LYING, CHEATING FOREIGNERS!!

NEGOTATIATION ETHICS ACROSS

CULTURES

Cheryl Rivers
School of International Business
Queensland University of Technology
George Street
Brisbane, QLD 4001
Australia
[email protected]

Paper submitted to the

18th Annual Conference of the
International Association for Conflict Management
Seville, Spain
June 12-15, 2005

Program Content Area of Culture and Conflict

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 LYING, CHEATING FOREIGNERS!! NEGOTATIATION ETHICS ACROSS
CULTURES

ABSTRACT

Being on the receiving end of ‘unethical’ negotiation tactics is challenging any

time but especially difficult to understand when the other party is culturally different.

This paper extends current understanding of the influence of culture on ethical decision

making in negotiation by presenting a new model showing that culture influences

situational variables in a negotiation. It is posited that culture directly influences the

organisational code of ethics, the organisational goals and the perception of the other

party in an ethical decision context and that culture moderates the understanding of each

of these situational variables. The theoretical and practical implications model are

discussed.

Key words: CULTURE, NEGOTIATION, ETHICS

This is a theoretical paper.

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 LYING, CHEATING FOREIGNERS!! NEGOTATIATION ETHICS ACROSS
CULTURES

Ply your average international business negotiator with a glass or two of wine and

it won’t be long before you hear a negotiation story that involves “those lying cheating

#*&%$s!!” from one or other country. When foreigners breach ethical expectations they

elicit potent negative emotions such as appalled, unhappy, angry and frustrated (McNeil

& Pedigo, 2001). These emotions are contradictory to cultivating the trust that we know

helps achieve integrative potential in a negotiation (Brett, 2001).

Because ethical dilemmas are an inescapable component of negotiation (Barry &

Robinson, 2002), it is important for negotiators to be aware of differences in what is

perceived as ethically appropriate. Arguably, it is harder to deal with ethically

ambiguous negotiation tactics when they are perpetrated by a foreigner because the

negotiator lacks certainty about the rules of negotiation in a foreign land. Although there

is growing evidence that there are cultural differences in the use and perceived

appropriateness of ethically ambiguous negotiation tactics (Elahee, Kirby, & Nasif, 2002;

Triandis et al., 2001; Volkema, 1998, 1999, 2001, 2004; Volkema & Fleury, 2002;

Zarkada-Fraser & Fraser, 2001), this work can be extended by explaining how culture

influences ethical decision making in negotiation. If negotiators can understand why

there are differences in ethical decision making across cultures it can help them avoid the

feelings of anger and mistrust toward the other party and help them avoid using tactics

that might incite anger in the other party.

The aim of this paper is to answer the ‘how does culture influence ethical decision

making in negotiation?’ question by proposing a model that emphasises the influence of

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culture on how the situation is understood. A secondary aim is to aggregate the findings

of cross-cultural negotiation ethics research into one place. Although a volume of ‘ethics

in negotiation’(Menkel-Meadow & Wheeler, 2004) and one of ‘negotiation and culture’

(Gelfand & Brett, 2004) were published in 2004, neither addressed the influence of

culture on ethics in negotiation and it is timely that an overview of research in this area is

provided.

The layout of this paper is as follows. I first define ethics, culture and ethically

ambiguous negotiation tactics. I then provide a review of the empirical cross-cultural

negotiation ethics studies and selected ethics in negotiation studies. Drawing on research

in ethical decision making from beyond the negotiation field I propose a model of the

influence of culture on ethical decision in negotiation. Finally, future research directions

are discussed.

Defining Terms and Approaches

Because definitions adopted by researchers vary, this section defines what is

meant by ethics, culture and ethically ambiguous negotiation tactics (EANTs).

