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Meanings of Cross-Cultural Differencesin Establishing Relationships in
Japanese-American Business Negotiations
Claudius KoldauTechnical University at Darmstadt, Germany
The Pennsylvania State University
ISBM Report 14-1996
Institute for the Study of Business MarketsThe Pennsylvania State University
402 Business Administration BuildingUniversity Park, PA 16802-3004
(814) 863-2782 or (814) 863-0413 Fax
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U.Ed. BUS 96-102
Meanings of Cross-Cultural Differences
in Establishing Relationships
in Japanese-American Business Negotiations
Claudius Koldau
Technical University at Darmstadt, Germany
The Pennsylvania State University
ISBM Report xX-1996
Institute for the Study of Business Markets
The Pennsylvania State University
402 Business Administration Building
University Park, PA 16802-3004
(814) 863-2782 or (814) 863-0413 Fax
Meanings of Cross-Cultural Differences
in Establishing Relationships
in Japanese-American Business Negotiations
Abstract
In recent years, the increasing Japanese-American trade volume reflects the importance of effective
business negotiations. Therefore, this study provides an overview of cross-cultural differences and their
meaning in Japanese-American business negotiations. Particularly, it focuses on factors which influence
establishing relationships between the negotiation parties such as long-term vs. short-term perspectives as
well as the role of cross-cultural preparation, time for the negotiation process, development of trust, size of
the negotiation team, and negotiation techniques.
Based on a comparative framework of these factors, this study describes an adaptive approach for
Americans, emphasizing the importance of establishing a relationship between both negotiation parties
before discussing task-related issues. As an application, the meaning of this approach for Japanese-
American trade negotiations is discussed. Finally, limitations and unanswered questions as well as future
research possibilities are pointed out.
I. INTRODUCTION
In recent years, globalization of markets and companies as well as growing international trade have
increased the importance of efficient and effective cross-cultural business negotiations. Research in
conflict resolution and negotiation as well as research in such fields as diverse as anthropology,
psychology, communication, linguistics, economics and organizational behavior have provided valuable
insights about how different negotiation styles are deeply influenced by cultural differences (e.g., Hall and
Hall 1987; Hall 1981; Munter 1993; Hofstede 1991, 1980).
Cross-cultural negotiation research so far has focused on two schools: descriptive comparison of
intracultural negotiation styles (e.g., Graham 1993; Neuliep and Hazelton 1985) and - more recently -
developing strategies to overcome the difficulties arising in intercultural negotiations due to cultural
differences (e.g., Weiss 1994a and 1994b). Independent from cross-cultural research, negotiation research
developed the concept of integrative negotiation techniques which lead to agreements which benefit both
negotiation parties (e.g., Fisher, Ury and Patton 1991; Jandt and Gillette 1985; Walton and McKersie
1965).
Characteristics of these techniques are reflected in the Japanese negotiation style which differs not only
significantly from many other cultures’, but also is the most effective one in enlarging the joint
negotiation outcome (Graham 1993).
II. BASIC NEGOTIATION APPROACHES
The following section will describe basic definitions and terms related to negotiation. It is important to
notice that each definition can only provide one perspective on the issue and, thus, is limited to this
viewpoint. Especially in a cross-cultural context, although these viewpoints often differ in fundamental
ways, each perspective is still based on its own assumptions.
The following description of definitions and terms draws heavily from Lewicki et. al. (1994). As it is
affected by a Western cultural bias (Lewicki et. al., p. 23) it provides a better understanding of the
American viewpoint of negotiation, though, has limitations applying it to the Japanese viewpoint. These
limitations will be addressed in section 3, pointing out the meanings of cross-cultural differences in a
negotiation context.
Definitions and Terms
Negotiation can be defined as a “viable way of resolving conflict when the following conditions hold true”
(Lewicki et. al., p. 4):
. Two or more parties (individuals, groups, or organizations) are involved.
. A conflict of interests between these two parties exists.
. Each party decides to negotiate in order to achieve a better outcome. This decision is voluntary.
. Both parties prefer to search for an agreement instead of fighting openly, having one side capitulate,
permanently breaking off contact, of taking their dispute to a higher authority to resolve it, etc.
. The process will lead to a “give and take”, i.e., both sides will make concessions.
As conflict can be both destructive and productive, the objective of negotiation is then not to eliminate
conflict but to manage it by controlling the destructive elements while enjoying the more productive
aspects (Lewicki et. al., p. 7). The dual concerns model, proposed by Rubin, Pruitt, and Kim (1994, pp.
29), is a common approach the management of conflict. It is based on the assumption that individuals or
parties in conflict have two independent levels of
about other’s outcomes. Based on this model,
commonly mentioned:
. Contending. The party is strongly interested
other party’s outcome.
. Yielding. Opposite to contending, the party
concerns: concern about own outcomes and concern
five major strategies for conflict management are
in its own outcome and shows little concern for the
is less interested in its own outcome while being
concerned that the other party reaches its desired outcome.
. Inaction. The party shows little interest in neither its own nor the other party’s outcome.
. Problem Solving. The party shows high concern for both its own outcome and the other party’s
outcome.
. Compromising. The party shows a moderate concern for its own outcome and the other party’s
outcome. However, this conflict management strategy is not identified as viable by Rubin, Pruitt,
and Kim (1994) as they see it as a weak approach of problem solving or yielding by both parties.
This study will focus on the strategies of problem solving used in integrative negotiation (win-win
situations) and contending used in distributive bargaining (win-lose situations). Although distinctions
between the terms negotiation and bargaining are possible (e.g., Adler 199 1, p. 182) they will be used
interchangeable in this study.
In negotiations, both parties are connected by a relationship of mutual dependency or interdependence.
Interdependent relationships are more complex than independent or dependent ones, as each party has the
opportunity to influence the other which wouldn’t be the case in a totally dependent or totally independent
relationship. An important characteristic of interdependent relationships in a negotiation context is that
of interlocking goals, i.e., each party cannot reach its goals without the other. The structure of this
interdependent situation determines the possible outcomes of the negotiation and also appropriate
negotiation strategies and approaches. The structure is called zero-sum, win-lose or distributive when the
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goals are in direct conflict with each other, i.e., the more one party gains the more the other loses. In
contrast, when both parties can achieve their goals, the situation is called nonzero-sum, win-win or
integrative. Each structure leads to tindamentally different negotiations strategies which will be
described in the following sections.
Distributive Negotiation Theory
This section summarizes the key insights of distributive negotiation theory and draws heavily from the
writings of Lewicki et. al. (1994); Raiffa (1982); Rubin, Pruitt and Kim (1994); Walton and McKersie
(1965).
Structure. The fundamental structure of distributive (or competitive, win-lose) negotiation is based on
the assumption that goals of both parties are in direct conflict with each other. Each party wants to
maximize its share of the limited resources. Whether or not one of the parties achieve their objectives
therefore depends on the strategies and tactics they employ to reach concessions from the other party
(Walton and McKersie 1965, p. 13). A distributive bargaining situation typically contains the following
basic structure: each party sets its own target, opening and resistance points. The negotiator’s target
point is the optimal goal he wants to reach, whereas the resistance point marks a limit beyond that he
wouldn’t go. Finally, the opening (or starting) point refers to the initial offer a negotiator will make. A
fourth factor in addition to the above mentioned points refers to possible alternative outcomes. To know
the best alternative to a negotiated outcome BATNA (Fisher, Ury, and Patton 199 1, p. 97) provides each
party the power to stop negotiating if the emerging deal is not satisfying, i.e., if it is worse than the
BATNA.
Process. The fundamental process of distributive bargaining is to reach a settlement point within a
positive bargaining range. Both parties, however, will try to gain as much of the bargaining range as
possible, i.e., bringing the settlement point as close as possible to the other party’s resistance point. It is
important that the settlement point is perceived as the best possible agreement by both sides, as frequently
parties try to get out of the agreement later, if they see this settlement as a loss (Lewicki et. al. 1994, p.
53).
Strategies. The main objective in distributive bargaining is to maximize the value of this single
negotiation, i.e., both parties will act according to a short-term perspective. Lewicki et. al. (1994, p. 54)
mention four fundamental strategies. In all of these strategies, one party attempts to influence the other
party’s perceptions about possible outcomes through information exchange and persuasion. Hence, two
tasks are important: discovering the other party’s resistance point and influencing the other party to
change their resistance point.
Positions and Concessions in the Distributive Negotiation. In the beginning, each negotiation party
first needs to decide if the opening offer should be more extreme or modest. Extreme opening offers have
the advantage of leaving more room for movement in negotiation and create the impression to the other
party that more concessions will be necessary. However, extreme opening offers are also disadvantageous,
because they can be summarily rejected by the other party and communicate an attitude of toughness
which jeopardizes a long-term relationship.
Concessions are essential in negotiation, otherwise it would soon end in a deadlock. Generally negotiators
will begin with an opening offer leaving enough space for concessions before reaching their resistance
point. Making concessions also means that one party acknowledges the other party’s position and moves
toward it. Hence, both parties feel better when a settlement is reached after a series of concessions. The
reciprocity of concessions plays an important role in negotiations, a concession is expected to be returned.
Patterns in concession making can convey a message, e.g., successive concessions getting smaller indicate
that the resistance point is reached.
Commitment. A key concept in distributive bargaining is that of commitment. Walton and McKersie
(1965, p. 82) define commitment as “taking of a bargaining position with some explicit or implicit pledge
regarding the future course of action”. The purpose of a commitment is twofold: First, it removes
ambiguity about the intended course of action of the party who employs it, and second, it serves to reduce
the other party’s options to act. However, commitments are often interpreted by the other side as a threat,
because the stated consequences usually are negative if the other side doesn’t comply to the proposed
course of action. Another disadvantage of commitments is that they require a follow-through in action,
otherwise the committed party would suffer loss of face and self-esteem. Hence, the use of commitments
can be dangerous as they fix a party to a position. In order to prevent this, a commitment should be stated
in a way that changing circumstances also allow a change of positions.
