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Understanding Cross-Cultural Negotiation: A Model Integrating Affective Events Theory and Communication Accommodation Theory
W H I T E , H A RTE L , PANI P U C C I
China. This was a complex process a s it required the establishment o f a Chi
nese importing company (ChinFertZ) , which imported fertilizer from Austra
lia. AusFert, however, was concerned that ChinFert might import other
brands once the license was obtained, so it agreed to enter into a joint venture
with an importing company in China to eliminate this possibility. AusFert
drafted a contract with its Chinese alliance and proceeded to set a date for fer
tilizer to be purchased, as well as a quantity estimation for the next 3 years.
It wasn't long before problems began to surface. First, the shipment did not
arrive on the due date, and AusFert began to realize that the possibility of re
ceiving an order was remote. Aware of cultural sensitivity, AusFert approached
an outside contact for advice. As soon as AusFert did this, however, communi
cation with ChinFert ceased as ChinFert was insulted that the Australians
were seeking outside advice. As a result, the Chinese began ignoring the con
tract, did not initiate any progress to obtain a permit, and did not engage in ne
gotiation with AusFert. In addition, the Chinese negotiator was uncontactable
both in Australia and in China.
Both parties believed that the other was to blame for the miscommuni
cation, although it is evident that it was simply a matter of cultural differences
and lack of understanding. According to AusFert, there was no explanation as
to why the Chinese negotiator refused to communicate with them. After failing
to establish any communication with the Chinese negotiator through "nor
mal" channels, AusFert decided that communication would be established
with the negotiator's parents.
Another problem that arose in the negotiation process was that the Chinese
national, who lacked English-language skills, used an interpreter for all negoti
ations. However, the interpreter for her was a Chinese from Hong Kong and
was excluded by AusFert, as it was assumed that "he was up to no good with
her from day one." At the time of the communication breakdown, the inter
preter was contacted directly by ChinFert and, like his client, refused to com
municate. AusFert could not understand that the signing of the contract by
AusFert's contact did not bind the contact to the delivery of orders on a certain
date. The only option to complete the task was to discover the real reason for
the communication breakdown.
By the time communication was established with the Chinese negotiator,
the negative emotions were so strong that the Chinese national believed
AusFert had no understanding of how the Chinese system worked and had
completely discredited her effort and ability. She did not see fit to engage in
any immediate communication. Her feelings also led her to believe that there
was a conspiracy to undermine her role when ChinFert communicated with
certain officials in Beijing without her knowledge. The effects of such negative
Not the company's real name.
U N D E RS TAND I N G C R O S S - C U L T U RAL N E G O T IA T I O N
emotion resulted in both parties viewing the other as divisive, untrustworthy,
uncooperative, and dishonest. ChinFert felt that, on this basis, no relationship
existed and therefore there was no further need for communication. AusFert,
however, felt that despite everything, there was a binding contract that needed
to be honored.
The preceding actual case demonstrates how cultural differences can im
pact on felt emotions, the ability to detect others' emotions in a timely manner
to avoid breakdown in negotiation and relationships, and the understanding of
what steps need to be taken to repair the bad feelings the other party has. This
chapter contributes to the understanding of the negotiation process by devel
oping a cross-cultural negotiation model based on an integration of affective
events theory (AET) and communication accommodation theory (CAT) .
Within today's global marketplace, it is inevitable that business interactions
will continue to cross cultural boundaries. These boundaries are no longer
purely physical but also include culture, religion, regulation, values and beliefs,
social groups and circles, and unfamiliar emotions and communication meth
ods (e.g., Ayoko, Hartel, Fisher, & Fujimoto, 2003; Phatak & Habib, 1996) .
Boundary crossing, which is the process of either uniting or separating people,
is mediated through negotiation. This chapter aims to bridge the boundaries
of strategic business negotiation, communication, and emotion in a cross
cultural context. Each of these three boundaries is discussed briefly, followed
by a review of cross-cultural communication literature.
