As an exercise, think of culture like an iceberg.⁰⁹ Typically, about one-ninth of an iceberg is visible; the rest is submerged. As Exhibit 10-1 indicates, the top (visible) part of the cultural iceberg is the behaviors, artifacts, and institutions that characterize a culture. This portion includes traditions, customs, habits, and other immediately visible stimuli. These behaviors and artifacts are an expression of deeper-held values, beliefs, and norms. Driving these values and norms are fundamental assumptions about the world and humanity. The artifacts and customs that characterize a culture are not arbitrary; rather, they are manifestations about fundamental values and beliefs about the world.

A key factor that influences behavior across cultures is the means by which people influence others and use of power in relationships. Some cultures have relatively permeable status boundaries and are egalitarian. Other cultures have relatively fixed status boundaries in which influence is determined by existing hierarchical relationships.

Direct versus indirect information sharing is a cultural dimension that refers to the amount of information contained in an explicit message versus implicit contextual cues.⁷³ Some cultures’ norms favor direct communication, whereas in other cultures, people communicate in an indirect, discreet fashion. The indirect-direct communication dimension has implications for how much people should rely on contextual cues.⁷⁴

Negotiators have more difficulty expanding the pie when negotiating across cultures than within a culture. A landmark study of five countries (Japan, Hong Kong, Germany, Israel, and the United States) examined intracultural (within the same culture) negotiations versus intercultural (across cultures) negotiations. Negotiations between Japan and the United States resulted in a smaller expansion of the pie than did intracultural negotiations (Japan–Japan and U.S.–U.S. negotiations).⁹⁹ Another study examined joint gains in intra- and intercultural negotiations between Japanese and U.S. negotiators and found that joint gains were significantly lower in intercultural negotiations, as opposed to intracultural negotiations.¹⁰⁰ The key reason appeared to be the degree to which parties understood the priorities of the counterparties and the opportunity for exploiting compatible issues. In cross-cultural negotiations, negotiators’ bargaining styles did not match, meaning they had less understanding of the counterparty’s priorities and consequently did not create as much value. Each culture expected the other culture to adopt its own style of negotiating. For example, North Americans expected others to talk directly, whereas people from indirect cultures expected to use implicit forms of communication, such as heuristic trial and error. U.S. negotiators exchange information directly and avoid using influence strategies when negotiating intra- and interculturally. In contrast, Japanese negotiators exchange information indirectly and use influence when negotiating intraculturally but adapt their behaviors when negotiating interculturally.¹⁰¹

As compared to other cultures, people from the United States are more unabashedly self-interested and consequently, often have higher aspirations. Aspirations influence opening offers and are strongly predictive of the ultimate slice of the pie negotiators receive. Indeed, U.S. negotiators who have higher aspirations than their opponents achieve greater profit than managers from China and Japan primarily because these collectivist cultures are not as self-interested.¹⁰²

Sacred values, or protected values, are the beliefs, customs, and assumptions that form the basis of a group or culture’s belief system.¹⁰³ Sacred values are by definition those values and beliefs people regard to be so fundamental that they are not discussible or debatable. Sacred values resist trade-offs with other values, particularly economic values. When people contemplate buying or selling “sacred objects,” they are more likely to distort the price, refuse to answer questions, and express moral outrage and cognitive confusion.¹⁰⁴ However, when it is in their economic interest, people may turn a blind eye to taboo trade-offs.¹⁰⁵ Consider the reaction for a mosque proposed for the site near Ground Zero in lower Manhattan. Before being approved by the city’s Landmarks Preservation Commission with former Mayor Michael R. Bloomberg hailing the decision with a speech on religious liberty, an array of opponents, including the Anti-Defamation League and prominent Republican politicians including Sarah Palin and Newt Gingrich, led a highly publicized fight over the placement of the mosque just blocks away from the former site of the World Trade Center. Opponents wrapped emotional arguments in religious and patriotic symbolism and insisted that mosques nurture terrorist bombers.¹⁰⁶

To study sacred values, people were shown a list of actions and asked to respond “yes” if they were in favor of the action and were willing to accept a great deal of money to see the action carried out and “no” or “not sure” if they were not in favor.¹⁰⁷ Some of the actions included:

• Destruction of natural forests by human activity, resulting in the extinction of plant and animal species forever