Hardball Tactics. Hardball negotiation tactics are designed to beat the other party. Usually they work by
pressuring other parties to do something what they wouldn’t do voluntarily. As many people perceive
these tactics as offensive once they recognize them, their motivation for counteractions or revenge will be
high. The use of hardball tactics involves several risks for the person using it, e.g., harm to reputation,
losing the deal, negative publicity, dealing with the other party’s revenge. Particularly the negative
feelings of the pressured party will probably make a follow-up negotiation difficult to impossible to
conduct.
Moreover, there are several responses to counter hardball negotiation tactics. First the negotiator needs to
identify the tactic quickly and understand the way it works. Most of the hardball tactics are targeted to
improve the appearance of one’s bargaining position or to detract from options available to the other
party. Depending on one’s goals and the broader context of the negotiation, negotiators can choose
among responses such as ignoring the hardball tactics, discussing them, responding in kind, or preventing
them beforehand by befriending the other side first.
Integrative Negotiation Theory
This chapter summarizes the key insights of integrative negotiation theory and draws heavily from the
writings of Lewicki et. al. (1994); Fisher, Ury, and Patton (199 1); Rubin, Pruitt and Kim (1994); Walton
and McKersie (1965). In contrast to distributive bargaining, the fundamental structure of integrative (or
cooperative, win-win) negotiation is based on the assumption that goals of both parties are not mutually
exclusive, i.e., it is possible for both sides to achieve their objectives (Walton and McKersie 1965, p. 127).
This requires a negotiation process which differs from distributive bargaining in the following key aspects
(Lewicki et. al. 1994, p. 81): First, a free flow of information - by negotiators’ revealing of their true
objectives and sharing information about all related issues and concerns - facilitates the joint development
of integrative solutions. Second, the negotiators need to understand each other’s real needs and
objectives. If one side wants to satisfy the other side’s needs, first a real understanding of them is
necessary. Third, commonalties need to be emphasized and differences de-emphasized. Both parties
should try to redefine their individual goals into a set of collective goals. Finally, in searching for
solutions that meet the goals and objectives of both sides, the negotiators must be firm about their primary
interests and needs, but flexible about the specific way to achieve them (Fisher, Ury, and Patton 199 1, p.
53).
Lewicki et. al. (1994, p. 83) propose the following stages in the integrative negotiation process:
identifying and defining the problem, understanding the problem by bringing interests and needs to the
surface, generating alternative solutions to the problem, and choosing a specific solution from the
generated alternatives.
1. Identify and Define the Problem. In order to reach a mutually acceptable problem definition, both
parties should have few or no preconceptions about the solution (Fisher, Ury, and Patton 1991, p. 57). By
creating the problem statement, both parties should focus on the primary problem, leaving secondary or
less important issues out. This approach differs strongly from distributive bargaining, where minor issues
are used for trading off positions. The problem should be stated as a joint goal which both parties want to
achieve, without making judgments about the solution process. Moreover, by depersonalizing the
problem, evaluative judgment of the worth of the opponent’s preferences can be avoided.
2. Understand the Problem Fully. Many authors stress that identifying each other’s interests is key to
develop an integrative agreement (e.g., Fisher, Ury, and Patton 1991; Rubin, Pruitt and Kim 1994).
Interests are the concerns, needs, desires, or fears which motivate a negotiator to take a position.
Focusing on fixed and usually mutual exclusive positions instead on the underlying interests often
prohibits a jointly satis@ing solution. Lax and Sebenius (1986, pp. 71) have suggested the following
categorization of interests in a negotiation context: Substantive interests are the focal issues under
negotiation, process interests influence how a party prefers to proceed through the negotiation, and
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relbtionship interests determine how much each party values of the relationship between both parties over
the issue of negotiation. Finally interest ofprinciples are based on ethical or cultural values (e.g., concept
of fairness, honesty, etc.) concerning the negotiation context in general.
3. Generate Alternative Solutions. Lewicki et. al. (1994, p. 91) distinguish between approaches which
redefine, recast, or reframe the problem to create win-win alternatives out of what earlier appeared to be a
win-lose problem, and approaches which generate alternative solutions leaving the original problem
definition unchanged. The latter category includes techniques (e.g. brainstorming, nominal groups, or
surveys) which generates alternative options, from which the negotiators can choose a particular option.
For the first category, Rubin, Pruitt and Kim (1994, pp. 173) mention five methods to generate alternative
solutions: Expand the Pie, Logroll, Use Nonspecific Compensation, Cut the Costs for Compliance, and
Find a Bridge Solution. Using the last method, both parties are able to reformulate the original problem
by developing new options, allowing a solution which satisfies both parties’ underlying interests. This
method is commonly referred to in order to establish a win-win agreement. A possible structure of such an
agreement could be as follows (Covey 1989, p. 223):
(1) Desired results (not methods) describe the goals related to a time schedule.
(2) Guidelines specify the parameters within which the results are to be reached.
(3) Resources identify the available support to achieve the desired results.
(4) Accountability sets up standards and time of evaluation.
(5) Consequences specify future action as a result of the evaluation.
4. Choosing a Specific Solution. In this final stage in the integrative negotiation process the negotiation
parties evaluate the generated options and select the best alternative to implement. In more complex
problem situations, the negotiators first need to develop criteria for judging and then ranking the options.
For the following decision making process, several authors provide guidelines on how the parties could
reach a consensus (Lewicki et. al. 1994, Filley 1975, Walton and McKersie 1965). These include, for
example, narrowing the range of solution options, evaluation of the solutions on the basis of quality and
acceptability, and agreeing on the criteria in advance of evaluating options.
There are several factors that facilitate successful integrative negotiation (Lewicki et. al. 1994, Filley
1975; Rubin, Pruitt and Kim 1994), e.g. a common objective or goal, faith in one’s own problem-solving
ability, the motivation and commitment to work together, trust, clear and accurate communication, etc.
In contrast to these facilitating factors, integrative negotiation is difficult to achieve for the following
reasons (Lewicki et. al. 1994, p. 105). The main reason usually is that the negotiators fail to perceive a
situation as having integrative potential, therefore focusing on their own needs only. Second, the history
of the relationship, particularly if it was influenced by competition, tends to form the expectations to a
more distributive, win-lose conception. Third, negotiators are usually not aware of cognitive biases and
heuristic decision rules, which will influence and distort their perception of the situation, the other party,
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and possible outcomes (Neale and Bazerman 1991, p. 43). This can lead to the perception, that a solution
can only be accomplished by distributive negotiation. Fourth, most negotiation problems are mixed-
motive in nature, i.e., containing not only integrative, but also distributive elements. The latter usually
leads to conflict and competitiveness, thus inhibiting cooperation and trust necessary for integrative
solutions.
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III. MEANINGS OF CROSS-CULTURAL DIFFERENCES
IN A NEGOTIATION CONTEXT
For years, researchers have argued about the impact of culture. One group concludes that manager’s
behavior worldwide is becoming more similar, whereas others are convinced that it maintains its
dissimilarity (Tayeb 1994, p. 429). However, there is evidence that indeed organizations worldwide are
growing more similar, while the behavior of people within organizations keeps its cultural uniqueness
(Nancy Adler, quoted in Munter 1993, p. 76). Thus, the following figure summarizes the differences
among cultural values systems and points out their implications for cross-cultural negotiations.***********************
**** Put Table 1 here ****
***********************
In this section, it will be described how cultural differences inlluence particularly Japanese-American
negotiations. According to various studies by Graham, business negotiations proceed through four stages
(Graham and Sano 1989, p. 13):
(1) Non-tusk sounding (activities that help establish rapport, including nonbusiness-related exchange of
information),
(2) Task-related exchange of information (information exchange about needs and preferences of both
sides),
(3) Persuasion (attempts to change the other’s mind by using persuasive tactics),
(4) Concessions and agreement (settling an agreement).
Although these negotiation process stages are the same in all studied countries, the purpose and therefore
the focus of the negotiation varies across cultures (Graham and Sano 1989, p. 12). The Japanese define
the purpose of negotiation differently than Americans do: “Americans tend to view negotiating as a
competitive process of offers and counteroffers, while Japanese tend to view the negotiation as an
opportunity for information-sharing” (Foster 1992, p. 272). This influences essentially their evaluation of
the importance of the different stages within the negotiation process. Consequently, the stages of non-task
sounding and task-related exchange of information receive more attention by the Japanese than the later
stages of persuasion, concessions and agreement (Graham and Sano 1989, p. 23). Moreover, the process
at the negotiation table is rather a “ritual approval of what has already been decided before” (Graham and
Sano 1989, p. 29).
American Negotiation Style
The following section draws heavily from Graham and Sano (1989, pp. 7-18) who point out specific
American negotiation characteristics and their perception by the Japanese side. The negotiation
characteristics are historically rooted in the American values of individualism and independence.
However, these values lead to problems in negotiations which are situations of interdependence.
Individual Problem Solving. American businessmen usually prefer to handle a negotiation by
themselves, taking full responsibility for the decisions made at the negotiation table. The reasons usually
lie in valuing independent behavior and responsibility as well as economic factors (lower cost due to
smaller number of negotiators). As a consequence, they are usually outnumbered by the Japanese
negotiation team which therefore enjoys advantages performing the several tasks required during the
negotiation (e.g., taIking, listening, preparing arguments and explanations).
