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

8

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,

9

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.

14

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