Examining Cultural Intelligence and Cross-Cultural Negotiation Effectiveness

Abstract

International negotiation failures are often linked to deficiencies in negotiator cross-cultural capabilities, including limited understanding of the cultures engaged in the transaction, an inability to communicate with persons from different cultural backgrounds, and limited behavioral flexibility to adapt to culturally unfamiliar contexts. Although management educators are concerned about developing students’ cross-cultural capabilities, there exists very little empirical research demonstrating the impact of such abilities on negotiation performance. To address this limitation while advancing research on the development of cross-cultural capabilities, we examined the impact of cultural intelligence (CQ) on cross-cultural negotiation performance. Using assessment center and consensus rating methodologies, 113 fully employed MBA students participated in a negotiation exercise designed to underscore key cultural differences with respect to both negotiation style and substantive issues. Controlling for prior negotiation and international experiences, personality (openness to change and extraversion), and emotional intelligence, our results demonstrated that CQ predicted negotiation performance while interest-based negotiation behaviors partially mediated the CQ–negotiation performance relationship. CQ capabilities facilitated negotiators’ ability to demonstrate cooperative, interest-based negotiation behaviors in a negotiation context that demanded behavioral adaptation. We conclude by discussing a series of practical implications for management educators and suggestions for future CQ research.

Keywords

cultural intelligence negotiation interest-based negotiation assessment center intercultural negotiation

International negotiations often fail due to a lack of understanding and knowledge of the multiple cultures involved in the transactions (Brett & Okumura, 1998; Gelfand et al., 2001; Tinsley & Pillutla, 1998). Prior research suggests that deficiency in cross-cultural competence is a primary cause of international negotiations that fail to meet both parties’ expectations (Gelfand & Raelo, 1999). Effective negotiators in global contexts possess the knowledge and skills to work with the nuances of communication, values, and behavioral cues of individuals from different cultural backgrounds. As educators of current and future business leaders, we must be concerned about the development of our students’ cross-cultural competencies as part of their management education experience. Equally important for the business education community is advancing theory and research on cross-cultural competencies in a business context (Eisenberg, Hartell, & Stahl, 2013), particularly concerning fundamental management functions such as negotiating agreements with customers, suppliers, government officials, and other stakeholders.

Theory and research on cross-cultural competence has evolved from a focus on cultural knowledge to cross-cultural communication skills (Adair, 2003; Adair & Brett, 2005) to the current formulation of cultural intelligence (Ang et al., 2007; Earley & Ang, 2003). Cultural intelligence (CQ), defined by Earley, Ang, and Tan (2006) as “a person’s capability for successful adaptation to new cultural settings, that is, for unfamiliar settings attributable to cultural context” (p. 5), has been linked to task performance in cross-cultural settings such as leadership effectiveness in cross-border contexts (Rockstuhl, Seiler, Ang, Van Dyne, & Annen, 2011), leadership and team effectiveness in culturally diverse teams (Groves & Feyerherm, 2011), and international assignment effectiveness (Kim, Kirkman, & Chen, 2006). However, with the notable exceptions of Imai and Gelfand’s (2010) analysis of negotiation transcripts between parties from different national cultures, and Engle, Elahee and Tatoglu’s (2013) findings that higher metacognitive CQ was related to higher problem-solving scores in cross-cultural negotiations, published research on the links between CQ and negotiation processes and outcomes is largely absent.

Overall, this study addresses three critical gaps in theory and research on the association between CQ and cross-cultural negotiation processes and performance outcomes. First, we extend the very limited empirical research of the impact of CQ on intercultural negotiation processes. Second, we expand the nomologial net of CQ theory by illustrating a key mediating process that partially explains CQ’s effect on complex intercultural processes. While empirical studies examining the direct effects of CQ competencies on performance outcomes are growing (e.g., Ahn & Ettner, 2013; Chua, Morris, & Mor, 2012; Eisenberg, Lee, et al., 2013; Salmon et al., 2013), research addressing the key explanatory mechanisms of CQ’s effects on intercultural processes and performance outcomes is scarce. Third, echoing the sentiment of a growing number of cross-cultural management education scholars (e.g., Blasco, 2009; Eisenberg, Hartel, et al., 2013), this study advances the field’s shift from examining cross-cultural competence as cognitive knowledge bases to cognitive experiences and transformations via experiential exposure to intercultural situations. Although our study does not directly address the efficacy of an experiential, assessment center intervention for enhancing CQ competencies, we extend cross-cultural management education research by examining CQ’s direct and indirect effects on intercultural negotiation processes and outcomes in a highly experiential context that facilitates students’ affective and cognitive engagement (Jones, 2003). Asserted by numerous cross-cultural management education scholars (e.g., Blasco, 2009; Molinsky, 2007; Pless, Maak, & Stahl, 2011), intense experiential activities such as assessment center role-playing exercises and simulations offer a much more meaningful examination of CQ’s impact on complex intercultural processes.

To address the research gaps and management education needs discussed above, we offer an empirical examination of CQ and its impact on negotiation processes and outcomes in a cross-cultural context. In a class dedicated to developing the managerial skills of fully employed MBA students, we conducted a cross-cultural negotiation simulation in which students completed a role-playing exercise that was subsequently assessed by a panel of assessors. Our article is organized as follows. First, we offer a brief review of the CQ construct and its multiple dimensions. Next, we develop a series of hypotheses through a review of the key theoretical and empirical research on CQ, interest-based negotiation (IBN) behaviors, and negotiation outcomes in cross-cultural contexts. After describing our sample, measures, and assessment center methodology, we present the results and discuss a series of management education implications.

Cultural Intelligence Background

Cultural intelligence presents a unique framework to study how individuals successfully adapt “in unfamiliar surroundings” (Earley et al., 2006, p. 5). CQ not only represents the cultural knowledge that one possesses and behavioral flexibility but also the ability to reason and act on observations and subsequent cognition in a culturally diverse setting. Similar to studies examining cognitive intelligence and the nature of emotional intelligence (EQ; e.g., Cote & Miners, 2006), CQ comprises how one’s abstract thinking and motivation influence his or her behavior. A culturally intelligent individual possesses the necessary background knowledge of a particular culture, as well as the motivation to learn about new cultures and create new mental frameworks in order to expand his or her behavioral repertoire. Earley and Ang (2003) identified four CQ capabilities (metacognitive, cognitive, motivational, and behavioral), which are discussed below.

Metacognitive CQ is “an individual’s cultural consciousness and awareness during interactions with those from different cultural backgrounds” (Van Dyne, Ang, & Koh, 2008, p. 17), which reflects the ability to actively think about key assumptions as one is engaged in cross-cultural contexts and revise such understanding and cultural knowledge accordingly. It not only promotes active cognitive process when one faces a cross-cultural situation, it also drives the critical thinking behind reasoning, decision making, and judgment regarding the situation. Metacognitive CQ enables individuals to evaluate and adjust cognitive schema when cross-cultural situations are involved, particularly complex processes such as intercultural negotiations. Recently, Chua et al.’s (2012) study of executives concluded that high cultural metacognition was strongly associated with positive outcomes in intercultural relationships, including affective closeness and creative collaboration. Further discussed below, these results offer support for examining the potential mediating role of IBN behaviors.

