What Makes Some Intercultural Negotiations More Difficult Than Others? Power Distance and Culture-Role Combinations

Abstract

This study examines whether and how intercultural negotiation dyads that vary in culture-role combinations experience different negotiation processes and outcomes. Participants completed an employment contract negotiation with a culturally different counterpart. Results indicated that high-status, high-power distance negotiators paired with low-status, low-power distance negotiators experienced more anger, placed less emphasis on cooperative goals, used less priority information exchange, and, consequently, gained less joint profits than high-status, low-power distance negotiators paired with low-status, high-power distance negotiators. Theoretical and practical implications of the study are discussed.

Keywords

intercultural negotiation power distance emotion goals negotiation tactics

As globalization continues to bring people from diverse cultural backgrounds into contact with each other, the study of culture and negotiation has gained increasing prominence in the past two decades. A growing body of research has documented culture’s effect on bargaining processes and outcomes, ranging from cultural differences in negotiators’ cognitive frames (Brett & Okumura, 1998; Gelfand et al., 2001; Tinsley, 1998), judgment biases (Friedman, Liu, Chi, & Chen, 2007; Gelfand & Christakopoulou, 1999), emotions (Liu, 2009), goals (Liu, 2012; Liu & Wilson, 2011), face concerns (Oetzel & Ting-Toomey, 2003), offer patterns (Adair, Weingart, & Brett, 2007), and frequencies and sequences of bargaining tactics (Adair et al., 2004; Liu, 2013), to negotiation outcomes (Adler, Brahm, & Graham, 1992; Brett et al., 1998). However, much of our knowledge is based on cross-cultural comparisons of intracultural negotiations, rather than investigations of intercultural interactions involving members of different cultures. Research has generally found intercultural negotiations to produce less positive outcomes than intracultural negotiations (Brett & Okumura, 1998). Little research, though, has examined the mechanisms that facilitate or impede the effectiveness of intercultural negotiations.

Culture has been defined as a socially shared knowledge structure, or schema, that guides the interpretation of incoming stimuli and subsequent outgoing reactions (Triandis, 1972). In intercultural negotiations, negotiating parties operate under different schemas that entail different expectations, plans, and behavioral choices. Depending on context, differences in cognitive schemas may become more or less pronounced (Morris & Fu, 2001). Traditionally, cross-cultural negotiation research has focused on documenting culture’s main effects on negotiation, using primarily Hofstede’s individualism-collectivism dimension. This approach is often criticized for treating culture as a stable and unitary system, failing to account for individual and contextual differences that may amplify or mitigate culture’s influence. In recent years, a new trend has emerged that conceptualizes culture as interacting with context, or individual differences, or both, to activate knowledge structures that direct culturally normative negotiation behavior (Brett & Crotty, 2008). The current study joins this trend in identifying contextual factors that may increase the degree of cultural clashes and exacerbate difficulties in intercultural negotiations.

A number of cross-cultural studies have shown that culture’s effects on negotiation behaviors and outcomes can be moderated by bargaining roles (e.g., buyers vs. sellers, Cai, Wilson, & Drake, 2000; employers vs. employees, Liu, 2012; Liu & Wilson, 2011). Such effects have been explained by differences in power. These studies, based on cross-cultural comparisons of intracultural negotiations, have generally assumed that negotiating parties uphold similar cultural values about power distance (PD). In intercultural negotiations, dyad members may have incompatible cultural values about PD; such a mismatch may cause either positive or negative violations of expectations, depending on their respective power positions (or bargaining roles). Consequently, different culture-role combinations may give rise to different emotions, goals, bargaining strategies, and outcomes. The purpose of this research, therefore, is to assess whether intercultural negotiation dynamics and outcomes vary as a function of culture-role combinations. The article begins with a review of relevant literature, followed by hypotheses, method, results, and a discussion of their theoretical and practical implications.

Role-Related Expectancy Violations in Intercultural Negotiation

One of the problems associated with intercultural negotiations is the potential clash in role-related expectations between negotiators from different cultures. Roles are “sets of rights, obligations, and normative expectations attached to social positions, and impose limitations on task-characteristic responsiveness” (Neale, Huber, & Northcraft, 1987, p. 230). Expectations refer to “an enduring pattern of anticipated behavior” (Burgoon, 1993, p. 31), derived from cultural and social norms, or relationship factors, such as similarity, familiarity, and liking. Thus, role-related expectancies refer to the expected behaviors people have of others based on the roles individuals have in specific interactions. Take, for example, the negotiation of an employment contract between a manager and a prospective employee. On the one hand, the manager represents the company and is, therefore, expected to work with a set of constraints, such as limited resources, to minimize hiring costs for the company. On the other hand, the manager is a future supervisor and colleague, and is, therefore, expected to care for the well-being of the prospective employee. Conflict in role expectations arises when negotiators place emphasis on different aspects of the given role: Whereas the manager may focus on his or her responsibility toward the company, the employee may focus on the care aspect of the manager’s role. Such role conflict can be further exacerbated when status differences between bargaining roles are met with differences in cultural values, such as those in PD.

