Negotiation Behavior Between U.S. and Japan


Introduction
     Cross-cultural buyer-seller transactions and joint ventures between companies have grown exponentially during the 1990s, bringing midrange and smaller companies into international ventures, some for the first time (Lewis, 1990). Managing these cross-cultural transactions thus requires knowing how to negotiate successfully with people from different countries and cultures.
     Japan and the United States are major business partners. Yet descriptions of Japanese and the US negotiating styles suggest substantial differences in approach (Graham, 1993; Kato & Kato, 1992; March, 1990) that may affect cross-cultural negotiations. Over two-thirds of the US-Japanese negotiation efforts fail, even though both parties want to reach a successful business agreement. Often barriers to a successful agreement are of a cultural nature rather than on an economical or legal basis. Since each party perceives the other from its own ethnocentric background and experience, often neither party fully comprehends why the negotiations failed. It is precisely this lack of knowledge concerning the culture and unusual expectations of the other party that hinders effective negotiation with those from another culture.

Cross-Cultural Negotiation
     When two people from the same country are negotiating, it is often possible to expedite communications by making cultural assumptions. The situation is reversed when two different cultures are involved. Making assumptions about another culture without a real knowledge of that culture is often counterproductive since it can lead to misunderstandings (Hendon, D., Hendon, R. & Herbig, 1998). The international negotiators therefore must be careful not to allow uninformed cultural stereotypes to determine his or her relations with local businesspersons. The differences must be understood and accepted prior to entering into international business dealings in order to gain optimal level of outcomes from the negotiations.

CULTURAL DIMENSIONS

     Negotiation styles clearly vary among national cultures. Cultural background affects the bargaining process and negotiation outcomes. The cultural context of the negotiation significantly influences the amount and type of preparation for bargaining, the relative emphasis on task versus interpersonal relationships, the tactics used, and even where the negotiation should be conducted. The two business negotiators are separated from each other not only by physical features, a totally different language and business etiquette, but also by a different way to perceive the world, to define business goals, to express thinking and feelings, to show or hide motivation and interests. Culture provides scripts and schemes for negotiations. Two different cultural values, individualism/collectivism and hierarchy/egalitarianism indicate that there is less understanding of the priorities of the other party and the utility of a compatible issue in cross-cultural negotiations between US and Japan.

Individualistic vs. Collectivist
     The Japanese culture is collectivist and hierarchical whereas the US culture is individualistic and egalitarian (Hofstede, 1980; Schwartz, 1994). In individual cultures, goals are independent of those of the in-group; in collectivist culture, goals are aligned with those of the in-group (Triandis, 1989). In individual cultures, there is an emphasis on personal needs; in collectivist cultures, the emphasis is on social obligations (Triandis, 1989). The linkage of goals to self as opposed to the collective and the emphasis on personal needs as opposed to social obligations suggest that American negotiators are significantly more likely than Japanese negotiators to espouse a self-interest negotiation schema (Huber & Neale, 1986, 1987; Pinkley, Neale, & Bennett, 1994).

Hierarchy vs. Egalitarianism
     The cultural value hierarchy versus egalitarianism has implications for how power is perceived in a culture (Leung, 1997). People are less receptive to power differences in egalitarian societies than in hierarchical ones (Leung, 1997). Social status may not automatically convey negotiating power in egalitarian societies. Egalitarians expect equal engagement in social intercourse, but those from hierarchical cultures have unidirectional expectations (Leung, 1997). In an egalitarian culture, a party's negotiating power may be tied to the best alternative to a negotiated agreement and may therefore vary from one negotiation to another. In a hierarchical culture, power is associated with the party's status in the social structure, and the power is viewed as fixed through one negotiation to another. Power is more important schema for negotiators in hierarchical cultures than in egalitarian cultures. Japanese negotiators, therefore, pay significantly more attention to power in their negotiation preparation than do American negotiators (Graham, 1983, 1993).

NEGOTIATION PROCESS

     The most difficult aspect of international business negotiation is the actual conduct of the face-to-face meeting. Differences in the expectations held by parties from different cultures are one of the major difficulties in any cross-cultural business negotiation. In both the United States and in Japan, business negotiations proceed through four stages: (1) non-task exchange of information; (2) task-related exchange of information; (3) persuasion; and (4) concessions and agreement (Graham, 1986). Despite the consistency of this negotiation process, the content and duration of the four stages differ substantially between the two cultural groups.

