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Learn More from Your Proposals

I found this article of great interest and value. Having studied at Harvard’s PON and negotiated global business deals, this article will provide some very interesting and valuable insight into creating value and mutual gains outcomes when working on complex international business deals. If you conduct, participate in or plan and execute complex business deals, this will be of interest to you. Check it out!

-DF

Learn More from Your Proposals

Adapted from “Lessons from Abroad: When Culture Affects Negotiating Style,” by Jeanne M. Brett (professor, Northwestern University) and Michele J. Gelfand (professor, University of Maryland), first published in the Negotiation newsletter, January 2005.Harvard Law School – PON.

Imagine that you have identified a great opportunity to expand your business by negotiating a joint venture with another company. You need to get information about this company’s needs and priorities. Which of the following options would you prefer?

A. Ask the other side about their priorities and give them only a little information about your own.
B. Do not ask direct questions; instead, be indirect and try to deduce what the other side’s priorities are by listening to their reactions to your proposals.

Around the world, negotiators understand the need to find wise tradeoffs that improve outcomes for all. But how do you get the other party to reveal the information you need about preferences and priorities?

Research shows that Western negotiators typically share information by asking questions about each other’s preferences and priorities—assuming the other party is trustworthy and answering truthfully—and giving information to reinforce the exchange. This direct approach can be used to identify tradeoffs that can be accumulated into a final, multi-issue proposal. It reflects the American preference for explicit, context-free communications.

Now consider how managers in Japan, China, Hong Kong, Thailand, and Russia glean information about one another’s preferences and priorities. Research conducted by Wendi Adair of Cornell University’s Johnson School of Management, Tetsushi Okumura of Shiga University in Japan, and Jeanne M. Brett of Northwestern University found that Japanese managers made many more proposals than did U.S. managers.

Subsequent research by Adair and Brett indicates that, beginning in the first quarter of their negotiation, non-Western negotiators were using proposals significantly more frequently than were Western negotiators. This difference was sustained until the last quarter of the negotiation, when Westerners’ proposal rate rose to match that of non-Westerners.

Gathering information about relative preferences and priorities from proposals requires highly developed inferential skills and a “big picture” approach. Doing so is common in collective cultures, where context matters and indirect communication is the norm. When proposals include all the issues in a negotiation, Western negotiators should be able to work effectively in this environment. But consider that Asian negotiators do not limit themselves to multi-issue proposals; they also make more single-issue proposals than Western negotiators.

Drawing inferences from a pattern of single-issue proposals requires a heavy focus on context. Imagine a two-issue negotiation over price and delivery. The other side offers a delivery date that you don’t explicitly reject; you then offer a price. Now it’s the other side’s turn to build toward a settlement based on his delivery date and your price. Suppose the other party makes an alternative offer on price, keeping in mind its prior offer on delivery. If your counterpart tracks your reaction to these alternative proposals, he can start deducing your priorities.

Westerners can do this cognitive work, of course—it is just a matter of preference regarding how to exchange information during negotiation. The message from Asian cultures: there is more than one way to get information in a negotiation. When negotiators are reluctant to share information directly, try proposals and look for the pattern of preferences revealed by changes in the proposals over time.

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Written by David Frederick

May 31, 2011 at 10:43 AM

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