According to Hofstede (2001), PD reflects the extent to which the less powerful members of organizations and institutions accept and expect that power is distributed unequally. High-PD societies consider hierarchy and power inequality as appropriate and beneficial to maintaining societal order. Superiors have a social responsibility to protect subordinates; in return, subordinates owe obedience, loyalty, and deference to superiors, and are expected to concede to them. Low-PD societies value equality, and perceive inequality as an evil that should be minimized (Leung, 1997). Although social status differences also exist in low-PD cultures, their members are generally less receptive to inequality in social status. As a result, low-status individuals are free to question or challenge authority, and a high-status position does not automatically translate into more power. Such differences in PD values are likely to produce different role-related scripts for individuals in intercultural hierarchical relationships (e.g., supervisor-supervisee; parent-child). For example, in an employment contract negotiation, a manager from a high-PD culture may place greater emphasis on loyalty to the organization than a manager from a low-PD culture, whereas a prospective employee from a low-PD culture may be less constrained to assert his or her own needs than a counterpart from a high-PD culture. Previous research has shown that incongruence in PD values between leaders and followers had a negative effect on team effectiveness (e.g., Cole, Carter, & Zhang, 2013). Cross-cultural negotiation research has generally found intercultural negotiations to yield poorer outcomes than intracultural negotiations (e.g., Adler & Graham, 1989; Brett & Okumura, 1998; Lituchy, 1997). However, research has not assessed whether incongruence in cultural values, such as PD, can produce positive outcomes. In other words, can negotiators with different PD values negotiate successfully, or is it always the case that the clash of role-related expectancies will produce negative outcomes?

According to expectancy violations theory (Burgoon, 1993; Burgoon & Hale, 1988), violations of one’s expectations do not always lead to negative evaluations of the other person’s behavior; a positive valence can be assigned to a violation when the transgressive behavior is evaluated more favorably than the expectation. The theory predicts that expectancies influence the outcome of the communication interaction either positively or negatively. It is, therefore, possible that intercultural negotiations involving incongruence in PD values between negotiators may produce positive or negative negotiation processes and outcomes depending on the nature of expectancy violations. For example, when a high-status negotiator from a high-PD culture (e.g., Chinese manger) meets a low-status negotiator from a low-PD culture (e.g., American employee), a violation of role expectancies can be perceived as particularly negative because the Chinese manager may demonstrate greater loyalty to the organization by making fewer concessions. In addition, from his or her perspective, the employee, rather than the manager, assumes greater responsibility for using cooperative tactics to communicate respect and deference. The American employee may negatively violate this expectation by assertively pursuing his or her self-interests through competitive tactics and by showing little concern for the status difference. Furthermore, the American employee may also exhibit greater resistance against a power-based approach used by the Chinese manager.

In contrast, the effects of role-related expectancy violations can be positive when a high-status negotiator from a low-PD culture (e.g., American manager) meets a low-status negotiator from a high-PD culture (e.g., Chinese employee). The American manager may be more accepting of an employee’s competitive tactics oriented toward maximizing self-interests, is less likely to use an authoritarian style of communication, and may demonstrate greater concern for the employee’s needs. The Chinese employee may be more accepting of an employer’s power tactics and is more likely to show respect and deference by making more concessions. Consequently, both parties will be less likely to experience negative violations of their expectations. The following sections discuss how the two types of dyadic negotiations (i.e., high-PD employer and low-PD employee; low-PD employer and high-PD employee) may produce different negotiation dynamics, such as negotiators’ emotions, goals, and bargaining tactics, as well as negotiation outcomes, such as individual and joint gains.

The Effect of Culture-Role Interaction on Emotions

Ample research has documented the effects of felt and expressed emotions on negotiation performance (e.g., Allred, Mallozzi, Matsui, & Raia, 1997; Friedman et al., 2004; Sinaceur, Van Kleef, Neale, Adam, & Haag, 2011; Van Kleef, De Dreu, & Manstead, 2004). Only recently, however, has research considered the role of culture in shaping negotiators’ emotional responses and the effects emotions have on the bargaining process. Research shows that negotiators from different cultures experience varying degrees of anger and compassion in response to the same persuasive arguments advanced by a counterpart. For example, Liu (2012) found that American negotiators judged the counterpart as more personally responsible for perceived negative behavior, and reported more anger and less compassion toward the counterpart than did Chinese negotiators.

Two sets of explanations were provided to account for the difference. First, according to the cognitive appraisal theory of emotion (Lazarus, 1991), anger arises from attribution of the negative behavior to personal responsibility, whereas compassion arises from attribution of the negative behavior to external, uncontrollable situational factors. The first explanation, therefore, focused on cultural differences in thinking styles: American negotiators, as analytical thinkers, are field-independent and more likely to attribute behaviors to internal, dispositional causes, whereas the Chinese, as holistic thinkers, are field-dependent and more likely to take external, situational constraints into consideration (Choi, Nisbett, & Norenzayan, 1999; Nisbett, 2003).

The second explanation attributed cultural differences in emotional experiences to differences in cultural values. From this perspective, anger is an ego-focused emotion that has the individual’s own needs, goals, and desires as the primary referent, and is therefore more likely to be experienced by individualists (e.g., Americans). In comparison, compassion is an other-focused emotion that results from being sensitive to another person’s feelings and concerns, and it is therefore more likely to be experienced by collectivists (e.g., Chinese; Markus & Kitayama, 1991).