Informality in Human Relations. The American preference of informality and equality in human
relations also reflects disappreciation of status distinctions. However, in the Japanese society,
interpersonal as well as business relationships are vertical (i.e., with implicit status differences) compared
to the more horizontal American relationships. Thus, Americans make Japanese negotiators feel
uncomfortable by playing down status distinctions. Moreover, in Japan status determines the specific role
each person is expected to play, effecting one’s communication style and behavior.
Lack of Foreign Language Capabilities. Their lack of foreign language abilities puts American
negotiators at a disadvantage at the negotiation for three reasons (Graham and Sano 1989, p. 11): (1) The
use of interpreters gives foreign negotiators better opportunity to observe the American nonverbal
responses and provides more time to respond. (2) It allows foreign negotiators to use the tactic of
“selective understanding” as well as changing previous commitments by blaming it on misunderstandings
due to language difficulties. (3) Americans often assume that the person in the foreign negotiating team
with the best English speaking ability represents the most intelligent and inlluential in the group. This
often is not the case and leads to paying most of the attention to the wrong person.
Full Decision-making Authority at the Negotiation Table. Americans are used to having full decision-
making authority in a negotiation, and expect the same from the other side. However, having limited
authority is a common circumstance overseas and is also used by the Japanese to maintain harmony at the
negotiation table by letting the home office take the responsibility for negative answers. Nevertheless, as
this tactic is not congruent with the American style, it is a common reason for American negotiators’
resentment.
Focus on the Persuasion Stage. From the American point of view, the first two stages of the negotiation
process are much less important than the persuasion stage. Hence, American negotiators tend to spend
only a few time on non-task sounding and stating task-related needs and preferences in order to focus on
12
the discussion of logical arguments during the persuasion stage. However, for the Japanese it is important
first to build up trust in their business relationships, besides they dislike an overly rational line of
arguments (Hall and Hall 1987, p. 120). The different focus points lead to two communication problems.
(1) The Americans get impatient during the lengthy first two stages what signals apprehension to the
Japanese side and therefore makes even longer periods of non-task sounding necessary. (2) In the
persuasion stage, the Americans jeopardize the already built up trust by stressing logical and rational
argumentation lines.
Reciprocal Trade of Honest Information. American negotiators expect to trade information with the
other party in a reciprocal way. However, the Japanese with their focus on long-term relationships are not
used to immediate reciprocal replies. Another problem lies in the culturally different attitudes and values
about “honest information”. The Americans value directness and frankness, thus, “honest information” is
expected to be provided in this way. However, often the Japanese side refuses to give straight answers,
because their negotiation team may not have found a consensus, or their culturally rooted avoidance of
direct negative responses prohibits such frankness.
Silence avoidance. Opposite to the Japanese, the American style of conversation usually contains only
few long silence periods. Particularly in response to an impasse, the common American negotiator’s
reaction is trying to fill these silent periods either with concessions or persuasive appeals. Both tactics are
counterproductive: (1) The Japanese perceive immediate concessions as inconsistent with the seriousness
of the other sides standpoint, and (2) the American does most of the talking therefore learning little about
the Japanese point of view.
Win or Lose the Negotiation. Americans have a competitive, adversarial view of negotiations as
something with a definite result determining a winner and a loser. This view is not shared by other
cultures who see business negotiations more in the light of establishing long-term relationships.
Negotiations are considered as cooperative instead of adversarial, stressing the interdependent effort to
enlarge the pie.
Sequential Problem Solving. Americans tend to solve a negotiation problem by separating sub-issues
and treating them sequentially, leading to a final agreement as the sum of several concessions on
individual issues. The holistic Japanese approach is opposite to this sequential problem solving,
preferring to settle all issues integratedly at the end. This leads to the problem that the American
negotiators can’t measure the progress of the negotiations, thus, agreements are often unexpected
including unnecessary concessions from the American side.
Binding Agreements. For Americans a contract constitutes an explicitly written agreement which is
expected to be honored under all circumstances. The Japanese view a contract more as an agreement to
pursue mutual beneficial business which will be adapted to the requirements of the future situations.
Inflexible Negotiation Style. The American culture values determination, persistence, and competition,
leading to an inflexible negotiation style. However, international business negotiations with changing
13
environments, different personalities and behavioral forms require flexible and adaptable negotiation
strategies and tactics.
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Japanese Negotiation Style
This section draws heavily from Graham and Sano (1989, pp. 19-34) and Goldman (1994a) who describe
specific characteristics of the Japanese negotiation style and how they are perceived by American
negotiators.
Like the American negotiation style, the Japanese negotiation style is historically rooted. Environmental
factors such as isolated insular geography and dense population led to cultural values and behavioral
norms which are uniquely consistent and homogeneous. One indigenous concept of interaction intrinsic
to everyday Japanese social and business relationships is ningensei which translates as concern and
prioritizing of “humanity” or “human beingness” (Goldman 1994a, p. 30). The Japanese negotiation style
is shaped by ningensei through conversation, behavioral tendencies, and interpersonal relations within
negotiating venues. As a consequence, Japanese negotiators strive for the development and nurturing of
carefully strategized relationships around the public negotiating table as opposed to the more task and
result-oriented interpersonal formats of Western negotiators (Goldman 1994a, p. 32).
Tate Shakai - Living and Working in a Vertical Society. One of the most important differences
between Japanese and other negotiation styles concerns status relationships. At interpersonal level, status
is determined by age, sex, education, or occupation, whereas in business relationships it depends on size
and prestige of the company, industry structure, and particularly the role (buyer or seller). In general,
Japanese buyers expect and receive deference from Japanese sellers (Adler 199 1, p. 188; Graham and
Sano 1989, p. 2 l), leading to very different norms of behavior and negotiation outcomes for buyers and
sellers. These role differences and status distinctions are oppositely perceived by Japanese and American
negotiators: Japanese feel uncomfortable if status distinctions do not exist or are not understood, while
Americans prefer to establish interpersonal equality in their relationships.
Amae - Indulgent Dependency. Closely related to the previous concept of hierarchical personal and
business relationships (tate shakei) is the Japanese concept of an indulgent dependency between two
parties (amae). Although the Japanese buyer has an advantageous position in the business negotiations,
the seller can be sure that he won’t be taken advantage of, since the buyer role includes implicit
responsibility to consider the needs of the seller before making demands that sellers defer to. This stands
in stark contrast to the American opinion of self-responsibility on both sides, seller and buyer.
Nagai Tsukiai - Long-Term Relationships. Negotiation behavior is also influenced by the culturally
rooted importance and expectation of establishing a long-term relationships between parties. Same as
personal and group relationships, business relationships are meant for a life-time and therefore entered
into slowly, carefully, and in a socially prescribed manner. Graham and Sano (1989, p. 23) mention two
important implications of this aspect for negotiations: (1) The Japanese negotiation party will invest more
efforts in negotiation preliminaries and rituals. (2) The structure and presentation of the desired business
15
deal will reflect the importance of a long-term commitment benefiting both sides. Although short-term
profits are also perceived as important, they are only secondary in a long-term perspective.
Shiny0 - Gut Feeling. In contrast to the American focus on the persuasion stage, the Japanese stress the
non-task sounding activities. The typical Japanese negotiation involves therefore non-task interactions as
the required aisatsu (a formal greeting ceremony, Graham and Sano 1989, pp. 1; Hall and Hall 1987, p.
118), entertainment and a ceremonial gift giving as well as lengthy (for Americans often seemingly not
task-related) information gathering. This serves to establish a harmonious relationship between both
negotiation parties, and is seen as an important investment: “If the Japanese don’t feel right about you,
they will not do business with you” (quotation of a Japanese company president in Hall and Hall 1987, p.
118).
Naniwabushi - A Seller’s Approach. Due to the different buyer-seller roles, task-related exchange of
information in Japan is generally unidirectional from seller to buyer. Based on a detailed description of
the seller’s need, the buyer considers the received information and makes a decision. The concept of
amae assures that the buyer will take care of the seller’s interest, too. Thus, the seller does not object to or
question the buyer’s decision.
The naniwabushi concept leads to a specific seller’s agenda which usually ‘distinguishes three stages: (1)
The opening (kikkake) provides the general background including introduction of the involved people and
their thinking and feelings, (2) an account of critical events (seme), and (3) the final request after detailed
and apologizing explanations of the reasons (urei). Hence, this approach strongly differs from the
American style of information exchange where both sides usually start with the request (without an
apology) and explanations only if desired.
Banana No Tataki Uri - The Banana Sale Approach. In earlier days, a common strategy among
Japanese banana salesmen was asking for outrageous prices and quickly lowering them faced with buyers’
objections. This negotiation strategy was adapted by other Japanese business people, i.e., sellers.are used
to set an high initial offer in order to leave sufficient room for concessions to the buyer.
Graham and Sano mention three explanations for the universal difficulty American business negotiators
experience in getting feedback from the Japanese party: (1) Japanese values interpersonal harmony (wa)
over frankness, (2) the Japanese negotiators may not agree about the next negotiation step yet, and (3)
subtle, but clear signals are missed by the Americans (Graham and Sano 1989, pp. 25).
Wa - Maintaining Harmony. In order to maintain surface harmony (wa), the Japanese avoid saying a
direct “no” by using several other ways to express their negative reply (Ueda 1974, pp. 185). This serves
to save the face of the other party and reflects the Japanese concept of tatemae (form, official stance, front
face) and home (substance, essence, real intention) (Graham and Sano 1989, p. 26; Hall and Hall, 1987, p.
16
118; Rowland 1993, p. 49). Japanese negotiators will politely communicate the tatemae, while avoiding
the possible offending, but informative honne.