Although almost everyone knows that ethics is about doing the ‘right thing’, how

the term is defined beyond that is important because it influences how ethical decisions

are investigated. There are many moral philosophies, but a comparison of just two

demonstrates their influence on how ethics is researched. If the Kantian view of ethics is

held, then the ethical decision is a duty that is followed on all occasions and across all

situations. According to the Kantian view, ratings of appropriateness of ethically

ambiguous negotiation tactics would be the same regardless of the situation. However, if

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a utilitarian view of ethics is held, then it is the outcome that matters and an ethical

decision is made to achieve the best possible outcome. In the Utilitarian perspective,

ratings of appropriateness of ethically ambiguous negotiation tactics will vary according

to the situation because tactics will become more appropriate if they help achieve a

desired outcome. It is something of an irony that the commonly adopted approach to

defining ethics in negotiation has been situational – viz ‘ethics are broadly applied social

standards for what is right or wrong in a particular situation’ (Lewicki, Barry, Saunders,

& Minton, 2003, p:236 italics added); – but studies that have measured ratings of

appropriateness of ethically ambiguous negotiation tactics provide little information

about the situation beyond ‘the negotiation is important to you’ (eg. Robinson, Lewicki,

& Donahue, 2000).

The dominant view in the business ethics literature is also that ethical decision

making is situationally specific (Randall & Gibson, 1990) and it is notable that the

situation has a feature role in the main models in this literature (eg. Trevino's 1986

situation-interactionist model and Jones' 1991 issue-contingent model). The definition of

ethics adopted in this paper also emphasises the situation: ethics are the ‘rules, standards,

codes or principles which provide guidelines for the morally right behaviour and

truthfulness in specific situations’ (Lewis, 1985). Adopting a situation-specific definition

means that my model emphasises the characteristics of the negotiation situation.

Culture is the unique character of a social group (Brett, 2001). Culture can

manifest itself in the values, beliefs, cognitive process and overt behaviour at the

individual level (Aycan, 2000). Like ethics, how culture is defined influences how it is

operationalised by researchers. The most common operationalisation of culture in

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negotiation ethics research has been the culture as shared values approach where culture

is broken down into one or more cultural value dimensions (eg. Hofstede’s values of

individualism and collectivism) and examples of this kind of work will be discussed in

the review of existing studies. An alternative conceptualisation of culture that is well

suited to ethics research is the ‘culture in context’ view that says culture is defined

through the meanings attributed to the social context (Gelfand & Cai, 2004 & Gelfand &

Dyer, 2000). The social context includes the roles, dyadic relationships, group dynamics

and the network of extended relationships among the negotiation parties (Gelfand & Cai,

2004). In its original form as articulated by Janosik (1987), context included both

structural and contextual factors like personality, social context and environmental

factors. This approach is well suited to explaining cultural differences in ethical decision

making in negotiation because both culture in context and ethics, according to the

definition adopted above, share an emphasis on the situation.

The final term to be defined is ethically ambiguous negotiation tactics. The

meaning of ‘ambiguous’ is ‘doubtful, questionable and open to several possible

interpretations’ (Oxford English Dictionary, 1989). If something is ethically ambiguous

it means there can be multiple understandings of whether it conforms to standards of

what is right.

Negotiation is generally accepted as being an interaction between two or more

parties who are working together to seek to resolve incompatible goals (after Pruitt &

Carnevale, 1993). Negotiations here are defined as deliberate interaction, involving face

to face discussions between two or more entities who are attempting to define or redefine

6
the terms of their interdependence in a matter’ (adapting Walton & McKersie, 1991 &

Weiss, 1996).

The word tactic is taken from military parlance and is the label given to a

manoeuvre in the course of battle. In a negotiation context it is an action or statement

used by a negotiator, usually with a view to achieving an aim. There are a range of

tactics that negotiators can use in a negotiation.

Pulling all these definitions together, an ethically ambiguous negotiation tactic is

a manoeuvre used in the course of a negotiation that may be regarded as wrong by at least

some individuals who participate in or observe the negotiation. Ethically ambiguous

negotiation tactics are referred to as EANTs throughout this paper.

Existing research on the influence of culture on negotiation ethics

Cultural differences create ethical dilemmas between negotiators because

negotiators from different cultures emphasise different behaviours as acceptable or

unacceptable (Lewicki et al., 2003). This section reviews the papers that have

investigated these differences.

Early research compared honesty ratings (of self and the other party) across four

cultures: the U.S., Japan, Brazil and the People’s Republic of China and linked these

honesty ratings to outcome in intra-cultural dyads (Allerheiligen, Graham, & Lin, 1985).