Although not conducted in a negotiation context, research has also shown that PD values influence emotional experiences and displays. Members of high-PD cultures were found to experience negative emotions (e.g., anger, sadness, and anxiety) more frequently, but exhibited higher rejection and lower intensity of negative emotions than members of low-PD cultures (Basabe et al., 2000). However, scholars suggest that the influence of PD values on emotions is likely to be moderated by role status. According to Matsumoto (1990, 1991), high-PD cultures tend to foster emotions that preserve status differences, which may involve displaying more positive emotions to higher status others and more negative emotions to lower status others. In comparison, low-PD cultures tend to foster emotions that minimize status differences, which may involve displaying more positive emotions to lower status others and more negative emotions to higher status others (Collins, 1984).

Therefore, in intercultural negotiations involving a high-status high-PD negotiator (e.g., Chinese manager) and a low-status low-PD partner (e.g., American employee), the high-PD manager, who is less tolerant of employees’ competitive or defiant behaviors than a low-PD counterpart, is more likely to display negative emotions. In addition, the high-PD manager is also more likely to experience a negative violation of expectations when a low-PD prospective employee more openly communicates disagreements in pursuit of self-interests and displays minimal concern for the status difference as compared with a high-PD counterpart. Such a negative expectancy violation can, in turn, cause the high-PD manager to feel more anger and less compassion toward the low-PD employee. On the other hand, in intercultural negotiations involving a high-status low-PD negotiator (e.g., American manager) and a low-status high-PD partner (e.g., Chinese employee), the low-PD manager, who accepts employees’ disagreements and contentions to a greater extent than a high-PD counterpart, is likely to display more positive emotions toward a prospective employee. In addition, the low-PD manager is also more likely to experience a positive expectancy violation when a high-PD prospective employee communicates more respect and agreeableness than a low-PD counterpart. Such a positive expectancy violation can in turn cause the low-PD manager to feel less anger and more compassion toward the employee. Therefore, the following hypothesis is advanced:

Hypothesis 1 (H1): Intercultural negotiation dyads’ culture-role combination will produce a significant effect on their emotions, such that dyads with a high-status negotiator from a high-PD culture paired with a low-status negotiator from a low-PD culture will experience (1a) more anger and (1b) less compassion than dyads with a high-status negotiator from a low-PD culture paired with a low-status negotiator from a high-PD culture.

The Effect of Culture-Role Interaction on Goals, Tactics, and Outcomes

Research focused on felt emotions generally found anger to be associated with increased use of retaliatory strategies and smaller joint gains (e.g., Allred et al., 1997; Liu, 2009; Zhang, Ting-Toomey, & Oetzel, 2014). However, the mechanism underlying such effects remains under-explored. Recent research suggests that negotiators’ interaction goals may explain the influence of emotions on negotiation performance. For example, consistent with Weiner’s (2006) attribution theory of motivation and emotion, Liu and Wang (2010) found that anger led to increased distrust, and consequently, greater emphasis on competitive goals, such as “to withhold information,” “to get a better deal,” “to gain more power,” and “to attack the other’s face,” whereas compassion led to increased trust, and consequently, greater emphasis on cooperative goals, such as “to promote information exchange,” “to maximize both parties’ profit,” “to enhance the other’s face,” and “to promote a positive relationship.” Furthermore, the interaction goals that negotiators indicated they wished to pursue prior to a negotiation have been found to predict bargaining strategies and sequences, as well as negotiation outcomes (Keck & Samp, 2007; Liu, 2013; Liu & Wilson, 2011). For example, competitive goals caused negotiation dyads to use more distributive persuasion, exchange less priority information, and reciprocate more distributive tactics, which, in turn, resulted in smaller joint and individual gains.

Although the relationships between emotions, goals, tactics, and negotiation outcomes were found to generally hold true across cultures (Liu, 2012; Liu & Wilson, 2011), research has documented considerable cultural variations in this process. For example, Liu (2012) found that culture moderated the effect of emotion on negotiation goals and tactics. Specifically, although Chinese reported less anger and more compassion than Americans, they demonstrated a stronger tendency to compete when they felt angry and used more distributive tactics, whereas Americans placed more emphasis on cooperative goals and used more integrative tactics, despite a generally more individualistic orientation. One explanation is that anger as a self-focused emotion can drive collectivists to deviate from culturally normative cooperative tendencies and exhibit more individualistic tendencies, such as pursuing competitive goals. Although never empirically assessed, another explanation has to do with PD values. As an egalitarian culture, the U.S. approach to negotiation, relative to high-PD cultures, is more interest-based than power-based (Adair et al., 2004; Brett & Okumura, 1998). Superiors lower in PD values favor open discussion and view subordinate disagreement with and criticism of authorities as appropriate and desirable. Research shows that subordinates lower in PD values cared more strongly about the relational aspects of their treatment by authorities than subordinates higher in PD values (Tyler, Lind, & Huo, 2000). It is, therefore, not surprising that American negotiators placed more emphasis on cooperative goals such as “to enhance the other’s face” and “to promote a positive relationship,” despite negative emotions (Liu, 2012). This is particularly true for high-status individuals, as subordinates from low-PD cultures are generally free to confront their supervisors for greater individual benefits, and are, therefore, more likely to pursue competitive goals.

