Cambridge Judge professor David De Cremer says it can depend on your nationality and that of the other party.
Negotiations are a key part of any business deal, and when it comes to the punch, ethically questionable tactics – false promises, misrepresentation or inappropriate information gathering – may just be the reality of modern business. But what if you could judge how likely someone was to use these tactics based purely on their – and your – nationality?
Professor David De Cremer
That was the thinking behind an experimental piece of research carried out by Professor David De Cremer, KPMG professor of management studies at Cambridge Judge Business School, which suggests that for both vendor and buyer in international deals, a lot of our decision-making comes down to our own preconceptions. For when negotiating with someone from another culture, says the study, we stereotype them and then employ tactics to gain advantage based on that stereotype.
“Ethical practices are not used without hesitation but socially shaped by our perceptions of a particular nationality,” says Professor De Cremer. “Everyone has certain cultural ways of acting that influence their strategies, but what does the nationality of your counterpart do to you as a negotiator? We found it has an immense impact.”
The research, How ethically would Americans and Chinese negotiate? The effect of intra-cultural versus inter-cultural negotiations”, led by Professor De Cremer with Professor Yu Yang from ShanghaiTech University and Chao Wang from the University of Illinois, focused on the Americans and Chinese but has lessons for any international business.
The Chinese, for instance, are perceived – according to the global think-tank Transparency International’s Corruption Perceptions Index – to be the 100th most “honest” nation in the world. In the list of 177 nations, based on various measures and surveys, the US ranked some 83 places higher at 17th (for the record, northern Europeans are seen as the most honest, with Denmark, Finland and Sweden taking the top three places globally. The UK is 10th).
The research found that US negotiators, while broadly honest when dealing with their countrymen, were found to employ ethically questionable tactics in similar discussions with people from China. Not only that, the Chinese would follow the same questionable tactics with anyone of their own nationality but would appear to “raise their game” and become more ethical when dealing with an American.
But, here, perception is the key word. For one thing, given that the American participants in the study used unethical techniques to gain an advantage over the “more corrupt” Chinese participants, while the latter consciously acted more ethically in dealings with the US, there’s an argument for saying that in this instance the Chinese were more honest than the Americans, not less so. Or does the fact both groups shifted mean neither’s behaviour is better or worse than the other’s?
Cross-culture business discussions have always had recognised sensitive issues – after all, one negotiator’s generous gift is potentially another negotiator’s underhand bribe, and who is the more immoral will always be a matter of opinion. Thomas Donaldson, Pennsylvania University’s Professor in Ethics and Law, wrote in the Harvard Business Review: “According to cultural relativism, no culture’s ethics are better than any other’s – therefore there are no international rights and wrongs.” But, he adds: “Cultural relativism is morally blind – there are fundamental values that cross cultures and companies must uphold them.”
Knowledge of how a particular nationality will react to certain negotiation strategies can, of course, help to facilitate a smooth deal for all parties. A recent blog by Erin Meyer, INSEAD’s Associate Professor of Organisational Behaviour, highlighted the value of knowing how different cultures question ideas. Meyer suggested she was frustrated at a conference when she started to take personally her German colleagues’ objections to everything she said – until one of them explained that when he said “I disagree” he was actually displaying expressing the German “sachlichkeit”, which was merely playing devil’s advocate, not disapproving of her. “That demonstrates,” says Meyer. “why the Germans, along with the French, Dutch and Danish, are on the confrontational side of the disagreeing scale. On the other side stand the Chinese.”
But whether or not our stereotypical views of foreigners are true, the essential thing is to recognise that we hold them, says Professor De Cremer. “Negotiating with someone from a different country is always more ambiguous than with someone from one’s own,” he says. “Hence, people may be motivated to reduce this uncertainty by considering the image of the other country as an important source of information.
“However honest you are, if people from your country have a reputation of acting less ethically, negotiators from other countries may relax their ethics when dealing with you.”
And the implications, says Professor De Cremer, are immense. “So many business negotiations today are based on nationality. And there will be impacts far outside business – global talks, peace talks. For these to work, we need to develop a more nuanced understanding of ethical practices in different countries. We’ve always believed that the choice and view of your business model drives your outcomes. That’s not true. It’s socially embedded and at least half the outcome will be determined by those social dynamics.”