Description
Behavior or behaviour is the range of actions and mannerisms made by organisms, systems, or artificial entities in conjunction with their environment, which includes the other systems or organisms around as well as the physical environment. It is the response of the system or organism to various stimuli or inputs, whether internal or external, conscious or subconscious, overt or covert, and voluntary or involuntary.
A Case Study on Behavioral Perspective on Negotiating International Alliances
This study examines the influence tactics of senior U.S. executives in negotiating international business alliances. The strategy literature on alliances and the behavioral literature on negotiations were incorporated into a behavioral model of alliance negotiations. Constructs identified from transaction cost, power dependence and game theories were integrated and linked to hypotheses describing negotiators' influence tactics in alliance negotiations. In examining eighty-three alliance negotiations, negotiator trust, perception of a partner firm's alternatives, conflict frame, time horizon, and cultural distance were found to affect negotiators' tactics. International business alliances are occurring with increasing frequency as firms cope with global technological, financial, and marketing challenges through joint ventures rather than vertically integrated structures. Research on alliances has centered on organizational and network motives fostering formation (e.g., Alter and Hage, 1983), partner selection (Geringer, 1991), negotiated structure (e.g., Luke, Begun and Pointer, 1989; Parkhe, 1993), governance and control (e.g., Yan and Gray, 1994a), and performance (Yan and Gray, 1994b). Surprisingly, with some exceptions (e.g., Graham, 1987), the behavioral negotiations through which these alliances are created remain largely unexamined. In this study, we incorporate constructs from power dependence, transaction cost, and game theories to develop and test a behavioral model of the negotiating influence tactics of U.S. executives in international alliance negotiations. This perceptual model views negotiations through the subjective reality of the negotiators and records elements that affect their behavior, instead of relying on normative standards which negotiators may not use (Rubin and Zartman, 1995). The study seeks to contribute to the literature on negotiating alliances in several ways. First, we seek to understand some of the behavioral elements in alliance negotiations. Understanding the process of formation may preempt problems that occur at later stages. Second, we combine theoretical constructs from the behavioral literature on mixed motive negotiations with the strategy literature on alliances between firms. Much of our knowledge about negotiations comes from laboratory experiments (e.g., Francis, 1991; Rubin and Brown, 1975) which tend to use simplified representations of reality (Greenhalgh, Neslin and Gilkey, 1985), and may not reliably generalize to the world of practice. Simultaneously, strategy oriented research treats negotiations as either transaction costs (e.g., Kogut, 1988; Williamson, 1979), or assumes that they are efficient channels through which firms' strategies are linked to results (e.g., Blodgett, 1991). Third, we integrate the constructs into a single framework to examine their relative effect on behavioral tactics. While both strategy research on alliances and behavioral research on negotiations deal with similar issues, research tends to be compartmentalized with little crossfertilization of ideas. Cross-level, cross-disciplinary studies combining strategy and behavioral perspectives can provide valuable insights into the process of interfirm cooperation (Smith,
Carroll and Ashford, 1995). While we often refer to a firm's negotiation tactics, these tactics are, in fact, persuasive communications implemented by individual negotiators. Hence, both firm and individual level constructs are necessary for understanding alliance negotiations. Finally, the applicability to alliance negotiators is enhanced by analyzing the tactics of executives in "real world" negotiations. THEORETICAL BACKGROUND AND HYPOTHESES International business alliances are partnerships between firms that may result in ventures such as commercial joint ventures, franchising, licensing, co-production agreements, or research and development consortia (Hergert and Morris, 1988). Figure one illustrates the hypothesized relationships between antecedents of negotiator influence tactics and the results of inter firm alliance negotiations. This study examines only the association between antecedent factors and negotiator tactics in negotiations that led to alliance agreements. Behavioral Negotiation Negotiator behavior is tactical. Alliance negotiators attempt to achieve their firms' goals by gaining their counterparts' compliance through using influence tactics. An array of behavioral tactics are used in negotiations regardless of the negotiators' general strategy, e.g., cooperative or competitive. Negotiator influence tactics have been studied in varied contexts, such as simulations, interpersonal bargaining within firms, international business and marketing channels (Adler and Graham, 1989; Bacharach and Lawler, 19821; Deluga, 1991; Frazier and Summer, 1984; Kale, 1989; Kipnis and Schmidt, 1983; Roering, 1977; Rubin and Brown, 1975). Synthesizing the research on tactics is problematic because of the plethora of deductive and inductive classifications. However, Kipnis and Schmidt's (1985) classification of influence tactics into the three meta-categories of hard, soft, and rational provides a parsimonious classification for describing negotiator influence tactics. Their classification was based on earlier inductive classification research (Kipnis, Schmidt and Wilkinson, 1980) and has been validated in a variety of contexts (e.g., Deluga, 1991; Falbe and Yukl, 1992; Farmer, et al., 1997). As Kipnis (1976) demonstrated, individuals employ tactics according to their assessment of the probability of the influence target complying. Thus, negotiators using hard tactics engage in threats, demands and sanctions believing that their counterparts face high costs for noncompliance, and hence will comply with their demands (Frazier and Summer, 1984; Kipnis, 1976; Kipnis and Schmidt, 1998). Negotiators may set deadlines, demands concessions, act in an assertive or forceful manner, and threaten to terminate negotiations. In contrast, negotiators using soft tactics emphasize friendliness, believing that their counterparts have the option of noncompliance with little cost. Gaining compliance using soft tactics is based on creating interpersonal liking, building a sense of obligation and reciprocity (Kipnis and Schmidt, 1988). Furthermore, indirect tactics, such as mobilizing the support of suppliers or trade unions, also are soft tactics. Negotiators employing rational influence tactics use logic, data and information in attempting to gain compliance from counterparts (Kipnis and Schmidt, 1983; Yeh, 1986). Typically, data and logic are used ti support nonemotional arguments. As with soft tactics, expected compliance is not taken for granted.
Transaction Cost Theory Transaction cost theory posts that firms organize their boundary activities with other firms to minimize the sum of their production and transaction costs (Williamson, 1975). Transaction costs occur in forming alliances due to human factors such as opportunism, bounded rationality, lack of trust, and environmental factors such as having few alternative partners due to a small number of bargaining firms (Kogut, 1988; Parkhe, 1993; Williamson, 1975). Because of the uncertainty involved, alliance negotiations may be characterized by soft contracting which "presumes much closer identity of interests between the parties and formal contracts are much less complete ... soft contracting relies on social controls, appeals more to the spirit than the letter of agreement" (Williamson and Ouchi, 1981, p. 361). For instance, Dow executives forming an alliance state, "We eventually had a contract with many details on paper, but our alliance was formed by the shared vision and understandings we developed before then ... our informal understanding was a central feature of the alliance", Lewis (1990,p. 104). Despite their clear behavioral implications and links to outcomes of alliance negotiations such as governance structures (e.g., Parkhe, 1993), researchers have not focused on the interplay of the factors in the transaction itself where negotiators "haggle" to reach agreements. Conflict Frames and Opportunism. Alliance formation and performance are hindered by perceptions of opportunistic behavior by participating firms (Parkhe, 1993). Opportunism refers to the tendency of negotiators to maximize their gains at the expense of their partner or the alliance. A behavioral negotiation concept similar to opportunism is that of conflict flames (Deutsch, 1980), These are the subjective lenses through which negotiators view their discord. Negotiators may believe that their firms can gain only through collaboration (cooperative frame), or that one can unilaterally gain a competitive advantage at the cost of the other (competitive frame). A competitive frame is analogous to high opportunism, whereas a cooperative frame suggests low negotiator opportunism. Opportunistic negotiators may be involved in "making false or empty, i.e., self-believed threats and promises in the expectation that individual advantage will thereby be realized" (Williamson, 1975, p. 26), i.e., they see an opportunity for unilateral gain. Behavioral research suggests that negotiators' competitive framing leads to using hard tactics (Deutsch, 1980; Tjsovold, 1989). Alternately, cooperative framing is often associated with using soft tactics and better settlements and resource allocation, because negotiators seek integrative tradeoffs (Bazerman et al., 1985). H1: The more competitive the U.S. negotiators' conflict frame, the more they will use hard tactics with their foreign counterparts. H2.: The more cooperative the U.S. negotiators' conflict frame, the more they will use soft tactics with their foreign counterparts. Trust. Strategy and behavioral negotiation literatures converge on trust being basic to forming alliances (Gulati, 1995; Rubin and Brown, 1975; Tung, 1988). Research on alliances has focused on trust as a consequence of repeated transactions, with trust emerging after partners have successfully completed deals in the past and complied with norms of equity, forsaking
opportunistic tendencies (Gulati, 1995; Ring and Van de Ven, 1992). We focus on trust prior to alliance negotiations to determine its role in the behavior of negotiators (Tung, 1988). Trust is the extent to which negotiators believe in the good intentions of their counterparts and have confidence in the predictability of their actions and words (Cook and Wall, 1980). This definition emphasizes two aspects of trust -- a potential partner's honesty and predictability. In the absence of prior contact, how do negotiators determine the trustworthiness of their counterparts? Prior to negotiations, negotiators base their estimate of trust and confidence on the reputation of their counterpart's firm. For instance, Corning's long history of successful alliances stands it in good stead in forming new alliances. In the mid-1990s, U.S. firms seeking telecommunications partners in India consistently sought out well known business houses, such as the Tatas, because of their reputations, despite their relative inexperience in the industry. Williamson (1985,pp. 62-63) suggests that "idiosyncratic exchange relations that feature persona] trust will survive greater stress and will display greater adaptability," and that some agreements may never be reached without trust. Others (Blau, 1964; Luhman 1979) indicate that trust helps negotiators process information by substituting "inner" certainty for environmental certainty to enable stable exchange relations. Trust works to reduce the perception of opportunistic behavior and limits transaction costs, as it encourages negotiators to candidly exchange technical and commercial information. It leads to openness, a willingness to use soft tactics, such as providing favors or benefits, and sacrifice present rewards for future gains (Axelrod and Keohane, 1986; Parkhe, 1993, Tung, 1986; Yeh, 1986). H3: The greater the U.S. negotiators' trust in their foreign counterparts, the more they will use soft and rational tactics and the less they will use hard tactics. Game Theory Game theory experiments dominate the empirical negotiation research (Axelrod, 1994; Neale and Bazerman, 1991; Neslin and Greenhalgh, 1983; Rubin and Brown, 1975) with various models predicting bargaining outcomes based on negotiators' utilities for outcomes (Neslin and Greenhalgh, 1983). While game theory is an "outcome" theory linking negotiators' utilities and preferences to negotiated outcomes (Neslin and Greenhalgh, 1983), we can extract two antecedents to the behavioral process, namely, the time horizon of collaboration and behavioral transparency associated with cultural distance (Axelrod and Keohane, 1986). Time Horizon. Alliances vary in the time horizon of collaboration anticipated by the negotiating firms. Negotiators' time horizons in forming alliances may be based on their anticipated duration of an alliance or belief that there will be future strategic collaboration in global strategic partnerships (Parkhe, 1993). Both experimental and strategy research indicate that negotiators' expectations of future interaction with counterparts affects current behavior (Axelrod, 1984; Parkhe, 1993). In negotiation experiments, when negotiators know that they will not encounter one another again, they tend to use hard tactics (Axelrod, 1981; Rubin and Brown, 1975). But, when the negotiations are iterative, negotiators are cooperative and accommodating because they know that their counterparts can retaliate in future sessions (Axelrod, 1984; Raiffa, 1982). In
distribution channels, Frazier & Summers (1984) found that parties in long term relationships use indirect, soft tactics and the exchange of information. H4: The longer the U.S. negotiators' time horizon, the more they will use soft and rational tactics, and the less they will use hard tactics in negotiating alliances with foreign counterparts. Behavioral Transparency and Cultural Distance. Behavioral transparency refers to the extent to which alliance negotiators know and understand each other's actions. While Axelrod and Keohane (1986) and Parkhe (1993) focused on information flows and reciprocity in strategies, we link behavioral transparency to cultural differences in international business negotiations. Research consistently indicates that cultural differences are the source of misunderstandings and problems in communications due to reduced behavioral transparency (e.g., Adler and Graham, 1989; Francis, 1991; Van Zandt, 1970). Cultural distance refers to the extent to which a culture is seen as different from one's own. Distance between national cultures can be mapped based on differences in core values and assumptions (Boyacigiller, 1990; Kogut and Singh, 1988; Ronen and Shenkar, 1985). The cultural distances between cultures, such as the United States and Japan that have traditional differences in customs and values, may lessen with frequent business contacts. Boyacigiller (1990) found that U.S. executives reported greater distance from China than Japan, perhaps because of the longer history of business contacts between the two nations. Executives usually prefer using soft tactics in negotiations because of the costs associated with using hard tactics, such as, consuming resources and damaging the prospects of long term collaboration (Kipnis, 1976; Pearce, 1997). Perceiving others as very different from themselves, reduces negotiators' behavioral transparency and their expectations of gaining compliance, thereby raising their willingness to use hard tactics and incur costs. Then, using hard tactics becomes preferable to facing non-compliance. Self-categorization theory offers further explanation about the role of cultural distance. It suggests that people categorize themselves into psychological groups based on obvious characteristics such as race (Tajfel and Turner, 1986), and categorization occurs even without actual interaction with other groups. People communicate differently with members of their own group and other groups when membership is based on culture (Triandis, 1977). Extrapolating from domestic U.S. research on self categorization (e.g., Brewer, 1979), we suggest that when cultural distance is low, as between U.S. and British negotiators, executives view their counterparts as part of their own psychological group. When cultural distance is high, as perhaps between U.S. and Chinese negotiators, the Chinese are seen as different, difficult to understand, less trustworthy and cooperative. HS: The greater the U.S. negotiators' cultural distance from their foreign counterparts, the more they will use hard tactics. Power Dependence Theory
Power dependence theory considers alliances as formalized exchange relationships that firms use to manage resource interdependencies (Emerson, 1962). Firms use alliances to increase their power or reduce their dependence on other firms by improving their competitive position with respect to their rivals. Cooperation is used to secure "downstream" producers, deprive competitors of raw materials, stabilize oligopolistic competition, and reap the benefit of network externalities (Harrigan, 1988; Kogut, 1988; Neilson, 1988). Power dependence theory supplements transaction costs and game theories, linking the antecedents of alliance negotiations to the interpersonal behavior of negotiators. While transaction cost theorists believe that power explains results when firms sacrifice efficiency (Williamson and Ouchi, 1981), power dependence elaborates on the small numbers bargaining issue recognized in transaction cost theory. In alliance negotiations, a firm's power is a function of the number of alternative partners with which it can form an alliance and the resources it controls which are needed or desired by prospective partners (Emerson, 1962, Yah and Gray, 1994a). Unlike game theory, power dependence theory concentrates on the negotiation process rather than outcomes, and facilitates the development of a behavioral perspective. Behavioral studies of negotiations use power dependence theory to examine how two or more parties attempt to resolve their opposing interests in managing interdependencies or allocating scarce resources among themselves and choose their negotiating tactics (Bacharach and Lawler, 1981). Relative Power. In an exchange relationship, each party's potential power lies in the perceived dependence of the other (Emerson, 1962). In deciding to collaborate, potential partners contrast the utilities of going it alone to those of collaboration, where they could gain from access to their partner's resources, but run the risks involved in sharing their resources with others. The fewer the strategic options and alternatives open to a firm, the greater its dependence on its potential partner in alliance negotiations. Chamberlain (1950) argues for the importance of relative power, because a negotiator's power exists only in the relationship with the other party. For example, in negotiating with Tata Telecom in India, AT&T's power may increase if changes in government regulations permit the formation of a wholly owned subsidiary, i.e., it has alternate strategic options. But, if at the same time, other viable partners emerge for Tata Telecom, there may be no change in power in the relationship. In negotiation experiments, negotiators who believe that they have a power advantage tend to use hard tactics, such as threats, sanctions, or demands for concessions in negotiations (Bacharach and Lawler, 1981; Rubin and Brown, 1975). In addition, negotiators with power do not reciprocate concessions (Michner, Vaske, Schleifer, Plazewski and Chapman, 1975). Negotiators perceiving themselves in a relatively low power position (dependent) such that they possess few valued resources or few alternative partners, tend to use "weapons of the weak" (Rubin and Zartman, 1995), i.e., soft and rational tactics, including information exchange, forming coalitions with secondary parties, or friendliness. Dependent negotiators usually use fewer threats, and are more willing to comply with their counterparts' requests (Dwyer and Walker, 1981; Rubin and Brown, 1975). Because of their need to understand the economic needs and preferences of their counterparts, negotiators with greater dependence focus on rational information gathering tactics rather than soft or hard tactics (Graham, 1987).