Ringi Kessai - Decision-making by Consensus. On the one hand, Japanese avoid saying “no” for
maintaining harmony. On the other hand, it can also be difficult to get a “yes” because of their concept of
decision-making by consensus (ringi kessai) - a decision has to be accepted by all executives. This
approach has the disadvantage of slowing down the decision-making process, but offers the advantage of
very fast implementation, as the solution is supported by all involved participants (Hall and Hall 1987, p.
82).
The consequences for negotiation concern identifying the key decisionmakers and buying influences. In
the Japanese approach the decision-making power isn’t centralized in key or high positions, hence, all
executives involved or influenced by the possible outcome of the negotiation must be considered. This
requires much more talking, information exchange and persuasion than in an American negotiation.
Moreover, the lengthy process often makes it impossible for the Japanese side to provide immediate
feedback, frustrating the impatient American negotiators.
Ishin-Denshin - Communication Without Words. While Americans consider words as the most
important vehicle of communication, the Japanese transmit the most important information via nonverbal
channels like the tone of voice, eye contact, use of silence, body movements, etc. (Doi 1974, pp. 21).
Japan’s ethnic homogeneity, isolation, and tradition of lifetime personal relationships allow this very
subtle communication style (haragei) which serves also to maintain harmony (wa) and to provide the
necessary information to develop a comfortable personal relationships (shinyo). In a Japanese-American
negotiation context, however, this leads to different viewpoints. Americans tend to focus not only on the -
less important - worded task-related information, but also on the wrong channel of information - the
verbal channel instead of the nonverbal one (Graham and Sano 1989, p. 29).
Nemawashi - Preparing the Roots. In contrast to the American focus on the persuasion stage, the
Japanese do not change minds during the negotiation, because decision-making by consensus (ringi
kessai) involves many people who are not present at the negotiation table. Hence, instead of using
persuasive appeals during the negotiation process, differences are discussed only during the informal
conversations outside the negotiation table.
Shokai-Sha (Introducer) and Chukai-Sha (Mediator). In Japan, business relationships and negotiations
are always established by a neutral third party called shokai-sha (introducer). Although similar
approaches do exist in the U.S., in Japan the functions of shokai-sha and chukai-sha (mediator) are
institutionalized and essential in order to start a business relationship. In Japan, business relationships
are initially established through proper connections. If one party does not have a connection to the other, a
third party can arrange an initial meeting. This third party usually can be a banker or a company’s
executive. Particularly, if the shokai-sha has a strong relationship with the buyer, he will be very
influential9 because the buyer does not want to damage the harmony and relationship with the shokai-sha.
17
Generally, the existence of the shokui-sha accelerates the negotiations very much. A shokai-sha attends
the first one or two meetings, as well as the last meeting for the signing ceremony. Shokui-sha also serve
in another important function as a valuable source of information. They offer both negotiation parties
facts and details which go beyond the publicly available information. If serious problems emerge during
the negotiation process, one party may ask a chukai-sha (mediator) for support. This role would also be
played by the shokai-sha, unless he prefers to call in another person for this purpose. A typical reason for
employing a chukai-sha is when both sides reach an impasse. In this case, he will attempt to resolve the
deadlock by finding a mutual benefiting solution. However, the use of a chukui-sha is only a last resort
and usually works only once (Graham and Sano 1989, p. 94).
The following figures summarize the above mentioned key differences between Japanese and American
negotiation styles, using the perspective of Japan as a collectivistic and high-context culture and America
as an individualistic and low-context culture.
***********************
**** Put Table 2 here ****
***********************
***********************
**** Put Table 3 here ****
***********************
***********************
**** Put Table 4 here ****
***********************
18
IV. COMPARATIVE FRAMEWORK
In the previous chapter, concepts regarding two levels of negotiation - intracultural and cross-cultural -
were described. On the intracultural level, the techniques of distributive and integrative bargaining were
introduced, while on the cross-cultural level the infhrence of culture on negotiation was shown, leading to
the special interaction of Japanese and American negotiation styles. In this chapter, these approaches are
used to develop a comparative framework of Japanese and American negotiation styles regarding
establishing a relationship.
Variables
The framework will use several variables which are grouped by Preparation, Process, Techniques, and
Outcome Goals. The selection of the specific variables is according to their importance for establishing a
relationship within a Japanese-American negotiation situation.
Preparation
Cross-Cultural Training to Achieve Knowledge about the Other Culture. There are many “non-tariff
barriers” in American-Japanese relationships, stemming from a lack of understanding of the Japanese
culture. The importance of understanding each other’s cultural background as a prerequisite for
negotiations is supported by various studies (e.g., Blaker 1977; DeMente 198 1, 1987; Graham and
Herbcrger 1983; Hall and Hall 1987; Hayashi 1988; McCreary 1986; Tung 1984).
A survey by Tung (1984, p. 79) provides evidence that experience from previous Japanese-American
negotiations and reading of related literature significantly improve the success of business negotiations.
Analysis of factors responsible for the success or failure of negotiations suggests that familiarity with
Japanese business practices and social customs is a necessary but insufIicient condition for success.
However, its absence is perceived as a primary factor in the failure of the negotiations (Tung 1984, p. 80).
The use of cross-cultural training for business experts is a measure to enhance the success of business
operations abroad. However, this poses a major challenge for multinational personal management, as
timely recruitment of future staff and acculturation is necessary (Hofstede 1991, p. 230). In order to
improve the outcomes, language, culture and communication skills need to be learned in an integrated
manner (Hijirida and Yoshikawa 1987, p. 1).
A survey of 29 empirical studies indicates that the use of cross-cultural training among U.S.
multinationals is very limited (Black and Mendenhall(l990) in Parkhe 1991, p. 585). This stands in stark
contrast to the extensive and costly preparation for Japanese managers, e.g., including achieving business
degrees from American universities (Graham and Sano 1989, p. 60). As a result, Japanese multinational
19
firms have built up managerial staff with knowledge about U.S. styles of management, cultural values and
traditions (Tung 1984, p. 216).
Language Skills. Negotiation would not be possible without communication, hence, both parties need to
find a common language. In Japanese-American negotiations, in almost all cases, English is used as the
business language. Partly rooted in American ethnocentrism, U.S. companies usually expect their
partners to adapt, leaving the burden of translation to them (Goldman 1994b, p. 49).
Consequently, Americans negotiators usually do not possess Japanese language skills, but regard having a
bilingual negotiation team member as an advantage (Tung 1984, p. 70). Japanese multinationals, on the
other hand, prepare their expatriates through intensive language training programs (Tung 1984, p. 2 16;
Goldman 1994b, pp. 200). This effort made communication possible, though, leads to the wrong
assumption that Americans need not to adapt their communication. As language skills are only second in
importance to cultural knowledge (Foster 1992, p. 54) the American frank and open use of language
differs from the way how Japanese implemented their honorific system and formality in speaking English
(Goldman 1994a, p. 34; Goldman 1994b, pp. 200).
Negotiation Process
Time for the Whole Negotiation Process. American negotiators are usually interested in fast interactions
and immediate results (Graham and Sano, p. 76). In general, they expect to spend little time on all stages
of the negotiation, especially on formalities and non-task sounding. However, the Japanese negotiation
process is extremely time consuming (Oikawa and Tanner 1992, p. 55) and requires patience as a key
ingredient (Tung, p. 48). There are several reasons why more time is needed. First, as the Japanese
emphasize long-term relationships, much time is spent on non-task sounding such as the first meeting
(aisatsu) where only formalities are exchanged. Second, in Japan, business often goes to the party
respected the most. Recognizing who is deserving of such respect takes more time than most Americans
plan to invest (Reardon and Spekman, p. 72). American attempts to accelerate the process (e.g.,
ultimatums, impatience, overly direct language, or verbosity) are interpersonally incompatible with the
development of obligatory, long-term, interdependent relationships (Goldman 1994a, p. 37). Third, the
whole negotiation process is slowed down by the use of interpreters, at least doubling the response time.
Finally, significant business transactions may require government consultation, leading to further
postponing.
Importance of Trust. In the American legal system, a contract determines the rights and responsibilities
of the involved parties. In case of a litigation, business contracts are reinforced by the law, therefore trust
is less important as a basis of the business deal. Japanese, on the other hand, prefer to place their trust in
20
people rather than in a contract, thus the Western negotiator needs to take extreme care that mutual
understanding is reached (Zimmerman 1985, p. 92). In order to find out whether or not they can trust the
foreign partner, Japanese put much more emphasis on face-to-face contact to build up a personal
relationship. If a personal relationship does not exist, the Japanese buyer will express skepticism about
the seller’s propositions due to a lack of trust (Oikawa and Tanner 1992, p. 56).
Importance of Status Distinctions. In America, status distinctions are considered to be less important.
Rooted in the concept of egalitarianism, Americans first try to establish an informal atmosphere,
diminishing status distinctions. In Japan, however, people first try to ascertain their position, or “rank”,
in relation to others present, and then behave according to their position. Hence, Japanese feel very
uncomfortable if rank is not apparent (Oikawa and Tanner 1992, p. 56).
Use of Formal Channels. In general, Americans expect to do business during the formal meeting times
(Goldman 1994a, p. 37). Focusing on the persuasion stage, American negotiators are used to an
argumentative process taking place at the negotiation table. Japanese, on the other hand, do not want to
reveal their true feelings because doing so might hurt the harmony between the executive levels of the
buyer and seller organizations. High-level buyer negotiators present the official position which may not
be their true feelings. As it is stated in a way which does not provide useful information for the seller, the
latter will use informal channels to get the real information and opinion (Oikawa and Tanner 1992, p.
57).
One must distinguish between Japanese-Japanese and Japanese-American interaction (ingroup/outgoup).
Japanese negotiation style depends on compatible negotiators who are reliable and in close proximity.