Cognitive CQ is “an individual’s cultural knowledge of norms, practices, and conventions in different cultural settings” (Van Dyne et al., 2008, p. 17). It reflects one’s knowledge of a certain cultural setting, which encompasses the fundamental knowledge of cultural similarities and knowledge of cultural differences. Similar to metacognitive CQ, cognitive CQ is closely related to decision making (Ang et al., 2007). Beyond its effects on decision making, cognitive CQ consists of the culture knowledge base while helping one to behave aptly in cross-cultural situations. Recently, two multinational longitudinal studies examining the effects of cross-cultural management courses on students’ CQ found that in addition to significantly higher student CQ scores at Time 2 (postcourse), the courses had much stronger effects on cognitive and metacognitive CQ than on motivational and behavioral CQ (Eisenberg, Lee, et al., 2013). The researchers concluded that the cognitive CQ dimensions (cognitive and metacognitive) are affected by traditional academic classroom interventions while motivational and behavioral CQ are “more readily affected by extensive, purposefully designed experiential learning interventions or through an intensive direct experience with other cultures, gained by spending a meaningful amount of time abroad” (Eisenberg, Lee, et al., 2013, p. 616). Ahn and Ettner’s (2013) recent examination of CQ in MBA curricula also concluded that intensive experiential activities, such as international work experiences and obtaining a degree from a foreign country, are the most important drivers of enhancing CQ.

Motivational CQ drives attention so that one can focus on both cultural differences and cultural similarities while also mobilizing energy toward adapting to unfamiliar cultural contexts. Defined by Ang and Van Dyne (2008) as the ability to “direct(s) attention and energy toward cultural differences,” motivational CQ is the foundation of one’s self-confidence concerning the ability to deal with people and situations of a different culture. This self-efficacy effect (Ang & Van Dyne, 2008) is critically important as it requires a high-level personal confidence to perform successfully in a cross-cultural setting (Earley et al., 2006). Imai and Gelfand’s (2010) research on intercultural negotiations found that integrative information sequences and their subsequent joint outcome gains were predicted by the negotiators’ motivational CQ. Most recently, Salmon et al. (2013) found evidence that motivational CQ was a significant factor in predicting the effectiveness of manipulative mediation styles in intercultural disputes. Overall, these research findings suggest that motivational CQ may affect the efficacy of negotiation strategies, including manipulative, cooperative, and interest-based behaviors, for resolving intercultural conflicts.

Behavioral CQ is the ability to act appropriately when interacting with people and situations in an unfamiliar culture. Behavioral CQ is essentially how one can “play a role very convincingly and consistently” (Earley et al., 2006) in a cross-cultural setting. Such performance demands a wide range of behaviors that can be flexibly deployed based on the situation. Behavioral CQ consists of the ability to properly adapt both verbal and nonverbal behavior (Ang & Van Dyne, 2008) in culturally unfamiliar contexts. Ang et al. (2007) showed that behavioral CQ and motivational CQ are positively associated with one’s cultural adjustment, well-being, and task performance.

Cultural Intelligence and Negotiation Process Behaviors

Cross-cultural negotiation is increasingly becoming an invaluable management competency that often determines an organization’s success in the global business community. Prior research suggests that international negotiations frequently fail due to an overall lack of understanding and knowledge of the multiple cultures involved in the transactions. For example, Adair (2003) indicated that in high context cultures, indirect communication is favored, while in low context cultures, direct communication is preferred. She also discovered that it was more difficult for those from low context cultures to adapt to the negotiation style of those from high context cultures than vice versa. Tinsley and Pillutla (1998) argued that different cultural groups developed negotiation strategies that were consistent with their cultural values, and thus, the joint gains of negotiation and negotiator satisfaction were moderated by culture. When Brett and Okumura (1998) examined the simulated negotiations between Japanese and American managers, they found that intercultural negotiation resulted in lower joint gains because both Japanese and American negotiators used different scripts to communicate with one another.

On the basis of CQ theory and research to date, we posit that negotiators with high CQ should be better equipped to navigate the difficulties of negotiating in a cross-cultural context. We draw on the work of Imai and Gelfand (2010), Gelfand et al. (2001), Busch (2012), and others in postulating that CQ capabilities facilitate one’s ability to exercise cooperative, IBN behaviors, which are associated with stronger joint gains and overall negotiation efficacy in cross-cultural contexts. Imai and Gelfand (2010) argued that integrative negotiation processes, which draw on IBN behaviors as opposed to competitive behaviors, are critical for determining overall negotiation effectiveness and mutually agreeable joint gains among the negotiating parties. Because of the anxiety caused by encountering an unfamiliar culture, it is often more difficult for negotiators from different cultural backgrounds to behave cooperatively and flexibly during cross-cultural negotiations (Hewston, Rubin, & Willis, 2002; Imai & Gelfand, 2010).

In their negotiation simulation study, Imai and Gelfand (2010) found that individuals with high CQ were more likely to form cooperative relationships during the negotiation. As demonstrated through prior CQ research, negotiators with high CQ are more agreeable, flexible, and cooperative while also possessing greater motivation to accurately perceive the nuances inherent in cross-cultural negotiation contexts (Ang et al., 2007; Chen, Liu, & Portnoy, 2012). When presented with the challenge of a negotiation involving culturally bound issues (e.g., issues underscored by cultural values such as individualism/collectivism, power distance, universalism/particularism, etc.) as well as an opposing party who demonstrates a disparate negotiation style, negotiators with high CQ will accurately perceive and decode culturally relevant information and adapt their negotiation behaviors accordingly (Hewston et al., 2002). The behavioral flexibility demonstrated by high CQ negotiators is also associated with the relationship-building process, which generates greater overall joint gains that effectively meet the common interests of both parties (Fisher & Ury, 1991). Finally, research on simulated negotiations demonstrates that negotiation dyads engaging in complementary and cooperative relationship management behaviors are more likely to create joint profits (Imai & Gelfand, 2010). This study concluded that overall CQ is associated with complementary and cooperative relationship management behaviors in cross-cultural negotiation contexts. On the basis of the theory and research reviewed above, we present the following hypothesis:

Hypothesis 1: Negotiators with high CQ will demonstrate higher negotiation performance outcomes than negotiators with low CQ.

Mediating Effects of Interest-Based Negotiation Behaviors

Extending the work of Imai and Gelfand (2010) and others (Ang et al., 2007; Chen et al., 2012) on the relationship between cooperative negotiation behaviors and negotiation outcomes, we examine the effects of CQ on IBN behaviors and subsequent negotiation outcomes. The following review of theoretical and empirical research suggests that negotiator CQ will predict the ability to demonstrate IBN behaviors in cross-cultural contexts. In turn, an IBN strategy will partially explain the relationship between negotiator CQ and negotiation outcomes in cross-cultural contexts. Given the nascent stage of research on the theoretical relationships between CQ competencies and both negotiation processes and performance outcomes in cross-cultural contexts, as well as the incredible complexity of intercultural negotiations and disputes (e.g., Molinsky, 2007; Salmon et al., 2013), we predict that IBN behaviors will partially explain the positive relationship between CQ and cross-cultural negotiation performance. Based on existing CQ theory and research, we acknowledge the likelihood that CQ competencies affect cross-cultural negotiation performance via other explanatory processes, including the interaction of negotiator individual differences (Barry & Friedman, 1998), interpersonal trust (Salmon et al., 2013), problem-solving style (Engle et al., 2013), and other processes. As such, this study adopts a conservative approach to explaining the causal mechanism between CQ and intercultural negotiation performance.