Paradoxically, powerful negotiators sometimes use soft tactics, and highly dependent negotiators may use hard tactics. Conceivably, negotiators of powerful firms do not need to use hard tactics because the mere presence of their power encourages counterparts to comply (Bacharach and Lawler, 1981; Frazier and Summers, 1986). Also, when firms are in positions of great dependence, their negotiators may be driven to using hard tactics, because they must reach an agreement. Weaker parties have reportedly "blustered, dawdled, appealed, borrowed power, exercised their own veto temporarily (by walking out) or longer (by at least threatening withdrawal). ... over issues that mattered more to them than to the distracted strong partner" (Rubin and Zartman, 1995, p. 356). In these instances, the low power negotiators rarely turn the tables to win, but do better than expected based on their relative power. We sought to understand the relationship between negotiators' perceptions of their firms' relative power and their tactics in actual alliance negotiations. Since empirical evidence on the relationship between power and negotiator tactics is equivocal we frame our hypothesis as follows: H6: There is no relationship between the relative power of U.S. firms and the tactics used by their negotiators with their foreign counterparts. Individual Differences While negotiators and researchers believe that the tactics used in negotiations vary with negotiators' personalities, prior research has failed to identify specific personality traits possessed by successful negotiators (Greenhalgh, et al., 1985; Rubin and Brown, 1975). As a result, Rubin and Brown (1975) developed a concept of interpersonal orientation (IO) to capture individual differences in responsiveness orientation to the interpersonal aspects of their negotiating relationships. A negotiator with high interpersonal orientation is both interested in and responsive to variations in the other's behavior, and claims to accurately judge character (Rubin and Brown, 1975). Negotiators sensitive to interpersonal aspects of negotiating are able to assess their counterparts' frames of reference as cooperative or competitive and, in turn, react by using soft rather than hard tactics. Because negotiators with high interpersonal orientation are both interested in, and responsive to, their counterparts' behavior, Graham (1987) suggests that they focus more on information gathering and use rational tactics. H7: U.S. negotiators with high interpersonal orientation will use more rational tactics with their foreign counterparts than negotiators with low interpersonal orientation. H8: U.S. negotiators with high interpersonal orientation, who perceive their foreign counterparts as having a competitive frame of reference, will use more hard tactics than negotiators with low interpersonal orientation. METHODOLOGY A cross-section of U.S. alliance negotiators were surveyed in 1991-92 for negotiations concluded between 19891991. The negotiators to be surveyed were limited by the following parameters: (i) time period; (ii) number of participants; (iii) nationality; and (iv) number of alliances formed by a single U.S. firm. The study was limited to alliances negotiated in a recent period (19891991) to reduce retrospective bias and loss of respondents from turnover and the dissolution of firms. To
control for variations in negotiator tactics resulting from the number of partners to an alliance, the study was limited to alliance negotiations with only one foreign partner. Most alliances are formed between two firms (81% according to Hergert and Morris, 1988). We limited the survey to U.S. negotiators because we sought a significant number of respondents from a single national culture negotiating with counterparts from different cultures to examine the role of culture in intercultural negotiations. Additionally, we could not contact both negotiating parties due to procedural, resource and language constraints.[ 1] We chose to analyze only one alliance negotiation per firm to control for the impact of firm culture on negotiations. Data Collection[2] We identified 243 alliance negotiators, each representing a single firm, from the Standard and Pool's Register of Corporations, Directors and Executives and phone calls to U.S. firms. Eightyone negotiators responded to the survey, yielding a response rate of 33.3 percent, considered rather high for a sample of this nature (Dawson and Dickenson, 1988). Measures taken to increase the response rate (Dilman, 1978) included identifying negotiators, notifying them of the survey by telephone (or facsimile if they were overseas), reminder letters, and a second mailing of the questionnaire two weeks later. The reasons for nonresponse were executive time constraints, a reluctance to provide confidential information, turnover of senior executives, and dissolution of firms. The sample was biased towards equity joint ventures (80 percent). The respondents were the lead negotiators who were active participants for the entire duration of the negotiations. Pre-test interviews indicated that while a team of executives were normally involved in the negotiations, tracing the "key" executive, often the chief negotiator, could best provide the relevant information. After pre-test interviews with negotiators, the language of the questionnaire was modified, and its length reduced. Participants were assured of confidentiality and a copy of the results. Measures Reliable and valid measures developed in prior research were used when available. Cronbach's (standardized) reliability alpha for each measure is reported in parentheses. All items were assessed on five point Likert type scales. Specific scale items are listed in Appendix B. Independent variables were prefaced with the phrase "Prior to negotiations ..." to recreate the time sequence of events for respondents. Conflict Frames. Previously, negotiators' conflict frames were experimentally induced by maximizing rewards/profits based on cooperative or competitive behavior (e.g., Tjosvold et al., 1984). We created the following two items to assess competitive and cooperative frame of reference: (i) Entering into negotiations did you believe that your firm could gain a competitive advantage at the expense of the other firm? (Negotiators assessed their counterparts' frame of reference with a parallel item.) (ii) Entering into negotiations, did you believe that both firms could gain a competitive edge only by collaborating?[3] Trust. Cook and Wall's (1980) interpersonal trust and confidence scale was modified to reflect the U.S. negotiators' trust in their foreign counterparts and firms (8 items, alpha = 0.88).
Time Horizon. Time horizon refers to the time frame that the negotiators have in mind during alliance negotiations between firms and has two components, (i) the expectation that it will survive for the planned duration and (ii) the expectation of negotiating future alliances (Parkhe, 1993) (alpha = 0.71). Cultural Distance. Cultural distance was assessed by identifying the negotiator's position on Boyacigiller's (1990) index of cultural distance which ranged from ( 1) low distance, to (5) high distance. For example, if Boyacigiller's respondents gave Japan a distance score of 4, and U.K. a score of 1, these were the scores assigned to the negotiating counterparts in our study. Boyacigiller (1990) demonstrated convergent validity for this measure (r=.42, p>.01) with Hofstede's classification. We found discriminant validity with a two item measure of cultural familiarity we developed, orthogonal to cultural distance (r=-.35, p>.05). Relative Power. A ratio of the U.S. negotiators' dependence to that of their counterparts was taken as a measure of their relative power in negotiations. Following Emerson's (1972) theoretical guidelines and Yah and Gray's (1994c) measure, dependence was determined by the alternatives available to the negotiators and their counterparts. These alternatives included both the alternative partners available to firms and their strategic options (alpha = 0.74). Negotiators also reported on the suitability of these partners and options to achieve their firm's goals (alpha = 0.75).[4] Interpersonal Orientation. A four item short form of Swap and Rubin's (1983) 29 item scale was used to measure a general construct of interpersonal orientation (alpha= 0.61). Swap and Rubin (1983) indicated that the scale had satisfactory discriminant and convergent validity with a number of personality scales (e.g., Machiavellianism, Self Monitoring Scales, p<.05). Negotiator Influence Tactics. Negotiator's tactics were measured with a modified version of the Profile of Organizational Influence Strategies (POIS) (Kiphis and Schmidt, 1982). This instrument is. usually used to assess social influence within organizations and has an extensive history of validation studies (e.g., Schreisheim and Hinkin, 1990; Yukl and Falbe, 1992). The instrument was modified based on a review of the international negotiation literature and iterative pre-test responses received from MBA students, faculty, and finally alliance negotiators who assessed the face validity of POIS items for a study of alliance negotiations. For example, an item, "threatens to affect salary decisions" in the original POIS, was replaced by "negotiator threatens to seek other alliance partners." Negotiator influence tactics (33 items) were defined by the scales of Hard tactics (alpha =.77); Soft tactics (alpha =.78); and Rational tactics (alpha =.67).[5] Control Variable. We controlled for the effect of experience or learning, assessed by the number of similar alliances that the responding negotiator had previously negotiated. In interpersonal negotiations, experienced managers differ from their less experienced peers in using a wider range of tactics with a strong emphasis on data driven, information based, influence tactics (Kiphis, Schmidt, Swaffin-Smith and Wilkinson, 1984). Prior experience in forming alliances helps firms move up the learning curve in negotiating alliances as their managers develop skills in negotiating and managing collaborations (Lyles, 1987). Large firms such as Corning or Dew Chemical, tend to have alliance forming expertise because of their past
experience and have developed planning processes and strategies (Barkema et al., 1996; Lewis, 1990). Analysis. Multiple regression analyses were used to determine the relative effect of independent variables on negotiator influence tactics, and to examine the interaction effects of interpersonal orientation with negotiator conflict frames. MANOVA was used to test the role of cultural distance in determining negotiator influence tactics. RESULTS The descriptive statistics and Pearson's product moment correlations for all variables are shown in Table 2. The zero order correlations indicate that the independent variables of the partner's alternatives, cooperative frame, cultural distance, trust, and time horizon are significantly correlated with the influence tactics used by U.S. negotiators. Negotiators report using rational tactics most often in negotiations (mean = 4.03) followed by hard (mean = 2.15) and soft tactics (mean = 1.29). Their conflict frames are more cooperative (mean = 4.20) than competitive (mean = 1.74), though they perceive their counterparts as having more competitive frames (mean = 2.02). They have a long time horizon of collaboration with their partner firm (mean = 3.82) and trust their counterparts and partner firms (mean = 3.80). Table 3 presents the results of our multiple regression analysis. The independent variables as a group predict two of the three influence tactics assessed in this study, namely hard and soft tactics. The U.S. negotiators' perceptions of their partners' alternatives, their cultural distance from foreign counterparts, and their trust in their counterparts are significant predictors of their using soft tactics with foreign counterparts. The U.S. negotiators' cooperative frame of reference is significantly and negatively associated with using hard tactics in negotiations with foreign counterparts (beta -0.24). The hypothesis (H1) positing a positive relationship between negotiators' competitive frames with their using hard tactics with foreign counterparts was not supported. Also the hypothesis (H2) predicting that U.S. negotiators with cooperative frames would use more soft tactics with their foreign counterparts was not supported. The relationship between trust and negotiator influence was contrary to our prediction (H3) that trust: in foreign counterparts would be positively associated with using soft and rational tactics and negatively related to using hard tactics. As the results of the regression analysis shown in Table 3 indicate, trust was negatively related to U.S. negotiators using soft tactics in alliance negotiations (beta -0.40; p>.01). The relationship between trust and U.S. negotiators using hard tactics was not significant. The correlational and regression results provided some support for our fourth hypothesis (H4) predicting that U.S. negotiators' time horizons would be positively associated with using soft and rational tactics, and negatively associated with using hard tactics with their foreign counterparts. Negotiator time horizon of collaboration was significantly and positively associated with their using rational tactics in alliance negotiations (15 0.29). For soft and hard tactics, the beta coefficients indicate that the relationships are in the predicted directions, but they are relatively weak (p>.10).
