Heike Hennig-Schmidt and Gari Walkowitz
No 06-01, Cologne Graduate School Working Paper Series from Cologne Graduate School in Management, Economics and Social Sciences
This paper aims to better understand negotiation behaviour between Germans and Chinese. We study intra- and inter-cultural bargaining in negotiations with asymmetric outside options. Our analysis is based on team decisions and verbal transcripts of video-recorded within- and between-team discussions. The data show the importance of aspiration formation in combination with equity concerns. Before the negotiation starts, all teams already have formulated goals that can be traced during the subsequent negotiation. Moreover, all first offers and demands and the majority of final outcomes represent equitable shares of the amount at stake. Teams often agree upon the ‘Split the Difference’ allocation, which represents a feasible and justifiable compromise. Chinese typically gather as much information on their counterparts as possible, anticipate and simulate their counterparts’ behavior and make harmony an issue. German teams, however, put great emphasis on fairness issues and aim at efficient outcomes by reaching an acceptable payoff within reasonable time.