People use boundaries to achieve integration and separation from others, as
a way of maintaining comfort zones (Petronio, Ellemers, Giles, & Gallois,
1 998) . They exist at the level of cultures as well as at the individual level. As
such, during negotiation, people have a boundary they place between them
selves and the other party and they evaluate the extent to which they need to
tighten or loosen it. This boundary-crossing adjustment may be initiated by
one or both parties to build the relationship. When boundaries are unattended
to, miscommunication may occur (Coupland, Wiemann, & Giles, 1 99 1 , as
cited in Petronio et a1., 1 998) .
Miscommunication may occur when boundaries are too tight or when they
are too loose. When they are too tight, the parties involved are not receptive to
each other's definition of an affective event (Petronio et aI., 1998) . When
boundaries are too loose, communication may cease altogether as the bound
ary is not salient and the parties are unsure of the appropriate behavior
(Dayringer, 1998) . Miscommunication will generally cause the tightening up
W H I T E , H A RTEL, PAN I P U C C I
o f boundaries i n all cultures when it is detected (Willemyns, Gallois, Callan, &
Pittam, 1 997) .
The boundary-crossing process is achieved through negotiation. Negotia
tion is a frequent part of everyday life; thus, it is largely an unconscious process
(Ferraro, 2002) . Chang (2002) identified five negotiation style preferences: ac
commodation, collaboration, and withdrawal (cooperative) , and competition
and consultation (instrumental) . Further, the dual concern model introduced
by Rubin, Pruitt, and Kim ( 1994) portrayed negotiation style as a combination
of high/low concern for the self and high/low concern for others.
The addition of differing cultures in the negotiation process adds further
complexities. This is because the style of our negotiations is conditioned cul
turally, both consciously and unconsciously (Dayringer, 1998) . Culture im
pacts on the way in which the parties think, feel, and behave (Casse & Deol,
1985) . In terms of cross-cultural negotiation, Adler, Brahm, and Graham
(1992) showed that the cooperative approach is more successful for both
Westerners and Easterners when negotiating with each other. We assume this
approach in our further discussion.
As shown, the process of boundary crossing in cross-cultural negotiations is
dependent on the culture of the parties involved. In particular, cultural differ
ences impact negotiation, with some cultures preferring to tighten the walls at
the beginning and work toward loosening up when trust is built between par
ties, and other cultures preferring to start with very open boundaries and
tighten these boundaries only when they feel threatened. Our focus, the Sino
Australian negotiation setting, involves these two opposing approaches to
From a business perspective, the issue of boundary crossings involved in
Sino-Australian negotiations is an important one. This is because the low suc
cess rate of foreign investments in China has been attributed, in part, to
miscommunications (cf. Pye, 1982) .
Both Hofstede (1980) and Trompenaars ( 1 993) studied cultural differ
ences between Westerners and the Chinese in their attempt to frame the be
havioral patterns of the Chinese to ensure successful communication with
their Western counterparts. Their research showed that certain patterns of
behavior are evident within cultures. These patterns have been widely used
within cross-cultural research and practice to train negotiators. Yet we argue
that more is needed.
The Chinese culture is notably among the least understood and studied
markets within the business arena (Zhang & Neelankavil, 1 997) . Therefore,
this chapter attempts to bridge this gap through developing a theoretical
framework for analyzing cross-cultural negotiation processes within Sino
Australian negotiations. Further, the framework developed represents a
bounded-emotionality perspective of the negotiation process. This link be
tween negotiation and emotion is discussed next.
UNDE RSTANDING C RO S S-C ULT U RAL N E G OTIAT I O N
EMOTION AND NEGOTIATION
Notwithstanding the fact that skill is an undeniable critical element in suc
cessful negotiations, negotiation is also affected, to a large extent, by emotion.