Non-Task Exchange
     The first stage, non-task exchange, includes all those activities which might be described as establishing a rapport or getting to know one another, but it does not include information related to the business of the meeting. Japanese negotiators make a great effort to establish a harmonious relationship. Therefore, they spend considerable time and expense devoted to the activities which involve a series of non-task interactions and even ceremonial gift giving (Graham & Sano, 1989). They view this stage as the first negotiation in a potential long-term relationship. American negotiators, on the other hand, view this as waste, thus spend relatively shorter periods of time. They always discuss topics other than business at the negotiation table, but not for long. Such preliminary talk is much more than just being friendly or polite.
     Japanese negotiators are making judgments about the integrity, reliability, commitment and humility of American negotiators during this process. The non-task exchange provides a context or vehicle for making such judgments. To American negotiators, the content of the early conversations may seem inane, but Japanese regards these conversations as critical messages and feelings of interpersonal harmony and trust. Since Japanese negotiators want to spend much more time in non-task exchange, from the Japanese perspective, American negotiators must consider the importance of this activities if negotiations with Japanese are to be successful.

Task-Related Exchange
     The information exchanged in the second stage of business negotiations regards the parties' needs and preferences, or, stated more precisely, the parties' subjective expected utilities of the various alternatives open to the interactants. Only when the non-task exchange is completed, then the task-related exchange will be introduced. Typically, American negotiators will be advised to let the Japanese side decide when such substantive discussions should begin. A task-related exchange of information implies a two-way communication process. However, the information flow is unidirectional from American negotiators to Japanese negotiators (Graham & Sano, 1989).
     American negotiators exchange that task-related information relatively direct with clear statements of needs and preferences. They tend to say what they want and explain the reasons behind the request only if necessary, therefore the task-related exchange of information will be done relatively quickly. For the Japanese, this exchange of information is the main and the most important part of the negotiation. A complete understanding is imperative with long explanations and in-depth clarification. They ask endless questions while offering little information and ambiguous responses. They spend much more time trying to understand the situation and associated details, therefore American negotiators should be prepared with detailed information to back up their proposals. While such an approach will take longer, with Japanese clients it will obtain better results.

Persuasion
     The third stage, persuasion, involves the parties' attempts to modify one another's subjective expected utilities through the use of various persuasive tactics. American negotiators tend to spend the most time in persuading. They openly disagree and use aggressive persuasive tactics such as threats and warnings. Japanese, on the other hand, take most of the time during the first two stages of the negotiation, thus little persuasion is necessary (Graham & Sano, 1989). They tend to avoid confrontations and respond to threats by a change of subject, a silent period, or withdrawal. For Japanese, it is more important to maintain the relationship than to be frank and open. They tend to assume that details can be worked out if the negotiators can agree on generalities.
     A mistake at this stage, even a minor one, can have serious consequences for cooperation. Therefore, American negotiators should be doubly conscientious to avoid blunders because the Japanese style of persuasion is so different and, apparently, cumbersome. The attention of American negotiators is directed more towards the specific details of the agreements (documenting the agreement), while the Japanese negotiators focus on how promises can be kept (process and implementation). Americans negotiate a contract whereas the Japanese negotiate a personal relationship.

Concessions and Agreement
     The final stage of business negotiations involves the consummation of an agreement which often is the summation of a series of concessions or smaller agreements. However, the approaches used for compromise differ on both sides (Graham & Sano, 1989). American negotiators tend to take a sequential approach to decision making. They make concessions throughout, settling one issue, then proceeding to the next issue. Thus, the final agreement is a sequence of several smaller concessions, and progress is easy to measure. Japanese negotiators, on the other hand, tend to use a holistic approach at the negotiation table. They make concessions at the end of the negotiation, and agreements are concluded rather abruptly, therefore progress is difficult to measure for Americans.
     These difficulties reflect more differences than just in decision-making styles (sequential vs. holistic). For Americans, a business negotiation is a problem-solving activity, the solution being a deal that suits both parties. For the Japanese, a business negotiation is a time to develop a business relationship with the goal of long-term mutual benefits. The economic issues are the context, not the content, of the talks. Settling any one issue is not really so important. The details will take care of themselves once a viable, harmonious business relationship is established.
     American negotiators, therefore, should expect this holistic approach and should be prepared to discuss all issues simultaneously and in what may appear to be a haphazard order. Progress in the talks should not be measured by how many issues have been settled. Rather, American negotiators must try to gauge the quality of the business relationship at the negotiation table. If the negotiation processes are handled adroitly, then the American negotiators can look forward to long, mutually beneficial business relationship with Japanese partners.

COMMUNICATION

     Needless to remark that the cross-cultural communication processes are a key component of the influence of culture on international business negotiations (Hall, 1960, 1976). When messages are exchanged, the degree to which they should be interpreted has to be taken into account. Therefore, the capacity to cope with very different communication styles is the key to successful international business negotiation. Both negotiators must be ready to hear true as well as false information, discourse based on facts as well as on wishful thinking or pure obedience to superiors.