The communication styles are mainly designed for in-group interpersonal relationships, making it
difficult to transfer these concepts to Americans as an outgroup (Goldman 1994a, p. 38). Hence, Japanese
expect that Americans will frequently misinterpret or overlook the concepts of nemawashi, ringi (decision
making by consensus), and the subtlety of haragei (gut logic, belly communication).
Use of Informal Channels. As mentioned before, Americans expect to do business during the formal
meeting times (Goldman 1994a, p. 37), without using informal channels. Japanese, on the other hand,
like to include informal discussions as part of the substantive negotiations and important decisions are
made during the after-hour socializing (Chen 1993, p. 153). Nevertheless, it is not universally true that
all important decisions are made through informal channels which seem to be a general misconception in
the U.S. (Tung 1984, p. 184).
Japanese prefer to blur the line between personal and public relationship by encouraging an informal
continuation of relationship building outside the negotiating table and within social arenas (Goldman
1994a, p. 37). In this way, true feelings can be acquired through the informal channels of communication
with the low-level negotiators of the two parties (Oikawa and Tanner 1992, p. 57). Using facial and
paralinguistic nuances, Japanese negotiators may subtly and indirectly acknowledge conflict at a public
table, but the preferred channel for conflict is private, personal interaction (Goldman 1994a, p. 39).
21
Size of the Negotiation Team. One of the most important characteristics of the Japanese is their strong
sense of group identity. This makes them to “ultimate team players” (Hall and Hall 1987, p. 68), at the
workplace as well as in negotiations. The members of Japanese negotiation teams usually outnumber
Americans (Graham and Sano 1989, p. 10). The reason for the relative small number of American team
members (sometimes even only one) are both economically and culturally rooted. Economically, the
American side has to consider executive time and travel expenses, particularly if the negotiation takes
place in Japan. Maybe even more significant is the cultural part, though. Americans value independence
very high thus favoring negotiating alone or with only few negotiators forming a team.
In contrast, the Japanese negotiation style requires the interaction between top, high and low-level
executives, leading to a larger negotiation team. According to the level, specific tasks are assigned to
each negotiation team member (Graham and Sano, pp. 79). Top executives will meet only for the
ceremonial part at the beginning and the end of the negotiations. Although they are not involved in the
actual negotiations, their presence is very important to communicate sincerity and commitment to the
other side (Chen 1993, p. 150). The task-related part of the negotiations will be conducted by high and
low level executives, again each assigned with specific roles. As the Japanese decision making process
(ringi kessai) is based on consensus from all involved participants, usually representatives from different
levels and departments will form the negotiation team (Chen 1993, p. 150).
Use of Silence. In negotiations, Japanese use long moments of silence - sometimes up to a period of 40
seconds (Graham 1993, p. 133). There are several possible functions which can be attributed to the use of
silence. First, silence can be a response when an impasse is reached. In order to maintain harmony (wa),
a direct negative response will be avoided. Second, the Japanese negotiators may just think about a
proposal from the American side, sometimes even with closed eyes. Third, a period of silence may allow
matters to cool off and provide a chance to reevaluate the situation (Tung 1984, p. 55). Fourth, lacking
relationship bonds with the American negotiators, top-ranking Japanese corporate executive officers may
remain purposefully quiet (Goldman 1994a, p. 45). Instead, a junior member of the negotiation team is
frequently asked to serve as a spokesperson for the senior.
Finally, sometimes silence can be used as a bargaining tactic, as most Americans are not used to it. One
common mistake of American negotiators faced with long silence periods is trying to fill them with words
or even concessions. The latter is even counterproductive, because it communicates insincerity to the
Japanese side (Hall and Hall 1987, p. 118; Graham and Sano 1989, p. 14).
Integrative and Distributive Techniques
As mentioned in the second chapter, integrative and distributive techniques are based on Western
negotiation theories which differ from the Japanese negotiation style. Hence, in this section
characteristics of the Japanese style will be described which show similarities to these techniques.
22
Use of Distributive Techniques. The typical techniques of distributive negotiation are positional
bargaining, commitments, and sometimes the use of pressuring or hardball tactics. Positional bargaining
is common among both American and Japanese negotiators. As Robert March writes about the Japanese
negotiation style (cited in Graham and Sano 1989, p. 94): “They developed strong defensive arguments
with no consideration of persuading or selling or converting the other side. Nor did they consider what the
other side might be thinking or offering, nor of anticipated strategies, nor of any concession strategies.
A strong consensus was reached based on the arguments supporting their positions after the leader had
reviewed these and everyone had noted them down. There was strong group cohesion.” This strong
commitment to a position can easily lead to an impasse and deadlock @laker 1977, p. 189; Chen 1993, p.
155).
Americans focus more on persuasion, nevertheless, they tend to view the negotiation situation from a win-
lose conception, leading to the use of distributive techniques such as positional bargaining (Kumar 1990,
p. 41). As Japanese value appearance of harmony, unwillingness to compromise would not be
appreciated. However, they see the first to make a concession as the weaker party (Chen 1993, p. 152).
Whereas some American negotiators like to use high pressure tactics such as hardball tactics, they are
considered as a sign of insincerity by the Japanese (Deutsch 1983, p. 111). Therefore, if Americans try to
negotiate using these negotiation practices, Japanese will feel rushed and pressured, making an agreement
less likely (Oikawa and Tanner 1992, p. 57).
Use of Integrative Techniques. Integrative negotiation includes the techniques used in the process of
focusing on interests, not on positions, in order to develop a mutual benefiting solution by joint problem
solving. In order to focus on underlying interests, a free flow of information is necessary. The Japanese
negotiation style facilitates the exchange of information, as extensive information gathering is common
during the negotiations. Also the Japanese negotiation team usually is well prepared about the other party,
e.g., knowing facts about the other company, its representatives and products (Chen 1993, p. 151).
However, this extensive preparation serves more the purpose of establishing a relationship and trust, i.e.,
it is not necessarily related to later joint problem solving.
Furthermore, the Japanese team will not show disagreement at the negotiation table, as controversial
opinions are discussed outside. Hence, in contrast to the American problem solving approach, Japanese
negotiators do not see the formal negotiation as a place to change minds and typically complain of
Americans’ tendency to be overly logical and rational (Goldman 1994a, p. 48).
Another obstacle in this context is rooted in the Japanese collective decision-making based on consensus
(Hall and Hall 1987, p. 81). As the negotiators do not have full decision making authority, it is difficult
and time consuming to develop a mutual benefiting agreement at the negotiation table which includes the
opinions of the hidden decision makers. In contrast, the American approach of having negotiators with
full decision-making authority would facilitate such an approach.
23
On the other hand, the Japanese side uses a holistic approach to agreement, i.e., all issues are related and
an agreement will be established at the end, including all issues. By this way, it is easier to explore the
integrative potential of a negotiation situation than using the American sequential approach, solving
issues one by one (Graham and Sano 1989, p. 15).
Outcome Goals
Importance of Short-Term Profit. Although short-run profits are also considered to be important by
Japanese companies, they are only secondary to the establishment of a long-term relationship (Graham
and Sano 1989, p. 23). This attitude is based on the capital structure of Japanese firms. As Japanese
companies have built up long-term corporate relationships with banks, they don’t need to be constantly
concerned about providing a dividend for the shareholder. (Beck and Hansen 1993, p. 450). Their shares
are generally held by large financial institutions or companies from the same keiretsu (family of firms)
who are more interested in the long-term viability of the company than in short-term profitability.
Consequently, quarterly profits and losses are not considered to be of significant importance, allowing
Japanese managers to approach business with a long-term perspective (Tung 1984, p. 58; Beck and
Hansen 1993, p. 450). Moreover, Japanese companies value the long-term relationship over possible
short-term profits which could be gained by shifting to another buyer or supplier (Richardson and Ueda, p.
152, cited in Zimmerman 1985, p. 92).
In contrast, U.S. firms are more oriented to the short-term and display a greater concern for immediate
profitability and return on investment. A survey by Beck and Hansen (1993) which examined goal and
strategy changes of Japanese and American firms during the 198Os, provides evidence. Its results point
out that the two most important goals for American managers are capital gains for shareholders and
return on investment. The reason is based on the fact that in contrast to the Japanese firms, American
firms’ quarterly and yearly earnings are translated into dividends, thus affecting investors’ perception of
the attractiveness of a company.
Importance of Long-Term ProJit. Hall and Hall (1987, p. 83) mention that “long-term planning is a
cornerstone of Japanese business”. Hence, Japanese top management invests more of the profits in
research and development for the future than American firms do in order to preserve long-term financial
health. This strategic difference is likely to be even more emphasized, as a survey by Beck and Hansen
(1993, p. 454) points out. According to it, Japanese managers increased the importance they put on basic
research and development over the past 10 years, while Americans slightly decreased it.
Another difference is shown by the same study regarding the importance of the long-term goal of gaining
market share. In order to achieve a good long-term market position, gaining market share is the most
important goal for Japanese companies and substantially more important than for Americans. However,
while there is no significant change in the value Americans managers attribute to this goal over the past
2 4
10 years, Japanese managers decreased its importance. Overall, the definition of profit is seldom seen by
Japanese as a one-time outcome (Chen 1993, p. 158).
Commitment for a Long-Term Relationship vs. One-Time Deal. In Japan, business transactions are
viewed as involving life-long obligations and responsibilities on both sides. This is related to the system
of life-time employment which the employees of large companies enjoy. Consequently, the Japanese
employee who enters one of the major companies builds up an identity with his firm (Hall and Hall 1987,
p. 66). This relationship is based on the assumption of mutual commitment, loyalty and goodwill, seeing
the company as a family. More than in the United States, the company status influences employee’s status.