Negotiation processes, aside from the substantive negotiation issues, include negotiators’ motivations, cognitions, behaviors, and emotions (Thompson, Wang, & Gunia, 2010). A specific type of negotiation, IBN depends on the parties’ willingness to explore the other party’s interests, engage in creatively seeking options for resolution, rely on objective third party criteria, and separate the people from the negotiation issues (Fisher & Ury, 1991; Marcus, Dorn, & McNulty, 2012). Cooperative negotiation strategies such as interest-based behaviors demand communication skills such as active listening and articulating in a way that others can clearly comprehend. Negotiation processes that capitalize on the explicit or implicit sharing and processing of information are critical to capturing integrative potential (Marcus et al., 2012; Pruitt & Carnevale, 1993). Interest-based conflict resolution processes facilitate greater joint gains by engaging each party in revealing, enlarging, and generating enlightened shared interests, which expand the range of acceptable solutions to both parties.

We postulate that negotiator CQ will predict overall cross-cultural negotiation performance while IBN behaviors will partially mediate the CQ–negotiation performance relationship. The theoretical justification for our prediction is based on the intersection of CQ and negotiation theory, specifically the critical role of “frames” or the cognitive perspective that each party uses to organize and interpret information about the negotiation issues (Lewicki, Saunders, & Barry, 2006). Negotiation theorists assert that the frames or perspectives assembled by each party are self-generated, fundamentally affected by cultural values and assumptions, and reflect both substantive and symbolic interests (Marcus et al., 2012). As such, the negotiation parties must achieve a profound understanding of one another’s interests, based on both substantive negotiation issues and symbolic interests associated with cultural values, to collectively reframe how they perceive and generate the range of options for arriving at a mutually acceptable solution. Based on the CQ theory and research reviewed below, we contend that CQ competencies facilitate the requisite “reframing” that drives effective IBN behaviors and ultimately performance outcomes in cross-cultural negotiations.

Recent research supports the contention that CQ competencies are associated with the ability to demonstrate IBN behaviors in cross-cultural negotiation contexts. Related to metacognitive CQ, Antal and Friedman (2008) describe “negotiating reality” as “a process whereby people become aware of their culturally shaped interpretations to a given situation, openly inquire into the interpretations of others, jointly test their interpretations, and design action strategies that make sense to all parties” (p. 364). Similarly, a series of quasi-field and experimental studies found strong support for the impact of a key metacognitive strategy—cultural perspective taking—on intercultural coordination and cooperation (Mor, Morris, & Joh, 2013). Recently, Imai and Gelfand’s (2010) study of intercultural negotiations concluded that integrative information sequences and their subsequent joint outcome gains were driven by the negotiators’ motivational CQ.

Effective IBN behaviors require each party to engage in multidimensional problem solving that reveals the “tangible and intangible gains that each party hopes to achieve, the relative power and influence of each of the stakeholders, the experiences that each party brings to the table, and the history of the parties’ relationship to each other” (Marcus et al., 2012, p. 340). Importantly, the breadth of issues relevant to the negotiation will be perceived differently by each party according to their own perspectives and cultural assumptions. Prior research suggests that CQ competencies are associated with more advanced, multidimensional problem-solving skills and a general willingness to exert cognitive effort for complex, analytical thinking that leads to a greater range of negotiation solutions addressing mutual interests. Engle et al. (2013) found that higher metacognitive CQ scores of both Turkish and U.S. students were related to higher problem-solving scores in cross-cultural negotiations. Along a similar vein, recent research suggests that cognitive motivation and complexity also provide an avenue to successful cooperative negotiation strategies and the ability to demonstrate IBN behaviors. Schei, Rognes, and Mykland (2006) found that cognitive motivation, defined as “a stable individual difference in the tendency to engage in arduous, analytical thinking” (p. 74) helped sellers achieve more integrative outcomes. Kassin, Reddy, and Tulloch (1990) concluded that high cognitive motivation aided negotiators in remembering more information cues, while Osberg (1987) noted that such negotiators are more likely to focus energetically on cognitive tasks. Berzonsky and Sullivan (1992) found that individuals with high cognitive motivation actively searched for and used relevant information. Pruitt and Lewis (1975) found that individuals with higher cognitive complexity were more likely to reach integrative solutions, when coupled with high levels of communication. Overall, cognitively complex individuals are more likely to entertain alternative scenarios and gather and integrate more information into their decision making.

Given that cognitive motivation and complexity are likely to produce IBN behaviors and integrative negotiation outcomes, in concert with the research reviewed above, it follows that high CQ negotiators (incorporating metacognitive, cognitive, and motivation dimensions) are more likely to exhibit IBN behaviors. Individuals with high metacognitive CQ, conceptually similar to cognitive complexity, are able to evaluate and adjust their cognitive schema in cross-cultural negotiation contexts. As such, they are more likely to reconsider culturally bound thinking and revise their understanding of the negotiation context through IBN behaviors that challenge one’s own assumptions about the other party (e.g., asking questions about the other party’s goals and interests, demonstrating active listening skills via reflective and clarification questions, avoiding discussion of hard positions, etc.). Similarly, individuals with high motivational CQ, which is conceptually consistent with key aspects of cognitive motivation, are more likely to demonstrate the requisite drive, curiosity, and cognitive attention to exercise IBN behaviors in cross-cultural negotiation contexts. An individual’s attraction to and willingness to sustain effort in a culturally unfamiliar context is likely associated with the ability to actively search for relevant information, propose and critically evaluate alternative scenarios, and integrate more diverse information into decision making, all of which are fundamental IBN behaviors (Fisher & Ury, 1991).

In addition to cognitive complexity and cognitive motivation, other research streams suggest that individuals with behavioral flexibility are more likely to demonstrate IBN behaviors. A problem-solving orientation was seen to have had a positive effect on dyads reaching a more integrative solution by encouraging heuristic trial and error and inhibiting behavior that would lead to a more distributive solution (Pruitt & Lewis, 1975). This trial-and-error approach indicated behavioral flexibility on the part of the negotiators who were able to achieve integrative solutions. Behavioral flexibility is conceptually consistent with behavioral CQ, which taps one’s ability to use a broad range of verbal and nonverbal behaviors that are appropriate for varied cultural contexts (Van Dyne et al., 2008). Similarly, prior research has demonstrated that behavioral “mimicry” improves the joint gains of the party that invokes subtle mimicry behavior (Maddux, Mullen, & Galinsky, 2007). Mimicry requires negotiators to be attentive to the behaviors of counterparts so that they can make in-the-moment adjustments to their own behaviors. Based on the research reviewed above, we offer the following hypotheses:

Hypothesis 2: Negotiators with high CQ will demonstrate greater IBN behaviors than negotiators with low CQ.

Hypothesis 3: Interest-based negotiation behaviors will partially mediate the relationship between negotiator CQ and negotiation performance.