Although not widely researched, emotional or affective reactions such as dis
tress or anger are often experienced during the negotiation process (George,
Jones, & Gonzalez, 1998), partly because of external and internal conflicts aris
ing from the process of attitudinal structuring (George et aI., 1 998). When
miscommunication occurs, it is likely to have a negative effect on negotiators,
rather than a positive effect. This negative effect is likely to trigger the negotia
tors' subconscious, which may result in the negotiator displaying a defense
mode or initiating the negotiation toward a negative emotion (Dayringer,
1998). Subsequently, the relationship between emotion and negotiation in
volves the impact of feelings or moods that people experience during cross
cultural negotiations (George et aI., 1 998).
Conflicts that take place during negotiations have an inherent affective
component (Pondy, 1 967), and distress or anger emotions are often experi
enced during the negotiation process (George et aI., 1 998) . Further, these
negative emotional reactions may continue to develop at an accelerated and ac
cumulative pace-a pattern also known as a "negative spiral" (George et al.,
1 998). Fueled with negative emotions, negotiators may experience a negative
spiral at different speeds, whereby there is little chance for that spiral to be
broken by either party. Therefore, the negotiation result can be unsuccessful
and can even terminate the possibility of future negotiations.
As with negotiation styles, culture impacts on the emotions experienced
during the negotiation process. Studies have shown cultural differences in a
range of emotional experiences including intensity, duration, and control of
emotion (Matsumoto, 1993) . Studies also conclude that cultures differ when
judging other emotions (Matsumoto, 1 993) . As such, incorrect emotional
judgments due to cultural differences will affect the outcome of a negotiation.
Behavior during the negotiation process is also affected by the emotions
evoked. George and colleagues ( 1 998) identified that an individual's behavior
is as affected by the person's moods and emotions as by his or her attitudes
and values. They suggested that there are two major emotional feelings during
negotiation: positive and negative. However, we suggest that there may also be
degrees of emotional uncertainty, with some factors during the negotiation
process increasing the propensity for one's emotion to move in a positive di
rection, and others increasing the propensity to move in a negative direction.
In other words, although the process of negotiation may begin positively, an
"uncertain feeling" can emerge when either or both parties are not sure if the
negotiation is heading in the agreed direction.
Toward the conclusion of the negotiation, negative feelings may emerge if
the result is not satisfactory, and likewise, positive feelings may emerge if the
W H I T E , H A RTEL, P AN I P U C C I
result i s satisfactory. Again, we argue for a third feeling, which appears be
tween positive and negative, namely, the uncertain feeling.
The preceding discussion of cross-cultural negotiation shows that there are
many points in a negotiation where an affective event can occur. According to
affective events theory (AET) , an emotional response flows from a particular
type of event labeled as an affective event. These affective events are shaped by
the environment in which interactions occur. The emotions that flow from af
fective events are in part a consequence of the event and in part a consequence
of individual factors that shape the interpretation of the event. These emo
tions, in turn, impact on individuals' attitudes and behaviors.
INFLUENCE OF AUSTRALIAN AND CHINESE
CULTURE ON NEGOTIATION
Cultural factors impact on whether negotiations begin with positive, negative,
or uncertain feelings. For example, observations of Chinese-Australian nego
tiations suggest that Chinese negotiators have the tendency to start negotiat
ing in a state akin to the uncertain feeling whereas Australians tend to start
with a positive feeling (cf. Breth & Jin, 1 99 1 ; Tung, 199 1 ) . Further, this uncer
tain feeling may also occur after negotiations have begun and neither party is
certain of the direction of the negotiation, leading to a negotiation standstill.
When negotiating with the Chinese, this type of ending may terminate the ne
gotiation process or close avenues for future negotiations (Engholm, 1 989;
Pye, 1 990) .
In cross-cultural negotiation, cultural values play an important role in
reaching an effective agreement. For example, Australians and the Chinese
differ in their definitions of value. Therefore, the Chinese would not use the
phrase "too expensive" because it suggests that one has not enough money to
purchase the item, which negates the achievement of saving face. However, the
Australian negotiator would have difficulty in understanding why the Chinese
do not inform them of the prices that are too expensive and thus "save face."