Mixed support was found for our hypothesis (H5) predicting that U.S. negotiators would increase their hard tactics as the cultural distance with their foreign counterparts increased. The regression results did not support the hypothesis, but the, MANOVA indicated that negotiators used significantly more hard tactics when cultural distance was the greatest (p>.05 on LSD test). Table 4 presents the results of further analyses of the relationships between cultural distance and U.S. negotiator influence tactics. The group numbers from one to four in Table four are indicative of increasing cultural distance from U.S. negotiators. U.S. negotiators increased their hard tactics with counterparts from distant cultures (Group 4). This finding provides some support to our prediction (H5) that negotiators will increase their hard tactics with counterparts from dissimilar cultures. An unanticipated, but important, finding in the MANOVA and regression analysis was that U.S. negotiators increased their soft tactics with increasing cultural distance from their foreign counterparts. Given the importance of cultural differences in intercultural negotiations, and the surprising relationship between cultural distance and influence tactics, we further analyzed the tactics that U.S. negotiators used with counterparts from different clusters of cultures in Appendix C. U.S. negotiators used more soft tactics with counterparts from Eastern Europe and the Far East than from other regions (p>.001). There were no differences in the tactics U.S. negotiators used with counterparts from Japan and Western Europe. The regression results lead us to accept the null hypothesis (H6), because the U.S. negotiators' relative power is not associated with their influence tactics. However, their absolute power indicated by their partner firm's perceived alternatives was significantly associated with their using soft tactics (beta 0.39; p>.01). We faced two problems in assessing the dependence of the firms and deriving their relative power. A large number of negotiators believed that their firms had no alternatives to this alliance (N=21). Also, while we assumed that negotiators were aware of their counterparts' strategic alternatives and potential alternative alliance partners, this was often not the case with negotiators stating that they did not know, or choosing to not answer the relevant questions (N=18). Relative power based on the perceived alternatives of both parties has usually been considered a key construct in negotiations (Chamberlain, 1950). Given that negotiators appear to have imperfect information on their counterparts' alternatives, we partitioned the original variable to include absolute power constructs based on the alternatives available to both firms, in addition to the preconceived measure of relative power. There was no significant difference between the rational tactics used by high versus low interpersonally oriented (IO) U.S. negotiators as indicated by the t-tests between the means of 4.03 and 4.02, respectively, leading us to reject (H7). We also predicted that high IO negotiators would use hard tactics when their perceived their foreign counterparts having competitive frames (H8). However, this was not supported by the regression analysis of the interaction between the U.S. negotiators' interpersonal orientation with their conflict frames and perceptions of their counterparts' conflict frame presented in Table 5. DISCUSSION Research on strategic alliances is fragmented, especially of the negotiation process (Parkhe, 1993). We proposed and tested an integrated model of negotiating international business
alliances, combining the strategy and behavioral influence literatures. We found that trust, time horizon, cultural distance, absolute power of negotiators, and their conflict frames, significantly predicted two of the three influence tactics used in alliance formation. However, the relationships that emerged between cultural distance, trust and using hard, soft and rational tactics were contrary to our predictions. Power, Dependence and Bounded Rationality. Relative power has been closely associated with negotiator tactics (Bacharach and Lawler, 1981; Rubin and Brown, 1975). Yet, we found that U.S. negotiators' perceptions of their relative power was not associated with any pattern of using hard, soft, or rational tactics in alliance negotiations. Rather than relative power, the perceived absolute power of negotiators, indicated by their counterparts' alternatives, appeared to affect the U.S. negotiators' tactics. The knowledge that their counterpart's firms have other potential partners encouraged U.S. negotiators to use soft tactics. More interestingly, a number of them had no knowledge of their partners' alternatives and strategic options. Given this lack of knowledge, how do negotiators assess their relative power? Understanding each other's alternatives is essential for effective negotiations (Lewicki, Litterer, Minton and Saunders, 1994). Negotiators clearly operate under conditions of bounded rationality and imperfect information about their counterparts, which can create transactional disabilities in forming alliances. The findings support Zajac and Bazerman's (1991) arguments that decision makers often have typical blind spots in considering the contingent decisions of competitors. For example, they report that in games modeling acquisition negotiations, negotiators consistently overpay for the acquiring firms, because they fail to analyze their counterparts' decision processes. In our case, many negotiators did not know if their counterpart's firms had alternative partners or alternative strategies to this alliance. Hence, negotiators have little information to estimate power. But, when negotiators had information on partnering firms and believed that their counterparts had viable alternatives to this alliance, they adopted an accommodating style in negotiations, using soft tactics as in experiments where low power parties used soft tactics (Rubin and Brown, 1975). Yet, issues of power and dependence may not be as salient at the point of alliance negotiations as predicted from the experimental negotiation literature. The picture emerging in this study is that entering into alliance negotiations, negotiators believe that they have few or no alternative partners or strategic options to an alliance. In some international alliances this may truly be the case because the search for alliance partners is sequential rather than simultaneous, especially in countries such as China where the government puts forward one prospective partner (Yan and Gray, 1994c). In other cases, key executives champion specific alliances and use their authority to overcome internal resistance (Lewis, 1990; Tallman and Shenkar, 1994). The decision to form a specific alliance is a product of internal bargaining and coalition building (Fornell, Lorange and Roos, 1990; Tallman and Shenkar, 1994), and negotiators have bought into the argument that it is the best strategy for the firm. The firm's culture may also encourage executives to show results of their foreign trips with signed deals (Beamish, 1988). While the belief that this alliance is the best or only strategy helps in internal decision making, it may hurt the firm in negotiations if negotiators believe that they have no alternative but to reach an agreement.
Game Theoretic Implications. Negotiators who believed that their firms would cooperate in the future used more rational tactics in negotiations. They focused on the exchange of information, and provided strongly data driven reasons for their demands. These rational tactics enhance behavioral transparency and encourage cooperation and reciprocity, lending support to earlier studies on cooperation and alliance formation (Axelrod and Keohane, 1986; Parkhe, 1993). Expectations of future cooperation cast a shadow on the present and encouraged the use of soft tactics and information exchange, while inhibiting using threats. Contrary to expectations, we found that U.S. negotiators used more soft tactics with dissimilar rather than similar foreign counterparts. We predicted that they would use fewer soft tactics in these circumstances because cultural differences reduce their expectations of gaining compliance. We now conclude that negotiators may base their tactics on both their perceptions of costs and their expectations of compliance. Soft tactics are low cost tactics, whereas the costs of using hard tactics are high (Kipnis, 1976). Hard tactics can damage relationships between negotiating parties and reduce prospects of long term collaboration. Alliance negotiators may have chosen to use soft tactics with greater cultural distance because of the interdependence between the firms and their long time horizon. Negotiators used more hard and soft tactics with greater cultural distance from their counterparts, suggesting that the reduced behavioral transparency encourages negotiators to react like novice managers in firms and use more of all tactics to gain compliance (Kipnis et al., 1984). There are two potential explanations for our finding that negotiators use more soft strategies with counterparts from the Far East and Eastern Europe (and the former USSR). First, U.S. negotiators may be adapting their tactics to the culture of their counterpart. Studies of cultural differences indicate that eastern cultures are high context cultures where negotiators use more soft and indirect tactics (Hall and Hall, 1988). Second, in the late 1980s, U.S. firms were just beginning to form alliances with firms in these nations. The lack of common business knowledge of these cultures and economies may have led negotiators to use soft tactics in negotiations such as those involving other firms or government agencies. To quote a respondent "... major problems in PRC are due to government entities who have a lot of input into corporate matters." This argument is supported by our finding (in Appendix C) that negotiators did not use different tactics with Japanese counterparts despite the two cultures being very different (Hofstede, 1991). Cultural differences and the experiences of U.S. firms in dealing with the Japanese have been so well documented that they reduce the perceptions of cultural distances in alliance negotiations. Transaction Costs Revisited. Two transaction cost constructs were linked to the dependent variable in unexpected ways. We predicted that cooperative frames would lead negotiators to use more soft tactics in negotiations, but found that they refrained from using hard tactics instead. Evidently, cooperative frames inhibit the use of hard tactics rather than increase the use of soft tactics. Surprisingly, perceptions of counterparts' competitive frame, e.g., opportunism, were negatively associated with negotiators using hard tactics. We suggest that negotiators were trying to de-escalate conflict by not acting on their perceptions of opportunism and using hard tactics (Neale and Bazerman, 1992). Using hard tactics in such a situation could lead to a conflict spiral and a consequent breakdown of the negotiations. Because both parties had stakes in cooperation, restraint would be a wiser option. Also, negotiators overwhelmingly had a cooperative frame of reference. Taken together, these findings suggest that by the time negotiators get to the
bargaining table, they believe that both parties benefit from the alliance, and have curbed their tendencies to engage in opportunistic behavior. Trust has rarely been empirically studied in field negotiations. Considering transaction cost arguments and studies of managerial influence, we predicted that trust would lead negotiators to behave less opportunistically and more cooperatively, using less hard tactics and more soft tactics in negotiations. However, trust was negatively associated with negotiators using soft tactics. Conceivably, once trust is established, soft tactics become unnecessary because negotiators withstand "frank" talk. When trust is low, negotiators use soft tactics to create trust through strategies of forbearance to obtain future payoffs, such as alliance stability, and to build their reputations (Parkhe, 1993). The negotiation literature suggests that negotiators valuing relationships more than the substantive outcomes follow an accommodating strategy, seeking to win over their counterparts, even if it costs them in the short run (Lewicki, et al., 1994). Finally, soft tactics include involving agents such as other firms or government agencies. Mistrust may lead executives to involve agents to ensure that their counterparts will honor agreements. Negotiators' interpersonal orientation failed to predict their influence tactics. This study is a first attempt to empirically examine the role of interpersonal orientation in negotiations. One explanation for our findings could be that U.S. negotiators were flexible enough to use influence tactics appropriate to the negotiation situation rather than consistent with their personality dispositions. Another could be that using a short form of the original instrument led to a weaker representation of the construct. When interpreting this study's findings, several limitations should be considered. First, the analysis is based on retrospective reports from negotiators who may be biased towards making themselves look reasonable. However, there is strong evidence for the rigor of this methodology when using reliable and valid measures (Hambrick, 1980; Spector, 1987). Second, we limited the study to U.S. negotiators. Future research will benefit from information from their international counterparts. Finally, by examining only negotiator behavior, we ignored other outcomes such as alliance survival and performance. Longitudinal research tracking these alliances to examine the relationships between antecedents, process and outcomes will provide a test of the complete model. NOTES 1. Executives reported on one of their negotiated alliances in the relevant time period as reported in Predicast's F & S Index. Their counterparts were identified only after negotiators responded to our inquiry. Due to confidentiality concerns, U.S. negotiators resisted reveling their foreign counterparts or involve them in the study. Therefore we faced a trade-off between gaining participation from many senior U.S. executives, or a far smaller number of negotiator dyads. Also, given the diversity in foreign counterpart culture, achieving equivalence in all their languages to ensure comparability of data was not within the scope of this study. 2. Alliance negotiators were identified from 685 citations of collaboration between firms in Predicast's F&S Index of Corporate Change between 19891991. Alliance was defined by the criteria set by Hergert and Morris (1986). We were inclusive in our approach and included any
mention of joint activity in our initial sample of 685 alliances, which explains the high attrition rate. For example, the following citation in the F&S Index led to the inclusion of the alliance in our initial sample: American Express Bank to jointly form Aviation Express, new aircraft firm, Israel (reported on 2/22/89). We eliminated alliances between overseas subsidiaries, and between foreign firms subsidiaries located in the United States (such as Sony, North America) with U.S. firms. The pool of potential alliances was reduced to 436 because some U.S. firms negotiated multiple ventures in the time period, or formed alliances with U.S. subsidiaries overseas, or with foreign firms' subsidiaries in the United States.
•
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3. To assess the validity of single item measures, negotiators responded to two statements taken from published reports on negotiations. A cooperative frame was assessed by (a) "I wouldn't try to gain the upper hand in a joint venture. It doesn't pay off in the long run" and, a competitive frame by; (b)" When I negotiate, my objective is to get the best possible deal for my firm, irrespective of the other firm's interests." 93.8 percent reporting a high cooperative frame on the Likert item chose statement (a). Of those who chose item (b), 93.7 percent displayed a competitive frame on item ( 2), indicating convergent validity. 4. SPSS excludes cases with values of zero from analysis. We followed Geringer's (1991) approach and re-coded the alternatives (both firms' and counterparts') so that a value of one indicated no alternatives. Cases with missing values were excluded from analysis. 5. A replication of hard, soft, and rational influence dimensions proposed by Kipnis and Schmidt (1985) and validated in previous research (e.g., Deluga, 1991; Farmer, et al., 1993) was attempted. Responses to the 33 items were factor analyzed, despite the small sample, using a principal component factor solution, with iterations for commonality and both orthogonal varimax and oblique rotations. The screen test suggested a three-factor solution with eigen values greater than one, providing a factor structure with few crossloadings and three interpretable factors. Appendix B shows the results of an orthogonal factor analysis and brief descriptions of the items. The first factor consisted of eight "soft" items. The second factor consisted of eleven "hard" items. The third factor consisted of seven "rational" items. Three additive scales for each of the factors were constructed which met acceptable reliability criteria (Kipnis et al., 1980).
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TABLE 1 DESCRIPTIVE SAMPLE STATISTICS OF ALLIANCES AND THEIR NEGOTIATORS
Characteristics % Mean S.D. Type of alliance negotiated Equity Joint Venture Non-Equity Joint Venture Licensing Consortium Subcontracting Joint R&D
79.3 3.7 6.1 2.4 2.4 1.2 19.9 9.7 14.2 8.