Language
     The most obvious barrier to intercultural communication is the language difference. English is rapidly becoming the language of international business, and many business people from other language communities have adopted it as their official language. In fact, the meetings between the two representatives (Japanese and Americans) are usually handled in English. However, this situation puts American negotiators at a serious disadvantage, because Japanese may have a better understanding about Americans than do Americans understand Japanese. To avoid misunderstandings, both parties could use visual media (slides, brochures, videos, etc.), and could provide copies of written support materials. Business negotiators could employ cultural experts, translators, attorneys, financial advisors, or technical experts who are familiar with the cultures of both parties. The use of intermediaries is common in many cultures and should be considered, since it represents a potentially effective approach to cross-cultural negotiation. However even with the best interpreters, language problems still can be sources of misunderstandings because of the different conceptualizations of the words (Sullivan & Kameda, 1982: 72-3). Failure on information exchanges can lead to bewilderment, confusion, frustration, and even threaten the further negotiations.

Nonverbal Communication
     One of the important issues that influence the atmosphere in face-to-face negotiations is nonverbal communication (Cavusgil & Ghauri, 1990). Nonverbal communication, in particular in the expression of emotions and the attitude of a negotiator toward the other party, is sometimes more important than the spoken language. However, many American executives report great frustration in trying to read Japanese negotiators' "poker face." In negotiations, Americans, therefore, should carefully observe the body language in order to grasp the full message. The initial goal of the negotiation will be improved if both parties aware of the structural aspects of nonverbal behaviors such differences lie not only in what is being said (content) but also in how it is said (linguistic and nonverbal behaviors) and in the social context of the negotiation.

Silence on Conversation
     Silence makes most American negotiators uncomfortable. When there is a pause in the conversation, American negotiators assume that the Japanese are angry or disagree with the proposal they have offered, even though the silence means no such things. Unlike Americans, Japanese negotiators are comfortable with conversational pauses. Silence does not necessarily signify a negative reaction, often they are simply evaluating what they have just heard (Graham, 1985). They respect an individual who remains quiet and thinks before speaking, therefore when a reply comes too quickly, they assume that the speaker has not given the matter much thought. These silences are frequently misunderstand by Americans, who tend to interpret them as non-comprehension, and therefore try to shorten the silence by explaining their point once again, or by moving on to the next topic (Morsbach, 1982). However, these attempts often cause silent frustration and resentment to the Japanese. Successful communication with the Japanese depends on sensitivity to the silent context, therefore American negotiators need to become desensitized to silence.

Adverse Response
     When negotiating with Japanese, it is important to understand that "yes" is not always an affirmative response. Before taking "yes" for an answer, American negotiators must ascertain whether in fact it was merely a polite response that really meant "no." Japanese business people are not likely to say "no" directly to a proposal, but rather will reply in ways that are synonymous with "no" (Engholm, 1991). In fact, American negotiators experience great difficulty in getting feedback on their proposal. Therefore Americans need to consider the Japanese reasons for such strange behavior. Also American negotiators should be aware of frequent use of the word hai (yes) in everyday conversation which does not necessarily mean agreement, but rather that they understand what is being said.

Direct vs. Indirect Approach
     The Japanese way of dealing with people also confounds Americans. American negotiators are relatively more direct and frank whereas the Japanese use a subtle approach and regard those traits as unnecessarily aggressive, superficial, insincere, even vulgar and repressive. American negotiators share information in order to get information but Japanese negotiators hide information. American negotiators in cross-cultural negotiations therefore may end up understanding less about the preferences and priorities of their Japanese opponents. Japanese negotiators, on the other hand, tend to get full information from their American opponents (Graham & Sano, 1989). American negotiators should understand the indirect communication style of the Japanese. An informal channel communication, which can be established only between and through the lower levels of the negotiation teams, is the only way that Americans can become privy to the accurate information about the Japanese. Therefore, American negotiators should include lower-level executives on their negotiation team.

Formal vs. Informal Communication
     American negotiators tend to focus on formal negotiating activities instead of informal gatherings. They may not wish to informally socialize with negotiating counterparts prior and / or after the meetings. However, non-business, social, group gatherings are standard practice for Japanese negotiators for any deal-making (Hall, E., & Hall, M., 1987). Therefore, management of the such informal channels of communication is critical for efficient and successful negotiations. During the non-task exchange activities, lower-level members of the American team should establish rapport with the operational level managers of the Japanese side. Then, throughout the task-related exchange of information and the rest of the negotiations, American negotiators should invest in after-hours nurturing, informal gathering. Japanese negotiators are usually looking to open such a channel of communication, and thus the Americans should be alert for such overtures.

