Negotiation Research You Can Use: When Cultural Expectations Lead Us Astray

By on / International Negotiation

In September 2014, a Chinese court found the British pharmaceutical firm GlaxoSmithKline (GSK) guilty of bribing government officials, hospital officials, and doctors to sell more drugs at higher prices, according to the Wall Street Journal. The court fined the company nearly $500 million and convicted five of GSK’s managers, including its former top executive in China, all of whom received suspended prison sentences. GSK admitted to the wrongdoing and issued a public apology to the people of China for the illegal activities.

A new negotiation study by Yu Yang (ShanghaiTech University), David De Cremer (University of Cambridge), and Chao Wang (University of Illinois at Urbana–Champaign) published in the Journal of Business Ethics suggests what cross-cultural negotiators can learn from such stories and how they can maintain high ethical standards.

Shifting moral codes

A culture’s values, systems, and regulations have a strong impact on the moral code that individual negotiators adopt and how ethically they behave at the bargaining table. But when negotiating in another culture, do our moral standards shift based on what we view to be appropriate in that culture?

To answer this question, Yang and his colleagues recruited about 400 American and 400 Chinese participants, the large majority of them college educated and employed, for an online study. Participants from both cultures were randomly assigned to one of two conditions: intercultural or intracultural.

American participants in the intercultural condition were asked to imagine that they represented a heavy-equipment manufacturer and were about to lead a high-stakes negotiation to sell some expensive excavators to a Chinese company located in Hunan, China. Chinese participants were told that they represented a Chinese company looking to sell excavators to an American company based in Illinois. By contrast, participants in the intracultural condition (both American and Chinese) were given the same scenario but asked to imagine that they would be trying to sell the excavators to a company based near them in their own country.

Next, all participants were asked to report their likelihood of using a variety of ethically questionable tactics in the hypothetical negotiation, including issuing extreme demands, making false promises, misrepresenting information, and paying others for privileged information.

The results? Whether participants were contemplating an intercultural or intracultural negotiation, Chinese participants reported being significantly more likely to use ethically questionable tactics than did American participants. However, American participants said they would be significantly more likely to use questionable tactics when negotiating with a Chinese company than when negotiating with an American company. In addition, Chinese participants said they were marginally less likely to use ethically questionable tactics when dealing with an American company rather than a Chinese one. That is, the gap between negotiators’ anticipated ethicality narrowed when Americans and Chinese were considering negotiating with each other.

Raising our standards

The results confirm past findings that Chinese people tend to be more accepting of ethically questionable negotiating tactics than Americans. Researchers have attributed such cultural differences in great part to public-sector corruption in China, which may signal that bribery and other forms of unethical business practices are permissible.

In societies where corruption is widespread, outsiders (such as a Western pharmaceutical firm negotiating in China) may believe they have more leeway to behave unethically than they do in their home country. Conversely, negotiators from a country such as China may feel a stronger motivation to behave ethically when negotiating in a country such as the United States, where unlawful activities are believed to be more strictly punished.

As negotiators, we need to be wary of the tendency for our perceptions of our environment to affect our moral code. We may feel tempted to relax our ethical standards based on stereotypes that don’t apply to a particular situation. In addition, negotiators from cultures with a reputation (whether deserved or not) for corruption should try to counteract such stereotypes by being positive cultural ambassadors and holding themselves to high ethical standards.

Resource: “How Ethically Would Americans and Chinese Negotiate? The Effect of Intra-cultural Versus Inter-cultural Negotiations,” by Yu Yang, David De Cremer, and Chao Wang, Journal of Business Ethics, 2015.

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