Daniel Millsap MBA School Research

Cultural Awareness As A Negotiation Strategy


Nations are inter-dependent. In order to achieve their goals, negotiators from different countries must be willing and able to communicate and come to agreements. Misunderstandings may arise during the process due to a lack of cultural awareness and misunderstandings that may occur unintentionally. Misunderstandings at the negotiating table have a potentially large effect on the world so it is important to understand why they arise and what can be done to prevent them. To do so, cultural dynamics, in addition to negotiating techniques, must be understood. The purpose of this paper is to examine Chinese and U.S. cultures and how their similarities and differences may affect a negotiating interaction. Recommendations, based upon the findings, will be given at the end of the paper.


A strong and positive relationship between the United States of America and China is of great importance to both countries. As each adapts to an ever-changing world environment, goals may be mutual or somewhat conflicting. Regardless of whether or not China and the United States agree on an issue, an effective communication style which stresses mutual understanding is necessary and of mutual benefit to both countries. The process of effective communication entails mutual understanding and a willingness to work together, emphasizing mutual interests and reconciling mutual differences. Whenever two parties come into contact with the goal of achieving something, the clear communication of needs and perceptions of others’ needs is of the utmost importance. The negotiation process can be helped or hindered by the negotiator's ability to understand and operate within another cultural context. Every business person traveling to China has probably brought along his/her one page list of “tips” to effectively operate there, and the Chinese, no doubt, have also attempted to understand and codify proper methods of negotiating with Americans- Yet mutual misunderstandings and frustrations continue to exist. Americans see Chinese negotiators as being “inefficient, indirect, and even dishonest, while the Chinese see American negotiators as “aggressive, impersonal, and excitable” (Grahm, & Lam, 2003). Why do these perceptions arise, and do they reflect objective reality or rather certain characteristics of the perceiver? If they are unintentional, then do they reflect cultural differences, and more importantly, can these differences be reconciled through a greater and more active effort to understand other cultures? Research indicates that cultural differences have an influence on the way different cultures conduct negotiations, from the timing of meetings to even the definition of what success in negotiation means. Certain differences are so subtle as to take months to identify but are important enough to make or break a deal (Francis, 2007). The success of negotiations must not be entrusted to one page “tips and reminders” but rather to a thorough understanding of cultural similarities and differences.


Organizations have needs. On a daily basis, negotiators strive to acquire the resources that will allow their country to survive. In order to do so, they must somehow convince another party to give up some of their valued resources, which entails cooperating with them in such a manner that an agreement can be reached. Whereas intra-cultural communications may seem straightforward, inter-cultural communications may not be so. Cultures can differ not only in language used to communicate but also in terms of the amount of eye contact used in communication and personal distance deemed appropriate when talking to friends versus strangers. Another area in which cultures can differ is in the formation and regulation of business relationships. For example, in order to precisely define conditions and decrease the probability of misunderstandings, some countries, like the United States, rely on the use of written contracts, whereas other countries, like China, place greater emphasis upon personal relationships and the implicit trust that comes with those relationships. One party uses a contract as a token of good will and trust whereas another party may view the very same contract as an insinuation of distrust and being of little or no use. One party may reason: “I just signed my name next to a legal document stating that I will do something so you know I will do it and don’t have to worry” while the other party may reason: “If we are doing something of mutual benefit then why do we need a contract? Friends don’t cheat each other in the first place and in requesting a legal document you are insinuating that I am not trustworthy?” Successful formation and implementation of agreements between the United States and China is of increasing importance, especially as China has emerged as a strong economy with 1/5 of the world’s consumers. It is “the world’s largest emerging market with more than one billion consumers” (Ghauri & Fang, 2001). As it continues to develop, its role has changed from a country in need to one that helps to fulfill the needs of others. Its recent entry into the World Trade Organization “is expected to deepen its impact on global markets and lead to further improvement in the health of the growing economy and the living standards of the Chinese people” (Wang, et al., 2005). As China’s global influence increases, political dynamics change, and it may seek to create new relationships with countries willing to cooperate with it. Its rapid and large growth makes it an attractive partner to other countries; therefore, the United States needs to maintain a positive relationship with it or risk losing a valuable ally.