Method

Sample

A total of 113 fully employed MBA students, each representing a different organization, participated in this study. The reported ethnic background of the sample was as follows: 43% Hispanic/Latin American (n = 49), 28% Asian American (n = 32), 15% Multiethnic (n = 17), 5% Caucasian (n = 6), 4% African American (n = 5), and 3.5% Native Hawaiian/Other Pacific Islander (n = 4). The reported nationality was as follows: 40% United States (n = 45), 17% China (n = 19), 13% Mexico (n = 15), 6% Philippines (n = 7), 5% El Salvador (n = 6), 3% Saudi Arabia (n = 3), 4% Vietnam (n = 5), 3% Armenia (n = 3), and 9% other nationalities (n = 10). Fifty-eight percent (n = 65) of the participants were female, and the mean age was 33.21 years (SD = 3.96). Drawn from a diverse mix of industries, including financial services (n = 19, 17%), aerospace (n = 16, 14%), health care (n = 17, 15%), hospitality (n = 14, 12%), government services (n = 14, 12%), the participants reported their position title as department supervisors or frontline managers (n = 45, 40%), project team leaders (n = 42, 37%), regional or district managers (n = 15, 13%), and executive-level managers (n = 11, 10%).

Procedure

Participant Recruitment

The participants were recruited from the part-time MBA program at a medium-sized public university in Southwestern United States. The participants were fully employed MBA students enrolled in three sections of a “Managerial Skills” course taught by the first author over the course of three consecutive academic quarters. The three sections consisted of 36, 38, and 39 students (113 overall), respectively. The learning objectives of the course centered on the assessment and development of a series of management skills, including performance feedback, conflict mediation, developing teams, and negotiation. During the first week of the course, students were asked to complete an online survey that measured CQ and a series of demographic, work background, and psychometric questions. During the first 3 weeks of the course, students were also asked to participate in an assessment center negotiation exercise that would elicit important feedback on their negotiation skills in a cross-cultural context. As detailed below, all students completed the negotiation exercise prior to the delivery of any course content or learning activities addressing negotiation skills. The course content and learning activities addressing negotiation skills was delivered during the final 2 weeks of the term. No part of the course addressed CQ, leading diverse teams, or other topical areas related to cross-cultural skills.

Assessment Center Development

The assessment center was developed by first selecting a cross-cultural negotiation exercise from the Dispute Resolution Research Center at Northwestern University’s Kellogg School of Management. The selected negotiation exercise, International Lodging Merger (negotiationexercises.com/Details.aspx?ItemID=116), was modified to suit the present study’s goals. This exercise was an integrative negotiation about the merger of U.S. and Brazilian hotel chains. The exercise was designed to motivate culturally different behaviors from the negotiators, as key cultural differences between the United States and Brazil (e.g., power distance, individualism/collectivism, universalism/particularism) are integrated into the exercise. For the purpose of the present study, the exercise was modified so that each participant (n = 113) performed the role of the negotiator for the U.S. hotel chain (Lambert Hotel) and a trained graduate student played the role of the negotiator for the Brazilian hotel chain (AAA Hotel). The exercise instructions for each role included general background information on both hotel chains and Lambert’s recent overtures to AAA for the purpose of acquiring AAA’s chain of properties. Although the original exercise included seven substantive negotiation issues, the exercise was modified to include three such issues: (a) number of voting seats on the 8-person executive board for each firm, (b) the management of AAA hotels after the merger, and (c) the incentive compensation plan for AAA hotel managers. These three issues were selected for the exercise because they underscored key cultural differences between negotiators from national cultures that diverge across national values (e.g., power distance, individualism/collectivism, universalism/particularism, masculinity, low/high context communication, etc.).

Given the present study’s goal of assessing the impact of CQ on negotiation performance outcomes, we sought to create a cross-cultural negotiation context whereby participants engaged with a negotiator demonstrating a negotiation style that was significantly different from their own style. The behavioral manipulation of the AAA manager’s negotiation style served the purpose of testing the participants’ adaptation to an unfamiliar negotiation context attributable to the cultural context, which meets Earley et al.’s (2006) definition of CQ. The role for the AAA hotel negotiator included several behavioral instructions intended to emphasize cultural differences concerning aspects of negotiation style. Supported by theory and research (e.g., Brew & Cairns, 2004; Gelfand & Christakopoulou, 1999; Volkema & Fleury, 2002) on negotiation style differences between negotiators whose values are aligned with the United States (low power distance, high individualism, high masculinity, high universalism, low-context communication, etc.) in contrast with negotiators whose values are aligned with Brazil (high power distance, high collectivism, low masculinity, high particularism, high-context communication, etc.), the AAA negotiator was instructed to negotiate indirectly, patiently, unemotionally, and passively (see the appendix).

The participants were instructed to complete the exercise within a 20-minute time limit. The participants were provided the role play instructions for the Lambert Hotel manager on arriving at the conference room facility. They were given 30 minutes to review the role play instructions and prepare for the negotiation. Each negotiation was recorded via video camera for subsequent assessment by a panel of three assessors. To minimize the effects of AAA negotiator fatigue, a maximum of six negotiation exercises were conducted in a single session.

The graduate student playing the role of the AAA Hotel manager completed several training sessions conducted by the first author. The goal of the training sessions was to prepare the student to demonstrate the negotiation style of the AAA negotiator role. The AAA Hotel manager’s stated goals were to (a) obtain multiple members on the executive board as “. . . this issue is a point of pride . . . you do not want to be taken over by Lambert—you desire a merger that is respectful of your identity and accomplishments as AAA”; (b) minimize any disruption to the existing management of the AAA Hotel properties (“you are proud of AAA’s success, and you see little need to change the way you operate your hotels . . . you realize that a merger will probably involve some standardization of practices”); and (c) minimize contingent incentives for AAA property managers (“. . . you want to continue the family atmosphere among managers and discourage competitive behaviors whereby they refuse to help one another, or lobby for specific properties [that are easier to make a profit]”). The graduate student completed readings on cross-cultural negotiations, reviewed films of cross-cultural negotiations, and conducted 10 mock negotiations using the modified International Lodging Merger exercise. The mock negotiations were video-recorded and subsequently reviewed and evaluated by the graduate student and first author for the purpose of role performance improvement. The video-recorded mock negotiations were also used to develop assessment instruments concerning negotiation process skills (interest-based behaviors) and negotiation performance outcomes.

Assessor Training

Three assessors were trained to provide assessments of the video-recorded negotiations. The assessors included the first author and two faculty members from the university’s business school with disciplinary training in organizational behavior and cross-cultural/comparative management. The assessors completed a 1-day intensive workshop for the purpose of developing skills in methods of observation and recording and categorizing negotiation behaviors reflecting the negotiation variables (e.g., interest-based skills and negotiation performance outcomes). The assessors conducted assessments of the 10 video-recorded mock negotiation exercises completed by the graduate student and several volunteer graduate students (none of whom were participants in the present study). The training workshop was intended to assist the assessors with developing a common understanding of the negotiation behaviors and dimensions being observed and evaluated. The workshop was also designed to teach the assessors which negotiation behaviors to observe and how to observe them accurately using the behavioral instruments described below.

Assessment Center Instruments

Two assessment instruments were developed for the purpose of measuring the IBN behaviors and performance outcomes of the Lambert Hotel negotiator (participant role). Based on the scoring sheet that accompanied the International Lodging Merger exercise, the first assessment instrument was developed to measure the negotiation performance outcomes for the Lambert Hotel negotiator. Based on the three substantive negotiation issues addressed in the exercise, as well as analysis of the video-recorded mock negotiations that were used in the AAA Hotel negotiator training sessions, the negotiation performance instrument consisted of three assessment items (one for each substantive negotiation issue). The first assessment item rated the Lambert Hotel negotiator’s performance according to the number of AAA Hotel voting seats on the 8-person executive board. The second assessment item rated the negotiator’s performance according to the management of the AAA Hotel properties after completion of the merger. The third and final assessment item rated the negotiator’s performance according to the management incentive policy for AAA Hotel properties after completion of the merger.