Brazilian and Chinese negotiators achieved a better outcome when they rated themselves

as deceptive. Only the American bargainers did better in negotiations where they rate the

other side as honest. ‘Americans who have deceptive bargaining opponents tend to

achieve significantly lower profits’ (Allerheiligen et al., 1985, p:9). Measurement of the

7
differing comfort levels with deceptions was the first step in identifying and measuring

cultural differences in what constitutes ethical behaviour in a negotiation.

Empirical evidence of cultural differences in perceived ethicality of tactics

emerged in a series of studies since the mid-90s. In the process of developing a scale to

measure perceptions of appropriateness of EANTs, Lewicki & Robinson (1998) and

Robinson et al., (2000) reported that perceived appropriateness of negotiation tactics is

sensitive to cultural differences. There were significant differences in the mean rating of

the tactics grouped as traditional bargaining between the U.S./U.K. students and Asian

students (Lewicki & Robinson, 1998), and significant differences between Asian

students’ ratings of appropriateness and USA and Canadian students’ ratings of

appropriateness in two factors called ‘false promises’ and ‘inappropriate information

gathering’ (Robinson et al., 2000). Perhaps it is not surprising that Asian students rated

so-called ‘inappropriate’ information gathering tactics as more appropriate than Western

students. These tactics include ‘gain information about an opponent’s position by

cultivating his/her friendship through expensive gifts, entertaining or personal favours’

which are common relationship building practices in Asian cultures (Yang, 1994).

A similar study investigated cultural difference in perceived appropriateness and

likelihood of use of EANTs between U.S. and Mexican negotiators. Volkema (1998)

hypothesised that Mexican negotiators would hold a higher standard of ethics due to the

importance of face, honour and relationships in Mexican society but because of the less

favourable economic conditions, Mexicans would be more pragmatic about adherence to

ethical standards. Thus, Mexican negotiators would rate EANTs as less appropriate but

would be more likely to use them. He confirmed that Mexicans would be less approving

8
of the behaviours overall, he found there was no significant difference in the likelihood of

use between the U.S. and Mexican negotiators. The principal differences were in ratings

of what was least acceptable. For the Mexicans, discrediting an opponent with his or her

superiors was the least appropriate behaviour and for the U.S. respondents, threatening to

harm an opponent was the least appropriate behaviour.

Zarkada-Fraser & Fraser (2001) also compared negotiators’ perceptions of

ethicality in a comparative study of the U.S.A., the U.K., Japan, Greece, Russia and

Australia. They found that there was greater variance between rather than within the

national groups with the Japanese the most different in their ratings from all the other

nationalities but ‘generally closer to the Greeks and the Russians in their evaluations than

to Americans, British and Australians’ (Zarkada-Fraser & Fraser, 2001, p:283). They

found that Japanese rated the tactics as less acceptable than the other groups.

Although all these findings support the existence of cultural differences in

perceptions of ethicality of negotiating tactics, it is hard to generalise the findings

because they do not explain what aspect of culture is causing the difference. A few

papers have adopted a culture as shared values approach to explore the link between

value dimensions and ethical decision making.

The main cultural value used in ethical decision research is individualism and

collectivism (I/C) following Hofstede's (1980) argument that I/C is the value dimension

that is most closely associated with moral dimensions because it reflects individual’s

relationships with society (Priem & Shaffer, 2001). Although few researchers have

measured I/C to test the link (Armstrong, 1996), a number of studies have shown that

individualists and collectivists differ in their ethical reasoning (eg: Lu, Rose, & Blodgett,

9
1999; Tsui & Windsor, 2001 & White & Rhodeback, 1992). The dominant view is that

individualists are interested in themselves, so they are more likely to act in a way that

supports individual achievement and be less concerned for others (Priem & Shaffer,

2001; Robertson & Fadil, 1999 & Vitell, Nwachukwu, & Barnes, 1993). In other words,

collectivists will be more ethical than individualists because collectivists are more

concerned about others.

In a comparison of Brazilian and U.S. negotiators Volkema (1999) concurred with

this view by hypothesising that the collective culture, Brazil would rate behaviours as less

appropriate where the tactics involve dealing with their extended social network (such as

information collection and influencing the opponents social network) than would

negotiators from the U.S. He also hypothesised that U.S. negotiators would rate

negotiation tactics involving direct engagement of the other party as less ethical than the

Brazilians based on a finding from a comparative study in the 1980’s (Graham, 1985) that

Brazilians expected more deception from negotiators they did not know. The hypothesis

were not clearly supported in his study and Volkema (1999) concluded that while U.S.

negotiators were less likely to endorse misrepresentation and bluffing, in general they

were no more or less likely to engage in traditional competitive bargaining tactics or in

tactics that involved third parties.

