Why Do Negotiations Tend to Fail in a Cross-cultural Milieu? The China and Norway Affair

Key words: cross-cultural negation, culture, dimensions of culture, high context, low context, negotiation styles, power index differential.

Abstract

This paper, applying Hofstede’s (1997) dimensions of culture and Hall’s (1990) contextual paradigm, explored and analyzed the stressed relationship between China and Norway. The paper notes that the stressed relationship is most notable in recent negotiations between the two countries. Further, the paper concluded that at least in the area of negotiations, relief for this stressed relationship could manifest if both sides were more aware and willing to respect the power index differential.

Introduction

Definitions

Negotiation

The word, negotiation is commonly used. Even with its frequent usage, many are stumped when asked to define the term. Faure (1993), one of the experts in this field, stated, “In its basic form, negotiation is a method of conflict resolution” (p. 7). Gulliver (1979) spoke of negotiation more realistically. He defined negotiation as “a problem-solving process in which two or more parties attempt to resolve their disagreement or conflict in a manner, and through a process, that is mutually agreeable” (p. xiii). His definition brings up two points, not mentioned by Faure (1993), which must be noted. The term “process” implies that there are steps or ways to maneuver through negotiations. Also, the term “mutually agreeable” insinuates that for negotiations to be successful both parties must agree. In itself, this serves as an example that negotiation can fail between differing cultures if they do not agree. Dasgupta (2005) defined negotiation more delicately, claiming that it “is essentially the art of persuasion” (p. 2). In order to successfully persuade a person, one must know certain fundamentals about the subject. Time, space, and many other factors are known as the contingencies of negotiation. These topics will be mentioned later and more thoroughly in the larger body of work.

Negotiation Styles

When speaking of negotiation and Gulliver’s (1979) definition, the word “process” should be further clarified. The author acknowledged there are many schools of thought and theories concerning the procedure of negotiations but those are beyond the scope of this piece. However, it is important to mention the types of negotiation, also known as bargaining, as well as some negotiation theories. Generally there are two types of bargaining. Robbins, Judge, and Vohra (2011) named these two types as distributive bargaining and integrative bargaining. They defined the distributive type: “its most identifying feature is that it operates under zero-sum conditions” (p. 452). This is parallel to the definition of the competitive style. A competitive style strives to “gain optimum value at the expense of the other party and is commonly referred to as the “win-lose” approach” (Pfetsch, 1999, p. 85). Conversely the style known as integrative bargaining seeks an ending conclusion suitable for both parties. “Integrative bargaining operates under the assumption that one or more settlements can create a win-win solution (Robbins, Judge, and Vohra, 2011, p. 455). Likewise, Pfetsch mentioned a similar style known as the collaborative style. Pfetsch defined this as a style that “attempts to reach agreement through creating options that are conducive to achieving or maximizing the goals of both parties thus creating a “win-win” situation” (Pfetsch, 1999, p. 85). He further defined a third style not mentioned by Robbins, Judge, and Vohra. The concession style is one where “one party reduces . . . [its] position to the gain of the other party” (Pfetsch, 1999, p. 85). With these definitions in mind, the terminology of negotiation and the styles will be discussed later.

Culture

The task of defining culture is one that many have embarked upon; Hall, Hofstede, and Cohen are recognized as seminal authorities on the subject. The work of Hall will be referred to mostly regarding his research of high-context and low-context cultures (a topic for later discussion), and Cohen and Hofstede will be mentioned when speaking of the definition of culture and dimensions of culture (also referred to as the contingencies of negotiation).

Cohen (1997) said, “a neat, one-sentence definition can mislead” (p. 11). Following this he gives a very thorough definition of what he has found culture to be.