Each assessment item was measured on a 6-point scale according to the stated goals of the negotiation for the Lambert Hotel manager (see the appendix). The Lambert Hotel manager’s goals (as stated in the exercise role play instructions) were to (a) obtain as many voting seats on the board as possible (to prevent “. . . a voting block of [AAA board members] that could disrupt the delicate dynamics of Lambert board’s decision-making”); (b) improve the management practices at the AAA Hotel properties (“Lambert has built its reputation on the consistency of its properties and services . . . you would like to see experienced Lambert managers operating all of the AAA properties, but you are willing to consider other approaches to the consistency and management efficiency challenges”); and (c) implement a contingent pay plan for AAA property managers (“. . . you prefer to pay your managers contingent on the performance of their properties.”). The instrument was pilot tested with the 10 mock negotiation exercises conducted during the training session for the AAA Hotel negotiator role. After the assessor panel conducted consensus ratings (described in detail below) of each negotiation performance item as part of the training session for the AAA Hotel negotiator, we conducted an internal reliability test of the three negotiation performance items. The resulting Cronbach alpha of .86 for the pilot test demonstrated support for the internal reliability of the instrument.

The second assessment instrument was developed to measure the frequency of the participants’ demonstrated IBN behaviors. Based on existing theoretical and empirical research on IBN behaviors (Fisher & Ury, 1991; Kolb, 2004; Kopelman & Olekalns, 1999; Leventhal, 2006; Maddux et al., 2007; Senger, 2002), a seven-item measure was developed (see the appendix) and pilot tested with the 10 mock negotiation exercises conducted during the training session for the AAA Hotel negotiator role. The seven behavioral items were assessed according to the frequency of behaviors demonstrated during the exercise (1 = not at all, 2 = rarely, 3 = occasionally, 4 = fairly often, and 5 = very frequently). After the assessor panel conducted consensus ratings (described in detail below) of each individual item as part of the assessor training session, we conducted an internal reliability test of the seven-item scale. The resulting Cronbach alpha of .83 for the pilot test demonstrated support for the internal reliability of the scale.

Consensus Ratings

On the basis of prior validation research concerning the aggregation of assessor ratings of behavioral exercises, we opted to conduct consensus ratings for measuring negotiation performance outcomes and IBN behaviors. After viewing each video-recorded exercise, the assessors completed individual ratings of the behavioral exercises and then immediately conducted consensus ratings. Used in prior empirical studies (Earley, 1999; Gibson, 1999; Tziner, Ronen, & Hacohen, 1993), the consensus method involves presenting a panel with a rating scale for the purpose of forming a single group response to a set of items. After discussing each item, the panel uses consensus decision-making techniques to determine an agreed on rating on a Likert-type scale.

Prior empirical research by Kirkman, Tesluk, and Rosen (2001); Pulakos, Schmit, Whitney, and Smith (1996); and Kleiman, Lounsbury, and Faley (1987) demonstrates the incremental validity of consensus ratings beyond the aggregation method of individual ratings. Because the consensus process demands that assessors discuss their ratings for each scale item, rich contextual and nuanced information concerning the behavioral performance is shared and deliberated across panel members (Kirkman et al., 2001). Gibson, Randel, and Earley’s (2000) experimental study of a negotiation task concluded that, regardless of whether consensus ratings occurred before or after individual ratings were completed, the consensus method was a superior predictor of multiple performance indicators compared with aggregated individual ratings. Kleiman et al.’s (1987) study of job performance ratings found that consensus ratings possessed significantly fewer halo and leniency errors and greater validity compared with aggregated ratings. Finally, Pulakos et al. (1996) found that consensus ratings demonstrated significantly higher validities of interviewer ratings compared with an aggregation of individual interviewers’ ratings. The authors concluded that consensus ratings may produce significantly higher validities because “. . . the consensus process increased interviewers’ accountability (to their peers) and hence the accuracy of their ratings” (Pulakos et al., 1996, p. 99).

Manipulation Check

On completion of the negotiation exercise, participants completed a short survey that included two manipulation check items. On a Likert-type scale (1 = Strongly disagree, 2 = Disagree, 3 = Neither disagree nor agree, 4 = Agree, and 5 = Strongly agree), participants responded to the following statements: “The AAA negotiator had a very different negotiating style than my own” (M = 4.56, SD = 1.02; 93% responded either Agree or Strongly agree), and “The AAA negotiator demonstrated significantly different cultural values than my own (M = 4.43, SD = 1.04; 90% responded either Agree or Strongly agree).

Measures

Negotiation Performance

A panel of three assessors observed each of the video-recorded negotiations and conducted group consensus ratings using the negotiation performance assessment instrument (see the appendix). To limit the effects of assessor fatigue, the panel conducted assessments for no more than six exercises in a single session. The assessor panel conducted consensus ratings of each negotiation performance item: (a) number of voting seats on the 8-person executive board to be controlled by AAA Hotel, (b) management of AAA Hotel properties, and (c) management incentives for AAA Hotel property managers.

Interest-Based Negotiation Behaviors

The same three-assessor panel observed each of the video-recorded negotiations and conducted group consensus ratings using the IBN behaviors assessment instrument (see the appendix). The assessor panel conducted consensus ratings of the seven IBN items according to the following scale (1 = not at all, 2 = rarely, 3 = occasionally, 4 = fairly often, and 5 = very frequently). The Cronbach alpha for the seven-item scale was .85.

Cultural Intelligence

Cultural intelligence was measured by Ang et al.’s (2007) 20-item self-report scale comprising the following subscales: metacognitive (“checks the accuracy of his/her cultural knowledge as he/she interacts with people from different cultures”; four items; α = .88), cognitive (“knows the rules for expressing nonverbal behaviors in other cultures”; six items; α = .91), motivational (“enjoys interacting with people from different cultures”; five items; α = .86), and behavioral (“changes his/her non-verbal behavior when a cross-cultural situation requires it”; five items; α = .87). Respondents completed the scales according to a 7-point scale (1 = strongly disagree; 7 = strongly agree). Overall, the CQ scale demonstrated strong internal reliability (α = .90). The means of the four subscales were calculated and then averaged to produce an overall CQ mean.

Control Variables

Emotional Intelligence

Emotional intelligence was measured by Wong and Law’s (2002) 16-item, self-report measure based on the Mayer and Salovey (1997) model of EQ. EQ was included as a control variable to more readily demonstrate the incremental validity of CQ in a cross-cultural performance context beyond the effects of a competing competency. Earley and Ang’s (2003) seminal work on CQ asserts that EQ competencies should not transfer across nationalities because a person’s ability to anticipate and react to the affective states of work colleagues differs considerably across cultures. Consistent with prior research that assessed the predictive validity of CQ beyond the effects of EQ in cross-cultural performance contexts (e.g., Crowne, 2013; Groves & Feyerherm, 2011; Rockstuhl et al., 2011), and specifically cross-cultural negotiation (Imai & Gelfand, 2010), the present study included EQ as a control variable for hypothesis testing. The measure includes the following four-item subscales: self-emotion appraisal (“I have a good understanding of my own emotions”; α = .88), others’ emotion appraisal (“I am sensitive to the feelings and emotions of others”; α = .84), use of emotion (“I am a self-motivated person”; α = .90), and regulation of emotion (“I have good control of my own emotions”; α = .91). Respondents completed the scales according to a 7-point scale (1 = strongly disagree; 7 = strongly agree). Overall, the EQ scale demonstrated strong internal reliability (α = .92). The means of the four subscales were calculated and then averaged to produce an overall EQ mean (M = 5.36, SD = 1.00).