Volkema (2004) again investigated the link between individualism and ratings of

appropriateness of EANTs in a 9 country study (Brazil, Chile, Great Britain, India,

Mexico, the Netherlands, Norway, Spain, and the United States). In this study, he

hypothesised that power distance and masculinity would be directly related to the

perceived appropriateness of EANTs and that uncertainty avoidance would be inversely

10
related. Using the Lewicki & Robinson (1998) incidents in negotiation questionnaire,

Volkema (1994) found that the culture was a significant influence for three categories of

tactics. Collectivists were less likely to use tactics grouped as influencing another’s

professional network, as predicted. Masculinity was linked to increased likelihood of

engaging in tactics grouped as questionable information collection tactics. Contrary to

expectations, power distance was inversely related to perceived appropriateness of

traditional competitive bargaining tactics – the higher the power distance of the country,

the less appropriate and less likely the use of competitive bargaining behaviours. Also

contrary to expectations, uncertainly avoidance was inversely related to the likelihood of

the traditional competitive bargaining tactics.

Elahee et al. (2002) also investigated the likelihood of use of tactics in the

Lewicki & Robinson (1998) incidents in negotiation scale amongst negotiators in the

U.S., Canada and Mexico. The collectivistic negotiators, the Mexicans scored higher in

their preferences for all the categories of tactics in both inter- and intra- cultural

negotiations. The Mexicans, unlike the Americans and Canadians, differentiated between

intra- and inter-cultural negotiations significantly and were less likely to use EANTs in

intra-cultural negotiations.

If the findings of the papers reviewed above are aggregated, it is hard to make

sense of the relationship between cultural values and perceived ethicality of EANTs.

There is some inconsistency between the results – Mexican negotiators were less

approving of tactics than U.S. negotiators in Volkema's (1998) study but more approving

of EANTs in Elahee et al.'s (2002) study. The nine-country study by Volkema (2004)

suggests that different values are a salient influence on different categories of EANTs.

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 This complex relationship between cultural values and ratings of appropriateness

of EANTs may be unravelled, at least in part, if consideration is given to the situation. In

the definition section, I proposed that culture in context, where cultural differences are

defined through the different meanings attributed to the social context, marries well with

ethical decision making because ethical decisions are subject to the interpretation of the

situation. For example, it is recognised that collectivists are target specific in their

decision making: collectivists feel solidarity with some people (their in-group) but not

others (their out-group) (Jackson, 2001) and so collectivists may change their rating of

appropriateness of tactics according to who they are negotiating with. The cultural social

psychology literature has also identified that there are cultural differences in the way

context or situation is viewed across cultures (Markus, Kitayama, & Heiman, 1996 &

Smith & Bond, 1993). For example, in a review of studies on the fundamental attribution

error (FAE), Norenzayan, Choi, & Nisbett (1999) argue that although both Asians and

Westerners make dispositional attributions about behaviour, if situational information is

present, Asians are more likely than Westerners to use it. Asians are able to avoid the

FAE because their theories of social behaviour are contextualist or interactionist

compared with the Western theories of social behaviour (Norenzayan et al., 1999).

Further, Gelfand & Dyer (2000) emphasises that ‘the impact of proximal situational

conditions on negotiators’ psychological states is likely to vary depending on the cultural

context. … The same objective social conditions are expected to be ascribed different

meanings and evoke different behaviours across cultures’ (p: 84). These perspectives

combine to suggest that situational context is an important, if not vital component of

ethical decision making in general and is likely to be a critical factor in identifying cross-

12
cultural differences in ethical decision since there will likely be differences in how the

situation is understood in different cultures. A few empirical studies have begun the

process of investigating the culture – situation – ethical decision interaction and these are

described below.

In a vast 8-country study, Triandis et al. (2001) incorporated a view that context

influences ethical decision in their argument that vertical collectivists were more likely to

lie in a negotiation situation than horizontal individualists because the collectivists have a

greater distance between themselves and the other party. The results supported this

hypothesis.

