Negotiation Styles Differences Between American and Japanese Cultures

 Joanna Salathé, Xiaoran Yu & Yoram Mottas

Negotiation styles

Differences between American and Japanese cultures

Introduction

In today’s business world, meeting partners from across the globe has become a daily routine, however, the great diversity of our world’s cultures can cause an important amount of complications and misunderstandings throughout the negotiations.

Any skilled and experienced negotiator should know how much small details such as eye contact and handshake could influence the negotiating process, especially when both parties have different cultural backgrounds. That’s why it is important to enter such negotiations with a certain amount of knowledge and preparation beforehand, in order to avoid starting off on the wrong foot with the foreign counterpart.

This paper will be focusing on two perfectly different cultures, examining briefly the differences in negotiation styles between Japan and the United States, this analysis will use the framework proposed by C.Schneider and J.-L.Barsoux [1] and adapted later on by Barbara A.Boldt.

‘Trust is earned’

To begin with, one important brick of the framework is a culture’s perception of relationships. In our case, Japanese and Americans clearly stand on each extreme of this axis. Namely, Japanese people are viewed as a collective community whereas Americans show a high rating in individualism. That’s why it is not uncommon to find around a negotiation table three Americans sitting in front of ten Japanese. [2] Japanese negotiators often emphasize the style of team negotiation and consensus decision making, while their American counterparts tend to be motivated by each participant’s own interest. Therefore when negotiating with Japan, one must convince the entire team of negotiators. [3] Since U.S negotiators are often driven by individual goals, they’ll most likely apply pressure on their counterparts in order to reach an agreement as quickly as possible, to achieve that, direct and explicit language is preferred rather than a subtle and allusive manner. [4] The Japanese, on the other hand, prefer the latter and often try to avoid on-the-spot decision. [5]

As a collectivist society, Japanese people seek harmony and loyalty. They tend to be paying more attention to the relationships with their counterparts instead of the contract. They put their focus on the people they are negotiating with while U.S negotiators’ priorities remain the outcomes. For that reason, the Japanese need to spend time getting to know the other party and trying to figure out whether they are trustworthy. [2] It is common courtesy for both parties of a negotiation to bring gifts, to have small talk to build conversation and trust before getting to the real business. For Americans it is rather unnecessary to get familiar with others since their goal is merely the contract, not the establishment of a relationship. U.S negotiators are often ill prepared to handle these kinds of customs, they are usually unaware of the importance of building trust for the Japanese. [6] This can result in great misunderstandings and bring negative impacts to the negotiation.

Additionally, these two cultures generally do not see the final contract in the same way. Americans usually wish to rush towards the last phase of deal making and make the mistake in not considering at all the will of the Japanese to create a long lasting relationship. Japanese negotiators, on the contrary, can even decide to not reach an agreement in order to avoid jeopardizing the whole relationship upon one deal, simply because they don’t wish to work with unknown or untrustworthy parties. [5] The whole trust building process can be seen as cumbersome for the Americans, but sometimes it can still turn out to be in their advantage. An example can be found in “The Hidden Challenges of Cross-border Negotiations” written by J.K.Sebenius [7] in which the Japanese “fell in love” with their American target and refused a better offer from another party in order to keep their relationship.

The Japanese society has high power distance and values strongly hierarchy, they have great respect for people who have higher social status. [8] Japanese negotiators have the rite of exchanging business cards and read them very carefully in order to find out the position in terms of social status of their counterpart. Putting a card directly in the pocket may be seen as disrespect and offend the Japanese representative. For an American however, this is the least of his worries, a firm handshake is perfect enough before talking business, reading business cards is not considered as a necessity. [9] That is mainly because the American society is highly liberal and egalitarianism is a major part of its foundation, which is by far the case of Japan or any other Asian societies. [10]

‘Time is money’

Time plays a key role in negotiations and the perception of time differs greatly between different cultures.

There exists two ways to perceive time: monochronic and polychronic. The former tends to deal with one thing at a time and values order and punctuality, while the latter finds time flexible and likes to do multiple tasks at the same time. It occurs that American and Japanese cultures are both monochronic, nevertheless in negotiations they usually act completely differently regarding to time.

According to J.L.Graham and Yoshihiro Sano, there are four stages in business negotiation process, these are non-task sounding; task related exchange of information; persuasion; concession and agreement. It has been shown in the previous chapter that Japanese people spend more time in building relationship compared to their American counterparts, this means that the first two stages can last significantly longer when dealing with the Japanese. In their eyes this is absolutely necessary in order to start the negotiation in harmony and to determine whether they wish to embark on a long-term partnership. [11] But Ezra Vogel and Paul Giarra have shown in their studies that close personal relationship and mutual trust can actually speed up the negotiation process. [12]