American cultures). Jeanne M. Brett in her seminal work Negotiating Globally (2001; third edition, 2014) argues that these culture types can be described:

“in terms of six sets of characteristics: self-worth, power and status, sensitivity and response to insults, confrontation style, trust and mindset. […] 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 behaviour. 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. Mindset refers to the way people reason and process information.”

What are the dignity, face and honour cultures? Let us look at each one in turn.

Dignity Culture

Dignity culture is the cultural prototype of the Western hemisphere. Dignity culture societies are more egalitarian and hence the self-worth of an individual is self-determined. Since self-worth is independent of social status and does not depend on social opinion, it is also possible that negotiations will focus more on individual welfare. In such cultures, retaliation is less common because of the lower dependence on others for self-worth. At the same time, greater importance is attached to trust and reciprocity. In addition, due to the influence of Greek philosophy and especially Aristotelian logic, a highly-analytical approach can be seen in negotiations.

Face Culture

Face culture is the prototype of East Asian societies. The main feature of these societies is collectivism. Self-worth is socially conferred and depends on a person’s relative position in a stable social hierarchy. The atomistic unit of society in a face culture is the family. Hierarchies and social relationships are very important in face culture. As a result, there is less confrontation in negotiations, while interactions are more indirect and impersonal. Interpersonal trust is important in face culture but this trust does not merely emanate from interpersonal interaction – rather, it also depends to a great degree on institutional approval. Some scholars even argue that forms of institutional surveillance (e.g., surveillance by the family, community, Church, etc.) serve as reliable external guarantors of individual behaviour. Another interesting characteristic that has a huge influence on negotiations is the holistic mindset of individuals in face culture. When negotiators analyse a situation, they focus both on the problem and on the context in which it is embedded. Many executives tell us that almost every negotiation in a face culture becomes a multi-issue negotiation.

Honour Culture

Honor culture societies are probably the most diverse, which is why it is more difficult to identify the precise prototype of honour culture. Self-worth has been seen as a combination of an individual’s assessment of his or her value in society and socially-conferred value. In other words, it is important to have social approval of individually determined self-worth. In honour cultures, societies tend to be hierarchical but these hierarchies are not always stable and so they need to be established. For negotiation, this is a very important issue. In a negotiation in honour cultures, there is an increased possibility of a confrontational approach. According to Brett:

“in honour cultures, trusting means putting your self-worth in the hands of others. If you trust and your trust is reciprocated, then you gain honour 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.”

Hence negotiations in honour cultures at times rely more on the argumentative brilliance of negotiators and not only on their trustworthiness.

Final Advice: Do Not Overlook the Individual

Having gained an understanding of these three cultural paradigms, we must also understand that culture is not a static and stable construct. So many countries in the world today have education systems that are highly influenced by European education systems. Many young men and women relocate to different parts of the world to pursue higher education, develop their careers or simply to benefit from new experiences. As a result, across the world there has been a great degree of cultural exchange. The framework that has been shown in this teaching note aims to help us understand one another better. Scholars of cross-cultural research have been working very hard to separate cultural stereotypes from cultural knowledge. This is why we strongly advise all negotiators not only to make an effort to understand the cultural nuances of their counterparts but never to undermine the importance of the individual with whom they are dealing. Negotiations are strongly influenced by individual needs and insecurities. Culture influences the way these needs are expressed and prioritised but this does not mean the basic needs of negotiators are absent. After all, across the world, a smile is always sweet and tears are always salty.

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This article was originally published on 20 January 2018.

About the Authors

Guido Stein is Academic Director of the Executive MBA of Madrid, Professor at IESE Business School in the Department of Managing People in Organizations and Director of Negotiation Unit. He is partner of Inicia Corporate (M&A and Corporate Finance).

Kandarp Mehta is a PhD from IESE Business School, Barcelona. He has been with the Entrepre-neurship Department at IESE since October 2009. His research has focussed on creativity in organisations and negotiations. He frequently works as consultant with startups on issues related to Innovation and Creativity.