Acknowledging that individuals will vary their ethical perceptions based on

situational contingencies, Volkema & Fleury (2002) argued that culture would moderate

this relationship and measured perceived ethicality of and likelihood of use of EANTS in

8 conditions: unspecified context; where the opponent has a reputation as an unethical

negotiator; where the country is known for skilled negotiators; where it is a very

important negotiation; where there is a time deadline; where the opponent has a

reputation as a very good negotiator; where there will be future business relations with

the opponent; and finally, where colleagues will learn negotiation details. Investigating

negotiators in the U.S. and Brazil, Volkema & Fleury (2002) identified a significant

difference due to country in five of the eight conditions on likelihood of use.

Interestingly, the study also showed that situational factors had a dramatic effect on

perceptions of appropriate behaviour and likely use of EANTs independent of country,

which suggests situational constraints are an integral part of the way negotiation is

conceived.

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 The influence of external environmental factors such as company and professional

codes, legality and short and long term issues for the company being represented were

included in the six-country study by Zarkada-Fraser & Fraser (2001) discussed above.

The most important of the external factors was professional norms with other factors

having a small to moderate impact on the moral evaluation and probability of using the

tactics. There was divergence between the cultural groups of what the most influential

external factor was with the Japanese negotiators assigning higher importance to

company-related concerns than did the other groups. Short-term issues such as firm

workload and market conditions weighed more for the English speaking countries’

managers. This suggests that not only are there cross-cultural differences in how ethical

tactics are perceived but there are differences in what variables negotiators consider in

coming to their decision about ethicality.

Summary

All of the empirical work reviewed here supports the idea that there is a

relationship between culture and ethical decision making in negotiation. Although there

is acknowledgement that the context is influential in ethical decisions, only two studies

have specifically looked at the culture – situation – ethical decision interaction. Given

the scarcity of research, it is difficult to define the exact nature of the interaction.

Culture, ethical decision making and situational variables

I have argued that a culture in context perspective will help unravel the influence

of culture on ethical decision making. This section of the paper identifies situational

14
variables which are salient to negotiators and which are proposed to be differently

understood across cultures. First this section identifies the situational variables that have

been included in negotiation models and then integrates the findings of the business

ethics literature to propose a new model. A situational factor is one that is characteristic

of the decision setting (as compared to being characteristic of the decision maker) and

that is expected to influence the decision making process and outcome (after Ross &

Robertson, 2003).

In the current model of ethical decision making process by Lewicki et al. (2003)

eight situational/contextual variables are identified. These are a) past experiences of the

negotiator; b) incentives; c) relationship with the other party; d) the relative power

between the negotiators; e) mode of communication; f) whether or not the negotiator is

acting as an agent; d) the group and the organisational norms, and; e) the cultural norms.

There is some overlap with the model of the influence of culture on negotiation by

Gelfand & Dyer (2000) who identify a) negotiator role; b) constituencies’ influence; c)

relationships between negotiators; and, d) deadlines or time pressure on the negotiation as

important social contextual variables in cross-cultural negotiations.

These variables have been rationalised in my model of how culture influences

ethical decision making. Lewicki et al. (2003) included ‘cultural norms’ as one of the

contextual variables, however I have adapted Gelfand & Dyer's (2000) perspective that

shows culture having a direct effect on the negotiator’s psychological states (in my model

this is negotiators’ consideration of the ethical decision) and on the situational factors, as

well as moderating the influence of the situational factors on the ethical decision. In my

model, culture includes the cultural values like individualism and collectivism, as per

15
Gelfand & Dyer's (2000) model, and the underlying moral philosophy such as

Confucianism or Christianity. It is important to include moral philosophy because it can

help differentiate cultures in sample selection. For example, Mexico is a collectivist

country with a strong Christian moral philosophic base. The Peoples’ Republic of China

is also collectivistic but has a Confucian moral philosophic base. By incorporating moral

philosophy into the view of culture, researchers can select countries with different values

and different moral philosophies.