• Raising the IQ of normal children by giving them (completely safe) drugs

• Using genetic engineering to make people more intelligent

• Performing abortions of normal fetuses in the early stages of pregnancy

• Performing abortions of normal fetuses in the second trimester of pregnancy

• Fishing in a way that leads to the painful death of dolphins

• Forcing women to have abortions for the purposes of population control

• Putting people in jail for expressing nonviolent political views

• Letting people sell their organs (e.g., a kidney or an eye) for whatever price they could command

• Refusing to treat someone who needs a kidney transplant because he or she cannot afford it

• Letting a doctor assist in the suicide of a consenting terminally ill patient

• Letting parents sell their daughter in a bride auction (i.e., the daughter becomes the bride of the highest bidder)

• Punishing people for expressing nonviolent political opinions

Sacred values are the opposite of secular values, which are issues and resources that can be traded and exchanged. Within a culture, a near-universal ascription to sacred values generally exists with some notable exceptions. However between cultures, extreme conflict may occur when one culture regards an issue to be sacred and another treats it as secular. Taboo trade-offs take place when sacred values are proposed for exchange or trade.¹⁰⁸

The trade-off principle is ideal for handling scarce resource conflicts containing issues that are fungible. Principles of rationality (see Appendix 1) assume people can compare and trade resources in a way that maximizes their outcomes. Rational bargaining theory assumes everything is comparable and has a price (see Appendix 1). However, the notion of trading becomes unconscionable in some conflict situations.¹⁰⁹ People sometimes refuse to place a monetary value on a good or even think of trading it. Attaching a monetary value to a bottle of wine, a house, or the services of a gardener can be a cognitively demanding task, but it raises no questions about the morality of the individual who proposes the sale or trade. In contrast, attaching monetary value to human life, familial obligations, national honor, and the ecosystem seriously undermines one’s social identity or standing in the eyes of others.¹¹⁰ In a dispute concerning the construction of a dam that would remove Native Americans from their ancestral land, a Yavapai teenager said, “The land is our mother. You don’t sell your mother.”¹¹¹

Proposals to exchange sacred values (e.g., body organs) for secular ones (e.g., money, time, or convenience) constitute taboo trade-offs. Given the inherently sacred values that operate in many countries, the familiar notions of trading and logrolling so important to interests-based negotiation, are likely to be considered unacceptable and reprehensible to members of different cultures. The extent to which sacred issues negatively impact negotiations depends on the BATNAs of parties.¹¹² When parties have a strong BATNA, sacred issues produce impasses, lower joint outcomes, and more negative perceptions; however, when negotiators do not have attractive BATNAs, they can’t afford to stand on principle. Perhaps this is why a couple agreed to name their infant son Golden-PalaceDotComSilverman after an Internet casino paid them $15,000.¹¹³ A study of the Isreali-Palestianian conflict revealed that when negotiators focus on the losses inherent in standing on principle and continuing the conflict, they are more willing to acquire new information about possible solutions to the conflict, reevaluate their current positions, and support compromise than when they focus on the gains of their position.¹¹⁴

Sacred and secular issues are culturally defined with no absolutes.¹¹⁵ Sociocultural norms affect the sacredness of certain positions, such as smoking, which is now generally considered baneful but in the recent past was completely acceptable. The sanctity of issues is also influenced by the labels and names used to define conflicts. In 2010, the government of Iran took offense when the U.S. Navy’s official online style guide referred to the “Persian Gulf” as the “Arabian Gulf.” Outrage flowed from Iranian advocacy groups, the Iranian government, and Facebook protesters. The Persian Gulf name had become a point of cultural pride over the decades after some Arab nations began calling it the Arabian Gulf in the 1960s—though it was known for centuries as the Persian Gulf and continues to be labeled as that. In 2013, the International Civil Aviation Organization (ICAO) ordered its different units to use the name “Persian Gulf” instead of “Arabian Gulf.”¹¹⁶

The term sacred describes people’s preferences on issues on which they view themselves as uncompromising. It immediately becomes obvious however, that labeling an issue as sacred may be a negotiation ploy rather than a reflection of heartfelt value. The strategy is similar to the irrevocable commitment strategy.¹¹⁷ We refer to issues that are not really sacred but are positioned as such, as pseudosacred.¹¹⁸

The biased punctuation of conflict occurs when people interpret interactions with their adversaries in self-serving and other derogating terms.¹¹⁹ An actor, A, perceives the history of conflict with another actor, B, as a sequence of B-A, B-A, B-A, in which the initial hostile or aggressive move was made by B, causing A to engage in defensive and legitimate retaliatory actions. Actor B punctuates the same history of interaction as A-B, A-B, A-B however, reversing the roles of aggressor and defender. The biased punctuation of conflict is a frequent cause of warfare. Consider the long, sad history of international conflict between the Arabs and Israelis. Each country chooses different historical moments of origin to justify its own claims to land and thus casts the other country in the role of the invader.

