Negotiations across cultures: To make or not to make the first offer?

Every day, most of us interact with several people from unfamiliar cultures. In many of our cross-cultural interactions, our inclination is to tread carefully, lest we commit an unwitting cultural faux pas. In a word, many of us act tentatively across cultures.

In general, that’s a good thing, reflecting a genuine desire to avoid offense and the correct intuition that cultures extensively differ. But what about when we negotiate with a cross-cultural counterpart? Should we bargain tentatively too? Our cross-cultural negotiations will be more negotiable if we don’t.

To see why, recall one of my previous posts, which generally advised you to make the first offer in a negotiation if you can. By doing that, I argued, you can direct your counterpart’s attention to your own goals rather than theirs. As a result, they will use the first offer to estimate the value of the commodity being negotiated, and their subsequent offers will look very much like your first offer. Many years of research have supported this so-called “first offer effect,” attributing it to the basic hardwiring of our brains and showing, for example, that the person who moves first does better.

But what about when you negotiate across cultures? Should you still make the first offer or should you follow the inclination to be tentative? It turns out that the previous research on the first offer effect had come almost entirely from Western cultures, so some colleagues and I recently conducted new research to find out. Recognizing that people from different cultures differ in several ways, many of which are relevant to negotiation, we predicted that they wouldn’t differ in the fundamental hardwiring of their brains. From Baltimore to Beijing, we expected the first mover to walk away from negotiations happy.

Almost uniformly, they did. Across two studies, the first offer effect still emerged in a prototypical East Asian culture: Thailand. In addition, the effect emerged in negotiations among individuals representing 32 cultures and all continents except Antarctica. Regardless of culture, then, making the first offer produced advantageous outcomes, and failing to make the first offer produced a problem.

The bottom line? Being tentative is probably a good antidote to cultural offense, but it’s also a recipe for getting hammered in cross-cultural negotiations. Though you may convey your cultural sensitivity, waiting for an offer is also likely to put you in a perilous position.

With that said, here’s an important reminder before applying this advice: making the first offer doesn’t mean making the first offer right away. In fact, in many cultures (especially Latin American and East Asian), it’s vitally important to build a strong relationship before anyone makes an offer. (Future posts will discuss this and other things that actually do differ across cultures). So the point is not to start making offers the second you meet a cross-cultural counterpart. The point is that it’s worth trying to make an offer before they do, whatever their culture.

Have you ever made the first offer in a cross-cultural negotiation? Or felt uncomfortable doing that?

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2 thoughts on “Negotiations across cultures: To make or not to make the first offer?

  1. Pingback: The key to a stress-free Thanksgiving: Celebrating our differences | Brian Gunia

  2. Pingback: The musings of 2015 | Brian Gunia

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