International Experience

Prior research suggests that length and intensity of international experiences may be associated with the development of cultural intelligence (Ang & Van Dyne, 2008; Crowne, 2013). To control for the influence of negotiators’ prior international experiences, we used Takeuchi, Tesluk, Yun, and Lepak’s (2005) measure of international experience as the total length of time the participants spent living abroad. Participants were asked to list in chronological order the countries and duration of living experiences abroad. The total list of living experiences abroad were summed and converted to weeks as the international experience variable (M = 28.05, SD = 5.99).

Negotiation Experience

To control for the depth of the negotiators’ prior negotiation experiences, which may influence the relationships among the study variables (e.g., Imai & Gelfand, 2010), participants were asked to report the level of prior negotiation experiences with the following question: “According to the following scale, how much prior experience do you have in formal negotiations?” The scale consisted of the following: 1 = no experience, 2 = little experience, 3 = some experience, 4 = significant experience, 5 = substantial experience, and resulted in a mean of 2.55 (SD = 0.89).

Openness to Experience and Extraversion

To control for individual difference characteristics that prior research has found to affect CQ and negotiation outcomes in intercultural contexts (e.g., Ang, Van Dyne, & Koh, 2006; Imai & Gelfand, 2010; Ma & Jaeger, 2005), the present study included openness to experience and extraversion as control variables in hypothesis testing. The inclusion of these personality traits allows for a more conservative assessment of whether CQ is associated with IBN behaviors and performance outcomes in a cross-cultural negotiation context. The personality traits openness to experience and extraversion were measured with John and Srivastava’s (1999) Big Five personality assessment. Respondents completed the scales according to a 7-point scale (1 = extremely uncharacteristic to 7 = extremely characteristic). The 10-item openness to experience scale (“Is curious about many different things”; α = .88) and 8-item extraversion scale (“Is outgoing, sociable”; α = .89) demonstrated acceptable Cronbach reliability estimates. The mean scores for openness to experience and extraversion were 4.59 (SD = 0.91) and 4.68 (SD = 0.67), respectively.

Results

Preliminary Analyses

Potential Interactive Effects of Ethnicity and Nationality

Given the potential for participant ethnic background and/or nationality to significantly interact with the study’s key variables, we tested for any significant differences between the major ethnic backgrounds or major nationalities across IBN behaviors and negotiation performance. Tukey’s honestly significant difference (HSD) test identified no significant differences across the major ethnic backgrounds (Hispanic/Latin American, Asian American, Multiethnic, Caucasian, African American, Native Hawaiian/Other Pacific Islander) for IBN or negotiation performance. Similarly, Tukey’s HSD test again revealed no significant differences between the main nationalities represented in the sample (United States, China, Mexico, Philippines, El Salvador, Saudi Arabia, Vietnam, and Armenia) for IBN or negotiation performance.

Measurement Model

Prior to testing the hypotheses, confirmatory factor analyses (CFA) were conducted to provide support for the construct validity of the study variables. Given consistent research findings regarding the most appropriate fit indices for conducting CFA analyses (Sharma, Mukherjee, Kumar, & Dillon, 2005; Shevlin & Miles, 1998; Wolf, Harrington, Clark, & Miller, 2013), we tested a measurement model using the following goodness-of-fit indices: Tucker–Lewis index (TLI), relative noncentrality index (RNI), normed noncentrality parameter (NNCP), and root mean square error of approximation (RMSEA). The measurement model tested the self-report variables, which included the four CQ capabilities (metacognitive, cognitive, motivational, and behavioral), EQ, openness to experience, extraversion, and IBN behaviors. Using Amos software, (Arbuckle, 1999), the measurement model was tested to assess whether each of the measurement items would load significantly onto their respective scales. Consistent with prior structural equation modeling (SEM) research concluding that measurement models with three indicators per latent construct are ideal while such models can carry up to five indicators without estimation problems, we completed a parceling procedure for those constructs with more than five items. Parceling offers the benefits of reducing random errors, simplifying the measurement model, and maintaining the structural integrity of models that include multiple-indicator constructs. For those variables with more than five items (EQ, openness to experience, extraversion, and IBN behaviors), the items for each variable were randomly parceled into three composite indicators and entered into the measurement model. For cultural intelligence (four subscales), the respective subscales were entered into the model as indicators of the latent construct.

Based on these conventional indices, an eight-factor model demonstrated a reasonable degree of fit: TLI = .94, RNI = .94, NNCP = .92, and RMSEA = .06. All loadings were statistically significant and the structure coefficients demonstrated that each item loaded highest with their specified latent factor. This model was compared with a single-factorial solution, which provided significantly worse fit: TLI = .77, RNI = .77, NNCP = .72, and RMSEA = .13. Overall, the results from CFA analyses demonstrated support for the variables as distinct constructs.

Hypothesis Testing

The following section includes the results of hypothesis tests using hierarchical regression analyses. We chose this analysis approach in lieu of SEM given the considerable research on the impact of sample size, indicators, and factor loadings on SEM results. Barrett (2007), Bentler (2007), and Wolf et al. (2013) indicate the significant challenges of using SEM analyses on small sample sizes, as Bentler (2007) cautions about samples of less than 100 while Barrett (2007) asserts that “SEM analyses based on samples of less than 200 should simply be rejected outright . . . unless the population from which the sample is hypothesized to be drawn is itself small or restricted in size” (p. 820). Furthermore, Wolf et al. (2013) assert that mediation models with smaller direct effects require larger sample sizes to achieve acceptable statistical power. Given the relatively small sample size in the present study as well as the expectation of relatively modest effect sizes in light of the current state of research on CQ competencies and cross-cultural negotiation performance, we chose to use hierarchical regression analysis for hypothesis testing.

Table 1 presents the means, standard deviations, and correlation coefficients among the primary study variables. Openness to experience, extraversion, and EQ demonstrated significant positive relationships with Overall CQ (range of r = .30 to r = .49) and the CQ dimensions (range of r = .21 to r = .48). Cultural intelligence was associated with both IBN behavior (r = .35, p < .01) and negotiation performance (r = .49, p < .01). The CQ subscales were moderately correlated with one another (r = .21, p < .05 to r = .45, p < .01). Finally, IBN behaviors were related to negotiation performance (r = .48, p < .01).

Table 1.

Means, Standard Deviations, and Correlation Coefficients of Study Variables.