As one would expect, an explanation of this complex definition can be expected to follow. The first of the three key aspects states that culture is not the same as personality. Culture is attributed not to the individuals but rather to the society as a whole. Secondly, culture is obtained and learned by one’s surroundings. As a sponge soaks up water, a person does the same with his/her culture. Third, culture is not limited to ideas or rituals held by the society. Culture is all of the tangibles and intangibles that, when combined, form a culture that is only found in that one place. Alder agreed with Cohen and supported him by saying that

Alder is another quintessential author on the topic of culture. In this piece she will help the reader understand the influence of culture on behavior and behavior on culture. In International Dimensions of Organizational Behavior she supplied the reader with the following illustration that shows how culture is affected by behavior, attitudes, and values, which are all affected by culture.

Figure 1: Influence of Culture on Behavior and Behavior on Culture (Alder, 2002)

Hofstede should also be recognized for his work in culture. As quoted by Horst (2007), Hofstede (1997) postulated that

The meaning of this is unlike human nature and personality; culture is learned. Figure 2 illustrates that human nature is universal and inherited; this includes some of the basic instincts such as fight or flight. The middle level shows that culture, as Hofstede believed, is learned and also specific to the group. The very top indicates that personality is specific to each individual, is inherited but also learned.

Figure 2: Three Levels of Uniqueness in Human Mental Programming (Hofstede, 1997)

Dimensions of Culture (Negotiation Contingencies)

From his research Hofstede identified four different dimensions of culture: power distance, individualism, masculinity, and uncertainty avoidance. The following will be the author’s attempt to enlighten the reader to the outstanding work of Hofstede.

Individualism Index (IDV). IDV, or the Individualism Index, is an attempt by Hofstede to measure how much people in a given society learn to interact together. Individualistic societies are commonly noted as self-centered, while collectivist societies worry more about their group. Hofstede explained it by saying that

Further explanation of Hofstede’s IDV along with examples and characteristics is shown in Table 2.

Masculinity Index (MAS).The third dimension Hofstede described was the Masculinity Index (MAS). The Masculinity Index is mostly focused on gender roles. Hofstede believed that

Uncertainty Avoidance Index (UAI). The last of the dimensions of culture described by Hofstede is the Uncertainty Avoidance Index (UAI). Those cultures that score high in this dimension fear ambiguity. These cultures crave organization, structure, and seek out ways to lower the level of ambiguity. The characteristics of the UAI are displayed in Table 4, along with some examples.

These dimensions, along with some others, can be found in many other works such as the Handbook of Distance Education by M. G. Moore and W. G. Anderson, Organizational Behavior by S. P. Robbins, T. A. Judge, and N. Vohra, International Dimensions of Organizational Behavior by N. J. Adler, Negotiating Across Cultures by R. Cohen, and many others. Although there are other dimensions, these four will be explored more thoroughly in this manuscript.

High Context and Low Context

Hall, followed by many other scholars, conducted extensive work to understand how communication affects culture, and these studies showed that there are two types of cultures. These separate types have their respective ways of communicating: high context and low context. High context is characterized by “which most of the information is either in the physical context or internalized in the person, while very little is in the coded, explicit, transmitted part of the message” (Hall, 1989, p. 91). Rather than actually conveying the message verbally, those in high-context cultures tend to send and receive information very differently from those in low-context societies. Low-context is communication where . . . “the mass of the information is vested in the explicit code” (Hall, 1989, p. 91). The context of communication is essential to understand if one seeks to be successful in cross-cultural negotiations. As quoted in Würtz (2005), Figure 3 depicts Hall’s taxonomy:

Figure 3 shows where some of the major countries in the world are ranked. This is not to say that this list is permanent or by any means set in stone. Cultures can and do change as time passes and this figure could look significantly different based on recent trends. Although there is extensive material on this topic, it will be avoided for now and left for further investigation.

It is important to understand a few concepts about interactions between high and low context cultures. Due to similarities in culture and negotiation styles, two high-context cultures (as well as two low-context cultures) will have a tendency to be able to negotiate successfully. Conversely, two cultures with differing context levels, as in a high and low level working together, will have a tendency to fail more often. This is not to say that the two differing cultures cannot work well together; however there must be special attention concerning the context levels when entering into negotiations.