Cultural misunderstanding may lead to negative attributions about a culture, a country, and its people. For example, “In Beijing’s view, the US is hegemonic, unilateralist, dismissive of international law and the United Nations, and wedded to 'zero-sum' concepts of security that ignore non-traditional security concerns and the negative effects of the security dilemma. It is also economically protectionist“(Foot, 2006). Some Americans view Chinese negotiators as being inefficient and even dishonest. How is it that these conceptions arise and what can be done to prevent them if and when they are not warranted?


People from different cultures literally perceive the world differently. In one study, subjects were presented with varying visual scenes while their brain activity was being measured with a functional magnetic resonance imaging device (fMRI). These subjects were categorized based upon their age and their culture as follows: (young/elderly) (U.S./Singapore.) The researchers found that both young and old Americans, when shown images, had a part of their brain associated with object recognition light up but not in the brains of the older Asians. “An Asian would see a jungle that happened to have an elephant in it. Meanwhile a Westerner would see the elephant and might notice the jungle” (Binns, 2007, p.9). The fact that Asian subjects’ brain responses differed between the two generations whereas there was no difference in response between the American generations led the researchers to conclude that the culture in which subjects were brought up played an important role in how they perceived the world. In another study, highlighted in the same magazine, researchers found that Russian speakers, “whose language includes two words that make a mandatory distinction between light blue and dark blue, could more quickly distinguish between shades of color than English speakers could” (Binns, 2007, p.9). If language can have a physiological impact on the way in which we see the world, imagine the impact on perception that different religious beliefs and cultural histories have.


“Culture is the collective programming of the mind which distinguishes one category of people from another” (Hofstede, 1993, p.89). Culture represents the environment in which a person is brought up in and where he/she learns appropriate behaviors and beliefs. This environment plays such a great part in the development of a person’s personality that scientists, to this day, are still arguing over whether it (environment) or a person’s genetic make-up (biology) plays a larger role in the formation of personality. Besides its effects on the formation of a person’s personality, culture is the adhesive that keeps society together. Culture helps set norms in every-day behaviors which ultimately helps to decrease the cognitive load in decision making. Molinsky (2007) articulates the importance of culture by stating that

Through socialization in a particular cultural setting, individuals internalize norms for appropriate behavior in specific interactions. Encoded in the form of scripts or event-based schemas, these norms are then primed when an individual steps into a particular role in a particular interaction. (p.623)

Culture is made up of a number of different variables that have been studied. According to one researcher, (Hofstede, 1993) culture can be classified using five dimensions: The first dimension is termed power distance, and refers to the degree to which inequality is accepted within a society. In some cultures, all people are considered to be equal whereas in other countries it is perfectly acceptable to treat people differently depending on their sex, job, family history, and other factors. Hofstede’s study found that China scored high in power distance while the United States scored low. In negotiations, this could mean that American negotiators are given greater decision-making flexibility whereas their Chinese counterpart may have to wait for approval from higher up in the organizational hierarchy. This may be one reason for the perceived inefficiency of Chinese negotiators. The second dimension is labeled Individualism/collectivism and refers to the degree to which members of a society prefer to act as individuals rather than as a group. Someone scoring low on individualism would view the greater good of the group as being more important than any single individual’s personal happiness whereas someone who scored highly would be more concerned about personal gains rather than more utilitarian ones. Individualists may judge a deal based upon its immediate personal benefits whereas collectivists may judge it based upon its contribution to the organization. A member of a collectivist society expects protection from the group whereas an individualist expects no protection from its group. The study found that the United States scored high in individualism while China scored low. The third dimension, labeled masculinity/femininity, is used to mark the degree to which a culture values “male” qualities, such as competitiveness and assertiveness, as opposed to “female” qualities such as care for the weak and solidarity. No significant difference was found between the two countries on this dimension. The fourth dimension, labeled uncertainty avoidance, is used to describe the degree to which a society prefers structured or unstructured situations. For example, certain cultures prefer explicit rules for guidance in many situations while another culture prefers there to be more freedom, discretion, and choice. On this dimension, the United States scored low and China scored medium. An example illustrating this dimension is as follows: In China, seating arrangement is of significant importance at banquets whereas it is more informal amongst Americans. A person’s rank could be signified by the place at which he/she is asked to sit at the table. A negotiator could unintentionally confuse or insult the counterparty by placing him/her in the “wrong” seat. The fifth dimension is long-term versus short-term orientation in relation to time. A long-term oriented culture looks farther into the future and values actions that may only have an impact farther into the future, such as saving and persistence. A short-term oriented society is focused more on the past and present, valuing immediate gratification and pleasure. On this dimension, China scored high while the United States scored low. In other words, a Chinese negotiator may select an action based on its distant-future consequences whereas an American negotiator may select an action based upon that action’s consequences on the immediate future. In addition to Hofstede’s five dimensions, Lin and Jones (2005, p.115) include other additional ones such as: Haptics- otherwise known as touching, and proxemics- the amount of personal space a person needs to maintain while communicating with others. According to these researchers, in terms of haptics the United States is a don’t touch oriented culture while China lies in the middle ground. In the US, touching may be misunderstood as a form of sexual harassment. It may also be an indication of social hierarchy, as people of higher rank usually touch people of lower rank. In terms of proxemics, they found that Americans chose to stand at an arm’s distance away from the person they were communicating with while Chinese tended to prefer a more intimate (physically closer) distance.