	M (SD)	1	2	3	4	5	6	7	8	9	10	11	12	13	14
1. Gender^a	1.58 (0.50)	—
2. Age	33.21 (3.96)	−.13	—
3. International Experience	28.05 (5.99)	−.13	.67**	—
4. Negotiation Experience	2.55 (0.89)	−.03	−.08	−.08	—
5. Openness to Experience	4.59 (0.91)	−.09	.09	.09	.18	.88
6. Extraversion	4.68 (0.67)	.10	−.06	−.06	.03	.52**	.89
7. Emotional Intelligence	5.36 (1.00)	.12	−.05	−.05	.15	.46**	.49**	.92
8. Overall CQ	4.32 (1.07)	−.09	−.16	−.16	.08	.30**	.36**	.49**	.90
9. Metacognitive CQ	4.91 (1.21)	−.03	−.18	−.18	.09	.28**	.42**	.50**	.66**	.88
10. Cognitive CQ	3.32 (1.39)	−.09	−.16	−.16	.05	.26**	.24**	.32**	.65**	.31**	.91
11. Motivational CQ	5.07 (1.19)	.01	−.06	−.06	.12	.24*	.31**	.48**	.74**	.21*	.36**	.86
12. Behavioral CQ	4.29 (1.34)	−.17	−.10	−.10	.03	.21*	.27**	.31**	.74**	.40**	.22**	.45**	.87
13. Interest-based Negotiation	3.49 (1.17)	−.18	−.03	−.03	.04	−.15	.19*	−.05	.35**	.29**	.32**	.22*	.30**	.85
14. Negotiation Performance	3.90 (1.31)	−.23*	−.13	−.14	.08	−.01	−.06	.04	.49**	.41**	.47**	.26**	.43**	.48**	.90

Note. N = 113. Italicized coefficients are Cronbach alphas.

1 = Male and 2 = Female.

p < .05. **p < .01.

Cultural Intelligence and Negotiation Performance

Hypothesis 1 predicted that negotiators with high CQ would demonstrate higher negotiation performance than negotiators with low CQ. The results of hierarchical regression analysis testing the effects of the CQ competencies on negotiation performance are presented in Table 2. After entering international experience, negotiation experience, openness to experience, extraversion, and EQ into the model (Step 1), Step 2 illustrates that cognitive CQ (β = .29, p < .05) and behavioral CQ (β = .26, p < .05) explained unique variance in negotiation performance (ΔR² = .28, ΔF = 9.77, p < .05). In comparison, none of the control variables were significantly associated with negotiation performance in Step 2. Overall, these results offer support for Hypothesis 1.

Table 2.

Results of Regression Analyses for Testing the Effects of CQ Facets on Negotiation Performance.^a

Variables	Step 1	Step 2
International Experience	−.14	−.04
Negotiation Experience	.06	.06
Openness to Experience	.04	−.02
Extraversion	−.08	−.19
Emotional Intelligence	.04	−.15
Metacognitive CQ		.24
Cognitive CQ		.29*
Motivational CQ		.14
Behavioral CQ		.26*
ΔR²	.03	.28
Total R²	.03	.31
ΔF	.55	9.22*
Total F	.55	9.77

Note. N = 113.

Standardized regression coefficients are shown.

p < .05. **p < .01.

Mediating Effects of Interest-Based Negotiation Behaviors

Hypothesis 2 predicted that negotiators with high CQ would demonstrate greater IBN than negotiators with low CQ, while Hypothesis 3 predicted that IBN behaviors would partially mediate the relationship between negotiator CQ and negotiation performance. Table 3 presents the results of a series of regression analyses testing the mediating effects of IBN behaviors. To test for mediation, we followed Baron and Kenny’s (1986) suggested mediation analyses. First, we tested the direct relationship between the CQ competencies and the mediator, IBN behaviors. As illustrated in the first column of Table 3, metacognitive CQ (β = .30, p < .05), cognitive CQ (β = .33, p < .05), and behavioral CQ (β = .27, p < .05) were positively associated with IBN behaviors. These results offer strong support for Hypothesis 2. Second, we tested the direct relationships between the CQ competencies and negotiation performance, which are listed in Step 1 of the regression model. Next, we added the mediator, IBN behaviors, to the regression model in Step 2 (third column). As anticipated in Hypothesis 3, the presence of IBN behaviors in the model considerably reduced the strength of the relationship between the CQ competencies and negotiation performance. Baron and Kenny’s recommended mediation analyses showed that IBN behaviors satisfied all three conditions for partial mediation: (a) metacognitive CQ, cognitive CQ, and behavioral CQ were strongly associated with IBN behaviors; (b) cognitive CQ and behavioral CQ were strongly associated with negotiation performance; and (c) the relationship between all four CQ competencies and negotiation performance lessened significantly when IBN behaviors was entered into the regression model. To test the significance and stability of this change, Sobel’s (1982) method found that the beta weight changes for cognitive CQ (z = 4.01, p < .01) and behavioral CQ (z = 3.89, p < .01) were statistically significant. Thus, Hypothesis 3 was supported.

Table 3.

Results of Hierarchical Regression Analyses for Testing the Mediating Effect of IBN Behaviors.^a

	IBN Behaviors	Negotiation Performance
	IBN Behaviors	Step 1	Step 2
International Experience	.07	−.04	−.08
Negotiation Experience	.04	.06	.04
Openness to Experience	−.12	−.02	.06
Extraversion	.25*	−.19	−.02
Emotional Intelligence	−.15	−.15	−.05
Metacognitive CQ	.30*	.24	.12
Cognitive CQ	.33*	.29*	.15
Motivational CQ	.20	.14	.04
Behavioral CQ	.27*	.26*	.11
Interest-based Negotiation			.41**
ΔR²	.25	.31	.07
Total R²	.25	.31	.37
F	3.44**	9.77**	16.05**
Total F	3.44	9.77	25.82

Note. N = 113.

Standardized regression coefficients are shown.

p < .05. **p < .01.

Discussion

We set out to address an important gap in the cross-cultural negotiation literature by examining the impact of negotiator CQ on IBN behaviors and negotiation performance. Despite the clear need for managers to possess the ability to effectively negotiate across cultures in an increasingly global business environment, there exists very little empirical evidence for the predictors of cross-cultural negotiation effectiveness. The results of our study demonstrate that CQ is strongly associated with negotiation performance outcomes, while IBN behaviors partially mediate the relationship between CQ and negotiation performance. Cultural intelligence capabilities facilitated the negotiators’ ability to demonstrate IBN behaviors in a negotiation context that demanded behavioral adaptation. Perhaps due to a lessening of the anxiety caused by encountering an unfamiliar culture in a negotiation context, high CQ negotiators possessed both the capability to behave cooperatively and flexibly (Hewston et al., 2002; Imai & Gelfand, 2010) as well as the motivation to engage in a demanding task that required knowledge of cultural differences between the negotiation parties (Schei et al., 2006). High CQ afforded negotiators the ability to accurately perceive and decode culturally relevant information and adapt their negotiation behaviors accordingly (Hewston et al., 2002). Furthermore, cognitive CQ and behavioral CQ were the strongest predictors of negotiation performance beyond the effects of prior international and negotiation experiences, openness to experience, extraversion, and EQ.

Implications for Theory

Our findings offer a valuable contribution to the negotiation and CQ research literatures concerning the predictors of cross-cultural negotiation effectiveness. With few exceptions (e.g., Imai & Gelfand, 2010), the negotiation literature largely includes cross-cultural comparisons of negotiation processes and outcomes while the present study offers direct evidence of CQ as a capability that predicts negotiation performance in a cross-cultural context. Furthermore, this study represents the first known application of assessment center and consensus rating methodologies to test the capabilities that predict cross-cultural negotiation performance.

