Chapter 1 The Art of Business Negotiation

 

1.1 An Introduction to Business Negotiation

Negotiation is a kind of basic human activity that we are involved everyday. It is a process ofgive and take where both parties modify their offers and expectations in order to come closer toeach other. It occurs on one of the two reasons: (1) to create something new that neither partycould do on his or her own, or (2) to resolve a problem or dispute between the parties. (Lewicki:2003)

A modern definition of negotiation widely accepted is two or more parties with common andconflicting interests who enter into a process of interaction with the goal of reaching anagreement (preferably of mutual benefit). Therefore, negotiation consists of two distinctprocesses: creating value and claiming value. (Hendon and Herbig, 1996) Creating value is acooperative process whereby the parties in the negotiation seek to realize the full potentialbenefits of the relationship, while claiming value is essentially a competitive process where eachparty strives to realize the largest benefit from the deal.

?Business negotiation refers to the negotiation that takes place in the business world and dealswith business relationship. Business negotiation may be understood as encounters between firms(or economic organizations) with the goal of reaching agreements to gain economic benefits. In abusiness negotiation, the stakes involved are high, and much preparation work and negotiationskills are needed to get the desired outcome. In a business relationship, parties negotiate becausethey have common business interests and they expect to get a better deal through negotiation thansimply accepting or rejecting what the other party has offered.

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?1.2 Basic Elements of Business Negotiation

Negotiation is a system consisting of four basic elements: actors, structure, strategy andprocess and outcome. The process here means the stages or episodes of negotiation. (Ghauri &Usunier: 1996) See the following figure 1.

In an international context, most of these elements are subject to the influence of culturaldifferences. Based on these elements, Moran and Stripp further identify ten variables that aregreatly subject to cultural influences when negotiating internationally. (Moran & Stripp: 1991)These variables will be introduced and analyzed in detail in Chapter Three.?

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Chapter 2 Cultural Factors of International BusinessNegotiation

 

?2.1 Understanding Culture

The term “culture” has been defined in a variety of ways, and there is no agreement on a? single definition of the term. More than a century ago, E.B. Tylor (1871) defined culture as “thatcomplex whole which includes knowledge, belief, art, morals, law, custom, and any othercapabilities and habits acquired by man as a member of society”. More recently, Hoebel (1972)defined culture as “the integrated system of learned behavior patterns which are characteristics ofthe members of a society and which are not the result of biological inheritance.” Hofestede (1980)treats culture as “the collective programming of the mind which distinguishes the members of onehuman group from another.”?

?According to the above-mentioned definitions, we can generally infer the followingcharacteristics of culture:

?1.Culture is a comprehensive concept, which includes almost everything that influencesour style of thinking and behavior.

?2.Culture is an integrated whole. The components of a culture are more than a randomassortment of customs, but rather an organized system in which particular componentsmay be related to other components. Any seemingly irrational phenomenon to theoutsiders may well fit that particular culture.

3.?Culture is learned and transmitted. Despite the enormous variations in the details ofcultures throughout the world, all people acquire their culture through the same process,that is, learning. Amram Scheinfeld illustrated the learned nature of culture by writingan American-Chinese man (1950:505):

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?2.2 Main Origins of Chinese Culture and American Culture

The forming and developing of a culture is a complicated and extended process with manyforces acting upon, such as historical forces, political construction and geographical situation, etc.In this thesis, The author is going to explore the main ideological forces that have shaped theChinese and American cultures.

2.2.1 Main Origins of Chinese Culture

To Americans, Chinese are “inscrutable” and “mysterious”. Chinese care much about theirchildren, act over-subserviently to their superiors, and seem to speak too indirectly with perhapstoo much “false” modesty. The Chinese values of group loyalty, respect for hierarchy and age,and preference for harmony are difficult for Americans to understand. What’s more, Chinese aretoo much concerned with “face” stuff, such as saving face, giving face and losing face. But allthese values have their roots to trace back.?

?Confucianism and some religious beliefs in China, which will be discussed in detail here,have shaped a large part of Chinese characteristics. Other than Confucianism and the religiousbeliefs, Marxism and Leninism in modern history also have formed a good part of Chinesecharacteristics, and strengthened the collectivist consciousness. But they are not within my scopeof research due to the time limits.

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Chapter 3 Cultural Impacts on Sino-US Business Negotiations............20

3.1 Basic Values and Assumptions of the Chinese and Americans....................20

?Chapter 4 Conclusion.................58

 

Chapter 3 Cultural Impacts on Sino-US BusinessNegotiations?

 

?3.1 Basic Values and Assumptions of Chinese and Americans

According to Fons Trompenaars and Charles Hampden-Turner, usually cultures will becompared under three headings: relationship with people, attitudes towards time and attitudestowards the environment. Based on Edward C. Stewart and Milton J. Bennett (1991)’s definitionof cultural assumptions as abstract, organized, general concepts which pervade a person’s outlookand behavior, cultural assumptions and values of Chinese and Americans will be illustrated fromthese three aspects.

?3.1.1 Basic Chinese Values and Assumptions

Most of the following prevailing Chinese values and assumptions are summarized from myformer exploration of their main origins.?

?Relationship with People

Collectivism. In a collectivistic culture, an individual is a member of a social unit, whoseactions and reactions are closely tied to his/her immediate social unit. This assumption isoriginated in Confucian value of filling one’s place both in family and society. In Chinese culture,personal dignity and worth is measured in terms of fulfilling one’s role in the family or in thegroup that one belongs to. Meanwhile, the decision-making of the collectivism-oriented Chineseis by consensus within hierarchical levels, and responsibility is diffused.

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Chapter 4 Conclusion

The act of negotiation is influenced by a set of variables, such as the specific issues, thenature of the initial problems and the general context of the negotiation. All these are not possibleto be exhaustive here. The purpose throughout this thesis is to examine the experiences ofbusiness negotiations between Chinese and Americans from the perspective of culture, so as toavoid unnecessary misunderstandings.

?The professional negotiating philosophy recognizes that the best method of achievingoptimum and mutual success for both parties at the bargaining table is to work together in acooperative atmosphere. During the negotiation, both negotiating parties try to agree on howresponsibilities, costs, and risks will be allocated, and to document the resulting compromises andconcessions in a clear contractual agreement. Each party regards the other party as being honestand sincere to enter into a business, aiming to achieve mutual desirable benefits. (McCall &Warrington: 223) The context of this negotiating philosophy is in an ideal world. Yet, in aninternational context, the negotiation is more complicated and the act of negotiation is influencednot only by the specific issues involved and the nature of initial problem, but also is very muchsubject to the influence of culture differences. The way we negotiate is colored by our culturalassumptions. No matter whether you are an effective negotiator or not, the culturally conditionednegotiating styles are largely operating at an unconscious level. Sino-US business negotiations,especially, due to the sharp contrast of these two cultures, are more delicate and changeable.

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