Pye (1 982) supported this contention, commenting that Sino-American busi
ness negotiation misunderstandings are due largely to cultural differences and
that joint-venture negotiations often intensify this problem further. Cultural
difference in values, in effect, fuel the possibility of miscommunication. Cul
tural understanding is, therefore, an important moderator of the types of emo
tions flowing from misunderstandings in a cross-cultural negotiation and is
depicted in our model (see Fig. 9.1).
Hall's (1 976) theory of high- and low-context cultures is also helpful in ex
plaining cross-cultural communication behaviors. In high-context cultures,
such as in China, nonverbal or situational cues bear considerable importance
(Stone, 2002), whereas the emphasis on time and formal documentation bears
Affective cultural background
Emotional awareness and regulation
Positive versus negative affect
Discrepancy in convergencedivergence between interactants
FIG. 9.1 .
Theoretical model of cross-cultural negotiation.
WHIT E , HARTEL, PANI P U C C I
high importance in low-context cultures such a s Australia. When negotiating
between these two cultural groups, the group from the high-context culture
requires a clearer interpretation of its negotiator's nonverbal signals. Failure
to do so decreases the chance of a successful negotiation.
Culture also determines the negotiation strategy used by the parties in
volved. For instance, Chinese negotiation teams are often constructed with
multiple layers of powerful people. This strategy is used to shift power from
one person to the other, in the attempt to confuse other negotiators through
role play. This shift may also be adjusted when a member of the team is enter
ing a negative emotive state. Further, the Chinese society is a high power dis
tance society (Hofstede, 1 980) , which means that subordinate persons con
verge more to the dominant persons rather than vice versa (Thakerar, Giles, &
Cheshire, 1 982) . These features of Chinese negotiating norms contrast mark
edly with the features of Australian negotiations, making Sino-Australian
negotiations undoubtedly difficult tasks (Shenkar & Simcha, 1 987) . It is no
wonder that despite numerous attempts to develop successful negotiation re
lationships between the two cultures, studies in this area have not yet ade
quately addressed the dynamic character of the cultures involved. We next at
tempt to address this gap by first discussing culture and emotion, and then
applying CAT to the Australian-Chinese negotiation process.
CULTURE AND EMOTION
Research has shown that cultures exert considerable influence over emotion
through behavioral norms (Ekman, 1994; Friesen, 1972; Matsumoto, 1993).
Awareness of this means that negotiators working in the cross-cultural context
will not take the process of communication for granted but instead pay more at
tention to the processes employed and their potential emotional consequences.
There are several types of emotional effects that may influence the Sino
Australian negotiation process. The most pertinent one is a postdecision emo
tion that occurs when a decision is reached with strong emotions attached.
This creates problems in negotiation, for instance, as our earlier scenario
demonstrated; because the Chinese society is based on trust, as opposed to
Western society's basis in legalities, the concept of being bound by a contract
is less important in Chinese culture than abiding in accordance with one's
emotions. In other words, the moral obligation was perceived by the Chinese
as insignificant compared to one's emotion, especially when revenge was an
Although great differences exist in expression and behavior, research sug
gests that the experience of basic moods and emotions tend to be universal
(Ekman, 1994; Scherer, 1994, as cited in George et al., 1998). For example, cry
ing, anger, and frustration are negative feelings that we have all experienced.
UNDE RSTAN D I N G C R O S S - C U LTURAL N E G O T IATION
Difficulties arise during cross-cultural negotiation regarding the conver
sion of negative feelings to positive feelings. First, these feelings may occur
when there is a misunderstanding. Moreover, the negative feelings are not de
tected by the other party. Second, the process of converting negative feelings to
positive feelings is difficult, although not impossible. They may be overcome if
the negotiator adopts the concept of "no hurt feelings. " This suggests that no
one party is at fault, and that business should continue as planned. Evidently,
negative emotions can be controlled in this situation as the cause of the misun
derstanding is not of paramount importance.