Literature Review

Research on China and Norway interactions has been somewhat difficult. This can be directly linked to the fact that the conflict is so young. However, research does indicate that both of these countries have been independently wealthy when they negotiate successfully; a mutually beneficial outcome is born. Although their relationship has hit a rough patch as of late, China and Norway have been able to work together in the past and should be able to move past the current situation. A possible way to bring these countries together is through a free trade agreement. This is not to say that one agreement will reconcile all difficulties, but it would significantly change the atmosphere around the current situation. It may not be possible for these two quarreling countries to agree to a bilateral agreement, but perhaps a multilateral agreement could make a difference.
Further investigation and exploration of China and Norway and the factors around the current situation are also important. There are quite a few topics worth considering. How would a multilateral agreement affect the situation? Would a multilateral or bilateral be more beneficial? Also, the fifth dimension (long-term orientation) of culture should be researched. It is not a debate of whether it exists or not; rather an inquiry should be undertaken to determine how a long-term orientation can affect cross-cultural negotiations on a global scale and specifically in the case of China and Norway. Because cultures are dynamic, the future of these cultures should be considered in order to predict the future of their relationships and negotiations.

China and Norway: A Cross-Cultural Milieu

During his extensive research, Hofstede scored countries on a scale from 1 to 120 based on the dimensions of culture. Below, in Table 5, the scores of China and Norway are displayed. According to his research, Hofstede showed that the Chinese scored a higher numerical value in the power distance index (PDI). Therefore, Chinese citizens believe they are far removed from the country’s center of power, they feel there is little they can do to affect the country on a large scale and are more comfortable with inequalities. Conversely, Norway scored much lower—meaning that its citizens believe they are closer to the center of power. On the topic of individualism (IDV) versus collectivism, the two countries once again do not see eye-to-eye. A higher numerical value in this category means that a country is individualistic and that a citizen identifies first as an individual and second as a member of a group. The opposite of this indicates that citizens see themselves as members of a group first and as an individual second. In this respect, Norway is much more individualistic while China is collectivistic. China and Norway also differ in respect to the masculinity index (MAS). Receiving a lower numerical value indicates that a country is more masculine. As discussed earlier in this manuscript, this index has nothing to do with sex. Rather, masculine cultures are motivated by success and achievement, while feminine cultures care more for others and the quality of life. China, as shown in the table above, is almost an extreme example of masculinity; Norway leans more towards the feminine side of the spectrum. Uncertainty avoidance (UAI) is the only dimension in where China and Norway are somewhat similar. Although the two countries are similar, China scored a lower numerical value, which indicates that, in general, Chinese citizens experience less stress in ambiguous situations than their Norwegian counterparts. When all of these are considered simultaneously, it is clear that these two countries will certainly struggle with negotiation if special attention is not paid to cultural differences.

Table 5: Comparison of China and Norway According to Hofstede’s Cultural Dimensions (http://geert-hofstede.com/china.html)

The previous four indices are very important to investigate when desiring to understand a cross-cultural negotiation, but there are a few other factors to consider. Through his studies, Hofstede provided four dimensions but later research identified a fifth dimension. This fifth dimension is referred to as long-term orientation. Although understanding and recognizing the importance of this dimension, the author chose to examine the relations of China and Norway strictly based on Hofstede’s dimensions.

Each country also has general negotiation styles. As stated early in this manuscript there are two main styles: competitive and integrative. The negotiation styles of China and Norway also make agreeing more difficult. Being a highly masculine culture, China values success and achievement. On the other hand, Norway is much more feminine and due to this, Norway favors integrative negotiation. Therefore, China looks at a negotiation as a “win-lose” situation and Norway sees it as a “win-win” negotiation.