Personal relationships between superiors and subordinates are established from the beginning and are
meant for a life-time. In Japan, friendships are established slower and more carefully as in the U.S., but
generally last longer (Tung 1984, p. 55). The same notion holds true for creating business relationships
which are established in similar ways.
In contrast, Americans prefer informality in relationships. Thus, business relationships are built up
quickly and in an informal way, e.g., by calling each other on a first name basis almost immediately
(Goldman 1994a, p. 34; Graham and Sano 1989, p. 10; Graham and Herberger 1983, p. 166).
Furthermore, they are not intended to be lifelong, often related only to close one deal.
Japanese business relations are lifelong and involve obligations and responsibilities on both sides even
under adverse conditions (Tung 1984, p. 56). Hence, Japanese view non-Japanese business-relationships
as dry, because they hinge only on the profitability and the benefits. Once these conditions stop to exist,
the relationships will be terminated (Tung 1984, p. 56). In contrast, the Japanese long-term commitment
is not sacrificed for possible short-term profits which could be gained, e.g., by switching suppliers. Only
in exceptional cases, once established business relationships would be dissolved because of profit reasons.
There are numerous opportunities for future research collaboration and licensing that would disappear if
one partner would only operate on short term gain (Zimmerman 1983, p. 93). Hence, the Japanese want
to maintain the relationship for mutual benefit rather than seek a one-time gain (Oikawa and Tanner
1992, p. 61).
Flexible Contract. In U.S. view, a contract defines the rights and responsibilities of the parties and seeks
to cover all possible contingencies. Consequently, Americans depend on tightly written contracts and
corporate lawyers to protect the company against possible losses (Graham and Herberger 1983, p. 166).
In traditional Japanese view, however, a contract is secondary in a business transaction which should be
premised on an harmonious relationship between the parties (Tung 1984, p. 45). Generally, Japanese
people dislike contracts and tend to feel that if personal trust and integrity are absent, a written contract
cannot substitute it (Zimmerman 1985, p. 91).
During the last decade, however, this attitude toward contracts and the involved lawyers has changed
(Rowland 1993, p. 92; Rowland 1985, p. 40). Experiences with American companies improved Japanese
view of lawyers and their need in dealing with U.S. firms. Still, long-term business relationships with
25
Asian partners without any written contract are usual, too (Interview with Roice Krueger, see Appendix).
Oikawa and Tanner (1992, p. 6 1) aptly summarize the Japanese view of contracts:
ccCircumstances are likely to change during the course of a business relationship. Japanese resolve most
of the conflicts that result from change through confer&. They assume that rights and duties under the
contract are conditional or tentative rather than absolute. Often Japanese contracts include such
statements as ‘All items not found in this contract will be deliberated and decided upon in a spirit of
honesty and trust.’ Instead of trying to write down all possible contingencies and conditions, Japanese
prefer to handle problems as they occur.”
Flexible Handling of Future Problems and Renegotiating. American businessmen are sometimes
surprised that Japanese executives continue to negotiate after the agreement is signed. In the American
business world, a signed contract seals the deal and is expected to be fulfilled as written regardless of
changing circumstances. To the Japanese, however, a signed contract merely marks the end of the first
stage in a business deal. It is not seen as a final agreement, as further measures may be necessary for
creating a mutual beneficial solution. Hence, the Japanese always keep a bit of leeway for dealing with
unforeseeable changes but honor contracts (Chen 1993, p. 149). If circumstances changes, judgments
based on prior negotiations can be changed. Consequently, flexibility is required, not merely legal
guidelines and contractual obligations (Chen 1993, p. 149).
Framework
The previous variables can be shown in a framework in the form of a snake-diagram. For each variable,
the relative value Japanese and American negotiators place on it is shown on a scale.***********************
**** Put Table 5 here ****
***********************
26
V. IMPLICATIONS FOR JAPANESE-AMERICAN NEGOTIATIONS
American Adaptive Approach
The comparative framework of variables related to establishing a relationship between Japanese and
American negotiators allows several implications. In the following section, first it will be noted for each
variable how Americans could adapt in order to improve the building of a relationship, though, it is not
meant that all of the adaptations have to be made by the American side. Second, it will be distinguished
which adaptations would require a long-term or short-term implementation.
Preparation
Cross-Cultural Training to Accumulate Knowledge of the Other Culture. As pointed out, the American as
an individualistic, low-context culture and the Japanese as a collectivistic, high-context culture differ in
essential ways. These differences influence day-to-day life as well as business transactions. Hence, one of
the first steps needed in the preparation of negotiation is cross-cultural training. Its purpose should be to
gain insights in culturally rooted value systems and their basic assumptions for both American and
Japanese culture. Insights in their own culture will help American negotiators to overcome
ethnocentrism, whereas understanding of the Japanese culture will facilitate recognizing its influence on
Japanese-American business negotiations. In particular, an understanding of the general importance of
building up a trusting relationship, the concept of maintaining surface harmony, non-verbal
communication channels and the overall status distinctions is required. Although collecting knowledge
and learning about the Japanese culture is not suflicient to fully understand the cultural background, it is a
necessary first step which will smooth the whole negotiation process.
Language Skills. Ideally, American negotiators should be able to speak the local language, though,
learning Japanese requires a long-term investment of up to several years. Especially the politeness forms
in Japanese are so complex that even the danger of insulting the other side exist. Therefore a company
need to consider carefully the advantages of such an approach. As Americans usually travel overseas only
for short trips, the investment in executive time for extensive language training appears unwarranted. On
the other hand, Americans face strong conversational disadvantages when Japanese executives use an
interpreter even though they understand English. Having the double response time and being able to focus
on observing non-verbal signals while the interpreter translates one’s own statement are significant
advantages for the Japanese side (Graham and Herberger 1983, p. 166).
An American team with perfect Japanese language capability is not necessary and can even be
counterproductive, because it would be perceived as suspicious by the Japanese party (Foster 1992, p. 59).
27
However, one bilingual member should be part of the negotiation team to prevent misunderstandings as
much as possible. Finally, at least a basic knowledge of key terms can be of help and will be appreciated
by the Japanese side.
Negotiation Process
While it is not necessary for Americans to adapt strongly concerning learning the Japanese language,
many other issues of the negotiation process related to the building of relationships require adaptation.
Time for the Whole Negotiation Process. The Japanese emphasis on building a relationship requires
much time spent in especially extensive non-task sounding and task-related exchange of information.
Although Japanese-American negotiations may not “take six times longer” than intracultural negotiations
between Americans any more (Van Zandt 1970, p. 50), they still need substantially more time (Graham
and Sano 1989, p. 76). Hence, the practice of patience on the American side is key, as any try to
accelerate the process by showing impatience or using concessions will only lead to the perception of
insincerity by the Japanese negotiation team.
Importance of Trust. Trust in business relationships may be less important to Americans due to their legal
system, still it is very important to the Japanese. Hence, negotiations only pass the non-task sounding
stage of the negotiations if an atmosphere of trust between the Japanese and American negotiators has
been built up. Again, patience for the longer process is required from the American side.
Importance of Status Distinctions. This important concept of Japanese society - vertical relationships
based on status distinctions - needs to be acknowledged by the American negotiators. In a negotiation
situation, the following implications occur. First, the most senior American officer should meet his
Japanese counterpart to establish the relationship, although details will be handled by lower ranking
employees. Second, the use of business cards (meishi) for status determination among all negotiation
team members is essential. Making the status of each person visible will make it easier for the Japanese
side to act according to their formality rules. Finally, it is necessary for American negotiators to adapt to
some of the status related Japanese behaviors.
Another issue related to status distinctions is the different roles of buyer and seller. As in Japan the
buyer’s position and status is much higher than the seller’s, the Japanese seller is expected to use
honorific language and show deference. Hence, if the American seller does not want to be perceived as
arrogant, at least some adjustment to the Japanese style is necessary.
Use of Formal and Informal Channels. Although American negotiators expect to do business within the
formal meeting times, the whole negotiation process can be facilitated by using the informal channels
intensively. In formal settings the Japanese side will avoid to mention conflicting interests directly. Once
a relationship is built up, however, the informal channels are a effective way of discussing differing
viewpoints and interests.
28
Use of Silence. ne right way for American negotiators to react to long moments of silence is to be
patient and wait. This behavior will avoid unnecessary and counterproductive talking or even
concessions. Any sign of impatience should be avoided to give the relationship enough time to grow.
Size of Negotiation Team. Americans should not hesitate to include additional members on their team
such as financial or technical experts, as there are several advantages which will outweigh the surcosts.
First, the specific roles in the Japanese negotiation style require the involvement of high and low level
executives. Second, diverse tasks such as talking, listening, preparing arguments and explanations,
asking questions are facilitated by a larger number of negotiators. A Japanese team might even include
one member whose only task consists of listening. This observation task can also serve as training for
younger company members. Third, the negotiation team size will be perceived by the Japanese side as an
indicator of seriousness and commitment, in addition to the relative rank of the high-level executive
(Chen 1993, p. 150). Finally, as negotiation is also a social process, a larger team can provide the
powerful psychological influence of supporting nodding heads and positive facial expressions (Graham
and Sano 1989, p. 10).
A second aspect of team preparation is concerned with presenting an undivided position. Disagreement
among one’s own negotiation team in front of the Japanese team would convey weakness and lack of
preparation. Briefing each of the team member in advance decreases this problem and increases the
effectiveness of the whole team. If controversial opinions arise during the negotiations, they should be
discussed outside the table (Rowland 1993, p. 93).
Integrative and Distributive Techniques
Both Japanese and American negotiation styles include techniques which are distributive or similar to
distributive bargaining. Although some Japanese techniques are similar to the integrative negotiation
style, they serve a different purpose. If Americans use integrative techniques, they try to focus more on
joint problem solving without regard to building up a personal relationship. Japanese, however, focus first
on building up a relationship which then serves as a basis for establishing mutual benefiting solutions.