Previous research has provided consistent support for the moderating effect of role on the relationship between culture and goals. In high-PD cultures, high-status individuals have the right to feel justified in expressing disagreement and even aggression toward subordinates, without fearing retaliation (Irani & Oswald, 2009). Decisions made by superiors are more readily accepted, whereas disagreement or criticism on the part of subordinates is generally frowned upon. Multiple studies have shown that employees from high-PD cultures have a greater tendency to withhold opinions (Huang, Van de Vliert, & Van der Vegt, 2005) and engage in acquiescent silence (Rhee, Dedahanov, & Lee, 2014).

Therefore, in intercultural negotiations involving a low-status high-PD negotiator (e.g., Chinese employee) and a high-status low-PD counterpart (e.g., American manager), the mutual respect that the negotiators show to each other helps foster positive dynamics. The low-PD manager may demonstrate more concern for the employee and use a democratic decision-making style in which the employee’s needs are taken into account. The high-PD employee may show more respect for the manager’s authority and is less likely to express disagreement or challenge the manager’s suggestions. As a result, these dyads will be more compatible and more likely to set cooperative goals, use more integrative bargaining tactics, and achieve more positive outcomes in the negotiation.

On the other hand, when a low-status low-PD negotiator (e.g., American employee) meets a high-status high-PD counterpart (e.g., Chinese manager), more tensions are likely to arise that lead to negative negotiation dynamics. The high-PD manager may exhibit more authoritarian behaviors and show less concern for the employee’s needs, and the low-PD employee may be more confrontational and more inclined to challenge decisions and suggestions made by the employer. Therefore, the two counterparts are more likely to adopt a competitive orientation, rooted in their conflicting role-related expectancies. As a result, they are more likely to use distributive tactics to claim more value for themselves throughout the negotiation, instead of integrative tactics to create more value for both parties. Therefore, the following hypothesis is formulated:

Hypothesis 2 (H2): Intercultural dyads’ culture-role combination will produce a significant effect on their goals, tactics, and outcomes, such that dyads with a high-status high-PD negotiator and a low-status low-PD negotiator will (2a) place more emphasis on competitive goals and (2b) less emphasis on cooperative goals, (2c) use more distributive tactics and (2d) fewer integrative tactics, and (2e) achieve less individual and (2f) joint gains than dyads with a high-status low-PD negotiator and a low-status high-PD negotiator.

Method

Participants and Recruitment Procedures

Participants were 34 American citizens (10 men and 24 women) and 34 sojourning Chinese (10 men and 24 women) pursuing master’s and doctoral degrees at a mid-Atlantic University in the United States. The average age of American participants was 25.94 (SD = 4.08), whereas the average age of Chinese participants was 25.70 (SD = 3.14). Ninety-seven percent (n = 33) of the Chinese participants reported having resided in the United States for less than 5 years. Participants were recruited through campus fliers, word-of-mouth, postings in university newsgroups, and postings in student organization list-serves. Upon arrival at an interaction research laboratory, participants were instructed to read and sign a consent form before they completed a series of tasks. Each participant was compensated $10 upon completion of the entire experiment.

Experimental Design and Hypothetical Scenarios

Participants were paired to form same-sex, intercultural negotiation dyads and were randomly assigned to one of two role combinations (Chinese employer/American employee vs. American employer/Chinese employee) to perform a job contract negotiation. The vast majority of negotiation dyads (n = 33, 97%) reported that they did not know each other prior to the study. One dyad reported a low level of knowledge of their partner (1 on a 7-point scale, 1 = not well, 7 = very well).

Hypothetical scenarios from Allred et al.’s (1997) study were borrowed and modified to ensure they fit the purpose of this study. Each negotiation dyad completed two negotiation tasks concerning the terms of employment in a large consulting firm. The first task was a single-issue, zero-sum game concerning the kind of laptop computer the employee would receive from the company. Three options were available for discussion, the basic, advanced, and elite options, which varied in price, weight, and accessories, and were respectively worth 0, 20, and 100 points for the employee and 100, 20, and 0 points for the manager. Instructions for this task were intended to elicit contrasting expectations. For example, the “employee” was told that the laptop computer was an important symbol of status and respect at the firm and aggressive pursuit of the elite option was typically perceived as an indicator of their requisite confidence to succeed at the firm. However, the “manager” was told that the consulting firm frowned upon ostentatious fringe benefits, and that most new recruits had been happy with a basic option computer. This task, therefore, was intended to induce varying degrees of emotions for intercultural negotiation dyads. The average amount of time it took participants to complete the first task was 10.31 minutes (SD = 3.60). At the end of the first negotiation, participants reported the emotions they felt toward the counterpart.

The second task involved negotiating core terms of employment, including multiple issues (salary, medical coverage, vacation, and start date) that had integrative potential (i.e., both parties could “win” by trading off issues of differential importance). Before beginning the second task, participants read a description of the issues to be negotiated and responded to a 36-item questionnaire regarding perceived importance of eight goals they might pursue in the second negotiation. Participants were separated into different rooms so that they could ask questions without the presence of the other party. After responding to the goals questionnaire, participants met again to complete the second simulation, completed a questionnaire where they reported negotiation outcomes and demographic information, and were then debriefed. The average amount of time it took participants to complete the second negotiation was 16.88 minutes (SD = 6.46). Transcripts of this second negotiation were subsequently coded to examine bargaining tactics used by negotiation partners.