Time period of negotiations(months) Contact (# face to face meetings)
Role of respondent Chief negotiator Other Cultural Clusters Cluster Anglo (10)
63.2 37.8 Nationality Canada (2) Australia (1) U.K. (6) Ireland (1) France (5) Italy (3) Belgium (1) Brazil (1) Finland (1) Sweden (1) Norway (1) Holland (3) Cluster Nationality
Latin European(10)
Nordic (6)
Eastern European (12)
USSR(9) Poland (2) Hungary (2)
Far Eastern (15)
Singapore (1) Indonesia (1) Hong Kong (1) India (5) China (6) Korea (2)
Not Guyana(1) classified (3) Saudi Arabia (1) Germany (1) Independent Japan (23)
Note: figures on parentheses refer to the number of counterparts, N=83 TABLE 2 PRODUCT MOMENT CORRELATIONS BETWEEN ALL VARIABLES
Legend for Chart: A B C D E F G H I J K L M Mean (S.D.) 1 2 3 4 5 6 7 8 9 10 11 12 A E I B F J C G K D H L M
1. Relative Power
3.02 (5.64) ---
x ---
----
-----
2. Partner's Alternatives
4.04 (4.54) ---
-0.25[a] ---
x ---
-----
3. Firm's Alternatives
5.63 (6.87) ---
0.71[c] ---
0.21 ---
x ----
4. Comp. Frame - Firm
1.74 (1.03) x --
0.14 ---
0.04 ---
0.09 ----
5. Comp. Frame - Partner
2.02 (1.12) 0.42[c] --
-0.03 x --
0.18 ---
0.23[a] ----
6. Cooperative Frame
4.20 (1.05) -0.13 --
0.16 -0.30 --
-0.07 x --
0.06 ----
7. Cultural Distance
3.76 (1.07)
0.03
0.00
-0.06
0.10 --
-0.06 --
-0.01 --
x ---
8. Time Horizon
3.82 (0.94) -0.14 x
0.18 -0.11 --
0.01 0.38[c] --
0.08 -0.18 ---
9. Interpersonal Orientation
3.71 (0.59) -0.20 0.17
0.09 0.18 x
-0.13 0.11 --
0.12 -0.03 ---
10. Trust
3.80 (0.75) -0.09 0.47[c]
0.20 -0.09 0.23
0.04 0.45[c] x
0.12 -0.22[a] ---
11. Soft Tactics
1.29 (0.47) 0.03 -0.07
-0.07 -0.07 -0.11
0.27[a] 0.00 -0.33
-0.08 0.34 x --
12. Hard Tactics
2.15 (0.53) 0.01 -0.25[a]
-0.23 -0.06 -0.21[a]
-0.05 -0.30 -0.35[c]
-0.16 0.13 0.31 x
13. Rational Tactics
4.03 (0.55) -0.05 0.24[a]
-0.03 0.01 -0.07
0.08 0.03 0.15
-0.02 0.05 0.16
0.21
c p>.001; b p>.01; a p>.05. TABLE 3 RESULTS OF REGRESSION ANALYSIS OF INDEPENDENT VARIABLES WITH NEGOTIATOR TACTICS.
Legend for Chart: A B C D A Relative Power Firm's Alternatives Partner's Alternatives Cultural Distance Experience Trust Time Horizon Interpersonal Orientation Competitive Frame-Firm Competitive Frame-Partner Cooperative Frame R2 Adjusted R2 Independent Variables Soft tactics beta Influence Tactics Hard tactics beta Rational Tactics beta B 0.24 -0.27 0.39[c] 0.24 0.01 -0.40[c] 0.10 0.06 0.07 -0.07 0.06 0.29[c] 0.18[c] C -0.24 0.10 -0.14 0.09 0.05 -0.09 -0.06 -0.14 -0.01 -0.11 -0.24 0.20[a] 0.11[a] 0.10 0.00 D -0.07 0.04 -0.01 0.12 -0.08 0.07 0.29 -0.15 -0.09 0.06 -0.06
c p>.01, b p>.05, a p>.10. TABLE 4 MANOVA OF NEGOTIATOR INFLUENCE TACTICS WITH CULTURAL DISTANCE BETWEEN NEGOTIATORS AND THEIR COUNTERPARTS.
Influence
Cultural Distance
(a) Means and standard deviations Tactics Soft Rational Hard (b) MANOVA Test Name Pillai's Hotelling's Wilk's F 2.70 3.06 2.91 Value 0.31 0.41 0.69 F 7.84[c] 0.57 2.21 Low Group1 (N=9) 1.17 (0.27) 3.88 (0.47) 2.21 (0.69) Group2 (N=18) 1.16 (0.37) 4.14 (0.57) 2.00 (0.50) Group3 (N=28) 1.14 (0.32) 3.98 (0.53) 2.07 (0.50) High cultural distance Group4 (N=21) 1.69[a] (0.62) 4.09 (0.57) 2.35 (0.48)
(c) univariate ANOVA Soft Rational Hard
c p>.001, b p>.01, a p>.05; for LSD at P>.05 a, b indicate that group 4 differs from group 1, 2, 3, figures in brackets are standard deviations; N=82. TABLE 5 REGRESSION RESULTS OF NEGOTIATOR INTERPERSONAL ORIENTATION (IO) WITH NEGOTIATOR AND COUNTERPART FRAMES
Legend for Chart: A B C D E F G A Hard Soft Rational Influence Tactics IO beta IOxNcoop IOxNcomp IOxCcomp R2 Adjusted R2 B 0.10 -0.05 -0.13 C D E -0.20 0.00 0.08 F 0.09 0.01 0.00 G 0.01 -0.07 -0.03
-0.28[*] 0.05 -0.05 0.04 0.06 -0.07
N=78
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-----. 1975. Markets and hierarchies: Analysis and antitrust implications. New York, NY: Free Press. Yan, Aimin & Barbara Gray. 1994a. Bargaining power, management control, and performance in U.S.-China joint ventures: A comparative case study. Academy of Management Journal, 37(6): 1,478-517. -----. 1994b. Reconceptualizing the determinants and measurement of joint venture performance. In L. R. Gomez-Mejia & M. W. Lawless, editors, Strategic alliances in high technology. Greenwich, CT: JAI Press. -----. The exercise of formal and informal control in international joint ventures. Paper presented at the Academy of Management meetings, Dallas, Texas. Yeh, Ryh-Song. 1986. Values and interorganizational influence: A comparative study of Taiwanese, Japanese and American firms in Taiwan. Philadelphia, PA: Unpublished Ph.D. Dissertation, Temple University, Philadelphia, Pennsylvania. Yukl, Gary & Cecilia Falbe. 1992. Consequences for managers of using single influence tactics and combinations of tactics. Academy of Management Journal, 35: 638-52. APPENDIX A Trust: Cook and Wall's (1980) instrument designed for use within firms was modified to apply to alliance negotiations. Negotiators indicated their position on five point Likert type scales ranging from ( 1) agree to (5) disagree, for the following items: ( 1) Our partner firm is sincere in its attempts to meet our point of view, ( 2) Our partner firm can be trusted to make sensible decisions for the future of the alliance, (3) Our partner firm seems to be an efficient organization, (4) Our partner firm would be quite prepared to gain an advantage through deception, (5) Our negotiating counterparts can be relied upon to keep their promises, (6) Our negotiating counterparts will lend us a helping hand if we run into problems, (7) Our negotiating counterparts will not make our job more difficult by being lax or careless, (8) Our negotiating counterparts have the skills and qualifications for the job (alpha =.88). Time Horizon: The following three items initially were used to measure time horizon: ( 1) At the time of the negotiations, what (in your opinion) was the likelihood of the alliance lasting for the intended duration? ( 2) At the time of the negotiations, what (in your opinion) was the likelihood of your firm negotiating future alliances with this firm? (3) At the time it was conceived, what was the intended duration of the alliance? a. Short term (13 years); b. Medium term (35 years); c. Long term (over 8 years). Principal component factor and item analysis indicated that the third item reflected a different construct, hence only the first two items were retained as a measure of time horizon (alpha = .71). Cultural Distance: U.S. negotiators described cultural distance from their counterparts by responding to the following questions (Boyacigiller, 1990): How difficult is it to do business in the following countries because of the difference in the location's culture from that of the U.S.?
Another way to think of this issue is to think about how long it takes an average American to adapt to the business milieu. Are some countries in the same region easier to adapt to than others? Respondents identified cultural distance on a scale ranging from one ( 1) very easy to (5) very difficult to adapt to. We collapsed groups one and two (easy to adapt to) into one category. Cultures that were not included in Boyacigiller's study were categorized based on similarities with other cultures in a category (Hofstede, 1991). For instance, Taiwan was in group 4, hence China was also included in group 4. The four groups in order of increasing distance are as follows. Group 1: Canada, Australia, United Kingdom. Group 2: Hong Kong, France, Sweden, Finland, Italy, Holland, Norway, Belgium. Group 3: Japan, Saudi Arabia, India. Group 4: USSR, Singapore, China, Poland, Hungary, Indonesia. While the cultures within each group differ, their distance from American culture is similar. Alternatives, Dependence and Relative Power: Dependence was assessed as a function of the participating firms' alternatives. The U.S. negotiators' firms' alternatives were assessed by four items as follows: Prior to negotiations, ( 1) How many alternative partners were available to your firm? ( 2) How suitable were these alternative partners in achieving your firm's goals? (3) How many strategic options, other than an alliance, did your firm have? (4) How suitable were these strategic options? Four similar items were used to assess the foreign partner's alternatives. Relative power was the ratio of the U.S. firms alternatives (weighted by their suitability) to that of their counterparts. (In an earlier analysis we assessed the stakes that the firms had in negotiating the alliance. U.S. negotiators perceived the stakes of both parties as equal. Since, this in effect controlled for differences in motivational investment (Emerson, 1962), we focused on the firms' alternatives instead.) Interpersonal Orientation: A short form of Swap and Rubin's (1983) scale was used, because the entire scale was too long and also included items obviously irrelevant to the context of strategic alliances as confirmed in our pre-test interviews. Asking irrelevant questions reduces face validity and response rates (Dilman, 1978). From the original scale items with p>.001 as assessed in their scale's internal consistency, and face validity in the context of strategic alliances (as assessed by the researchers) were used to create the scale. Negotiators responded to 8 items on five-point Likert type scales ranging from ( 1) agree to (5) disagree. Four items were eliminated to meet reliability criteria. The four items retained in further analysis were as follows. ( 1) It is important for me to work with people with whom I get along well, even if it slows down negotiations. ( 2) I am sensitive to criticism. (3) The more other people reveal about themselves, the more inclined I am to reveal things about myself. (4) I would like to know what my counterpart is really like, behind the professional mask. The items loaded significantly onto a common factor in factor analysis. Negotiator Influence Tactics: Three measures have been widely used to measure influence tactics by researchers in organizational behavior, marketing, and international business. The Profile of Organizational Influence (POIS; Kiphis and Schmidt, 1982) is most often used to assess interpersonal influence, Frazier's (1984) influence strategy measure is widely accepted in marketing research, and Anglemar and Stern's (1978) classification system has been commonly used to code negotiator tactics in international negotiation simulations. Each measure alone was
inappropriate for our study. The POIS items were developed for use within organizations, and had low face validity. Frazier's instrument consisted of single-item measures for strategies and was limited in scope compared to the POIS. Anglemar and Stern's (1978) coding system suffered from conceptual overlaps between strategies and used content analysis of text. We decided to adapt the POIS items. While basic tactics were not changed, we provided contextual information on interfirm negotiations, drawing from examples provided by Frazier (1984), Anglemar and Stern (1978) and case studies of alliances negotiations (e.g., Weiss, 1987) to anchor items. APPENDIX B Results of the factor analysis of POIS items
Items 1. Other Support 2. Flatter 3. Detail plan 4. Demand firmly 5. Offer exchange 6. Humble 7. Refuse offer 8. Appeal others 9. Simply demand 10. Remind past aid 11. Continue pressure 12. Establish rapport 13. Threat poor service 14. Appeal higher power 15. Threat/seek new partner 16. Sympathy 17. Told comply 18. Logical arguments 19. Offer job incentive 20. Sought receptive moment 21. Set deadlines 22. Strong disagree 23. Information 24. Support from others 25. Threaten termination 26. Informal other support 27. Personal sacrifice 28. Confrontation 29. Promise incentive 30. Offer help 31. Explain reason 32. Repeat remind 33. International regulations Eigen value % variance Cronbach's alpha (# of items) N=82 1 Factors 2 3
.68960 .07743 .33386 .29948 -.22545 .10596 -.08551 .12908 .47390 -.02426 .65793 .01292 .16715 .20044 .09806 .08629 -.26553 -.15161 .28015 .55456 .13888 .78069 .19993 -.19734 .08419 .58347 -.32551 .06505 .48032 .24712 .08195 .49256 .24242 .14033 -.42789 .18983 .16019 .38823 -.15173 .56976 .21206 -.03572 -.15968 .03896 .21328 .18088 .24008 -.23272 .38601 .49855 .14745 .08883 .03837 .57779 .66851 -.23110 -.04863 .15686 -.11486 .37807 .06888 .19041 .62316 -.18873 .55053 .49395 .08730 -.00724 .72684 .40878 -.00168 ,41976 .39754 .56188 .04938 .80177 .08170 -.06678 .38828 .16058 .09253 .02409 .61401 .11318 .51236 -.10972 -.09206 .16151 -.26687 .16888 -.09287 -.16469 .69142 .10126 .15181 .33363 .46218 .19005 .14777 3.85 3.78 3.33 11.65 11.42 10.11 .78 (8) .77 (11) .67 (7)
APPENDIX C Cultural differences between U.S. negotiators and their counterparts from different country clusters were examined using a second measure. Negotiating counterparts were grouped into the Anglo, Latin European, Nordic, and Far Eastern clusters (Ronen and Shenkar, 1985). Because of
the number of alliances negotiated with Japanese counterparts (N=22), they were grouped separate from the Far Eastern cluster. We grouped twelve negotiations from U.S.S.R, Poland and Hungary into a new Eastern European cluster. We placed China and South Korea in the Far Eastern cluster based on common factors identified in prior research of geography, language, economic development, attitudes, values and religion (Ronen and Shenkar, 1985). As indicated in Table C below, cultural differences between U.S. negotiators and their foreign counterparts had a significant effect on U.S. negotiator behavior. They used more soft tactics with counterparts from Eastern Europe and the Far East than from other regions (p>.001). Surprisingly there were no differences in their tactics with counterparts from Japan and Western Europe. The analysis supports hypothesis (H4) predicting that negotiators would vary tactics with counterpart culture. TABLE C MEANS, STANDARD DEVIATIONS AND RESULTS OF THE MANOVA OF NEGOTIATOR INFLUENCE TACTICS WITH COUNTERPART NATIONAL CLUSTERS
National Cluster Cluster 1. 2. 3. 4. 5. 6. Japan Anglo Latin Europe Nordic Far East East Europe Soft 1.06 1.13 1.02 1.15 1.57 1.72 Value 0.41 0.61 0.60 (0.20) (0.27) (0.12) (0.39) (0.66)[a] (0.45)[a] F 2.16 2.64[c] 2.40 Influence Tactics Hard Rational 2.07 2.23 1.97 2.05 2.18 2.36 (0.40) (0.65) (0.40) (0.60) (0.55) (0.58) 4.01 3.86 3.96 4.21 3.89 4.14 (0.54) (0.46) (0.84) (0.56) (0.43) (0.63)
MANOVA Pillai's Hotelling's Wilk's
Univariate ANOVA F Soft Hard Rational 7.08[c] 1.05 0.78
c p<.001, b p<.01, a p<.05, N=74, dissimilar letters indicate significant differences on LSD test ~~~~~~~~ By Asha Rao and Stuart M. Schmidt Asha Rao is Assistant Professor of Organizational Management at the Faculty of Management, Rutgers University. Her research interests are in the areas of international negotiations and crosscultural management. Stuart M. Schmidt is Professor of Human Resource Administration and Organizational Behavior at Temple University. His research interests are in issues of social influence, crosscultural behavior and international business alliance negotiations. He has published in Administrative Science Quarterly, Human Relations and Journal of Applied Psychology. The authors thank Rajan Chandran, Alison Konrad, Arvind Phatak for their assistance with this project, and three anonymous JIBS reviewers for their helpful and stimulating comments on this article. Funding for this project was provided by Temple University.
doc_209245402.doc
Behavior or behaviour is the range of actions and mannerisms made by organisms, systems, or artificial entities in conjunction with their environment, which includes the other systems or organisms around as well as the physical environment. It is the response of the system or organism to various stimuli or inputs, whether internal or external, conscious or subconscious, overt or covert, and voluntary or involuntary.