Hence, characteristics of the Japanese style which seem to be similar to integrative negotiation are less
related to the development of a solution than the joint problem solving techniques in the concept of
integrative negotiation.
Outcome Goals
Importance of short-term profit vs. short-term profit. Although the goals of Japanese companies are
slightly moving toward American firms’ goals, short-term profits are still secondary to the long-term
relationship. If American negotiators show too much concern for immediate profitability, this would be
29
perceived as being insincere in their wish to form a long-term relationship. As building up a relationship
is the necessary context for any business deal in Japan, American companies need to lower their
expectations concerning immediate profits.
Commitment for a long-term relationship vs. one-time deal. As pointed out, in Japan friendships are
established slower and more carefully than in the U.S., but last longer. Hence, there are two implications
for Americans companies. First, they need to develop long-term relationships with representative of
companies in the Japanese industrial society, using negotiations as one part of this process. Second, they
have to accept and adapt to differences in corporate time horizons (Tung 1984, p. 55). These observations
suggest that foreign firms be patient in negotiations, use less frequent rotation of U.S. expatriates in
Japan, and maintain frequent contacts with customers and suppliers, socializing with Japanese outside of
office hours, and exchange of gifts (Tung 1984, p. 56).
Flexible contract. An American type of contract which can be more than one hundred pages long,
including all contingencies and conditions, is certainly not the right approach. It would communicate
mistrust to the Japanese partner and therefore jeopardize the already established relationship. Contracts of
this form are required - and work - only in such adversarial legal systems as the one of the U.S. In such
systems it is necessary that lawyers protect their companies against all circumstances and actions of the
other party, leading to very long contracts with explicit conditional phrases (Graham and Sano 1989, p.
103).
In Japan, litigation is not seen as a favorable way of conflict resolution, hence, only few lawyers are
allowed to pursue business. Consequently, Japanese executives invest much time in establishing personal
relationships to ensure that business relationships endure and lead to mutual benefiting outcomes.
However, the perception of legal assistance in negotiations changed during the last decade in Japan
(Rowland 1993, p. 92; Rowland 1985, p. 40). As Japanese business has become more international, a
significant change in attitude toward consulting attorneys during negotiations can be observed. Now
Japanese companies also value the advantage of having a clearly worded understanding between two
parties whose expectations may differ from each other.
Thus, it is more a question of the appropriate time when to bring in lawyers or consider legal review
without inciting mistrust. This will be at an earlier point of time at negotiations with large multinational
Japanese companies than with smaller domestic ones. It is important to convey the message that a lawyer
ultimately works for the welfare and satisfaction of both parties (Rowland 1993, p. 93).
Also, it is more and more common for Japanese negotiation teams to include a legal staff member in their
negotiation team (Ohe and Koo 199 1, p. 57). Still, a Japanese contract differs from U.S. legal drafts. It is
less voluminous and concentrates on business issues without the fine print customary in American
business contracts. Hence, Ohe and Koo (1991, p. 58) recommend to let the Japanese side prepare the
3 0
first draft as a basis for discussion. This way
faced with a U.S. style draft.
Flexible Handling of Future Problems and
contracts are slowly approaching each other,
will save time and avoid aggravation on the Japanese side
Renegotiating. As the Japanese and American views of
the need for renegotiating will probably be reduced in the
future. Both sides are already adapting, still, this process needs more time.
The above mentioned implications can be distinguished by the time frame within which they can be
implemented. Some of the measures (e.g., enlarging the team size) can be realized immediately or within
short term planning, while other (e.g., acquiring extensive language skills) need more time. The following
distinctions can be made:
Implications which need a long-term time frame:
Long-term planning and goal setting
Building up a corporate relationship
Extensive cross-cultural training (e.g., living in Japan)
Development of Japanese language skills by negotiation team members
Implications which need a short-term time frame:
Enlarge negotiation team size
Basic cross-cultural training
Invest more time in negotiation
Adaptations to Japanese negotiation style (role of trust, status, etc.)
Application on Japanese-American Trade Wars
In this section, the implications for business negotiations will be applied to the context of Japanese-
American trade negotiations. First, the underlying problems in the Japanese-American bilateral trade
negotiations will be briefly characterized by mentioning economical and cultural concepts related to the
trade negotiation context. Second, a possible negotiation approach will be pointed out which is based on
establishing a relationship between both negotiation parties.
The Situation - Historical Development and Today
The following description of the development of the Japanese-American trade wars draws heavily from
Prestowitz (1988, pp. 7).
31
The first trade war between the United States and Japan began in 1853 when Commodore Perry blocked
Tokyo with his black ships and demanded from the Japanese to open their market for trade with the
United States. The Japanese - faced with the American military and economic power - seemed to give in.
Nevertheless, Japan tried to minimize any foreign influence and started to build up own industries to catch
up with western standards without using foreign capital.
After World War II and the beginning of the Cold War, the U.S. occupation of Japan resulted in a new
Japanese constitution and outside system, but the inside system remained basically unchanged as Japan
kept refusing outside influence. Economically, however Japan got unrestricted access to U.S. consumer
market in exchange for political and military abstinence as well as pro-American support during the Cold
War.
From 1960 to 1986, imports from Japan as a percentage of GNP quadrupled in U.S. and Europe (U.S.:
from below 1% to 4.4%) whereas Japanese imports (from 1.5% to 1.6%) remained practically constant
despite liberal trade concessions (Prestowitz 1988, p. 75). This imbalance increased to a ballooning
multilateral and bilateral Japanese trade surplus: $120 billion worldwide in 1993, alone $50 billion with
the U.S. (Wood 1994, p. 69 and p. 187). In 1994, the Japanese trade surplus with the U.S. increased
again to the peak of $55 billion (Source: Frankfurter Allgemeine Zeitung, No. 174, July 29, 1995, p. 11).
Due to these imbalances, several bilateral trade negotiations and wars have been taken place in order to
open the Japanese market to American companies. After 1990, with the end of the Cold War and a
worldwide recession, new trade negotiations have been induced by beginning political changes in Japan as
well as a shift of priorities from defense to commerce interests in the United States.
The Background - Concepts, Characteristics, and Patterns
The Japanese-American trade wars are mainly based on different concepts of an open market and free
trade vs. unfair trade. The Japanese view of an open market is rooted in the Japanese group and
relationship concepts. The societal group system is transferred into the business world, seeing a company
as a community (Wood 1994, p. 24). Strong buyer-seller relationships build up bonds between the
companies, supported by company-government relationships. The whole system of relationship buying is
enforced by the Japanese bureaucracy and a complex distribution system.
In contrast, the American concept of an open market is rooted in the nature of the United States as an
integrating “melting pot” which allows the freedom to maintain cultural differences (Prestowitz, p. 80).
Therefore, an open market is not only a system of buying which operates on the basis of the best offer
rather than the relationship of buyer to seller, but also assumes implicit, rarely articulated meanings such
as openness of the law-making process to the public, the existence and enforcement of individual rights as
32
well as checks and balances to prevent agglomerations of both economic and political power (Prestowitz,
p. 80).
A central point in the controversial Japanese-American discussion of open market access concerns the
existence of non-tariff barriers. The access to the Japanese market is less limited by tariffs, as Japanese
tariffs are on average lower than those of other industrial countries (Lincoln 1990, p. 14). However, there
exist several non-tariff barriers which inhibit American imports to Japan. Lincoln (1990, p. 15) lists a
classification of the principal types of such non-tariff barriers. It includes standards, testing and
certifications processes, customs procedures, intellectual property right protection, government
procurement practices, industry collusion, administrative guidance, and other government regulations
which are targeted to inhibit foreign imports or even make them impossible. While the Japanese side
either denies the existence of such measures or views them as regular trade instruments, the American
side perceives them as unfair.
These different assumptions and concepts about open markets and free and fair trade lead to adversary
viewpoints and positions which are summarized in the following figure.
33
***********************
**** Rut Table 6 here ****
***********************
The American and Japanese views of each other’s role in the trade wars have led to the following typical
and recurrent pattern in U.S.-Japanese trade negotiations (Prestowitz 1988, p. 77):
. The United States demands that Japan opens its market.
. After prolonged and tedious haggling, including various cultural misunderstandings in negotiations,
Japan offers some apparent relaxation of restrictions.
. The United States thanks Japan and regards measures as a great progress, but soon finds out that
things do not work as anticipated.
. The United States complains about unfairness and new barriers, and the whole process starts again.
As a result of this development, there still exists a variety of unsolved U.S. market access problems despite
continued trade negotiations (Lincoln 1990, p. 154).
Two Major Problem Solution Strategies: Revisionism vs. Free-Trade
In the last years, two major viewpoints have been developed about how the American side should
approach the Japanese-American trade negotiations.
The revisionist viewpoint is based on the premise that Japan will never change its system, hence, the
United States have to play the game by their rules. Its representatives argue that Japan operates a different
sort of capitalism than the West which is designed to benefit the producer rather than the consumer.
Consequently, conventional rules of free trade do not apply. Revisionists therefore favor the strategy of
managed-trade solutions (e.g. as in airlines negotiations) as the only effective way of dealing with Japan’s
huge surplus. Negotiations should be oriented on outcomes in order to achieve a balanced trade, and
tariffs can be used to punish.
In contrast to Revisionism, the Free Trade viewpoint is based on the contrary premise. Although Japan’s
market is dominated by different rules, the basic free market principles are still valid. Its representatives
use the argument that the market forces do also apply in the Japanese domestic market, therefore the free
trade concepts should be kept. This leads to the strategy that negotiations still are the most effective way
to accelerate Japan’s change to open its markets. However, opposite to the goal of the revisionists,
negotiations should focus on structural changes and not on specific outcomes.