Whenever a person engages in a social act, whether it is something important, such as a job interview, or more trivial, such as meeting a friend for dinner, he relies upon certain unconscious rules in his decision-making. For example, when he goes to a job interview in the United States, he knows what to expect and how to behave in each sub-situation. He knows that first there is the greeting with the expected handshake, followed by a few minutes of small talk before the real business is brought up and ultimately culminating in the exit. How is it that he knows exactly what to do in this situation and when to do it? Something seemingly as simple as a job interview is, in reality, a complex interaction made up of numerous unspoken rules. If a person were to travel to another country in which these rules were completely different, he would experience internal discomfort if he perceived that things were not going as “smoothly” as they might have gone in his home country. Whenever someone is put into a foreign situation he/she must reassess and consciously be aware of all the potential outcomes for potential actions within situations that had seemed so simple and straightforward within that person’s natural environment. One researcher, (Molinsky, 2007) calls this reassessment “cross-cultural code switching,” and states that it “forces an individual to consciously override this dominant, culturally ingrained response” (Molinsky, 2007, p.623). In order to act appropriately within a novel environment, a person must be able to quickly and successfully adapt his/her behavior to the cultural rules regulating proper behavior within that environment. Molinsky argues that people face psychological challenges when faced with becoming consciously aware of and changing these previously habitual actions (code switching). The first problem, he states, is that “code switchers must 'proficiently execute a novel and possibly complex set of behaviors in a manner that will be judged appropriate by an evaluative audience native to the culture” (Molinsky, 2007, p.624). The second is that “individuals must grapple internally with the personal meaning of the behavior they are producing, especially in terms of how the new behavior might conflict with internalized values and beliefs” (Molinsky, 2007, p.624). When an old behavior and a new one are at great variance with one another, a person is likely to undergo, what Molinsky calls, “psychological toll,” which refers to the “depleting and burdensome feeling a person experiences when the act of switching elicits high levels of negative emotion” (Molinsky, 2007, 624). Habitual behavior functions as a means of reducing the cognitive load a person faces when making day-to-day decisions. This load increases when these habitual behaviors do not have their desired effect within a novel culture. Not only must the person be aware of the fact that he is not achieving his desired results, but he must also be able to consciously determine which behaviors are out of place and then must be able to replace those behaviors with culturally appropriate ones. Ultimately, the more cultural knowledge that someone has, the less difficulty he/she will face in these situations and the less psychological toll he/she will experience. Understanding culture is important step in preparation for the negation process. Some people may be able to change their behavior more easily than others, but perhaps there are certain situations in which most people would find it difficult to adapt to a culture where the socially correct behavior goes against that person’s moral beliefs. For example, a person coming from a collectivist culture might find it difficult to perform well in a highly competitive company organization while an individualist may find it difficult to act against his own self-interest in order to benefit the organization as a whole.


