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How to Negotiate Effectively in Different Cultures

January 20, 2018 • Global Business, People Management

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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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.

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