A Case Study on Behavioral Perspective on Negotiating International Alliances
This study examines the influence tactics of senior U.S. executives in negotiating international business alliances. The strategy literature on alliances and the behavioral literature on negotiations were incorporated into a behavioral model of alliance negotiations. Constructs identified from transaction cost, power dependence and game theories were integrated and linked to hypotheses describing negotiators' influence tactics in alliance negotiations. In examining eighty-three alliance negotiations, negotiator trust, perception of a partner firm's alternatives, conflict frame, time horizon, and cultural distance were found to affect negotiators' tactics. International business alliances are occurring with increasing frequency as firms cope with global technological, financial, and marketing challenges through joint ventures rather than vertically integrated structures. Research on alliances has centered on organizational and network motives fostering formation (e.g., Alter and Hage, 1983), partner selection (Geringer, 1991), negotiated structure (e.g., Luke, Begun and Pointer, 1989; Parkhe, 1993), governance and control (e.g., Yan and Gray, 1994a), and performance (Yan and Gray, 1994b). Surprisingly, with some exceptions (e.g., Graham, 1987), the behavioral negotiations through which these alliances are created remain largely unexamined. In this study, we incorporate constructs from power dependence, transaction cost, and game theories to develop and test a behavioral model of the negotiating influence tactics of U.S. executives in international alliance negotiations. This perceptual model views negotiations through the subjective reality of the negotiators and records elements that affect their behavior, instead of relying on normative standards which negotiators may not use (Rubin and Zartman, 1995). The study seeks to contribute to the literature on negotiating alliances in several ways. First, we seek to understand some of the behavioral elements in alliance negotiations. Understanding the process of formation may preempt problems that occur at later stages. Second, we combine theoretical constructs from the behavioral literature on mixed motive negotiations with the strategy literature on alliances between firms. Much of our knowledge about negotiations comes from laboratory experiments (e.g., Francis, 1991; Rubin and Brown, 1975) which tend to use simplified representations of reality (Greenhalgh, Neslin and Gilkey, 1985), and may not reliably generalize to the world of practice. Simultaneously, strategy oriented research treats negotiations as either transaction costs (e.g., Kogut, 1988; Williamson, 1979), or assumes that they are efficient channels through which firms' strategies are linked to results (e.g., Blodgett, 1991). Third, we integrate the constructs into a single framework to examine their relative effect on behavioral tactics. While both strategy research on alliances and behavioral research on negotiations deal with similar issues, research tends to be compartmentalized with little crossfertilization of ideas. Cross-level, cross-disciplinary studies combining strategy and behavioral perspectives can provide valuable insights into the process of interfirm cooperation (Smith,
Carroll and Ashford, 1995). While we often refer to a firm's negotiation tactics, these tactics are, in fact, persuasive communications implemented by individual negotiators. Hence, both firm and individual level constructs are necessary for understanding alliance negotiations. Finally, the applicability to alliance negotiators is enhanced by analyzing the tactics of executives in "real world" negotiations. THEORETICAL BACKGROUND AND HYPOTHESES International business alliances are partnerships between firms that may result in ventures such as commercial joint ventures, franchising, licensing, co-production agreements, or research and development consortia (Hergert and Morris, 1988). Figure one illustrates the hypothesized relationships between antecedents of negotiator influence tactics and the results of inter firm alliance negotiations. This study examines only the association between antecedent factors and negotiator tactics in negotiations that led to alliance agreements. Behavioral Negotiation Negotiator behavior is tactical. Alliance negotiators attempt to achieve their firms' goals by gaining their counterparts' compliance through using influence tactics. An array of behavioral tactics are used in negotiations regardless of the negotiators' general strategy, e.g., cooperative or competitive. Negotiator influence tactics have been studied in varied contexts, such as simulations, interpersonal bargaining within firms, international business and marketing channels (Adler and Graham, 1989; Bacharach and Lawler, 19821; Deluga, 1991; Frazier and Summer, 1984; Kale, 1989; Kipnis and Schmidt, 1983; Roering, 1977; Rubin and Brown, 1975). Synthesizing the research on tactics is problematic because of the plethora of deductive and inductive classifications. However, Kipnis and Schmidt's (1985) classification of influence tactics into the three meta-categories of hard, soft, and rational provides a parsimonious classification for describing negotiator influence tactics. Their classification was based on earlier inductive classification research (Kipnis, Schmidt and Wilkinson, 1980) and has been validated in a variety of contexts (e.g., Deluga, 1991; Falbe and Yukl, 1992; Farmer, et al., 1997). As Kipnis (1976) demonstrated, individuals employ tactics according to their assessment of the probability of the influence target complying. Thus, negotiators using hard tactics engage in threats, demands and sanctions believing that their counterparts face high costs for noncompliance, and hence will comply with their demands (Frazier and Summer, 1984; Kipnis, 1976; Kipnis and Schmidt, 1998). Negotiators may set deadlines, demands concessions, act in an assertive or forceful manner, and threaten to terminate negotiations. In contrast, negotiators using soft tactics emphasize friendliness, believing that their counterparts have the option of noncompliance with little cost. Gaining compliance using soft tactics is based on creating interpersonal liking, building a sense of obligation and reciprocity (Kipnis and Schmidt, 1988). Furthermore, indirect tactics, such as mobilizing the support of suppliers or trade unions, also are soft tactics. Negotiators employing rational influence tactics use logic, data and information in attempting to gain compliance from counterparts (Kipnis and Schmidt, 1983; Yeh, 1986). Typically, data and logic are used ti support nonemotional arguments. As with soft tactics, expected compliance is not taken for granted.
Transaction Cost Theory Transaction cost theory posts that firms organize their boundary activities with other firms to minimize the sum of their production and transaction costs (Williamson, 1975). Transaction costs occur in forming alliances due to human factors such as opportunism, bounded rationality, lack of trust, and environmental factors such as having few alternative partners due to a small number of bargaining firms (Kogut, 1988; Parkhe, 1993; Williamson, 1975). Because of the uncertainty involved, alliance negotiations may be characterized by soft contracting which "presumes much closer identity of interests between the parties and formal contracts are much less complete ... soft contracting relies on social controls, appeals more to the spirit than the letter of agreement" (Williamson and Ouchi, 1981, p. 361). For instance, Dow executives forming an alliance state, "We eventually had a contract with many details on paper, but our alliance was formed by the shared vision and understandings we developed before then ... our informal understanding was a central feature of the alliance", Lewis (1990,p. 104). Despite their clear behavioral implications and links to outcomes of alliance negotiations such as governance structures (e.g., Parkhe, 1993), researchers have not focused on the interplay of the factors in the transaction itself where negotiators "haggle" to reach agreements. Conflict Frames and Opportunism. Alliance formation and performance are hindered by perceptions of opportunistic behavior by participating firms (Parkhe, 1993). Opportunism refers to the tendency of negotiators to maximize their gains at the expense of their partner or the alliance. A behavioral negotiation concept similar to opportunism is that of conflict flames (Deutsch, 1980), These are the subjective lenses through which negotiators view their discord. Negotiators may believe that their firms can gain only through collaboration (cooperative frame), or that one can unilaterally gain a competitive advantage at the cost of the other (competitive frame). A competitive frame is analogous to high opportunism, whereas a cooperative frame suggests low negotiator opportunism. Opportunistic negotiators may be involved in "making false or empty, i.e., self-believed threats and promises in the expectation that individual advantage will thereby be realized" (Williamson, 1975, p. 26), i.e., they see an opportunity for unilateral gain. Behavioral research suggests that negotiators' competitive framing leads to using hard tactics (Deutsch, 1980; Tjsovold, 1989). Alternately, cooperative framing is often associated with using soft tactics and better settlements and resource allocation, because negotiators seek integrative tradeoffs (Bazerman et al., 1985). H1: The more competitive the U.S. negotiators' conflict frame, the more they will use hard tactics with their foreign counterparts. H2.: The more cooperative the U.S. negotiators' conflict frame, the more they will use soft tactics with their foreign counterparts. Trust. Strategy and behavioral negotiation literatures converge on trust being basic to forming alliances (Gulati, 1995; Rubin and Brown, 1975; Tung, 1988). Research on alliances has focused on trust as a consequence of repeated transactions, with trust emerging after partners have successfully completed deals in the past and complied with norms of equity, forsaking
opportunistic tendencies (Gulati, 1995; Ring and Van de Ven, 1992). We focus on trust prior to alliance negotiations to determine its role in the behavior of negotiators (Tung, 1988). Trust is the extent to which negotiators believe in the good intentions of their counterparts and have confidence in the predictability of their actions and words (Cook and Wall, 1980). This definition emphasizes two aspects of trust -- a potential partner's honesty and predictability. In the absence of prior contact, how do negotiators determine the trustworthiness of their counterparts? Prior to negotiations, negotiators base their estimate of trust and confidence on the reputation of their counterpart's firm. For instance, Corning's long history of successful alliances stands it in good stead in forming new alliances. In the mid-1990s, U.S. firms seeking telecommunications partners in India consistently sought out well known business houses, such as the Tatas, because of their reputations, despite their relative inexperience in the industry. Williamson (1985,pp. 62-63) suggests that "idiosyncratic exchange relations that feature persona] trust will survive greater stress and will display greater adaptability," and that some agreements may never be reached without trust. Others (Blau, 1964; Luhman 1979) indicate that trust helps negotiators process information by substituting "inner" certainty for environmental certainty to enable stable exchange relations. Trust works to reduce the perception of opportunistic behavior and limits transaction costs, as it encourages negotiators to candidly exchange technical and commercial information. It leads to openness, a willingness to use soft tactics, such as providing favors or benefits, and sacrifice present rewards for future gains (Axelrod and Keohane, 1986; Parkhe, 1993, Tung, 1986; Yeh, 1986). H3: The greater the U.S. negotiators' trust in their foreign counterparts, the more they will use soft and rational tactics and the less they will use hard tactics. Game Theory Game theory experiments dominate the empirical negotiation research (Axelrod, 1994; Neale and Bazerman, 1991; Neslin and Greenhalgh, 1983; Rubin and Brown, 1975) with various models predicting bargaining outcomes based on negotiators' utilities for outcomes (Neslin and Greenhalgh, 1983). While game theory is an "outcome" theory linking negotiators' utilities and preferences to negotiated outcomes (Neslin and Greenhalgh, 1983), we can extract two antecedents to the behavioral process, namely, the time horizon of collaboration and behavioral transparency associated with cultural distance (Axelrod and Keohane, 1986). Time Horizon. Alliances vary in the time horizon of collaboration anticipated by the negotiating firms. Negotiators' time horizons in forming alliances may be based on their anticipated duration of an alliance or belief that there will be future strategic collaboration in global strategic partnerships (Parkhe, 1993). Both experimental and strategy research indicate that negotiators' expectations of future interaction with counterparts affects current behavior (Axelrod, 1984; Parkhe, 1993). In negotiation experiments, when negotiators know that they will not encounter one another again, they tend to use hard tactics (Axelrod, 1981; Rubin and Brown, 1975). But, when the negotiations are iterative, negotiators are cooperative and accommodating because they know that their counterparts can retaliate in future sessions (Axelrod, 1984; Raiffa, 1982). In
distribution channels, Frazier & Summers (1984) found that parties in long term relationships use indirect, soft tactics and the exchange of information. H4: The longer the U.S. negotiators' time horizon, the more they will use soft and rational tactics, and the less they will use hard tactics in negotiating alliances with foreign counterparts. Behavioral Transparency and Cultural Distance. Behavioral transparency refers to the extent to which alliance negotiators know and understand each other's actions. While Axelrod and Keohane (1986) and Parkhe (1993) focused on information flows and reciprocity in strategies, we link behavioral transparency to cultural differences in international business negotiations. Research consistently indicates that cultural differences are the source of misunderstandings and problems in communications due to reduced behavioral transparency (e.g., Adler and Graham, 1989; Francis, 1991; Van Zandt, 1970). Cultural distance refers to the extent to which a culture is seen as different from one's own. Distance between national cultures can be mapped based on differences in core values and assumptions (Boyacigiller, 1990; Kogut and Singh, 1988; Ronen and Shenkar, 1985). The cultural distances between cultures, such as the United States and Japan that have traditional differences in customs and values, may lessen with frequent business contacts. Boyacigiller (1990) found that U.S. executives reported greater distance from China than Japan, perhaps because of the longer history of business contacts between the two nations. Executives usually prefer using soft tactics in negotiations because of the costs associated with using hard tactics, such as, consuming resources and damaging the prospects of long term collaboration (Kipnis, 1976; Pearce, 1997). Perceiving others as very different from themselves, reduces negotiators' behavioral transparency and their expectations of gaining compliance, thereby raising their willingness to use hard tactics and incur costs. Then, using hard tactics becomes preferable to facing non-compliance. Self-categorization theory offers further explanation about the role of cultural distance. It suggests that people categorize themselves into psychological groups based on obvious characteristics such as race (Tajfel and Turner, 1986), and categorization occurs even without actual interaction with other groups. People communicate differently with members of their own group and other groups when membership is based on culture (Triandis, 1977). Extrapolating from domestic U.S. research on self categorization (e.g., Brewer, 1979), we suggest that when cultural distance is low, as between U.S. and British negotiators, executives view their counterparts as part of their own psychological group. When cultural distance is high, as perhaps between U.S. and Chinese negotiators, the Chinese are seen as different, difficult to understand, less trustworthy and cooperative. HS: The greater the U.S. negotiators' cultural distance from their foreign counterparts, the more they will use hard tactics. Power Dependence Theory
Power dependence theory considers alliances as formalized exchange relationships that firms use to manage resource interdependencies (Emerson, 1962). Firms use alliances to increase their power or reduce their dependence on other firms by improving their competitive position with respect to their rivals. Cooperation is used to secure "downstream" producers, deprive competitors of raw materials, stabilize oligopolistic competition, and reap the benefit of network externalities (Harrigan, 1988; Kogut, 1988; Neilson, 1988). Power dependence theory supplements transaction costs and game theories, linking the antecedents of alliance negotiations to the interpersonal behavior of negotiators. While transaction cost theorists believe that power explains results when firms sacrifice efficiency (Williamson and Ouchi, 1981), power dependence elaborates on the small numbers bargaining issue recognized in transaction cost theory. In alliance negotiations, a firm's power is a function of the number of alternative partners with which it can form an alliance and the resources it controls which are needed or desired by prospective partners (Emerson, 1962, Yah and Gray, 1994a). Unlike game theory, power dependence theory concentrates on the negotiation process rather than outcomes, and facilitates the development of a behavioral perspective. Behavioral studies of negotiations use power dependence theory to examine how two or more parties attempt to resolve their opposing interests in managing interdependencies or allocating scarce resources among themselves and choose their negotiating tactics (Bacharach and Lawler, 1981). Relative Power. In an exchange relationship, each party's potential power lies in the perceived dependence of the other (Emerson, 1962). In deciding to collaborate, potential partners contrast the utilities of going it alone to those of collaboration, where they could gain from access to their partner's resources, but run the risks involved in sharing their resources with others. The fewer the strategic options and alternatives open to a firm, the greater its dependence on its potential partner in alliance negotiations. Chamberlain (1950) argues for the importance of relative power, because a negotiator's power exists only in the relationship with the other party. For example, in negotiating with Tata Telecom in India, AT&T's power may increase if changes in government regulations permit the formation of a wholly owned subsidiary, i.e., it has alternate strategic options. But, if at the same time, other viable partners emerge for Tata Telecom, there may be no change in power in the relationship. In negotiation experiments, negotiators who believe that they have a power advantage tend to use hard tactics, such as threats, sanctions, or demands for concessions in negotiations (Bacharach and Lawler, 1981; Rubin and Brown, 1975). In addition, negotiators with power do not reciprocate concessions (Michner, Vaske, Schleifer, Plazewski and Chapman, 1975). Negotiators perceiving themselves in a relatively low power position (dependent) such that they possess few valued resources or few alternative partners, tend to use "weapons of the weak" (Rubin and Zartman, 1995), i.e., soft and rational tactics, including information exchange, forming coalitions with secondary parties, or friendliness. Dependent negotiators usually use fewer threats, and are more willing to comply with their counterparts' requests (Dwyer and Walker, 1981; Rubin and Brown, 1975). Because of their need to understand the economic needs and preferences of their counterparts, negotiators with greater dependence focus on rational information gathering tactics rather than soft or hard tactics (Graham, 1987).