FIGURE ONE ABOUT HERE

Lewicki et al., (2003) have included ‘past experience’ as a situational influence on

ethical decision making. They argue that ‘the simple impact of past experience –

particularly failure – can increase the likelihood that a negotiator might attempt to use

unethical tactics’ (p: 266), drawing on a study about the role of goal setting as a motivator

of unethical behaviour (Schweitzer, Ordonez, & Douma, 2004). Arguably, past

experience would be more appropriately recognised as an individual difference, because a

negotiator takes their past experiences to all negotiations and it is not characteristic of the

decision setting of any one negotiation. However, I agree with the idea that goals

influence a negotiator’s view of ethicality of tactics, although there is surprisingly few

studies have investigated the effect of goals on ethical decision making.

Acknowledging that goals are motivational (Locke & Latham, 1990), I propose

that negotiators in cross-cultural negotiations are likely to find organisational goals

influential in their ethical decision making. For example, if a company is desperate to get

16
a sale in a new market because profits have been weak, the negotiator may be more

inclined to use EANTs if they help him or her achieve the goal. In support of this idea,

research has found that strategic objectives of the firm are a factor of considerable impact

in decisions about collusive tendering (Zarkada-Fraser, 2000). This study showed that

the desirability and utility of an organisational goal were considered in the decision.

Similarly, Volkema & Fleury (2002) showed that if a negotiation is more important, some

negotiators are more likely to use some EANTs.

Organisational goals will vary with each negotiation and are likely to be directly

influenced by culture. Even in the situation described above where a company is keen to

make the sale because of weak profits, the organisational goals of an Indian company

may be more long-term and relationship oriented compared to the goals of a U.S.

company who may be focussed on short-term profits and not care as much about the

relationship with the buyer.

My model also shows culture moderating the influence of the organisational

goals. According to a Western ethicist, ‘most folks believe that employees have a prima

facie duty of loyalty to their companies’ (Corvino, 2002, p:181), however in some

cultures social obligations are very complex and negotiators may not support the

organisational goals. For example, because of cultural differences in social obligations to

family and friends, a Chinese negotiator may be differently affected by organisational

goals than a negotiator from the United Kingdom.

I propose that ‘organisational goals’ incorporates the incentives and rewards

offered to a negotiator for achieving a particular outcome. Incentives has been included

in the Lewicki et al., (2003) model based on findings that greater incentives influenced a

17
negotiator’s tendency to misrepresent (Tenbrunsel, 1998). Findings in business ethics

research also suggest that rewards can influence ethical decision making (Loe, Ferrell, &

Mansfield, 2000).

Deadlines have also been included as a component of organisational goals in my

model because the timing of a negotiation is likely to be part of the outcome sought.

Deadlines have been included in Gelfand & Dyer's (2000) model and they argue that

there may be cultural differences in how time pressure influences negotiation schemas.

They give the example that a U.S. negotiator, under time pressure, might become more

competitive whereas a Scandinavian negotiator under time pressure might become more

cooperative. Similarly, it is likely there are cultural differences in how time pressure

influences the use or perceived appropriateness of EANTs. Whether or not deadlines are

imposed is also likely to differ across cultures. Organisations that belong to long-termist

cultures (eg China or Taiwan) (Chinese Cultural Connection, 1987) often have long-

range goals and may not set strict deadlines whereas an organisation from a short-termist

culture like the U.S. will probably have a definite deadline to achieve its goals.

Negotiator role (agent) is also shown as a component of the organisational goals.

It is proposed that the organisational goals such as a desire to break into a new

international market, will determine the role of the person sent to do a negotiation, or

whether an agent is appointed. For example, if a small U.S. company has the goal of

selling products into South Korea, this will lead to the appointment of an agent if the

company doesn’t have appropriate personnel to develop the market. Similarly, if an

Australian company has had a team of negotiators in China negotiating a joint venture

deal, and the deal is being finalised, the Australian company is likely to send a senior

18
negotiator or the CEO to finalise the deal. Culture is likely to influence the seniority of

representatives dependent on whether the culture favours autonomy or hierarchy (Gelfand

& Dyer, 2000). As far as I am aware, negotiation researchers are yet to turn their

attention to how different roles influence negotiation decision making or ethical decision

making. Following Bowie & Freeman's (1992) work, Lewicki et al., (2003) propose that

when people act as an agent they may be more willing to violate personal ethical

standards.