Time Orientation and Decision-Making
     Knowledge of a culture's time orientation can provide insights into the importance of dealings, whether long-term planning is widely practiced, the length of job assignments, or what constitutes lateness. Americans view time as a scarce commodity that must not be wasted. They focus on the present and the near future, therefore decisions will be made relatively fast. The Japanese are also time conscious people like Americans, however their decision making style is quite different from those of Americans'. Most of them usually don't have the right or authority to make decisions. The Japanese tends to avoid responsibility by simply passing the issues and defer to the person of the highest status (top management.) Therefore they expect negotiations to progress slowly and for all parties to be flexible about the schedules. American negotiators, therefore , should be aware of the Japanese way of long-term negotiating.

EXTERNAL INFLUENCES

     Several external factors also play a role in the success or failure of cross-cultural negotiations between US and Japan. Such factors are (1) external agents; and (2) site selection.

External Agents
     The process of encoding, sending, and decoding, receiving, of messages into symbols is based on an individuals cultural background and, as a result, is not the same for all people. People from different cultures see, interpret, and evaluate things differently, and consequently act on them differently. Therefore, translation must be culturally correct as well as linguistically accurate. Translation is more than just language conversion, it is also a cultural phenomenon, more than simply customs and traditions. Translation must be reviewed for accuracy and cultural correctness by someone in the country, the region, or the city where it will be used. Negotiators that use external agents such as translators and bicultural brokers tend to be more successful in their cross-cultural negotiations (Herbig & Gulbro, 1997). Therefore, American negotiators should include a translator and / or bicultural broker on their negotiation team.

Site Selection
     Location is one of the most important aspects of any international negotiations. The site of the negotiation can impact the availability of space, the psychological climate, time constraints, information flow, team building, stress management and adoption of communication channels (Ghauri, 1986; Griffin & Daggatt, 1990; Hendon, D. & Hendon, R., 1990).
     If American negotiators are the buyer, they could act as the host. As being a host, there are many territorial advantages, including control over the location protocols. Psychological stress will be also reduced, and when additional information is required, the host has easier access to local experts as well as superiors for quick authorization and consultation (Moran & Stripp, 1991; Peak, 1985). However, it is hard for then to claim limited authority or to walk out from the negotiations. If American negotiators are the seller, they should act as a guest. Nonetheless, there are many disadvantages to negotiating in another country (Fayerweather & Kapoor, 1976). Culture shock and its companion physical and mental discomfort pose potential problems. Physical fatigue, such as jet lag, is real and can hinder negotiating efforts. On the contrary, pressure is on them to make extra concessions. Despite of those disadvantages, guest negotiators could view facilities, personnel, capabilities as well as culture and lifestyle of host negotiator's. At the same time, guests have the opportunity to show seriousness of intent and commitment. Furthermore, they could maintain low disclosure in cases of discrete negotiations (Adler, 1991; Deferrer, 1989). Another possibility is a neutral site. The key reasons for a neutral location are conflict avoidance, time or convenience and sensitivity to cultural context (McCall & Warrington, 1987). In the case of conflict avoidance, a location that is not associated with any of the participant countries may be preferred in order to eliminate any undue advantage gained from playing host. The location may be halfway between the two countries or may simply be a place both sides want to visit. Americans and Japanese sometimes meet in Hawaii so that both can enjoy the golf and the beaches.

CONCLUSION

     In light of the increasing incidence of global economic cooperation among business entities from different nations, the need to identify strategies which can maximize the probability of positive outcomes in a negotiation situation is indeed great. Joint cooperative agreements between the US firms and Japanese firms have been increased rapidly in the past decade and are expected to increase further in the years ahead. However, even with great care and attention to preliminary details, most of the business negotiations have been failed because of the incompatible on schemes and scripts owing to cultural differences. Negotiations can be easily break down because of a lack of understanding of the cultural component of the process.
     To succeed in cross-cultural negotiations, first, international negotiators need to recognize that a foreign negotiator is different in perceptions, motivation, beliefs and outlook. Identify, understand, accept, and respect the other side's culture, and be prepared to communicate and operate on two separate and different cultural wavelengths. Second, international negotiators need to be culturally neutral. Do not cast judgment on the other party's cultural mores. Finally, international negotiators need to be sensitive to the other party's cultural norms. Try to understand how behaviors may impact on them even though it causes discomfort or emotional stress. Yet it is necessary to accept, and to proceed with the business without showing distress if one wish to come home with an agreement beneficial to both parties and the start of a long-term healthy relationship between two companies from two cultures. Negotiators who take the time to understand the approach that the other parties are likely to use and to adapt their own styles are likely to be more effective negotiators in cross-cultural business negotiations.


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