Our findings also add to the growing body of empirical CQ research. First, this study expands CQ’s nomological network by demonstrating a relationship between CQ and an objective behavioral outcome, adding to the many affective outcomes (cross-cultural adjustment, expatriate adjustment, integration in multinational teams, etc.) that comprise CQ empirical research to date (Ang et al., 2007; Flaherty, 2008; Shaffer & Miller, 2008). Our findings also provide initial support for an explanatory mechanism that links CQ capabilities and negotiation performance outcomes in cross-cultural contexts. IBN behaviors partially mediated the relationship between CQ (cognitive and behavioral) and negotiation performance, suggesting that high CQ negotiators are more likely to reconsider culturally bound thinking and revise their understanding of cross-cultural negotiation contexts through IBN behaviors that focus on challenging one’s assumptions about the other party (e.g., asking questions about the other party’s goals and interests, demonstrating active listening skills via reflective and clarification questions, avoiding discussion of hard positions, etc.). The finding that IBN behavior partially mediates the CQ–negotiation performance relationship offers first time support for the explanatory mechanisms of CQ on negotiation performance in cross-cultural contexts while also providing important links to research on cognitive complexity and cognitive motivation as mediating cross-cultural negotiation performance outcomes (Berzonsky & Sullivan, 1992; Kassin et al., 1990; Schei et al., 2006).

Implications for Management Education

Our findings point to several implications for management education, specifically negotiation, cross-cultural management, and the potential transferability to the workplace. Since CQ is a malleable capability, it can be developed through education and intercultural experiences (Van Dyne et al., 2012). Given the impact of CQ on negotiation performance outcomes, particularly cultural knowledge and behavioral adaptability across cultural contexts, it follows that management education in negotiation should include the development and behavioral demonstration of cross-cultural knowledge. Indeed, as Moon (2010) points out in his example of Walmart’s difficulties entering Germany, the organization’s cultural intelligence was lacking in that the CEO and top management team did very little to generate integrative routines that would increase adaptability across cultures. Firm-level research concludes that the CQ of the top management team is a valuable resource to the organization’s CQ and ability to operate in multiple cultures (Ang & Inkpen, 2008).

In our analyses, two CQ dimensions stood out for further examination and discussion with respect to implications for management education. Cognitive CQ, which is developed from one’s understanding the specifics of a country’s culture, norms, habits, and practices, is often included in cross-cultural education courses by exposing students to different countries relative to certain cultural dimensions (e.g., Hofstede, 1980). Similarly, negotiation education frequently incorporates didactic learning (or principle-based learning); however, by itself this learning modality is not as effective as other types of learning processes (Nadler, Thompson, & Van Boven, 2003) for development of cross-cultural capabilities (Eisenberg, Hartel, et al., 2013; Szkudlarek et al., 2013). Triandis (1977) recommends that learning the full range of cultural variations may be more beneficial in the long run since people are likely to be exposed to a wide variety of cultures, even when based on a single team or negotiation experience. Indeed, management educators recognize that information and principles alone are insufficient as most cross-cultural training includes experiential exercises (Tan & Chua, 2003) and international business experiences (Ng, Van Dyne, & Ang, 2009), or as suggested by Blasco (2009), to see business activities (such as negotiation) as a “culturing” activity.

Additional implications for management education concern metacognitive CQ, the mental capability to acquire and evaluate cultural information by strategizing and thinking about one’s assumptions. Eisenberg, Lee, et al. (2013) found that both metacognitive CQ and cognitive CQ increased for those students taking academic cross-cultural management courses. Therefore, it would be helpful to educate students about the multiplicity of cultures and the notion that as global citizens we are all an amalgam of cultures (Phillips & Sackmann, 2002). In addition, enhancing students’ “thinking about thinking” would reinforce metacognitive abilities and hence negotiations. Antal and Friedman (2008) illustrate a process based on student-generated intercultural cases, which are then processed by using several tools designed to have students examine their own mental models and assumptions. This process enhances students’ planning, awareness, and verification of information and assumptions, which are subcomponents of metacognitive abilities (Van Dyne et al., 2012).

From the perspective of management educators, motivational CQ addresses the following practical issues: Are our students curious about discovering something new about a culture that is unfamiliar to them? Will they pursue more information and rich experiences in such cultures? The management education implications for motivational CQ include tapping into the agency of individual students and their self-efficacy regarding cross-cultural learning and encounters. There are ways that an instructor can provide salience of being curious and increase the level of self-efficacy. For example, Yamazaki and Kayes (2004) propose that interpersonal skills may be the most important skills for expatriates to be effective learners when challenged with a new culture. Mor et al. (2013) demonstrate the efficacy of providing students with a “cultural perspective taking” intervention during cross-cultural negotiations, which improves cooperative behavior orientation, based on their upcoming simulated negotiations with a Chinese business representative. This is a practice that could easily be incorporated into the preparation of workplace negotiations.

Behavioral CQ, which deals heavily with verbal and nonverbal communication, could best be developed by observing others and practicing in a simulated environment, consistent with social learning theory (Weiss, 2003). In an experiment comparing different learning conditions for improving integrative negotiation skills, Nadler et al. (2003) found that students who were exposed to observing skilled negotiators subsequently performed at the highest level of the four learning conditions, yet could not articulate why. The authors conjectured that the students were acquiring tacit knowledge, which is by definition harder to bring to the level of explanation required in the teaching simulation. In turn, however, this process positively influenced their behavior. As demonstrated in the present study, assessment center methodologies may be employed to offer students both CQ and negotiation skill assessments, simulated negotiation exercises that address culturally bound issues and parties, and the opportunity to observe their own negotiation performance to develop greater self-awareness (Salacuse, 2010).

Limitation and Future Research

The findings of this study should be viewed in the context of several limitations. First, future research should examine the impact of CQ on negotiations in actual business settings, as this study’s assessment center methodology limits the external validity of our findings. Second, although CQ was assessed via a validated self-report instrument (Ang et al., 2007), there are limitations associated with the self-report methodology. As such, we recommend that future research use peer and/or multisource CQ assessments when examining negotiation performance outcomes to corroborate our findings. Also, the sample was comprised of fully employed MBA students residing in the Southwestern United States, a population and geographic location that may have affected the results. Additionally, the temporal nature of negotiation, specifically the series of steps and exchanges that would characterize an actual intercultural negotiation, was not reflected in the study’s negotiation exercise and should be addressed in future assessment center methodologies. Finally, a potential drawback related to the use of consensus ratings is the risk of groupthink, conformity, and domination of panel discussion by one or few members. However, these concerns were mitigated by adopting consensus processes such as calling on silent assessors when appropriate, rotating who begins the discussion of each item, repeatedly checking with all assessors to evaluate satisfaction with the assessment process after each session, and ensuring no status or power difference among the assessors.

Conclusion

This study addressed important limitations to the negotiation and CQ research literatures by illustrating CQ as a key predictor of cross-cultural negotiation effectiveness. Our findings demonstrate that high CQ negotiators facilitate cross-cultural negotiation performance outcomes through IBN behaviors. Organizations seeking to improve the outcomes of international negotiations and better prepare their managers for an increasingly global business environment should focus management education efforts on CQ assessment and development.

Footnotes

Appendix

Declaration of Conflicting Interests

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

Funding

The author(s) received no financial support for the research, authorship, and/or publication of this article.

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