The last factor to consider is whether the countries involved in negotiation are high- or low-context cultures. In high-context cultures the message is not necessarily conveyed solely by actual words. Rather, the message is transmitted to the listener through things such as gestures and signals common in that culture. Low-context cultures, on the other hand, send the message explicitly through the spoken words. As quantified by the work of Hall (1981), China is a high-context culture but Norway is a low-context culture. This means that even basic communication between the two negotiating cultures will struggle. When considered jointly, Hofstede’s dimensions of culture, negotiation styles, and the communication context demonstrate exactly how negotiations can possibly fail in a cross-cultural milieu.

History of Recent Conflict

In the past decade, interest in the Arctic has been growing. Climate change has affected many countries including China and Norway. For example, China has been negatively affected by more violent storms, and Norway has benefited because the warming effects have made its land more fertile. There are many other effects to both countries, but such is not pertinent to this paper. It is important to understand that the warming climate is melting Arctic regions. The melting has allowed for access to previously unreachable parts of this region. Located in this region are resources such as oil and natural gas deposits. Far more important than these is the possible navigation route that would open if the region melts sufficiently. Some academics believe that this new route will be more important than the likes of the Panama and Suez Canal. This has been the buzz on the international scene since 2010.
The recent history of these two countries adds to the difficulty of negotiation. Liu Xiaobo, a Chinese citizen, has been imprisoned since 2008 in a Chinese prison. Why? He is a writer that believes in democracy and seeks a democratic China in the future. When he wrote in protest of the Chinese government, he was imprisoned. In recognition of his work, he was awarded the Nobel Peace Prize in 2010. This act is regarded as the beginning of China and Norway’s struggles. China aligned the Nobel Prize Selection Committee with the government of Norway and furthermore saw it as meddling (the committee is actually appointed by the Norwegian Parliament). In response to the awarding of the Nobel Prize, China stopped communications with Norway on topics such as Free Trade Agreements and human rights. China was accused of holding Norwegian salmon in customs where it spoiled during the process of clearing customs. China claimed that the salmon did not meet their qualifications and therefore chose to sign trade agreements with other salmon producers outside of Norway. Norway certainly felt the sting of no longer being able to tap into China’s huge economy but defended itself by saying that the selection committee was free from governmental influence and would not apologize for the Nobel Prize Committee’s selection. Although China demanded rectification, Norway refused to make any changes. The two countries seemed to have reached an impasse.

Discussion

Cross-cultural negotiation is a very sensitive matter. The slightest gesture can carry a certain meaning in one culture, while meaning something else in another. Such is the case with the American hand gesture indicating peace. The same gesture in Great Britain carries a much more offensive meaning. Granted this is just an example, but it is important to realize that if communication or negotiation between two countries that are very similar can fail, the same can be said for countries that have much less in common such as China and Norway. The problem with China and Norway basically boils down to one of Hofstede’s (1997) dimensions of culture. Norway has a low power distance indicating that citizens perceive power to be shared and much closer. Conversely, China has a much higher power distance, which means that its citizens are far removed from the center power. Where these two cultures collide revolves around that dimension when the Nobel Peace Prize was given to a Chinese prisoner. Norway claimed that the selection committee was an independent body, but such was not the case because the committee was selected by Parliament and was comprised of most, if not all, Norwegians. In an attempt to express its discontent with China’s government, Norway offended China and, in a way, brought this upon itself. Meanwhile, China felt the threat of change and may have over-reacted. Until these two countries can find some way to mend the wounds, their relationship will continue to be strained and possibly worsened. Each country retaliated and lost sight of issues of mutual importance. Without compromise, these two will continue on a downward spiral. A possible common interest that might get these countries moving in the right direction could be negotiation of a free trade agreement. Obviously, engaging in a free trade agreement will not heal the wounds or reverse the damage, but it will get China and Norway moving in the direction of a mutually beneficial relationship that will lead to more cross-cultural negotiations.