Negotiation behaviors are a continuous stream of cause-and-effect relationships in which each person’s actions influence the actions of others.¹²⁰ To an outside observer, their interaction is an uninterrupted sequence of interchanges. However, people who are actively engaged in conflict do not always see things this way. Instead, they organize their interactions into a series of discrete, causal chunks,¹²¹ a process known as causal chunking or punctuation.¹²² Causal chunks influence the extent to which people are aware of their influence on others, as well as their impressions of others. Two kinds of chunking patterns are self-causal and other-causal. People form self-causal chunks (e.g., “My action causes my partner’s action”) when they possess an offensive set and other-causal chunks when they possess a defensive set. Disagreement about how to punctuate a sequence of events and a conflict relationship is at the root of many cross-cultural disputes.

If egocentrism refers to unwarranted positive beliefs about oneself relative to others, then ethnocentrism refers to unwarranted positive beliefs about one’s own group relative to other groups.¹²³ Ethnocentrism, or the universal strong liking of one’s own group and the simultaneous negative evaluation of out-groups, generates a set of universal reciprocal stereotypes in which each culture sees itself as good and the other culture as bad, even when both groups engage in the same behaviors. The behavior may be similar, but the interpretation is not: “We are loyal, they are clannish; we are brave and willing to defend our rights, they are hostile and arrogant.”

Even when members of groups do not know one another and never interact, people show in-group favoritism.¹²⁴ However, conflict between groups and intergroup bias does not always arise from competition over scarce resources. A great deal of intergroup bias stems from fundamental differences in cultural values. Symbolic conflict can occur between cultural groups due to clashes of values and fundamental beliefs. Consider the long-standing values-based conflict between environmentalists and local residents on the issue of dam removal in Sweden. Environmentalists argue in favor of dam removals because it restores rivers to their former courses as well as other ecological benefits. Conversely, local residents are vehemently opposed to dam removal because tranquil water provides aesthetic value to the area and the dam represents their cultural heritage.¹²⁵

One unfortunate by-product of in-group favoritism is the tendency to view people from different cultures as more alike than they really are. Thus, the pejorative phrase, “They all look alike,” suggests that within-race and within-culture errors are more prevalent than between-race or between-cultural errors because people categorize members of other cultures not as individuals but as part of a group (See Exhibit 10-8).

Affiliation bias occurs when people evaluate a person’s actions on the basis of his or her affiliations rather than on the merits of the behavior itself. For example, when football fans watch a game, they believe the other side commits more infractions than does their own team.¹²⁶ Consider the following actions a country could take: establishing a rocket base close to the borders of a country with which it has strained relations, testing a new assault weapon, or establishing trade relations with a powerful country. People’s perceptions of the acceptability of these actions differ dramatically as a function of the perceived agent. For example, during the time of the Cold War, U.S. citizens regarded the preceding actions to be much more beneficial when the United States was the one responsible than when the former U.S.S.R. engaged in the same actions.¹²⁷ People perceive the same objective behavior as either sinister or benign, merely as a consequence of the agent’s affiliation.

During World War II, the American journalist Edward R. Murrow broadcasted nightly from London, reporting on the psychological and physical consequences of the Nazi bombing of British cities.¹²⁸ Contrary to Nazi intent, the bombing did not move the British toward surrender. It had quite the opposite effect, strengthening rather than diminishing British resolve to resist German domination. Shortly after the United States entered World War II, the Americans joined the British in launching costly bombing raids over Germany. In part, the intent was to decrease the German people’s will to resist. Later research reported by the Office of Strategic Services that compared lightly and heavily bombed areas found only minimal differences in civilians’ will to resist.

Several other conflicts followed the same psychological pattern, such as Pearl Harbor, South Africa, and North Vietnam. All of these instances point to important differences in countries’ perceptions of what will be effective in motivating an enemy and what will be effective in motivating themselves or their allies. Coercion is viewed as more effective with our enemies than with ourselves, whereas conciliation is viewed as more effective with ourselves than with our enemies. The unfortunate consequence is that this perception encourages aggressive rather than constructive action.