Paradoxically, powerful negotiators sometimes use soft tactics, and highly dependent negotiators may use hard tactics. Conceivably, negotiators of powerful firms do not need to use hard tactics because the mere presence of their power encourages counterparts to comply (Bacharach and Lawler, 1981; Frazier and Summers, 1986). Also, when firms are in positions of great dependence, their negotiators may be driven to using hard tactics, because they must reach an agreement. Weaker parties have reportedly "blustered, dawdled, appealed, borrowed power, exercised their own veto temporarily (by walking out) or longer (by at least threatening withdrawal). ... over issues that mattered more to them than to the distracted strong partner" (Rubin and Zartman, 1995, p. 356). In these instances, the low power negotiators rarely turn the tables to win, but do better than expected based on their relative power. We sought to understand the relationship between negotiators' perceptions of their firms' relative power and their tactics in actual alliance negotiations. Since empirical evidence on the relationship between power and negotiator tactics is equivocal we frame our hypothesis as follows: H6: There is no relationship between the relative power of U.S. firms and the tactics used by their negotiators with their foreign counterparts. Individual Differences While negotiators and researchers believe that the tactics used in negotiations vary with negotiators' personalities, prior research has failed to identify specific personality traits possessed by successful negotiators (Greenhalgh, et al., 1985; Rubin and Brown, 1975). As a result, Rubin and Brown (1975) developed a concept of interpersonal orientation (IO) to capture individual differences in responsiveness orientation to the interpersonal aspects of their negotiating relationships. A negotiator with high interpersonal orientation is both interested in and responsive to variations in the other's behavior, and claims to accurately judge character (Rubin and Brown, 1975). Negotiators sensitive to interpersonal aspects of negotiating are able to assess their counterparts' frames of reference as cooperative or competitive and, in turn, react by using soft rather than hard tactics. Because negotiators with high interpersonal orientation are both interested in, and responsive to, their counterparts' behavior, Graham (1987) suggests that they focus more on information gathering and use rational tactics. H7: U.S. negotiators with high interpersonal orientation will use more rational tactics with their foreign counterparts than negotiators with low interpersonal orientation. H8: U.S. negotiators with high interpersonal orientation, who perceive their foreign counterparts as having a competitive frame of reference, will use more hard tactics than negotiators with low interpersonal orientation. METHODOLOGY A cross-section of U.S. alliance negotiators were surveyed in 1991-92 for negotiations concluded between 19891991. The negotiators to be surveyed were limited by the following parameters: (i) time period; (ii) number of participants; (iii) nationality; and (iv) number of alliances formed by a single U.S. firm. The study was limited to alliances negotiated in a recent period (19891991) to reduce retrospective bias and loss of respondents from turnover and the dissolution of firms. To
control for variations in negotiator tactics resulting from the number of partners to an alliance, the study was limited to alliance negotiations with only one foreign partner. Most alliances are formed between two firms (81% according to Hergert and Morris, 1988). We limited the survey to U.S. negotiators because we sought a significant number of respondents from a single national culture negotiating with counterparts from different cultures to examine the role of culture in intercultural negotiations. Additionally, we could not contact both negotiating parties due to procedural, resource and language constraints.[ 1] We chose to analyze only one alliance negotiation per firm to control for the impact of firm culture on negotiations. Data Collection[2] We identified 243 alliance negotiators, each representing a single firm, from the Standard and Pool's Register of Corporations, Directors and Executives and phone calls to U.S. firms. Eightyone negotiators responded to the survey, yielding a response rate of 33.3 percent, considered rather high for a sample of this nature (Dawson and Dickenson, 1988). Measures taken to increase the response rate (Dilman, 1978) included identifying negotiators, notifying them of the survey by telephone (or facsimile if they were overseas), reminder letters, and a second mailing of the questionnaire two weeks later. The reasons for nonresponse were executive time constraints, a reluctance to provide confidential information, turnover of senior executives, and dissolution of firms. The sample was biased towards equity joint ventures (80 percent). The respondents were the lead negotiators who were active participants for the entire duration of the negotiations. Pre-test interviews indicated that while a team of executives were normally involved in the negotiations, tracing the "key" executive, often the chief negotiator, could best provide the relevant information. After pre-test interviews with negotiators, the language of the questionnaire was modified, and its length reduced. Participants were assured of confidentiality and a copy of the results. Measures Reliable and valid measures developed in prior research were used when available. Cronbach's (standardized) reliability alpha for each measure is reported in parentheses. All items were assessed on five point Likert type scales. Specific scale items are listed in Appendix B. Independent variables were prefaced with the phrase "Prior to negotiations ..." to recreate the time sequence of events for respondents. Conflict Frames. Previously, negotiators' conflict frames were experimentally induced by maximizing rewards/profits based on cooperative or competitive behavior (e.g., Tjosvold et al., 1984). We created the following two items to assess competitive and cooperative frame of reference: (i) Entering into negotiations did you believe that your firm could gain a competitive advantage at the expense of the other firm? (Negotiators assessed their counterparts' frame of reference with a parallel item.) (ii) Entering into negotiations, did you believe that both firms could gain a competitive edge only by collaborating?[3] Trust. Cook and Wall's (1980) interpersonal trust and confidence scale was modified to reflect the U.S. negotiators' trust in their foreign counterparts and firms (8 items, alpha = 0.88).
Time Horizon. Time horizon refers to the time frame that the negotiators have in mind during alliance negotiations between firms and has two components, (i) the expectation that it will survive for the planned duration and (ii) the expectation of negotiating future alliances (Parkhe, 1993) (alpha = 0.71). Cultural Distance. Cultural distance was assessed by identifying the negotiator's position on Boyacigiller's (1990) index of cultural distance which ranged from ( 1) low distance, to (5) high distance. For example, if Boyacigiller's respondents gave Japan a distance score of 4, and U.K. a score of 1, these were the scores assigned to the negotiating counterparts in our study. Boyacigiller (1990) demonstrated convergent validity for this measure (r=.42, p>.01) with Hofstede's classification. We found discriminant validity with a two item measure of cultural familiarity we developed, orthogonal to cultural distance (r=-.35, p>.05). Relative Power. A ratio of the U.S. negotiators' dependence to that of their counterparts was taken as a measure of their relative power in negotiations. Following Emerson's (1972) theoretical guidelines and Yah and Gray's (1994c) measure, dependence was determined by the alternatives available to the negotiators and their counterparts. These alternatives included both the alternative partners available to firms and their strategic options (alpha = 0.74). Negotiators also reported on the suitability of these partners and options to achieve their firm's goals (alpha = 0.75).[4] Interpersonal Orientation. A four item short form of Swap and Rubin's (1983) 29 item scale was used to measure a general construct of interpersonal orientation (alpha= 0.61). Swap and Rubin (1983) indicated that the scale had satisfactory discriminant and convergent validity with a number of personality scales (e.g., Machiavellianism, Self Monitoring Scales, p<.05). Negotiator Influence Tactics. Negotiator's tactics were measured with a modified version of the Profile of Organizational Influence Strategies (POIS) (Kiphis and Schmidt, 1982). This instrument is. usually used to assess social influence within organizations and has an extensive history of validation studies (e.g., Schreisheim and Hinkin, 1990; Yukl and Falbe, 1992). The instrument was modified based on a review of the international negotiation literature and iterative pre-test responses received from MBA students, faculty, and finally alliance negotiators who assessed the face validity of POIS items for a study of alliance negotiations. For example, an item, "threatens to affect salary decisions" in the original POIS, was replaced by "negotiator threatens to seek other alliance partners." Negotiator influence tactics (33 items) were defined by the scales of Hard tactics (alpha =.77); Soft tactics (alpha =.78); and Rational tactics (alpha =.67).[5] Control Variable. We controlled for the effect of experience or learning, assessed by the number of similar alliances that the responding negotiator had previously negotiated. In interpersonal negotiations, experienced managers differ from their less experienced peers in using a wider range of tactics with a strong emphasis on data driven, information based, influence tactics (Kiphis, Schmidt, Swaffin-Smith and Wilkinson, 1984). Prior experience in forming alliances helps firms move up the learning curve in negotiating alliances as their managers develop skills in negotiating and managing collaborations (Lyles, 1987). Large firms such as Corning or Dew Chemical, tend to have alliance forming expertise because of their past
experience and have developed planning processes and strategies (Barkema et al., 1996; Lewis, 1990). Analysis. Multiple regression analyses were used to determine the relative effect of independent variables on negotiator influence tactics, and to examine the interaction effects of interpersonal orientation with negotiator conflict frames. MANOVA was used to test the role of cultural distance in determining negotiator influence tactics. RESULTS The descriptive statistics and Pearson's product moment correlations for all variables are shown in Table 2. The zero order correlations indicate that the independent variables of the partner's alternatives, cooperative frame, cultural distance, trust, and time horizon are significantly correlated with the influence tactics used by U.S. negotiators. Negotiators report using rational tactics most often in negotiations (mean = 4.03) followed by hard (mean = 2.15) and soft tactics (mean = 1.29). Their conflict frames are more cooperative (mean = 4.20) than competitive (mean = 1.74), though they perceive their counterparts as having more competitive frames (mean = 2.02). They have a long time horizon of collaboration with their partner firm (mean = 3.82) and trust their counterparts and partner firms (mean = 3.80). Table 3 presents the results of our multiple regression analysis. The independent variables as a group predict two of the three influence tactics assessed in this study, namely hard and soft tactics. The U.S. negotiators' perceptions of their partners' alternatives, their cultural distance from foreign counterparts, and their trust in their counterparts are significant predictors of their using soft tactics with foreign counterparts. The U.S. negotiators' cooperative frame of reference is significantly and negatively associated with using hard tactics in negotiations with foreign counterparts (beta -0.24). The hypothesis (H1) positing a positive relationship between negotiators' competitive frames with their using hard tactics with foreign counterparts was not supported. Also the hypothesis (H2) predicting that U.S. negotiators with cooperative frames would use more soft tactics with their foreign counterparts was not supported. The relationship between trust and negotiator influence was contrary to our prediction (H3) that trust: in foreign counterparts would be positively associated with using soft and rational tactics and negatively related to using hard tactics. As the results of the regression analysis shown in Table 3 indicate, trust was negatively related to U.S. negotiators using soft tactics in alliance negotiations (beta -0.40; p>.01). The relationship between trust and U.S. negotiators using hard tactics was not significant. The correlational and regression results provided some support for our fourth hypothesis (H4) predicting that U.S. negotiators' time horizons would be positively associated with using soft and rational tactics, and negatively associated with using hard tactics with their foreign counterparts. Negotiator time horizon of collaboration was significantly and positively associated with their using rational tactics in alliance negotiations (15 0.29). For soft and hard tactics, the beta coefficients indicate that the relationships are in the predicted directions, but they are relatively weak (p>.10).