Organisational goals are shown to influence and be influenced by the

organisational codes of ethics in my model. Codes of ethics are the ‘visible and public

statement of ostensible organisational values, duties and obligations’ and these codes help

create ‘homogeneity of behaviour within an organisation’ (Carroll, 1978). Codes of

ethics influence both the recognition of an ethical dilemma and the acceptable process by

which the dilemmas are resolved (Barnett & Vaicys, 2000) and are analogous to the

group and organisational norms included in the Lewicki et al. (2003) model and the

influence of constituents shown in Gelfand & Dyer's (2000) model. Organisational codes

of ethics are one of the most widely incorporated variables in business ethics research and

are included in most of the ethical decision models (eg. Ferrell & Gresham, 1985; Hunt &

Vitell, 1986; Stajkovic & Luthans, 1997).

However, there is debate about the efficacy of codes of ethics in influencing

behaviour (Schwartz, 2001). The effect of salient corporate codes of ethics in negotiation

has been tested in an experiment by Aquino, (1998) who presented negotiators with

advice about the cultural practices (fairness and honesty in business dealings) of the

company they were representing. His data showed that with an organisational climate

19
where ethical standards were highly salient, negotiators were significantly less likely to

use deception even when there were strong individual incentives to act otherwise.

It is anticipated that there will be cross-cultural differences in how codes of ethics

are understood as a function of familiarity with codes in organisations. For instance,

codes of ethics have been common place since the late 1980s and 1990s in Western

businesses (Brief, Dukerich, Brown, & Brett, 1996) with an Australian study showing the

median date of introduction of codes of ethics in Australia was 1992 (Farrell & Cobbin,

1996). However, in other cultural contexts, codes of ethics do not have such a long

history, such as in China where the pace of introduction is slower and more recent (Tam,

2002).

My model proposes that the legal environment is a salient situational factor for

negotiators’ ethical decision making. The legal environment is widely considered the

first hurdle to be cleared in ethical decision making (Cullen, 2002) and has been included

in ethical decision making models (Hunt & Vitell, 1986; Stajkovic & Luthans, 1997;

Zarkada-Fraser, 2000).

There are national differences in legal systems (Beamer & Varner, 2001) and

cross-cultural research shows that managers differentially apply rules (Trompenaars &

Hampden-Turner, 1998) according to whether they believe in applying a rule uniformly

to all situations or applying the rule according to the particular circumstances. Zarkada-

Fraser & Fraser (2001) found differences between Japanese respondents and their other

respondents (from the UK, Australia, the U.S., Greece and Russia) in the relative

importance of the law compared with organisational codes on the evaluation of

negotiation ethics. This study suggests that negotiators are cognisant of the law in their

20
ethical decision making and that there may be cross-cultural differences in how it is

understood.

The final situation variable in my model is the perception of the other party. The

perception of the other party includes the nature and closeness of the relationship with the

other party; the relative power of the negotiators; expectations of a future interaction with

the other party; and, perceptions of the reputation of the other party. There is a sizable

body of research on how relationships with the other party affect the negotiation process

(see Valley, Neale, & Mannix, 1995 for a review), however, most of this research has

taken place in the U.S. and has implicit in it a Western understanding of what a

‘relationship’ is. Yet key differences exist between cultures in how self and others are

understood (Markus & Kitayama, 1991) and so how relationships are defined. For

example, Worm & Frankenstein (2000) note that ‘in the guilt-focussed religions of the

…West, deception is considered immoral. In particularistic cultures, honesty is only a

norm that concerns the in-group or people with whom one has established personalised

relations. … According to Chinese morals it’s not wrong to lie, or a more nuanced view

would be that the Chinese are honest and loyal to persons they know, not toward people

in general’ (p:275).

When there is the likelihood of a future long-term relationship with the other

party, negotiators are less likely to endorse EANTs (Lewicki & Spencer, 1991 cited in

Lewicki et al., 2003). Similarly, people are more likely to deceive a stranger than a

friend (Schweitzer & Croson, 1999). There is also a link between the relative power of

negotiators and the expectation of undesirable behaviour (Tenbrunsel & Messick, 2001)

however, the direction of that influence is unclear because there are conflicting findings.

21
On one hand, there is empirical evidence that negotiators with more power will use

EANTs (bluffing) more than their counterparts with less power (Crott, Kayser, & Lamm,

1980) and on the other hand, there is evidence that when the negotiator knows there is a

power imbalance, they will be more open and provide information (Tenbrunsel &

Messick, 2001). There is also research showing that power has no effect at all (Aquino,

1998). Another component of the perception of the other party – their reputation – was

identified as influential on perception of ethicality in a negotiation (Volkema & Fleury,

2002).