Participants were told in the scenarios for both tasks that their objective was to get as good a deal as they could for their company or for themselves, measured by the total number of points they could earn from the negotiation and that they should avoid reaching an impasse as it would result in zero points. The payoff schedule for the four issues in the second task was designed in ways that reflected three types of negotiation: integrative, distributive, and compatible. Salary and medical coverage were integrative issues (i.e., salary was worth more points for employees, whereas medical coverage was worth more points for managers, creating the potential for trading off these two issues in a way that benefited both parties more than a straight compromise on each issue). Vacation was a distributive issue (i.e., higher point values for managers resulted in lower point values for employees and the issue was equally important for both parties, creating a zero-sum situation). Start date was a compatible issue in that employees and managers received the same point value for each given option (i.e., there was no conflict in terms of what was the most desirable outcome for both parties on this issue, though participants, blind to each other’s payoff schedule, had to figure out for themselves that their interests were similar). To control for extraneous factors that may generate power difference (e.g., BATNA), participants in both roles were given the same information (i.e., 900 points or lower are considered an unacceptable deal). The tasks, which have been validated and used widely in previous research, provide the context for testing a series of behavioral measures.

Instrumentation

Sampling check of PD values

Following previous research measuring PD at the individual level (e.g., Brockner et al., 2001), PD values were assessed using an eight-item measure from Earley and Erez (1997; 1 = strongly disagree, 7 = strongly agree). Sample items include “In most situations managers should make decisions without consulting their subordinates,” and “Employees should not express disagreements with their managers.” Confirmatory factor analyses (CFA) performed on the eight items resulted in an acceptable model fit: χ²(20, N = 68) = 25.90, p = .17, root mean square error approximation (RMSEA) = .05 (confidence interval [CI]: [.00, .12]), standardized root mean residual (SRMR) = .08, and comparative fit index (CFI) = .94. Cronbach’s alpha was .69. The average score of the eight items was used as a composite measure of PD. An independent-sample t test showed that PD values were significantly higher for Chinese participants (M = 3.43, SD = 1.13) than for American participants (M = 2.93, SD = 0.76), t(63) = −2.07, p < .05.

Anger and compassion

Four items on 7-point Likert scales (1 = not at all, 7 = very much) were used to assess participants’ feelings of anger, annoyance, madness, and irritation toward the other party; two items assessed participants’ feelings of sympathy and compassion (Liu, 2009; Weiner, 1986). The internal consistency of the two scales was deemed satisfactory: Cronbach’s alpha was .90 for anger and .74 for compassion. The average scores of the items were used as composite measures of the two emotions.

Measuring interaction goals

The Interaction Goals Questionnaire (IGQ) developed in Liu and Wilson’s (2011) study was used to assess eight goals. The IGQ includes 36 items with four~five items measuring each of the eight goals on a 7-point Likert-type scale (1 = strongly disagree, 7 = strongly agree). Sample items include “I want to maximize the total number of points I can earn in the negotiation” (maximizing one’s own profit), “I want to make sure that Mr. Hale [the employer] will not achieve his goals by the end of the negotiation” (minimizing the other party’s profit), “I want to find a solution that meets both parties’ needs and concerns” (maximizing both parties’ profit), “I want to understand what Mr. Hale’s concerns are in the negotiation” (understanding the other’s concerns), “I want to appear forceful so that Mr. Hale knows I can’t be easily taken advantage of” (appearing forceful and assertive), “I want to appear polite and respectful during the negotiation” (appearing considerate and cooperative), “I want to make Mr. Hale aware that I have opportunities with other companies” (gaining power), and “I want Mr. Hale to know that I care about our relationship” (promoting a positive relationship). CFA results indicated that three items did not load significantly on their respective factors and were, therefore, dropped. All remaining goal measures demonstrated acceptable internal consistency: Cronbach’s alpha ranged between .71 and .84 for the eight goals. A second-order CFA was then performed on scores of the eight interaction goals to further reduce the IGQ to two scales: cooperative and competitive goals. Results showed that a two-factor structure was acceptable: χ²(18, N = 68) = 18.51, p = .42, RMSEA = .02 (CI: [.00, .11]), SRMR = .09, and CFI = .98. The two second-order factor scores were used as composite measures of the two goals for subsequent statistical analyses. Although the two factors were hypothesized as independent, they were allowed to correlate given the reasonable expectation that individuals pursue multiple goals simultaneously (i.e., multiple goal theory, Berger, 2005; Caughlin, 2010). The correlation between the two factors was moderate, r = −.46.

Measuring negotiation outcomes

Individual gain was the number of points each individual earned in the second negotiation. Joint gain was the number of points that each dyad jointly earned in the second negotiation. It was composed of the sum of each negotiator’s individual gain and it was the same score for both dyad members. Two negotiation dyads reached an impasse and were excluded from analyses involving negotiation outcomes.