Mixed support was found for our hypothesis (H5) predicting that U.S. negotiators would increase their hard tactics as the cultural distance with their foreign counterparts increased. The regression results did not support the hypothesis, but the, MANOVA indicated that negotiators used significantly more hard tactics when cultural distance was the greatest (p>.05 on LSD test). Table 4 presents the results of further analyses of the relationships between cultural distance and U.S. negotiator influence tactics. The group numbers from one to four in Table four are indicative of increasing cultural distance from U.S. negotiators. U.S. negotiators increased their hard tactics with counterparts from distant cultures (Group 4). This finding provides some support to our prediction (H5) that negotiators will increase their hard tactics with counterparts from dissimilar cultures. An unanticipated, but important, finding in the MANOVA and regression analysis was that U.S. negotiators increased their soft tactics with increasing cultural distance from their foreign counterparts. Given the importance of cultural differences in intercultural negotiations, and the surprising relationship between cultural distance and influence tactics, we further analyzed the tactics that U.S. negotiators used with counterparts from different clusters of cultures in Appendix C. U.S. negotiators used more soft tactics with counterparts from Eastern Europe and the Far East than from other regions (p>.001). There were no differences in the tactics U.S. negotiators used with counterparts from Japan and Western Europe. The regression results lead us to accept the null hypothesis (H6), because the U.S. negotiators' relative power is not associated with their influence tactics. However, their absolute power indicated by their partner firm's perceived alternatives was significantly associated with their using soft tactics (beta 0.39; p>.01). We faced two problems in assessing the dependence of the firms and deriving their relative power. A large number of negotiators believed that their firms had no alternatives to this alliance (N=21). Also, while we assumed that negotiators were aware of their counterparts' strategic alternatives and potential alternative alliance partners, this was often not the case with negotiators stating that they did not know, or choosing to not answer the relevant questions (N=18). Relative power based on the perceived alternatives of both parties has usually been considered a key construct in negotiations (Chamberlain, 1950). Given that negotiators appear to have imperfect information on their counterparts' alternatives, we partitioned the original variable to include absolute power constructs based on the alternatives available to both firms, in addition to the preconceived measure of relative power. There was no significant difference between the rational tactics used by high versus low interpersonally oriented (IO) U.S. negotiators as indicated by the t-tests between the means of 4.03 and 4.02, respectively, leading us to reject (H7). We also predicted that high IO negotiators would use hard tactics when their perceived their foreign counterparts having competitive frames (H8). However, this was not supported by the regression analysis of the interaction between the U.S. negotiators' interpersonal orientation with their conflict frames and perceptions of their counterparts' conflict frame presented in Table 5. DISCUSSION Research on strategic alliances is fragmented, especially of the negotiation process (Parkhe, 1993). We proposed and tested an integrated model of negotiating international business
alliances, combining the strategy and behavioral influence literatures. We found that trust, time horizon, cultural distance, absolute power of negotiators, and their conflict frames, significantly predicted two of the three influence tactics used in alliance formation. However, the relationships that emerged between cultural distance, trust and using hard, soft and rational tactics were contrary to our predictions. Power, Dependence and Bounded Rationality. Relative power has been closely associated with negotiator tactics (Bacharach and Lawler, 1981; Rubin and Brown, 1975). Yet, we found that U.S. negotiators' perceptions of their relative power was not associated with any pattern of using hard, soft, or rational tactics in alliance negotiations. Rather than relative power, the perceived absolute power of negotiators, indicated by their counterparts' alternatives, appeared to affect the U.S. negotiators' tactics. The knowledge that their counterpart's firms have other potential partners encouraged U.S. negotiators to use soft tactics. More interestingly, a number of them had no knowledge of their partners' alternatives and strategic options. Given this lack of knowledge, how do negotiators assess their relative power? Understanding each other's alternatives is essential for effective negotiations (Lewicki, Litterer, Minton and Saunders, 1994). Negotiators clearly operate under conditions of bounded rationality and imperfect information about their counterparts, which can create transactional disabilities in forming alliances. The findings support Zajac and Bazerman's (1991) arguments that decision makers often have typical blind spots in considering the contingent decisions of competitors. For example, they report that in games modeling acquisition negotiations, negotiators consistently overpay for the acquiring firms, because they fail to analyze their counterparts' decision processes. In our case, many negotiators did not know if their counterpart's firms had alternative partners or alternative strategies to this alliance. Hence, negotiators have little information to estimate power. But, when negotiators had information on partnering firms and believed that their counterparts had viable alternatives to this alliance, they adopted an accommodating style in negotiations, using soft tactics as in experiments where low power parties used soft tactics (Rubin and Brown, 1975). Yet, issues of power and dependence may not be as salient at the point of alliance negotiations as predicted from the experimental negotiation literature. The picture emerging in this study is that entering into alliance negotiations, negotiators believe that they have few or no alternative partners or strategic options to an alliance. In some international alliances this may truly be the case because the search for alliance partners is sequential rather than simultaneous, especially in countries such as China where the government puts forward one prospective partner (Yan and Gray, 1994c). In other cases, key executives champion specific alliances and use their authority to overcome internal resistance (Lewis, 1990; Tallman and Shenkar, 1994). The decision to form a specific alliance is a product of internal bargaining and coalition building (Fornell, Lorange and Roos, 1990; Tallman and Shenkar, 1994), and negotiators have bought into the argument that it is the best strategy for the firm. The firm's culture may also encourage executives to show results of their foreign trips with signed deals (Beamish, 1988). While the belief that this alliance is the best or only strategy helps in internal decision making, it may hurt the firm in negotiations if negotiators believe that they have no alternative but to reach an agreement.
Game Theoretic Implications. Negotiators who believed that their firms would cooperate in the future used more rational tactics in negotiations. They focused on the exchange of information, and provided strongly data driven reasons for their demands. These rational tactics enhance behavioral transparency and encourage cooperation and reciprocity, lending support to earlier studies on cooperation and alliance formation (Axelrod and Keohane, 1986; Parkhe, 1993). Expectations of future cooperation cast a shadow on the present and encouraged the use of soft tactics and information exchange, while inhibiting using threats. Contrary to expectations, we found that U.S. negotiators used more soft tactics with dissimilar rather than similar foreign counterparts. We predicted that they would use fewer soft tactics in these circumstances because cultural differences reduce their expectations of gaining compliance. We now conclude that negotiators may base their tactics on both their perceptions of costs and their expectations of compliance. Soft tactics are low cost tactics, whereas the costs of using hard tactics are high (Kipnis, 1976). Hard tactics can damage relationships between negotiating parties and reduce prospects of long term collaboration. Alliance negotiators may have chosen to use soft tactics with greater cultural distance because of the interdependence between the firms and their long time horizon. Negotiators used more hard and soft tactics with greater cultural distance from their counterparts, suggesting that the reduced behavioral transparency encourages negotiators to react like novice managers in firms and use more of all tactics to gain compliance (Kipnis et al., 1984). There are two potential explanations for our finding that negotiators use more soft strategies with counterparts from the Far East and Eastern Europe (and the former USSR). First, U.S. negotiators may be adapting their tactics to the culture of their counterpart. Studies of cultural differences indicate that eastern cultures are high context cultures where negotiators use more soft and indirect tactics (Hall and Hall, 1988). Second, in the late 1980s, U.S. firms were just beginning to form alliances with firms in these nations. The lack of common business knowledge of these cultures and economies may have led negotiators to use soft tactics in negotiations such as those involving other firms or government agencies. To quote a respondent "... major problems in PRC are due to government entities who have a lot of input into corporate matters." This argument is supported by our finding (in Appendix C) that negotiators did not use different tactics with Japanese counterparts despite the two cultures being very different (Hofstede, 1991). Cultural differences and the experiences of U.S. firms in dealing with the Japanese have been so well documented that they reduce the perceptions of cultural distances in alliance negotiations. Transaction Costs Revisited. Two transaction cost constructs were linked to the dependent variable in unexpected ways. We predicted that cooperative frames would lead negotiators to use more soft tactics in negotiations, but found that they refrained from using hard tactics instead. Evidently, cooperative frames inhibit the use of hard tactics rather than increase the use of soft tactics. Surprisingly, perceptions of counterparts' competitive frame, e.g., opportunism, were negatively associated with negotiators using hard tactics. We suggest that negotiators were trying to de-escalate conflict by not acting on their perceptions of opportunism and using hard tactics (Neale and Bazerman, 1992). Using hard tactics in such a situation could lead to a conflict spiral and a consequent breakdown of the negotiations. Because both parties had stakes in cooperation, restraint would be a wiser option. Also, negotiators overwhelmingly had a cooperative frame of reference. Taken together, these findings suggest that by the time negotiators get to the
bargaining table, they believe that both parties benefit from the alliance, and have curbed their tendencies to engage in opportunistic behavior. Trust has rarely been empirically studied in field negotiations. Considering transaction cost arguments and studies of managerial influence, we predicted that trust would lead negotiators to behave less opportunistically and more cooperatively, using less hard tactics and more soft tactics in negotiations. However, trust was negatively associated with negotiators using soft tactics. Conceivably, once trust is established, soft tactics become unnecessary because negotiators withstand "frank" talk. When trust is low, negotiators use soft tactics to create trust through strategies of forbearance to obtain future payoffs, such as alliance stability, and to build their reputations (Parkhe, 1993). The negotiation literature suggests that negotiators valuing relationships more than the substantive outcomes follow an accommodating strategy, seeking to win over their counterparts, even if it costs them in the short run (Lewicki, et al., 1994). Finally, soft tactics include involving agents such as other firms or government agencies. Mistrust may lead executives to involve agents to ensure that their counterparts will honor agreements. Negotiators' interpersonal orientation failed to predict their influence tactics. This study is a first attempt to empirically examine the role of interpersonal orientation in negotiations. One explanation for our findings could be that U.S. negotiators were flexible enough to use influence tactics appropriate to the negotiation situation rather than consistent with their personality dispositions. Another could be that using a short form of the original instrument led to a weaker representation of the construct. When interpreting this study's findings, several limitations should be considered. First, the analysis is based on retrospective reports from negotiators who may be biased towards making themselves look reasonable. However, there is strong evidence for the rigor of this methodology when using reliable and valid measures (Hambrick, 1980; Spector, 1987). Second, we limited the study to U.S. negotiators. Future research will benefit from information from their international counterparts. Finally, by examining only negotiator behavior, we ignored other outcomes such as alliance survival and performance. Longitudinal research tracking these alliances to examine the relationships between antecedents, process and outcomes will provide a test of the complete model. NOTES 1. Executives reported on one of their negotiated alliances in the relevant time period as reported in Predicast's F & S Index. Their counterparts were identified only after negotiators responded to our inquiry. Due to confidentiality concerns, U.S. negotiators resisted reveling their foreign counterparts or involve them in the study. Therefore we faced a trade-off between gaining participation from many senior U.S. executives, or a far smaller number of negotiator dyads. Also, given the diversity in foreign counterpart culture, achieving equivalence in all their languages to ensure comparability of data was not within the scope of this study. 2. Alliance negotiators were identified from 685 citations of collaboration between firms in Predicast's F&S Index of Corporate Change between 19891991. Alliance was defined by the criteria set by Hergert and Morris (1986). We were inclusive in our approach and included any
mention of joint activity in our initial sample of 685 alliances, which explains the high attrition rate. For example, the following citation in the F&S Index led to the inclusion of the alliance in our initial sample: American Express Bank to jointly form Aviation Express, new aircraft firm, Israel (reported on 2/22/89). We eliminated alliances between overseas subsidiaries, and between foreign firms subsidiaries located in the United States (such as Sony, North America) with U.S. firms. The pool of potential alliances was reduced to 436 because some U.S. firms negotiated multiple ventures in the time period, or formed alliances with U.S. subsidiaries overseas, or with foreign firms' subsidiaries in the United States.
•
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3. To assess the validity of single item measures, negotiators responded to two statements taken from published reports on negotiations. A cooperative frame was assessed by (a) "I wouldn't try to gain the upper hand in a joint venture. It doesn't pay off in the long run" and, a competitive frame by; (b)" When I negotiate, my objective is to get the best possible deal for my firm, irrespective of the other firm's interests." 93.8 percent reporting a high cooperative frame on the Likert item chose statement (a). Of those who chose item (b), 93.7 percent displayed a competitive frame on item ( 2), indicating convergent validity. 4. SPSS excludes cases with values of zero from analysis. We followed Geringer's (1991) approach and re-coded the alternatives (both firms' and counterparts') so that a value of one indicated no alternatives. Cases with missing values were excluded from analysis. 5. A replication of hard, soft, and rational influence dimensions proposed by Kipnis and Schmidt (1985) and validated in previous research (e.g., Deluga, 1991; Farmer, et al., 1993) was attempted. Responses to the 33 items were factor analyzed, despite the small sample, using a principal component factor solution, with iterations for commonality and both orthogonal varimax and oblique rotations. The screen test suggested a three-factor solution with eigen values greater than one, providing a factor structure with few crossloadings and three interpretable factors. Appendix B shows the results of an orthogonal factor analysis and brief descriptions of the items. The first factor consisted of eight "soft" items. The second factor consisted of eleven "hard" items. The third factor consisted of seven "rational" items. Three additive scales for each of the factors were constructed which met acceptable reliability criteria (Kipnis et al., 1980).