Implications
The implications for business negotiations can also be applied to the Japanese-American trade
negotiations, although they are limited to the preparation and beginning stage of the negotiation situation.
34
As in business negotiations, establishing a relationship between both negotiating parties is essential.
Before substantial issues of disagreement can be discussed, an atmosphere of trust needs to be created.
Only then, a bridge between both economic views can be developed. The revisionist approach, however,
uses aggressive tactics such as applying pressure by ultimatums which will jeopardize any good
relationship. Once the relationship is damaged, though, it is less likely that any desired results can be
achieved. As mentioned before, the Japanese will only do business with a party they respect and trust. In
this perspective, the revisionist approach does not seem to be promising.
The free trade approach avoids such confrontive measures, hence, it will be easier to build up or enhance
already established relationships. Nevertheless, building up a relationship between both negotiating
parties is the first step to an approach to find a solution. It would help to overcome the negative
perceptions of each other and could avoid the typical pattern of the previous Japanese-American trade
negotiations. Furthermore, the American side could approach the trade negotiations similar to the way
business negotiations are conducted. Considering the importance of the political and economical
relationship between Japan and the United States as well as its complexity, one possibility could be to
build up bilateral institutions for trade negotiations. These institutions could establish a bridge between
both countries by employing negotiators who fulfill two major requirements. First, trade negotiators need
to be experienced in the economical and political issues of international trade, in particular the Japanese-
American trade problems. Second, they need to be skilled in handling the specific difficulties in
Japanese-American negotiations.
Similar to business negotiations, a negotiation team would include several roles. Top-level government
representatives could act similar to top executives, mainly participating in ceremonies of formal
meetings, e.g., the introduction of the negotiation parties and the signing of contracts. In contrast, the
issues of the negotiation would be discussed by mid-level and low-level members of the institutions.
Being prepared by cross-cultural training and with good language skills, they could make the necessary
adaptations in their negotiation style which would improve the chance of reaching an agreement. In
particular, this includes spending more time on the negotiations, valuing building up a trusting
relationship, and the appropriate use of formal and informal channels during the negotiations.
Providing institutions for the trade negotiations would also facilitate to approach the negotiation issues
with a long-term perspective. Long-term relationships could be established between the American
negotiators, smoothing the discussions about differing viewpoints as well as making them an effective
negotiation team. Similarly, long-term relationships between both American and Japanese negotiators
would have the same effect.
VI. DISCUSSION AND CONCLUSIONS
35
The relationship approach to Japanese-American business negotiations in this study has several
limitations. The most restricting limitation concerns the use of anecdotal data which leads to the danger
of generalizations and stereotyping. Although the importance of relationship is often mentioned in the
literature, there are few empirical studies which could give generalizable evidence.
As particularly mentioned in the case of contracts, a fast changing environment due to political,
economical and societal developments increases the diffkulty to find general conclusions. Furthermore,
as each negotiation situation is unique, broadly valid prescriptions are not possible. Hence, this approach
can only provide a direction how to approach and prepare for Japanese-American business negotiations,
and which goals and techniques are appropriate. Regarding the latter, both Japanese and American
negotiation styles reflect strong distributive elements, although many characteristics in the Japanese style
could also be used to explore the integrative potential in a negotiation situation.
As this approach tries to improve the building of a relationship in the beginning of a negotiation, many
questions about negotiation tactics, details of persuasion and the follow up after an agreement are not
addressed. Although both Japanese and American negotiators slowly approach each other in negotiation
styles as well as in underlying goals, there still exist fundamental differences. Considering the importance
of the Japanese-American trade, it is necessary to explore these fields more intensively.
36
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39
Table 1
Cultural Values Systems
Attitude
Toward . . .
NATURE
TIME
Range Negotiation
Implications
Submit to Harmony with Mastery over NEGOTIATION
nature nature nature OBJECTIVE
Life determined Live in harmony Control and
by God/fate with nature challenge nature
Past tradition Present moment Future goals NEGOTIATION
Goals of past Goals reflect Goals directed OBJECTIVE
are sufficient present demands toward future
SOCIAL
RELATIONS
ACTIVITY
By rank or By entire group By individual AUDIENCE
class Group decision Individual SELECTION
Authoritarian making decision making
decision making
Being, not Inner Accomplishment AUDIENCE
accomplishing, development and future most MOTIVATION
most important; most important important;
minimize work maximize work
HUMANITY Basically evil
Initial lack of
trust, people
won’t change,
control
necessary
Mixture good
and evil
Initial choice,
people can
change
Basically good
initial trust,
controls
unnecessary
AUDIENCE
MOTIVATION
Source: Munter (1993), adapted from Kluckhohn and Strodtbeck “Variations in Value Orientations”,
Evanston, Ill. : Row, Peterson, 196 1
4 0
Table 2
Differences in Individualistic and Collectivistic Cultures
Preferred Values
Individualistic (American)
Freedom, individual personality,
personal enterprise and
achievement
Truth I One truth
Education Individual autonomy and rights Respect for traditions and
Personal Relationships
status
Many groups by choice
Horizontal: Equality, status
acquired
Authority Function of office, respected but
frequently questioned
Transactions Rights and duties defined by law
and contracts
Conflict resolution
Debate
Formal process of law (by
courts)
IAdversarial approach
Economical dimension I Free market
Collectivistic (Japanese)
Welfare of the group,
cooperative endeavor
Several truths
authority
Group affiliation inherited, in-
group, often life-long
Vertical: Status inherited
Function of status, not
questioned
By customs
Group opinion, informal
methods of conciliation
Face-saving, harmony
Regulations
Source: Adapted from Cohen 1991, pp. 22
41
Table 3
Contrasting Roles of Language in High and Low-Context Cultures
I Low-Context (American) IHigh-Conted (Japanese)
IRole of language Information transfer, accuracy Social instrument, ambiguity as
I as virtue I virtue ICommunication style
Speech style
Direct, explicit
Subtleness and allusiveness in
speech less important
Less meaningful
Persuasive, argumentative,
rational, logical
Allusive, implicit
directness and contradiction
disliked
Subtleness and allusiveness in
speech highly important
Context of message
Conflict resolution
Highly meaningful
Face-saving: contradictions and
persuasive logic disliked
Nonverbal gestures I Less important I Highly important IPoliteness, respect and
courtesy
Less important Highly important
Moral bases Guilt, internalized sense of
responsibility (conscience)
Shame in front of the group
Personal Relationship I Less important I Highly important I
Source: Adapted from Cohen 199 1, pp. 25
42
Table 4
Key Points of Conflict between Japanese and American Business Negotiation Styles
Category American Japanese
Basic Cultural Values individual competition individual cooperation
individual decision-making group decision-making and
and action action
horizontal business relations vertical business relations
independence amae, personal interdependence
Negotiation process
1. Non-task sounding short long, expensive
informal formal
2. Task-related exchange of “fair” first offers “banana sale” first offers include
information room to maneuver
full authority limited authority
“cards on the table” tatemae and honne
immediate reciprocity long-term reciprocity
explicit communication implicit communication
3. Persuasion aggressive, persuasive tactics nemawashi and chukai-sha
(threats, promises, arguments,
and logic)
“you need this” naniwabushi
4. Concessions and sequential holistic
agreements
goal = “good deal” goal = long-term relationship
Source: Graham and Sano 1989, p. 32
43
Table 5
Factors Influential to the Relationship in Japanese-American Negotiation
Preparation
Cross-Cultural Training
Language Skills
Low High
Low High
Process
Time
Importance of Trust
Importance of Status
Use of Formal Channels
Use of Informal Channels
Use of Silence
Size of the Negotiation Team
Low
Low
Low
Low
Low
Low
Small
High
High
High
High
High
High
Large
Techniques
Distributive
Integrative
Low
Low
High
High
Outcome Goals
Importance of Short-Term Profit Low High
Importance of Long-Term Profit Low High
Long-Term Relationship One-Time Long-Term
vs. One-Time Deal
Contract Flexible Inflexible
Handling of Future Problems Flexible Inflexible
American Japanese
44
Table 6
Japanese and American Views of the Trade Wars
Japanese Viewpoints American viewpoints
Open market Market is as open as other markets Japanese keep their markets closed
concept while their exports penetrate other
markets. This behavior is against
American sense of “fair-play”
Barriers The problem are not barriers - there Japanese market is closed because of
are only few anyway - Americans systematic barriers
just do not try hard enough
Foreign Criticism of “closed market” Criticism justified
Criticism unjustified
Foreign Foreign complaints relate to Complaints relate to the major
complaints about relative minor problems, usually problem of a closed market, not just
Japanese market based on misunderstandings of the misunderstandings.
culturally very different Japan. The U.S. wants to treat the underlying
Therefore Japan only wants to react systematic problem of a closed market.
to specific complaints, not
systematic problems.
Concessions Concessions seen as serious Japanese concessions not seen as
approach to respond to U.S. serious reply to demands
demands, although they do not
make sense in Japanese view
Emotional Japanese had worked hard for Treated in an unfair way and abused
reaction success, now they feel as a by Japanese
scapegoat for American laziness
and incompetence
Perception of Americans can never be satisfied Japanese only reluctantly make
each other concessions to open their markets and
usually do not implement these
concessions = unfair behavior
Source: Adapted from Prestowitz 1988, pp. 75
45
Appendix
American Expert Interviews
Japanese-American Negotiation:
Roice N. Krueger, Covey Leadership Center
Cross-Cultural Negotiation:
Prof. John L. Graham, University of CA at Irvine
46