Coding negotiation strategies

All of the second negotiations were audio-taped, video-taped, and transcribed. Two undergraduate research assistants who were blind to the hypotheses were trained to perform a content analysis of a subset of the transcripts using the coding manual developed by Liu (2009). Five categories of negotiation tactics were identified that conveyed an integrative (cooperative) or distributive (competitive) orientation: priority information exchange (e.g., requesting or providing information regarding the relative priority of multiple issues), integrative issue-linking (e.g., proposing multi-item offers or linkages between multiple issues), relationship building (e.g., giving compliments to the counterpart, showing concerns for the counterpart’s needs and concerns as well as the long-term work relationship), distributive positioning (e.g., proposing or rejecting single-item offers, demanding concessions on single-issues, or making positional commitments), and distributive persuasion (e.g., making arguments to reduce the counterpart’s resistance or threatening to walk away from the table). Coders began by bracketing the presence of any tactic (regardless of type) used during a simulation. Guetzkow’s U, an index of disagreement in unitizing, was .07, indicating acceptable unitizing reliability. After resolving disagreements through discussion, coders independently placed each of the bracketed tactics into one of the five categories. Cohen’s kappa was .89, indicating substantial agreement (Landis & Koch, 1977). Disagreements were resolved through further discussion. The rest of the transcripts were then divided equally among the coders who then finished coding the tactics used by all dyads.

There was substantial variation in the amount of time it took participants to finish the negotiation, ranging from 3.25 to 30.23 minutes (M = 16.03, SD = 6.74). Correspondingly, there was also substantial variation in the total number of tactics used by participants. As a result, the raw number of tactics in each category was no longer meaningful, unless the total number of tactics is taken into account. In addition, some tactic scores were highly positively skewed (three out of five categories were above 1.00 in skewness, SE = 0.29). Due to these two issues, transformation procedures were performed for each type of negotiation tactic by log transforming a proportion score of the number of tactics of each type to the total number of tactics used by each participant. After transformation, the normality of the distributions was much improved (skewness ranged from −0.19 to −0.59, SE = 0.29). The transformed scores were used for all subsequent statistical analyses.

Results

As data were collected from intercultural negotiation dyads, the degree of non-independence of dyadic data was assessed using Pearson product-moment correlation coefficients between dyad members’ scores on all dependent variables (see Kenny, Kashy, & Cook, 2006). Results showed that the intraclass correlations for most of the measures were statistically significant. Therefore, all the hypotheses were assessed using dyadic data analysis techniques suggested by Kenny et al. (2006). Preliminary analysis also showed that negotiation outcomes of the first negotiation were significantly associated with anger, r = .25, p < .05, but not with any other dependent variable. The outcome variable from the first negotiation was therefore statistically controlled for in analyses involving anger.

Hypotheses 1a and 1b predicted that culture-role combinations would have a significant effect on negotiators’ anger and compassion, with high-status high-PD negotiators (Chinese managers) and low-status low-PD negotiators (American employees) hypothesized to experience more anger and less compassion than dyads with high-status low-PD negotiators (American managers) and low-status high-PD negotiators (Chinese employees). Two mixed-model analysis of variance (ANOVA) analyses were performed with anger and compassion as the dependent variables, bargaining role as a repeated measures factor and culture as a between-dyads factor, and task one negotiation outcome as a covariate (see Kenny et al., 2006). Results indicated that neither culture nor role produced a significant main effect on anger in intercultural negotiations; however, there was a significant Culture × Role interaction effect on anger, F(1, 32) = 8.30, p < .01, partial η² = .18, with American employees (M = 2.50, SD = 1.55) and Chinese managers (M = 2.76, SD = 1.45) reporting significantly higher levels of anger than Chinese employees (M = 1.79, SD = 1.25) and American managers (M = 2.07, SD = 1.48). In addition, the Chinese exhibited a much greater role difference in anger (Cohen’s d = .72), as compared with Americans (Cohen’s d = .28). Therefore, H1a was supported. Results did not indicate levels of compassion varied as a result of culture, role, or the interaction between culture and role. So, H1b was not supported.

Hypotheses 2a and 2b predicted that culture-role combinations would have significant effects on negotiators’ competitive and cooperative goals, with American employees and Chinese managers hypothesized to place greater emphasis on competitive goals and less emphasis on cooperative goals than Chinese employees and American managers. Mixed-model ANOVA procedures were performed with competitive goals and cooperative goals as the dependent variables, bargaining role as a repeated measures factor, and culture as a between-dyads factor. Results indicated a significant Culture × Role interaction effect on pursuit of cooperative goals, F(1, 32) = 5.47, p < .05, partial η² = .17, with American employees (M = 0.09, SD = 0.95) and Chinese managers (M = −0.20, SD = 0.75) placing significantly less emphasis on cooperative goals than Chinese employees (M = 0.39, SD = 0.89) and American managers (M = 0.24, SD = 0.89). The Chinese exhibited a much greater role difference in pursuit of cooperative goals (Cohen’s d = .72), as compared with Americans (Cohen’s d = .16). H2b was supported. The analyses produced similar but non-significant results for competitive goals. Specifically, although there was a non-significant Culture × Role interaction effect, F (1, 32) = 1.38, p = .26, partial η² = .05, and therefore, H2a was not supported, the direction of the interaction was consistent with the hypothesis: American employees (M = 0.00, SD = 1.27) and Chinese managers (M = −0.04, SD = 0.96) placed greater emphasis on competitive goals than Chinese employees (M = −0.37, SD = 0.68) and American managers (M = −0.30, SD = 0.80).