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TABLE 1 DESCRIPTIVE SAMPLE STATISTICS OF ALLIANCES AND THEIR NEGOTIATORS
Characteristics % Mean S.D. Type of alliance negotiated Equity Joint Venture Non-Equity Joint Venture Licensing Consortium Subcontracting Joint R&D
79.3 3.7 6.1 2.4 2.4 1.2 19.9 9.7 14.2 8.
Time period of negotiations(months) Contact (# face to face meetings)
Role of respondent Chief negotiator Other Cultural Clusters Cluster Anglo (10)
63.2 37.8 Nationality Canada (2) Australia (1) U.K. (6) Ireland (1) France (5) Italy (3) Belgium (1) Brazil (1) Finland (1) Sweden (1) Norway (1) Holland (3) Cluster Nationality
Latin European(10)
Nordic (6)
Eastern European (12)
USSR(9) Poland (2) Hungary (2)
Far Eastern (15)
Singapore (1) Indonesia (1) Hong Kong (1) India (5) China (6) Korea (2)
Not Guyana(1) classified (3) Saudi Arabia (1) Germany (1) Independent Japan (23)
Note: figures on parentheses refer to the number of counterparts, N=83 TABLE 2 PRODUCT MOMENT CORRELATIONS BETWEEN ALL VARIABLES
Legend for Chart: A B C D E F G H I J K L M Mean (S.D.) 1 2 3 4 5 6 7 8 9 10 11 12 A E I B F J C G K D H L M
1. Relative Power
3.02 (5.64) ---
x ---
----
-----
2. Partner's Alternatives
4.04 (4.54) ---
-0.25[a] ---
x ---
-----
3. Firm's Alternatives
5.63 (6.87) ---
0.71[c] ---
0.21 ---
x ----
4. Comp. Frame - Firm
1.74 (1.03) x --
0.14 ---
0.04 ---
0.09 ----
5. Comp. Frame - Partner
2.02 (1.12) 0.42[c] --
-0.03 x --
0.18 ---
0.23[a] ----
6. Cooperative Frame
4.20 (1.05) -0.13 --
0.16 -0.30 --
-0.07 x --
0.06 ----
7. Cultural Distance
3.76 (1.07)
0.03
0.00
-0.06
0.10 --
-0.06 --
-0.01 --
x ---
8. Time Horizon
3.82 (0.94) -0.14 x
0.18 -0.11 --
0.01 0.38[c] --
0.08 -0.18 ---
9. Interpersonal Orientation
3.71 (0.59) -0.20 0.17
0.09 0.18 x
-0.13 0.11 --
0.12 -0.03 ---
10. Trust
3.80 (0.75) -0.09 0.47[c]
0.20 -0.09 0.23
0.04 0.45[c] x
0.12 -0.22[a] ---
11. Soft Tactics
1.29 (0.47) 0.03 -0.07
-0.07 -0.07 -0.11
0.27[a] 0.00 -0.33
-0.08 0.34 x --
12. Hard Tactics
2.15 (0.53) 0.01 -0.25[a]
-0.23 -0.06 -0.21[a]
-0.05 -0.30 -0.35[c]
-0.16 0.13 0.31 x
13. Rational Tactics
4.03 (0.55) -0.05 0.24[a]
-0.03 0.01 -0.07
0.08 0.03 0.15
-0.02 0.05 0.16
0.21
c p>.001; b p>.01; a p>.05. TABLE 3 RESULTS OF REGRESSION ANALYSIS OF INDEPENDENT VARIABLES WITH NEGOTIATOR TACTICS.
Legend for Chart: A B C D A Relative Power Firm's Alternatives Partner's Alternatives Cultural Distance Experience Trust Time Horizon Interpersonal Orientation Competitive Frame-Firm Competitive Frame-Partner Cooperative Frame R2 Adjusted R2 Independent Variables Soft tactics beta Influence Tactics Hard tactics beta Rational Tactics beta B 0.24 -0.27 0.39[c] 0.24 0.01 -0.40[c] 0.10 0.06 0.07 -0.07 0.06 0.29[c] 0.18[c] C -0.24 0.10 -0.14 0.09 0.05 -0.09 -0.06 -0.14 -0.01 -0.11 -0.24 0.20[a] 0.11[a] 0.10 0.00 D -0.07 0.04 -0.01 0.12 -0.08 0.07 0.29 -0.15 -0.09 0.06 -0.06
c p>.01, b p>.05, a p>.10. TABLE 4 MANOVA OF NEGOTIATOR INFLUENCE TACTICS WITH CULTURAL DISTANCE BETWEEN NEGOTIATORS AND THEIR COUNTERPARTS.
Influence
Cultural Distance
(a) Means and standard deviations Tactics Soft Rational Hard (b) MANOVA Test Name Pillai's Hotelling's Wilk's F 2.70 3.06 2.91 Value 0.31 0.41 0.69 F 7.84[c] 0.57 2.21 Low Group1 (N=9) 1.17 (0.27) 3.88 (0.47) 2.21 (0.69) Group2 (N=18) 1.16 (0.37) 4.14 (0.57) 2.00 (0.50) Group3 (N=28) 1.14 (0.32) 3.98 (0.53) 2.07 (0.50) High cultural distance Group4 (N=21) 1.69[a] (0.62) 4.09 (0.57) 2.35 (0.48)
(c) univariate ANOVA Soft Rational Hard
c p>.001, b p>.01, a p>.05; for LSD at P>.05 a, b indicate that group 4 differs from group 1, 2, 3, figures in brackets are standard deviations; N=82. TABLE 5 REGRESSION RESULTS OF NEGOTIATOR INTERPERSONAL ORIENTATION (IO) WITH NEGOTIATOR AND COUNTERPART FRAMES
Legend for Chart: A B C D E F G A Hard Soft Rational Influence Tactics IO beta IOxNcoop IOxNcomp IOxCcomp R2 Adjusted R2 B 0.10 -0.05 -0.13 C D E -0.20 0.00 0.08 F 0.09 0.01 0.00 G 0.01 -0.07 -0.03
-0.28[*] 0.05 -0.05 0.04 0.06 -0.07
N=78
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Another way to think of this issue is to think about how long it takes an average American to adapt to the business milieu. Are some countries in the same region easier to adapt to than others? Respondents identified cultural distance on a scale ranging from one ( 1) very easy to (5) very difficult to adapt to. We collapsed groups one and two (easy to adapt to) into one category. Cultures that were not included in Boyacigiller's study were categorized based on similarities with other cultures in a category (Hofstede, 1991). For instance, Taiwan was in group 4, hence China was also included in group 4. The four groups in order of increasing distance are as follows. Group 1: Canada, Australia, United Kingdom. Group 2: Hong Kong, France, Sweden, Finland, Italy, Holland, Norway, Belgium. Group 3: Japan, Saudi Arabia, India. Group 4: USSR, Singapore, China, Poland, Hungary, Indonesia. While the cultures within each group differ, their distance from American culture is similar. Alternatives, Dependence and Relative Power: Dependence was assessed as a function of the participating firms' alternatives. The U.S. negotiators' firms' alternatives were assessed by four items as follows: Prior to negotiations, ( 1) How many alternative partners were available to your firm? ( 2) How suitable were these alternative partners in achieving your firm's goals? (3) How many strategic options, other than an alliance, did your firm have? (4) How suitable were these strategic options? Four similar items were used to assess the foreign partner's alternatives. Relative power was the ratio of the U.S. firms alternatives (weighted by their suitability) to that of their counterparts. (In an earlier analysis we assessed the stakes that the firms had in negotiating the alliance. U.S. negotiators perceived the stakes of both parties as equal. Since, this in effect controlled for differences in motivational investment (Emerson, 1962), we focused on the firms' alternatives instead.) Interpersonal Orientation: A short form of Swap and Rubin's (1983) scale was used, because the entire scale was too long and also included items obviously irrelevant to the context of strategic alliances as confirmed in our pre-test interviews. Asking irrelevant questions reduces face validity and response rates (Dilman, 1978). From the original scale items with p>.001 as assessed in their scale's internal consistency, and face validity in the context of strategic alliances (as assessed by the researchers) were used to create the scale. Negotiators responded to 8 items on five-point Likert type scales ranging from ( 1) agree to (5) disagree. Four items were eliminated to meet reliability criteria. The four items retained in further analysis were as follows. ( 1) It is important for me to work with people with whom I get along well, even if it slows down negotiations. ( 2) I am sensitive to criticism. (3) The more other people reveal about themselves, the more inclined I am to reveal things about myself. (4) I would like to know what my counterpart is really like, behind the professional mask. The items loaded significantly onto a common factor in factor analysis. Negotiator Influence Tactics: Three measures have been widely used to measure influence tactics by researchers in organizational behavior, marketing, and international business. The Profile of Organizational Influence (POIS; Kiphis and Schmidt, 1982) is most often used to assess interpersonal influence, Frazier's (1984) influence strategy measure is widely accepted in marketing research, and Anglemar and Stern's (1978) classification system has been commonly used to code negotiator tactics in international negotiation simulations. Each measure alone was
inappropriate for our study. The POIS items were developed for use within organizations, and had low face validity. Frazier's instrument consisted of single-item measures for strategies and was limited in scope compared to the POIS. Anglemar and Stern's (1978) coding system suffered from conceptual overlaps between strategies and used content analysis of text. We decided to adapt the POIS items. While basic tactics were not changed, we provided contextual information on interfirm negotiations, drawing from examples provided by Frazier (1984), Anglemar and Stern (1978) and case studies of alliances negotiations (e.g., Weiss, 1987) to anchor items. APPENDIX B Results of the factor analysis of POIS items
Items 1. Other Support 2. Flatter 3. Detail plan 4. Demand firmly 5. Offer exchange 6. Humble 7. Refuse offer 8. Appeal others 9. Simply demand 10. Remind past aid 11. Continue pressure 12. Establish rapport 13. Threat poor service 14. Appeal higher power 15. Threat/seek new partner 16. Sympathy 17. Told comply 18. Logical arguments 19. Offer job incentive 20. Sought receptive moment 21. Set deadlines 22. Strong disagree 23. Information 24. Support from others 25. Threaten termination 26. Informal other support 27. Personal sacrifice 28. Confrontation 29. Promise incentive 30. Offer help 31. Explain reason 32. Repeat remind 33. International regulations Eigen value % variance Cronbach's alpha (# of items) N=82 1 Factors 2 3
.68960 .07743 .33386 .29948 -.22545 .10596 -.08551 .12908 .47390 -.02426 .65793 .01292 .16715 .20044 .09806 .08629 -.26553 -.15161 .28015 .55456 .13888 .78069 .19993 -.19734 .08419 .58347 -.32551 .06505 .48032 .24712 .08195 .49256 .24242 .14033 -.42789 .18983 .16019 .38823 -.15173 .56976 .21206 -.03572 -.15968 .03896 .21328 .18088 .24008 -.23272 .38601 .49855 .14745 .08883 .03837 .57779 .66851 -.23110 -.04863 .15686 -.11486 .37807 .06888 .19041 .62316 -.18873 .55053 .49395 .08730 -.00724 .72684 .40878 -.00168 ,41976 .39754 .56188 .04938 .80177 .08170 -.06678 .38828 .16058 .09253 .02409 .61401 .11318 .51236 -.10972 -.09206 .16151 -.26687 .16888 -.09287 -.16469 .69142 .10126 .15181 .33363 .46218 .19005 .14777 3.85 3.78 3.33 11.65 11.42 10.11 .78 (8) .77 (11) .67 (7)
APPENDIX C Cultural differences between U.S. negotiators and their counterparts from different country clusters were examined using a second measure. Negotiating counterparts were grouped into the Anglo, Latin European, Nordic, and Far Eastern clusters (Ronen and Shenkar, 1985). Because of
the number of alliances negotiated with Japanese counterparts (N=22), they were grouped separate from the Far Eastern cluster. We grouped twelve negotiations from U.S.S.R, Poland and Hungary into a new Eastern European cluster. We placed China and South Korea in the Far Eastern cluster based on common factors identified in prior research of geography, language, economic development, attitudes, values and religion (Ronen and Shenkar, 1985). As indicated in Table C below, cultural differences between U.S. negotiators and their foreign counterparts had a significant effect on U.S. negotiator behavior. They used more soft tactics with counterparts from Eastern Europe and the Far East than from other regions (p>.001). Surprisingly there were no differences in their tactics with counterparts from Japan and Western Europe. The analysis supports hypothesis (H4) predicting that negotiators would vary tactics with counterpart culture. TABLE C MEANS, STANDARD DEVIATIONS AND RESULTS OF THE MANOVA OF NEGOTIATOR INFLUENCE TACTICS WITH COUNTERPART NATIONAL CLUSTERS
National Cluster Cluster 1. 2. 3. 4. 5. 6. Japan Anglo Latin Europe Nordic Far East East Europe Soft 1.06 1.13 1.02 1.15 1.57 1.72 Value 0.41 0.61 0.60 (0.20) (0.27) (0.12) (0.39) (0.66)[a] (0.45)[a] F 2.16 2.64[c] 2.40 Influence Tactics Hard Rational 2.07 2.23 1.97 2.05 2.18 2.36 (0.40) (0.65) (0.40) (0.60) (0.55) (0.58) 4.01 3.86 3.96 4.21 3.89 4.14 (0.54) (0.46) (0.84) (0.56) (0.43) (0.63)
MANOVA Pillai's Hotelling's Wilk's
Univariate ANOVA F Soft Hard Rational 7.08[c] 1.05 0.78
c p<.001, b p<.01, a p<.05, N=74, dissimilar letters indicate significant differences on LSD test ~~~~~~~~ By Asha Rao and Stuart M. Schmidt Asha Rao is Assistant Professor of Organizational Management at the Faculty of Management, Rutgers University. Her research interests are in the areas of international negotiations and crosscultural management. Stuart M. Schmidt is Professor of Human Resource Administration and Organizational Behavior at Temple University. His research interests are in issues of social influence, crosscultural behavior and international business alliance negotiations. He has published in Administrative Science Quarterly, Human Relations and Journal of Applied Psychology. The authors thank Rajan Chandran, Alison Konrad, Arvind Phatak for their assistance with this project, and three anonymous JIBS reviewers for their helpful and stimulating comments on this article. Funding for this project was provided by Temple University.
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