Conclusion

The future is difficult to predict, especially from an outsider’s point of view. Some believe Norway is acting inappropriately, while others think China is to blame. Regardless of what side is at fault, it is important to find a way past it. Reviving the lines of communication between the two countries is the first thing that must be done to have a working relationship. If the two were able to take that step, they should be able to resume their negotiations on a free trade agreement and a mutually beneficial relationship. The good that will come from China and Norway reuniting will benefit themselves but will also benefit other countries with affiliations to China and Norway as well as lower stress in the international community. If these two countries continue on their current course, the damage that ensues could be irreparable. At the moment it may seem far off, but if the conditions were just right China and Norway could very well go to war. Granted, the likelihood of war due to pressure from other nations and groups such as the United Nations is slim to none but economies will certainly suffer. For example, Norway’s salmon market has felt the effects of China’s retaliatory actions for the Nobel Prize incident. It seems as though there is not much good that will come if China and Norway stay this course.
There has been little to no research conducted on the negotiation and relationship between China and Norway. There is much that can be explored such as the short-term and long-term effects of the situation at hand. One could also explore how other countries influenced and/or were affected by this situation. When studying the cultures of China and Norway, one could also bring in the fifth dimension of culture, long-term orientation, to understand what role it plays in these countries’ current discontent. Furthermore, there is certainly room for an inquiry into how this argument between China and Norway has affected global economics and global businesses. The China and Norway Affair offers an opportunity for examination of the impact of the cross-cultural milieu on global relationships.

References

Alder, N. J. (2002). International dimensions of organizational behavior (4th ed.). Mason, OH; Thomson Higher Education. Retrieved from: http://books.google.com/books?hl=en&lr=&id=w_AnUby8L3EC...

Nancy J. Adler is a professor of International Management in the Faculty of Management of McGill University in Montreal, Canada, and she has received her doctorate in management. Doctor Adler conducts research and consults on many different topics such as management, global leadership, and developing cultural synergistic approaches to problem solving. Her research has proven to be very insightful and helpful. In this piece, her work will help the author gather a deeper understanding of the dimensions of culture, the process of negotiations, along with other aspects of culture.

Anderson, W. G., & Moore, M. G. (2003). Handbook of distance education. Mahwah, NJ: Lawrence Erlbaum Associates, Publishers. Retrieved from: http://www.uady.mx/~contadur/sec-cip/articulos/libros_online/...

The Handbook of Distance Education due to a need of a compilation of significant developments in international education. This book provides overviews and summaries of research and practice of distance education in the United States. It covers a broad spectrum of topics including culture, negotiation, and the dimensions of culture. The works in this book were quintessential for the author of this proposal.

Berton, P., Kimura, H., & Zartman, I. W. (1999). International negotiation: Actors, structure/process, values. New York, NY: St. Martin’s Press. Retrieved from: http://books.google.com/books?id=trbrG2Nj_kUC...

Cohen, R. (1997). Negotiating across cultures: International communication in an interdependent world (revised ed.). Washington, DC: United States Institute of Peace. Retrieved from: http://books.google.com/books?id=nhTXH-Kk3EsC...

Raymond Cohen’s revised edition of Negotiating Across Cultures: International Communication in an Interdependent World was crucial to the author. As he started his research, this book was the first thing the author read and therefore it had a great impact upon him. This piece provided significant insight into cultural analysis as it pertained to international politics. Cohen is a professor of international relations at the Hebrew University of Jerusalem and the author of four other books.

Dasgupta, A. (2005). Cultural dynamics in international negotiations. Social Science Research Network (SSRN) Retrieved from: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=651185

Faure, G. O., & Sjostedt G. (1993). Culture and negotiation: An introduction. In Culture and negotiation.Newbury Park, CA: SAGE Publications, Inc.