Hypotheses 2c and 2d predicted that culture-role combinations would have a significant effect on negotiators’ distributive and integrative bargaining tactics, with American employees and Chinese managers hypothesized to use more distributive tactics and fewer integrative tactics than Chinese employees and American managers. Mixed-model ANOVA procedures were performed with the five types of bargaining tactics (priority information exchange, integrative issue-linking, distributive positioning, distributive persuasion, and relationship building) as the dependent variables, bargaining role as a repeated measures factor, and culture as a between-dyads factor. Results showed a significant Culture × Role interaction effect on priority information exchange, F(1, 32) = 7.30, p = .01, η² = .19, and a significant role effect, F(1, 32) = 8.61, p < .01, partial η² = .21, with Chinese managers using significantly fewer priority information exchange tactics (M = −1.07, SD = 0.31) with their American employee counterparts (M = −1.00, SD = 0.18) than Chinese employees did (M = −0.89, SD = 0.21) with their American manager counterparts (M = −1.01, SD = 0.23). The role difference for Chinese participants (Cohen’s d = .56) was much larger than that for American participants (Cohen’s d = .05). Results also showed a significant Culture × Role interaction effect on distributive positioning, F(1, 32) = 6.40, p < .05, partial η² = .17, and a marginally significant role effect, F(1, 32) = 3.89, p = .06, partial η² = .21. Contrary to the hypothesis, Chinese managers used significantly fewer distributive positioning tactics (M = −0.58, SD = 0.16) with their American employee counterparts (M = −0.48, SD = 0.15) than Chinese employees (M = −0.46, SD = 0.12) with their American manager counterparts (M = −0.46, SD = 0.14). The role difference for Chinese participants (Cohen’s d = .85) was much larger than that for American participants (Cohen’s d = .14). Results did not detect any significant culture and role effects on integrative issue-linking, distributive persuasion, or relationship building tactics. H2d received considerable support, but H2c did not.

Hypotheses 2e and 2f predicted significant culture and role interaction effects on individual and joint outcomes, with American employees and Chinese managers hypothesized to gain less profit than Chinese employees and American managers. To assess H2e, a mixed-model ANOVA was performed with individual gains as the dependent variable, bargaining role as a repeated measures factor, and culture as a between-dyads factor. Results revealed a significant Culture × Role interaction effect on individual gains, F(1, 30) = 4.03, p < .05, η² = .12, with American employees (M = 925.00, SD = 218.55) and Chinese managers (M = 960.94, SD = 156.58) achieving significantly less individual gains than Chinese employees (M = 1,050.31, SD = 89.40) and American managers (M = 971.25, SD = 137.05). Thus, H2e was supported. At the dyad level, although American employee-Chinese manager intercultural dyads gained less joint profit (M = 1,896.25, SD = 295.43) than Chinese employee-American manager intercultural dyads (M = 2,011.25, SD = 194.45), the difference was not statistically significant, t(30) = −1.30, p = .20. Therefore, H2f was not supported.

Discussion

In the past two decades, the volume of intercultural negotiations has grown exponentially. These negotiations provide opportunities for learning and growth, but they also present significant challenges for the parties involved. Due to the scarcity of intercultural negotiation research, there remains an insufficient understanding of the factors that make some intercultural negotiations more frustrating than others, not to mention the mechanisms by which such factors influence intercultural negotiation processes and outcomes. The current study examined how different culture-role combinations affect cognitive, emotional, and behavior processes, and negotiation outcomes in intercultural negotiations. This section reviews the major findings of the study and discusses their theoretical and practical implications.

Effects of Culture-Role Combination on Intercultural Negotiations

In this study, negotiators’ cultural backgrounds and bargaining roles interacted to form two types of role combinations: high-status negotiators from a high-PD culture paired with low-status negotiators from a low-PD culture (i.e., Chinese managers and American employees) and low-status negotiators from a high-PD culture paired with high-status negotiators from a low-PD culture (i.e., Chinese employees and American managers). Results showed that the interaction between culture and role produced a significant impact on bargaining processes and outcomes. Specifically, negotiators in the former role combination were found to experience more anger, place less emphasis on cooperative interaction goals, exchange less information about preferences and priorities, use less distributive positioning, and consequently, gain less profit than negotiators in the latter role combination.

These findings have several theoretical and practical implications. First, scholars have noted that incompatible schemas and scripts about negotiation can make it difficult to achieve integrative outcomes in intercultural, as compared with intracultural negotiations (Brett & Okumura, 1998; Gelfand & Dyer, 2000). The general assumption is that intercultural negotiations are inherently more frustrating and less productive than intracultural negotiations. The current study is one of the first to demonstrate empirically that some intercultural negotiations can be more conducive to integrative negotiation processes and outcomes than others. Specifically, incongruent schemas and scripts may result in either positive or negative violations of expectations, which confirms the theoretical propositions of expectancy violations theory (Burgoon & Hale, 1988) in the context of intercultural negotiations. A high-status negotiator from a low-PD culture, or a low-status negotiator from a high-PD culture, is more willing to consider their negotiation partner’s goals and interests and to exhibit more cooperative behaviors, as the former seeks to minimize status difference with a low-status counterpart, whereas the latter wants to show respect and deference to a high-status counterpart. When these two roles form a negotiation dyad, both parties may experience positive violations of expectations in that one’s counterpart behaves more cooperatively than is generally the case with a counterpart from one’s own culture. Such positive perceptions may explain why American managers and Chinese employees in the study reported less negative emotions, placed more emphasis on cooperative goals, used more integrative bargaining tactics, and had more positive outcomes than Chinese managers and American employees.