Three key reasons explain why this behavior occurs.¹²⁹ A preference for punitive strategies with one’s enemies may reflect a desire to inflict injury or pain, as well as a desire to influence behavior in a particular direction. The relative preference for punishment is based on an incompatible desire to both injure and modify the behavior of the enemy. Alternatively, people may be inclined to use more coercive strategies with a counterparty because the appearance of toughness conveys information about their motives and intentions, which in the long run may bring about the desired result. Finally, the mere creation of mutually exclusive, exhaustive social categories (e.g., “them” and “us”) leads to different assumptions about members of such groups: More favorable attributes are assigned to in-group than to out-group members.¹³⁰ Social categorization processes may be particularly powerful in cross-cultural disputes because of stereotypes.

A heated debate among English teachers concerns which books should be on the required reading list for U.S. high school students. The Western Canon Debate features traditionalists, who prefer to have classics on the reading list, and revisionists, who believe the reading list should be more racially, ethnically, and gender diversified. In one study, traditionalists and revisionists were interviewed about their own and the other party’s preferred books.¹³¹ Most strikingly, each party exaggerated the views of the other side in a way that made their differences bigger rather than smaller. Traditionalists viewed revisionists to be much more extreme than they really were; revisionists viewed traditionalists to be much more conservative. In fact, the groups agreed on 7 out of the 15 books on the reading list! Nevertheless, each group greatly exaggerated the difference between their own and the other’s belief systems in a way that exacerbated the conflict. Further, people perceived the other side to be more uniform in their views, whereas they perceived their own views to be more varied and heterogeneous.¹³² This faulty perception of course, leads to beliefs such as “They’re all alike.” Ideological conflict is often exacerbated unnecessarily as partisans construe the other person’s values to be more extremist and unbending than they really are.

The fundamental attribution error occurs when people explain the causes of the behavior of others in terms of their underlying dispositions and discount the role of situational factors.¹³³ Many environmental disputes involve a group that is believed to be interested in the economic development of the environment and an opposing group that represents the interests of the ecosystem. According to the fundamental attribution error, when each group is asked to name the cause of the dispute, each attributes the negative aspects of conflict to the dispositions of the other party. Specifically, developers regard environmentalists to be fanatic lunatics; environmentalists regard developers to be sinister and greedy.

The negotiator who is able to anticipate differences in terms of goals, influence, and communication will have a pie-expanding and pie-slicing advantage in intercultural negotiations. Further, when encountering differences, the negotiator who is aware of cultural differences does not make negative attributions about the counterparty but instead, views discomfort as a natural consequence of different cultural styles.

Cultural perspective taking is the active consideration of the other party’s culturally normative negotiation behaviors prior to negotiation. In one investigation, some negotiators were coached in cultural perspective taking; others were coached in alternative-focused perspective taking, in which negotiators considered different alternatives for agreement. Negotiators who engaged in cultural perspective taking claimed more value than those who engaged in alternative-focused perspective taking; there were no discernible differences in value creation.¹⁴²

When negotiating with members of hierarchical cultures, be prepared to present information about your company and products, even if you think such information should have no bearing on the outcome. In failing to make a presentation comparable to the one made by the negotiator from the hierarchical culture, negotiators from egalitarian cultures risk appearing weak. By the same token, negotiators from hierarchical cultures should be aware that power-based persuasion, although normative in deal-making negotiations in their own cultures, is not normative in egalitarian cultures. Furthermore, power-based persuasion is likely to be reciprocated in negotiation and may lead to impasse.¹⁴³ One American businessperson suffered due to a lack of understanding about cultural behavioral styles. After long, hard bargaining, a U.S. firm landed a large contract with a Japanese firm. At the signing ceremony however, the Japanese executive began reading the contract intently. His scrutiny seemed endless. The American panicked and offered to take $100 off each item. What the U.S. executive did not know was that the Japanese president was merely demonstrating authority, not backing out.¹⁴⁴

An attribution error is the tendency to ascribe someone’s behavior or the occurrence of an event to the wrong cause. For example, people often attribute behaviors of others to their underlying personality (e.g., a smile from another person is often attributed to a “good” disposition; similarly, a frown is presumed to be a manifestation of a grouchy personality).¹⁴⁵ However, the behavior of others is more often a reflection of particular features of the situation, rather than enduring personality traits.

