Top tips on achieving success when negotiating cross culturally

Culture goes much deeper than behaviour and customs and cultural norms lead to critical assumptions that wreak havoc on negotiations,  says Joshua N Weiss. Here he highlights several dos and don’ts for negotiating cross-culturally

Let me tell you a story about a cross cultural negotiation that ended up with an agreement, but was rife with problems and challenges due to the very different cultures and approaches involved.  

This story is loosely based on an example from my book The Book of Real-World Negotiations: Successful Strategies from Business, Government, and Daily Life – and I would like to thank my colleague Chang In Shin for sharing this story. 

The story highlights the many don‘ts when negotiating cross culturally.  However, at the end of the article I will take the don’ts and reconfigure them into prescriptive dos to help you negotiate across different cultures. 

The aforementioned story begins in a place called Pankyo, South Korea, which is an emerging digital city similar to Silicon Valley in California.  The negotiation involves two biotech companies – Kyammi, a South Korean company, and Bundascorp, a German company – that were negotiating a merger and possible acquisition.  It is important to note that this negotiation occurred at the Kyammi CEO’s office and the parties had maintained a somewhat distant business relationship for more than 20 years.

The interests in this negotiation were quite clear.  Kyammi wanted to be an authorised subsidiary of Bundascorp, but did not want to lose its majority stake in the company so they could still make their own decisions. Conversely, Bundascorp wanted to control the management and decision making of Kyammi in order to exploit its regional domination in Asia.

In preparing for the negotiation Kyammi’s CEO perceived himself as the lower power party due to various cultural norms.  In the South Korean cultural context, South Korean parties seeking foreign investment perceive themselves as the lower power parties, given that their counterparts have financial capability and resources. As a result, South Koreans engage in negotiation processes without communicating their needs and wants with the high-power parties.

As such, when the negotiation unfolded, cross-cultural differences in communicating their respective needs were clearly on display. Despite Kyammi’s CEO experiencing significant discomfort with the way the Bundascorp’s CEO negotiated, he did not express these emotions openly since such a demonstration would have been deeply frowned upon from a cultural point of view. This refrain by the Kyammi CEO was coupled with the Bundascorp CEO’s direct and strongly assertive approach advocating for his company’s needs. The contrast could not have been more apparent.

Another cultural factor involved was the age of the negotiators. In a South Korean cultural context, more senior people are supposed to get resources first and then distribute them based on the loyalty demonstrated by more junior employees. In the case of Kyammi, the CEO was much younger than the Bundascorp’s CEO, and this was another reason why he perceived himself as a lower power party and acted as such.

The last cultural factor that was prevalent from a South Korean point of view was the value of harmony. This value emanated from a combination of Buddhism and Taoism belief systems that underpin South Korean culture.  The negotiation process progressed simply because Kyammi’s CEO made begrudging concession after concession. He did so for the aforementioned reasons and because of the critical importance of maintaining a harmonious relationship above all else. As a result, Kyammi’s CEO lost most of his company shares through these voluntary concessions, allowing Bundascorp to take over 65% of the company.

The outcome of this negotiation was far from optimal. By making their culturally based concessions Kyammi attempted to put itself into a new and different relationship with Bundascorp. Bundascorp unfortunately did not understand that was what was happening and, as a result, took advantage of the situation and the relationship. Interestingly however, due the very strong emphasis on the relationship by the CEO of Kyammi, the business relationship has persisted and, while not balanced, it continues to this day.

There are four lessons from this case that have applicability for cross cultural negotiations in general.  These include:

1Behaviours in different cultures carry very different meanings.  Behaviors can be interpreted very differently from culture to culture as we saw in this scenario.  Consider two other examples.  First, certain non-verbal signals in one culture, such as a thumbs-up sign, can by an affirmation or an insult.  Second, a colleague recently shared a story with me of a negotiation he had as part of a team of people from Australia going to do a business deal in Japan.  One of the Australian team members, while waiting for the negotiation to begin, gave an empty water bottle to the oldest secretary in the waiting room (one of three women).  Little did he know that this was a significant insult – he should have given it to the youngest secretary because age is equal to respect in a Japanese context.  Knowing these behaviors and customs is important not to cause affront to the other and inadvertently derail the negotiation process.      

2Culture goes much deeper than behaviour and customs.  This case study clearly demonstrates that if you are only preparing for cross cultural negotiations by focusing on behaviours and customs you are missing a significant part of the preparation process.  One has to delve deeply into a culture that you plan to negotiate in and understand the underpinnings of that culture.  In this example, the paramount concepts of harmony and the perspective on a powerful vs. powerless negotiation relationship were essential to grasp.  So, look beyond the obvious to these underlying and often hidden notions.

3Culture impacts process as much as outcome.  From this example we also saw how important process was in this negotiation.  The Kyammi CEO was using one process to approach the negotiation and the German CEO was using a completely different approach.  This is something that is important to discuss – subtly or openly depending on the cultures involved – so it does not lead you astray.    

4Cultural norms lead to critical assumptions that wreak havoc on negotiations.  The last issue that negotiators needed to understand was that hidden cultural norms led to assumptions that significantly disrupted the negotiation process.  This happened because the other negotiator did not share those assumptions and, as such, significant misunderstandings occurred.   

Joshua N Weiss, PhD is the author of the recently published The Book of Real-World Negotiations: Successful Strategies from Business, Government, and Daily Life (Wiley), and a Senior Fellow at the Harvard Negotiation Project.  For more see www.joshuanweiss.com

You may also like...

responsible business

Connecting passion with impactful projects

Nyenrode’s Désirée van Gorp talks to David Woods-Hale about enabling students and graduates to pursue their desire to make a positive contribution in the world through a new digital ecosystem

Read More »
AMBA Excellence Awards

From boardgames to boardroom: AMBA’s MBA Entrepreneur of the Year

Taking inspiration for the name from his love for Scrabble, Oluwatobi Ajayi founded Nord Automobiles with a desire to bring affordable and reliable cars to Nigeria. Earlier this year, he won MBA Entrepreneur of the Year at the AMBA & BGA Excellence Awards 2021. Ellen Buchan finds out more about his company and Nigeria’s unique business environment

Read More »