Further difficulties arise due to the terminology used in negotiations. For
instance, there are often terms used by Australians that have no direct transla
tion in the Chinese language, such as "to hold a grudge" and "no hard feel
ings." This indicates that the Chinese culture is lacking a process to convey
verbally negative feelings. The only term used in China that is similar to this is
qing bie jian jue, which translates as "please do not see it as odd." When it is
used, it suggests that the Chinese person caused the misunderstanding. This
confirms further Hofstede' s ( 1980) power distance theory, which states that in
Eastern cultures, the less powerful party is more likely to submit to the higher
COMMUNICATION ACCOMMODATION THEORY
IN SINO-AUSTRALIAN NEGOTIATIONS
In this section we extend communication accommodation theory (CAT)
(Coupland et aI., 199 1 ; Giles, 1973) to detect positive and negative emotions
in the communication process and in cross-cultural negotiations. This is
achieved by drawing on George, Jones, and Gonzalez's (1998) model, which
describes the affect of negotiators in cross-cultural negotiations. These au
thors identified negative emotional spirals as the major cause of unsuccessful
negotiations. Further, unless the negotiators break out of the negative spiral,
miscommunications or negotiation breakdowns are likely to result.
CAT is designed to examine the efficiency of communication (Petronio et
al., 1998). In particular, it focuses on the convergence and divergence involved
in speech communication. CAT is applied broadly in a number of areas, in
cluding convergence and divergence, cross-boundary communications, non
verbal communications, miscommunication, and integration of intergroup and
outer-group communications (Petronio et aI., 1 998) .
There are six levels of CAT, relevant to understanding problems in negotia
Level l : Discourse and meaning are inherently flawed although speakers
are not likely to recognize the problem.
W H I T E , H A RTE L , PANI P U C C I
Level 2 : Strategic compromises or minor misunderstandings abound;
there may be some awareness of miscommunication.
Level 3 : Miscommunication is typically attributed to the personal defi
ciencies of an individual.
Level 4: Failure in conversational goal attainment, of which speakers are
likely to be fully aware.
Level 5: Intergroup considerations play the major role in miscommuni
Level 6: Sociostructural power imbalances.
The application of the CAT framework to Australian-Chinese negotiations
can facilitate further the link between culture, emotion, and negotiation. Ex
tending it to include emotions allows us to describe how a given negotiation
Level 1 of CAT
The first level of CAT is concerned with the meaning and discourse, or cul
tural and language differences, in the use of the English language. Although
English is becoming the international negotiation language, it is not used in
the same way by everyone, and this can create a barrier to communication
(Crystal, 2000) . In other words, although Chinese and Australians speak Eng
lish, they may not necessarily use the language in the same way (Crystal, 2000).
When this issue is not recognized, miscommunication may arise, resulting in
negotiation problems that may not be discovered until greater damage has sur
Level 2 of CAT
The second level of CAT is primarily concerned with the minor misunder
standings likely to accumulate in cross-cultural negotiations, especially with
the Chinese. When negotiators come from different origins, the potential for
misunderstandings is even greater. Culture provides a perceptual filter that
influences the way we interpret events (Adler & Rodman, 2000). Parties of dif
ferent cultures begin the negotiation process testing many communication
methods until a mutually understood method is established. This process is a
fertile ground for misunderstandings, albeit mostly minor ones, and the accu
mulation of these misunderstandings causes negative emotions (George,
Jones, & Gonzalez, 1 998). For example, Chinese negotiators do not want to
cause their counterparts hurt feelings and do not have any contingency plans
for resolving such problems when they do occur. Although Australians are ca
pable of saying "no hard feelings" or "no worries, mate" and continuing with
the negotiation process, Chinese negotiators will not be able to forget the
UNDE RSTAN DING C RO S S - C U L TU RAL N E G O T IATION
"hurt feelings." The accumulation of these hurt feelings throughout the proc
ess can become a large issue at a later stage of the negotiation, which is evident
in the scenario presented at the beginning of this chapter.