Implications

I have proposed that organisational goals, organisational codes of ethics, the legal

environment and the perception of the other party are salient situational variables that

negotiators take into account in making ethical decisions. The national culture of a

negotiator is posited to influence both the nature of these situational variables (for

example the exact goal that is sought in a negotiation) and how the situational variables

are understood (for example how committed a negotiator is to the organisational goals). I

conclude with some remarks about how my model contributes to theory, what it means

for negotiators and for future research on cross-cultural negotiation ethics.

Although Lewicki et al.’s (2003) model of ethical decision making proposed the

influence of situational variables such as the relationship with the other party and cultural

norms, it did not propose an interaction between culture and the situation. By responding

to recent calls in the literature to investigate culture in context (notably Gelfand and Dyer,

2000) the model here has extended the current model of ethical decision making in

22
negotiation by proposing an interaction between culture and situational variables.

Integrating the findings from the business ethics literature has lead to a slight shift in

emphasis away from negotiation-specific situational variables such as ‘relative power’ to

more generic variables that many business people consider such as ‘organisational codes

of ethics’ and so broadened the model.

The ultimate test of negotiation theory is perhaps whether it makes any sense, and

is of any use to the negotiation practitioners who have to craft deals across cultures. A

raft of research has succeeded in identifying cultural differences in perceived

appropriateness of ethicality of tactics, yet none has succeeded in explaining why there

are differences. By adopting a culture in context perspective and identifying the

situational variables that are likely to be understood differently, the model here has

sought to do just that.

In practice, a negotiator might not be aware that there are cultural differences in

how relationships with other parties are understood. A Chinese negotiator may not

realise that a Western counterpart does not share his/her view of the importance of

obligation to a friend and may be perplexed to be labelled ‘unethical’ when he/she is

acting honourably within his/her ethical principles and offers gift money to establish a

stronger relationship. The model here can be used to explain to negotiators that there are

differences in how a relationship with the other party is defined and understood.

Mislabelling actions as unethical is a potentially dangerous mistake for

practitioners to make. As explained in the introduction, ‘unethical’ behaviours can elicit

potent negative responses. Because this model can help explain why there are cultural

23
differences in what is deemed ethical, it can be used to better equip practitioners to

accurately label and understand actions they may otherwise deem unethical.

The model here has opened a number of interesting avenues for future research.

Given the embryonic state of research into the interaction of culture, situational variables

and ethical decision making, it is necessary to test the proposed interactions in multiple

cultures.

The call for negotiation research to move out the laboratory and into the field has

gained considerable support of late and it is proposed that this model is well suited to

testing by qualitative or ethnographic methods such as interview of negotiators where

they are prompted to discuss their ethical decision making using scenarios. In-person

interviews will provide detailed descriptions of ethical decision making and it is one of

the most common techniques used in ethics research because alternatives such as

observations of ethical decisions in negotiation are almost impossible to predict or set up.

Ethnographic techniques may also help identify emic situational variables that negotiators

consider in their ethical decision making. Discovery of such variables can help expand

the model and our understanding of why there are cultural differences in ethical decision

making in negotiation.

Empirical tests of how each of the situational variables influence ratings of

appropriateness of EANTs can also help illuminate the nature of the relationships

proposed in the model. The existing scale of EANTs – the SINS II scale (Lewicki et al.,

2003) can be modified by prefacing it with a scenario where the situational variable is

manipulated and can be administered in multiple cultures to test the culture-situational

variable interaction. I expressed some concerns that the SINS scale was not totally free

24
of Western bias and it may require some modification before being used in multiple

cultures.

I started this paper with a reference to ‘lying, cheating foreigners!’ Unravelling

how culture influences ethical decision making is an important endeavour, if only to save

international negotiators from needing a drink. Few researchers have entered the fray to

find the answers. It is hoped that this model might serve as a stimulant for future

research and as a starting point for future research into cultural differences of negotiators’

ethical decision making.

25
Figure 1: The Influence of Culture on Ethical Decision Making in Negotiation

26
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