Although American managers and Chinese employees also used more distributive positioning tactics, such as single-issue offers, demands, and refusals, which seems counter-intuitive given the overall integrative nature of their interaction, it should be noted that the negotiation task they completed, like most real-life negotiations, was a mixed-motive negotiation requiring both value creation and value claiming skills for optimal outcomes. In addition, this finding is consistent with prior cross-cultural research that found Chinese and American negotiators to reduce their use of distributive positioning in response to their counterpart’s anger (Liu, 2009). It is likely that, given the fewer angry feelings both parties had, American managers and Chinese employees were more comfortable using value claiming tactics without necessarily turning the negotiation toward a competitive direction.

Second, considerable research has shown that negotiators’ emotions can have a significant impact on their bargaining tactics and outcomes (e.g., Allred et al., 1997; Friedman et al., 2004). This study is one of the first that extends this line of research to intercultural negotiation settings. The study showed that, in intercultural negotiations, degrees of negative emotions varied as a result of different culture-role combinations, and so did the relative emphasis placed on competitive and cooperative interaction goals, the use of bargaining tactics, and negotiation outcomes. Although the study’s sample size was not large enough to afford statistical assessment of the mediated relationships between emotions, goals, tactics, and outcomes (given the difficulty of collecting interaction data from intercultural dyads), findings from the study suggest that such a model is a viable mechanism for explaining why some intercultural negotiations are less productive than others.

On a practical level, this study suggests that intercultural negotiations can be more effective when the culture-role combinations are more conducive to empathy and perspective taking, a significant predictor of integrative negotiation outcomes (Galinsky, Maddux, Gilin, & White, 2008). When a culture-role combination poses barriers for a more productive bargaining process, negotiators can combat the difficulties through a better understanding of the counterpart’s cultural background, so as to avoid exhibiting behaviors that negatively violate the counterpart’s expectations. Specifically, high-status negotiators from high-PD cultures should be mindful of the egalitarian nature of low-PD cultures and de-emphasize power and hierarchy in their interactions with low-status negotiators from low-PD cultures. Likewise, low-status negotiators from low-PD cultures should be mindful of the cultural assumptions of a high-PD culture to reduce negative attributions of the high-status counterpart’s authoritative behavior to dispositional factors, and reduce negative emotions that can easily turn the negotiation in a more distributive direction.

Limitations and Future Directions for Research

Despite its many strengths, the study is not without limitations. First and foremost, due to the difficulty of collecting data from intercultural negotiation dyads, the sample size of the study was small. Despite the monetary incentive offered to participants, it took over 2 years to complete data collection for the study. On the positive side, the study was still able to detect many significant effects. In addition, although the study used a student sample, the majority were graduate students in their mid-20s who were relatively more experienced in employment contract negotiation than undergraduates. Nevertheless, participants in the study had little experience serving in a manager’s role and culturally prescribed role expectations may be more pronounced when individuals enact a less familiar role. Therefore, future research should replicate the study with a larger sample size and working professionals.

Second, the study focused on a deal-making negotiation situation where economic outcomes were the most important consideration. Future research should replicate the study with a dispute resolution context where socio-emotional outcomes, such as the relationship between negotiating parties, are the most significant outcome. Such contextual constraints may reveal additional considerations that affect how disputants negotiate and the effects culture, role, and emotions have. With a larger sample size, future research should also assess whether the intrapersonal and interpersonal effects of emotions on negotiation performance vary in intercultural, as compared with intracultural, settings.

Third, insights gained from this study—intercultural interaction in hierarchical relationships—can be applied to other organizational communication contexts, such as leader-member exchanges in multicultural organizations, and professor-student interactions involving sojourners studying abroad. Finally, future research should further investigate various types of role expectation violations and their impact on bargaining processes and outcomes. The propositions of expectancy violations theory (Burgoon & Hale, 1988) may offer predictive reasons for identifying the conditions in which role incongruence will lead to better outcomes. This is a particularly important direction for intercultural communication research because a notable difference between individualistic and collectivistic cultures is the varying degree of role obligation that people are accustomed to fulfilling for various social roles and such difference may be magnified when negotiators are held accountable for their negotiation outcomes. Future research should continue to explore such factors that make some intercultural interactions more difficult than others, as well as explanatory mechanisms that explicate these processes.

Footnotes

Acknowledgements

The authors would like to thank Sejal Patel and Sabine Chai for their help with data collection for this study.

Author’s Note

An earlier manuscript based on the study received a Top Faculty Paper Award from the Intercultural Communication Division of the International Communication Association at its 2014 annual convention in Seattle, WA.

Declaration of Conflicting Interests

The authors declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.

Funding

The authors received no financial support for the research, authorship, and/or publication of this article.

Author Biographies

Meina Liu (PhD, Purdue University, 2006) is an associate professor in the Department of Organizational Sciences and Communication at the George Washington University where she specializes in Intercultural Communication and Organizational Communication, focusing on culture and emotion in negotiation processes.

Lin Zhu (PhD, University of Maryland, 2012) is an assistant professor of communication at the University of Massachusetts Boston where she specializes in Intercultural Communication and Negotiation and Conflict Management.

Ioana A. Cionea (PhD, University of Maryland, 2013) is an assistant professor in the Department of Communication of the Oklahoma University, with research interests at the intersection of intercultural and interpersonal communication, focusing on argumentative behaviors.

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