Before any deal can be made, business partners must get to know and trust one another. The manner in which people get to know one another and the degree of trust attributed to a stranger differs throughout the world. Whereas one negotiator may be trusting of everyone until proved wrong, another negotiator may start off untrusting of the same person. “Westerners befriend their counterparts only after making a deal, while the Chinese make a deal only when some level of friendship has been reached”(Friedman, 2007, p.10). Once some level of trust has been built, “Chinese teams tend first to establish agreement on general principles before moving to more specific issues, as the Chinese generally try to avoid or postpone direct confrontation” (Zhao, 2000, p.213). This style is “the exact opposite of the US belief that progress in negotiations is usually best facilitated by adhering to concrete and specific details. “The Chinese also prefer to make concessions at the end, and they seldom indicate when negotiations have reached their apex” (Zhao, 2000, p.213). Whereas in the United States it may only take a few minutes to become acquainted with someone, it can take days and even months in China. “From the vantage point of Confucianism, the Chinese will not rush into any serious meeting with someone whom they do not know; trust and a certain feeling of closeness must be in place for any negotiation to start” (Ghauri & Fang, 2001). For the Chinese, trust is not something gained after a deal has been made but rather something that is gained before any negotiations are commenced. The deal of trust a Chinese negotiator has will often determine which strategy is taken up by that person. “Trust is a prime indicator showing which role (bureaucrat/gentleman/strategist) the Chinese are going to play. When mutual trust between their business partners is high the Chinese will negotiate as gentlemen. When it is low they will negotiate as strategists” (Ghauri & Fang, 2001). Americans use contracts to establish trust. They see less of a need to be friends than to be faithful to a contract. Thus, often times, a contract is given precedence over personal trust. This may be due to the American legal system, which has a legal framework set up to protect contracts. Breaches are punishable and therefore contracts have value. As opposed to written contracts, personal trust, and not written contracts, is of importance to the Chinese negotiator. “Chinese continuously emphasize that all agreements are based on friendship and goodwill, really making the final contracts unnecessary and so the contract does not signal the last word on anything”(Buttery & Leung, 1998, p.385). This may be due to China’s past where, according to Hofstede, there existed a society

“in which there were no formal laws, only formal networks of powerful people guided by general principles of Confucian virtue. The favors of the authorities could change daily, so nobody could be trusted except ones kinfolk-of whom, fortunately, there used to be many, in an extended family structure (p.86).”


In order to be a more successful negotiator, one should familiarize himself, first, with his own culture and how others may perceive his actions through both his conscious and unconscious actions. Second, a negotiator should understand his objective and its importance to both his personal interests and to the interests of the organization he represents. Organizations should choose sensitive individuals, who are able to perceive cultural differences and appropriately adapt to them, as representatives. Individuals who have cultural knowledge experience lower levels of psychological toll and thus are able to function better in a foreign environment. To foster greater cross-cultural ability, organizations should encourage members to work in foreign cultures, gaining the needed level of experience to effectively perform their duties in an increasingly inter-related world. Negotiators should also review and keep an accurate negotiating record to ensure knowledge of any past grudges that might come up again in the future. Should any disagreement come up during the negotiating process, the negotiator can make a determination as to whether it is the past record or some present misunderstanding that is causing any problems.


Culture is the shared beliefs and behaviors of a society and is a good predictive and prescriptive device for inter-cultural relationship management but it does not take into account the individual differences that occur within cultures. One must be extremely careful in classifying cultures not to stereotype. Individuals should always ultimately be treated as such, and his/her actions should be viewed on an individual basis. An effective method in preserving objectivity is through the use of scientific studies. For example, Neuroscience offers a more objective method of studying cultural differences than a questionnaire. Whereas observation is susceptible to individual bias, medical imaging machines are not. Further studies, such as those referenced within this paper, should be done in order to better understand physiological differences and similarities among people of different cultures. Other studies, of a different nature, might include research on anomalies within cultures. For example, are there certain instances in which Chinese negotiators, who supposedly place such high value on relationships, decide to cross an established business partner in order to pursue a better deal? Similarly, are there certain instances in which Chinese negotiators prefer the use of contracts to verbal agreements? Under what circumstances do American negotiators intentionally break a contract? The study of individual differences allows for more flexibility in negotiations and expecting the unexpected is better than forming a rigid expectation of how a person from a particular culture should act.


The existence of cultural differences in perception and behavior has been proven scientifically through the use of sophisticated brain imaging devices. Researchers have classified cultures using various dimensions and have proceeded to attempt to understand and predict behavior based upon these dimensions. In very few situations is there a greater need of having a proper understanding of culture than in international negotiations. Any misunderstanding at a negotiating table can have a detrimental effect on an entire country; therefore,it is of great importance to properly train individuals to understand and accept cultural differences as well as similarities. An organization must be especially careful not to classify culture as a static variable. Cultures change as ideas spread and shape the beliefs and behaviors of individuals comprising different social groups throughout the world. This constant change means that past records are not always reliable in predicting outcomes. Instead of using culture as a predictor, organizations should use it as a means of training members to be more flexible and understanding in a globalized world.


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