Guy Oliver Faure is a Professor of Sociology at the Sorbonne University, Paris V, France, where he teaches international negotiation, conflict resolution, and strategic thinking and action. Faure clearly has the ability to impart knowledge as he did upon the author of this piece. His words reverberated in the mind and intrigued the author of this piece; especially his writing on the topics of culture as well as negotiation.

Gulliver, P. H. (1979). Disputes and negotiations: A cross-cultural perspective. New York, NY: Academic Press, Inc.

Hall, E. T. (1989). Beyond culture. New York, NY: Random House, Inc. Retrieved from: http://books.google.com/books?hl=en&lr=&id=reByw3FWVWsC...

Edward Hall is widely accepted as a seminal author. His work is responsible for the author’s interest in international negotiation. Hall is an anthropologist and an author. He was written many books and co-authored many others. This piece assisted the author of this piece grasp intercultural communication and aided his writings.

Hall, E. T., & Hall, M. R. (1990). Understanding cultural differences: Germans, French and Americans. Yarmouth, MN: Intercultural Press. Retrieved from: http://books.google.com/books?hl=en&lr=&id=Hr3adyadHC4C...

Hofstede, G. H. (1997). Cultures and organizations: Software of the mind. The University of Limburg at Maastricht, Netherlands: McGraw-Hill.

Geert Hendrik Hofstede is another seminal author. Many of his writings have influenced many minds, not excluding the author of this piece. He is a learned man and earned his doctorate in social psychology from Groningen University in the Netherlands. His insight into the dimensions of culture was greatly appreciated by the author of this piece and is regarded as a necessity when researching the topic of cross-cultural groups and organizations.

Horst, P. R. (2007). Cross-cultural negotiations. Retrieved from: http://www.au.af.mil/au/awc/awcgate/awc/horst_crosscultural_negot.pdf

Paul R. Horst, Jr., Lieutenant Colonel, United States Air Force has conducted research in the field of cross-cultural negotiations. For the author of this piece, the work of Horst was a stepping stone he needed to begin to understand the words of Hofstede, Zartman, Hall, and the other seminal authors cited in this proposal. The author owes a debt of gratitude to Horst for his work on the topics of culture and negotiation.

Pfetsch, F. R. (1999) Institutions Matter: Negotiating The European Union” In International negotiation: Actors, structures/process, values. New York, NY: St. Martin’s Press.

Robbins, S. P., Judge, T. A., Vohra, N. (2011). Organizational behavior (14th ed.). UP, India; Pearson Education, Inc.

All three of the authors of this book have earned a doctorate, have been published many times, have written many books, and have conducted much research. Their combined experience has come together seamlessly and was a great help to the author of this proposal. This book covers many topics of organizational behavior, but the ones employed by the author are more concerned with culture, negotiation, and the dimensions of culture.
Würtz, E. (2005). A Cross-Cultural Analysis of Websites from High-Context Cultures and Low-Context Cultures. Journal of Computer-Mediated Communication (article 13). Retrieved from: http://jcmc.indiana.edu/vol11/issue1/wuertz.html

Elizabeth Würtz is an expert in the field of applying the concepts of high and low context communication in terms of the Internet for communication and marketing purposes. Her understanding and application of Hall’s high/low context communication is not only outstanding but crucial for the author of this proposal. Thanks to her work, the author was able to get a firm grasp on the somewhat complex work of Hall.

Why Do Negotiations Tend to Fail in a Cross-cultural Milieu? The China and Norway Affair

Mario B. Rojas, IV Newberry College

Abstract

Introduction

Definitions

Negotiation

Negotiation Styles

Culture

Dimensions of Culture (Negotiation Contingencies)

High Context and Low Context

Literature Review

China and Norway: A Cross-Cultural Milieu

History of Recent Conflict

Discussion

Conclusion

References

Why Do Negotiations Tend to Fail in a Cross-cultural Milieu?
The China and Norway Affair

Mario B. Rojas, IV
Newberry College