One of the most important preparatory steps a negotiator can take when commencing intercultural negotiation is to find out how to show respect in the other culture. Don’t assume that the other culture will have the same customs as one’s own culture. For example, when Aramex, a global logistics firm wanted to expand to Saudi Arabia, they researched the culture and discovered that women must work in separate offices from men and be monitored via camera. So, Aramex constructed special buildings where women worked separately from men and installed cameras in the hallways in the Jeddah call center. The cultural restrictions that made it nearly impossible to incorporate women into the Saudi workforce were overcome in this case with cloud computing technology that allowed women to stay in contact with managers and coworkers.¹⁴⁶

In a complementary fashion, intercultural negotiations may fail not because negotiators stay anchored to their own cultural assumptions and styles, but rather because they try to adjust to their counterpart’s cultural assumptions about negotiating. This phenomenon is called schematic overcompensation.¹⁴⁷ In a study of 100 experienced Japanese and U.S. negotiators, there was a clash on six of nine elements, such that the parties had significantly different expectations about what it was like to negotiate with the other. (Also see Exhibit 10-10).

Perceptions of time differ dramatically across cultures.¹⁴⁸ Consider, for example, the lengthy negotiations between the Chinese government and Philip Morris International. After more than three years of negotiations, the Chinese government selected three domestic cigarette brands of the hundreds sold to market abroad in partnership with PMI. According to PMI Chief Executive Andre Calantzopoulos, the negotiations were delayed partly because of cultural differences. “By Chinese standards, urgency is in terms of decades, versus U.S. companies, where urgency is next quarter.”¹⁴⁹ Even the idea of the length of the workday varies from culture to culture. In Mexico, American bankers found it frustrating when they tried to plan a meeting during working hours only to have their Mexican colleagues want to meet in the evening when Americans are usually home. Similarly, U.S. managers who attend a business dinner in Brazil must be prepared to sit for hours and be open to talking about their personal life, not just business.¹⁵⁰

Cooperative and competitive behaviors in global negotiations wax and wane across four stages: relational positioning, identifying the problem, generating solutions, and reaching agreement.¹⁵¹ Cultural differences occur at these stages, perhaps the most notable being that direct cultures use more rational arguments in stages 3 and 4. Differences in how time unfolds may lead Westerners to want to talk (i.e., discuss their feelings with the goal of repairing frayed relationships); however, the meaning of such talk may not be shared by people from culturally different backgrounds.¹⁵²

Succeeding in international business requires that people gain international as well as business competence.¹⁵³ However, cultural differences may conflict with your own values and norms. For example, a report from the Corporate Women Directors International indicated that in Saudi Arabia, where Muslim law demands strict gender separation, just 0.1% of company directors are women. Female executives from the United States who do business in the kingdom are expected to dress conservatively in long skirts with sleeves at elbow length and conduct business meetings in the presence of their American male counterparts at all times, but they are not typically allowed to appear in public places with their colleagues. Indeed, an American woman who worked for a finance company in the Saudi capital of Riydah was arrested for sitting with a male colleague in a Starbucks.¹⁵⁴

Cultural awareness is one thing; deciding how much one wants to adapt is another. Consider four choices that people have when interacting with someone from a different culture (see Exhibit 10-11).¹⁵⁵ The first question is whether the individual (or group) finds it valuable to maintain distinct cultural identity and characteristics. The second question is whether the individual (or group) desires to maintain relationships with other (cultural) groups.

• Integration is a type of acculturation whereby each group maintains its own culture and also maintains contact with the other culture.

• Assimilation occurs when a group or person does not maintain its culture but does maintain contact with the other culture.

• Separation occurs when a group or individual maintains its culture but does not maintain contact with the other culture.

• Marginalization occurs when neither maintenance of the group’s own culture nor contact with the other culture is attempted. Marginalization is the most unfavorable condition.¹⁵⁶

Sometimes, options for change are driven by skill sets—or lack thereof. Most Americans are monolingual, compared to other cultures. Furthermore, members of other cultures know that Americans are monolingual, and so they adapt accordingly. For example, in interactions between North Americans and Mexicans, Mexican bilingual managers immediately switched to English when interacting with North Americans; however, North American linguistic accommodation was a rare occurrence.¹⁵⁷