Level 3 of CAT
The third level of CAT shows that individual differences have enormous po
tential to cause miscommunications. These personal differences influence
people's communication pattern. Unless communication parties consciously
are making allowances for such differences, miscommunication may occur.
Level 4 of CAT
The fourth level of CAT addresses the cultural differences which pose a bar
rier for negotiators in achieving the full awareness of misunderstandings.
When negotiation occurs between high- and low-context culture groups, the
interpretation of the negotiators' goals may differ dramatically from their ac
tual goals. This is because the low-context group presents its evidence before
its conclusions whereas the high-context group presents its conclusions before
its evidence (Hall, 1976) . These two contrasting ways of presenting informa
tion may cause some negotiators to mistake unimportant evidence as their
counterpart's goals, thus missing the counterpart's actual goals, and vice
versa. Unless the negotiators are trained or aware of such critical cultural dif
ferences, the miscommunication may not be detected and thus successful ne
gotiation may be impaired.
Level S of CAT
Once boundaries are created, groups will remain within their boundary to
avoid uncertainty (Petronio et aI., 1998) . Within Level S of CAT, these bound
aries are used to keep nongroup members out and other group members in.
According to Coupland and colleagues (199 1 ) , this involves regulating, aging,
blurring, and coping with boundaries that often are fuzzy.
As Petronio and colleagues (1998) observed, "We fit in our environment by
drawing lines around those things that are important to us, and then control
them through rules." Yet we also recognize that to fit successfully within the
environment, we must have enough flexibility within these boundaries to allow
a degree of integration between ourselves and the world within which we live.
Such boundary negotiation evokes emotions in ourselves and others, and re
quires emotional awareness and regulation (see Fig. 9. 1 ) .
WHITE, HARTEL, PAN I P U C C I
Level 6 of CAT
The Australian culture is less structured and lower on Hofstede's ( 1 986)
power distance scale in comparison to the Chinese. In negotiation processes
between these two cultures, Chinese negotiators are more likely to have an es
tablished team structure (cf. Breth & Jin, 1 99 1 ) . Further, Level 6 of CAT illus
trates that Chinese negotiators have a power distance structure that facilitates
decision making from the person with the most authority. When negotiating
with one or two Australians, it is often difficult for the Chinese negotiator to
determine how the power structure should be maintained and how to keep the
balance of power for both parties (cf. Breth & Jin, 199 1 ) .
In summary, the CAT model predicts that speakers will b e evaluated posi
tively or negatively: Converging speakers will be evaluated positively, whereas
divergers and maintainers will be evaluated as hostile and unfriendly (Hornsey
& Gallois, 1998) . When the style of negotiation is converted from convergence
to divergence, it is also converted from positive to negative. At this stage, we
propose that a negative emotion is likely to play a stronger role than a positive
one (see Fig. 9. 1 ) , and it is at this point that the negotiation is likely to be
guided toward a negative outcome (George et al., 1 998) . The first indication of
this problem is the presence of ignoring or reducing (Dayringer, 1 998) behav
iors not coded among the nonverbal behaviors reported in Jones and col
leagues' ( 1999) research. Therefore, these need to be added to CAT when ap
plying it to the cross-cultural negotiation context.
The application of the CAT framework to Australian-Chinese negotiations
can facilitate further the link between culture, emotion, and negotiation.
EXTENDING CAT FOR THE CROSS-CULTURAL
INTEGRATING AFFECTIVE EVENTS THEORY (AET)
The integration of AET in cross-cultural negotiations is beneficial because
CAT in its current conceptualization fails to consider the role of affective
events or emotional responses and their subsequent attitudinal and behavioral
Conversion and Diversion
Do all negotiators begin as converging speakers and convert to diverging
throughout the negotiation (i.e., when they are ignored by their counterpart) ?
When negotiation occurs between people of the same culture, this changing
process should occur at the same time due to a shared mental model of the ne
gotiation process (cf. George et aI., 1998) . When the negotiation is between