The Journal of Management Theory and Practice (JMTP)

ISSN: 2716-7089, Volume-2, Issue-4,

http://dx.doi.org/10.37231/jmtp.2021.2.4.162
https://journal.unisza.edu.my/jmtp

Cultural Differences in Interaction Goals between Malaysia-China Business

Negotiations
1*Soo Hoo Pin Lick, 2Hassan Abu Bakar
1Awang Had Salleh Graduate School of Art and Social Sciences, Universiti Utara Malaysia, Sintok, Kedah State, Malaysia
2Othman Yeop Abdullah Graduate School of Business, Universiti Utara Malaysia, Kuala Lumpur, Malaysia

*Corresponding Author E-mail: [email protected]

Received: 07th October 2021 Accepted: 04th December 2021 Published: 15th December 2021

ABSTRACT
As the world is getting more globalized, cross-cultural business negotiation is getting more in demand and challenging compared to
those days where most business involved mostly in domestic business negotiations. As many Chinese and Malaysian companies
seeking the role as importer-exporter, this study expects to contribute in understanding cultural differences between Malaysian and
Chinese culture and the influence of cultural norms on interaction goals during international business negotiations. The research
adapts House et al.’s GLOBE model approach which has been applied in a wide range of scholarly studies to explore the influence of
culture on leadership, organizational effectiveness, economic competitiveness of societies, and the human condition of members of
the societies studies. Liu and Wilson (2011)’s interaction goals method is also being adapted in this study. A total of 400 respondents
were used as sample and questionnaire method was used to conduct the survey in this study. The findings of this study shows the
influence of cultural norms on interaction goals which reveals that the respondents perceive interaction goals are influenced by nine
cultural dimensions, namely, assertiveness, humane orientation, performance orientation, power distance, in-group collectivism,
institutional collectivism, future orientation, gender egalitarianism and uncertainty avoidance. This study sheds lights on culture’s
effects on the behaviour of the business negotiators by which goals impact the negotiation outcomes. In addition, future research may
also examine the effects of cultural norms on digital trade negotiations.

Keywords: China, Malaysia, Cultural Dimensions, Interaction Goals, and International Business Negotiations
OPEN ACCESS

INTRODUCTION It is worth to note that several studies attempt to examine

The influence of culture on negotiation processes and negotiation styles within the framework of The Global
outcomes has been widely discussed in international business Leadership and Organizational Behavior Effectiveness
literature (Brett, 2000). It is also worth to note that previous (GLOBE) theory (Stankov, 2015, Pathak, 2018; Javidan,
research also found that cross-cultural negotiations tend to be Cotton, Dastmalchian, Dorfman, Egri & Kar, 2019). However,
more challenging due to cultural differences (Brett, 2000; past studies mainly focused on comparing culture at different
Salacuse, 2004; Peleckis, 2014). Despite these challenges, levels of industry, organization and society using GLOBE
negotiating is one of the most practiced joint decision-making model (Stankov, 2015; Pathak, 2018; Javidan, Cotton,
processes at different organizational levels and functions Dastmalchian, Dorfman, Egri & Kar, 2019). Thus, there are
(Caputo, Ayoko, Amoo & Menke, 2019). Hence, managing several questions unanswered in GLOBE literature. One of
cultural differences in negotiation is important (Bulow & these questions concerns how and whether people will react
Kumar, 2015). There is an extensive body of comparative and behave the same way in different culture though they are
research on cross-cultural negotiations but scholars call for from the same collectivistic cultural norms (Shi & Wang, 2011).
more integrated and systematic approaches and beyond Based on this lacuna, the present article attempts to advance
cultural differences in negotiations (Lewicki, Barry & Sauders, the research on cultural values and practices on international
2010). In particular, the cultural value of individualism versus business negotiations in several ways. First, we respond to the
collectivism is linked to goals in negotiation (Brett, 2000). Thus call by House et al. (2002), Shi and Wang (2011) and Stankov
it is building on previous research findings, this study responds (2015) to examine the impact of cultural values and practices
to the calls for more integrated research and aims at filling this between two Asian countries. In order to do so, we develop
gap in the literature through the examination of the how and test a model that specifies the relationship between
interaction goals are affected by the individual’s different cultural norms with interaction goals between Malaysia and
cultural values (Liu & Wilson, 2011). China business negotiators. In line with recent research in
international business negotiations (Zhang & Zhou, 2008;
Peleckis, 2013; Bulow & Kumar, 2015), we argue that in cross-
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ISSN: 2716-7089, Volume-2, Issue-4,
http://dx.doi.org/10.37231/jmtp.2021.2.4.162
https://journal.unisza.edu.my/jmtp
cultural settings, cultural values have direct impact on The first cultural dimension is power distance. Power distance
negotiation processes and outcomes. Exploring those is defined as the degree to which members of an organization
relationship provides a more comprehensive and realistic or society expect and agree that power should be stratified and
picture of how cultural values influence interaction goals concentrated at higher levels of an organization or government
during business negotiations. (Stankov, 2015). This dimension is very appropriate to
describe China, the rising power of Asia. Inequalities do exist
LITERATURE REVIEW in every culture and society, thus this study describes how a
Global Leadership and Organization Behaviour country expects and accepts the power distance between
Effectiveness (GLOBE) Model nations. This is also agreed by Chui and Kwok (2009) that
Global Leadership and Organizational Behavior Effectiveness stated that the expectation of power is being distributed
(GLOBE) model has nine cultural dimensions which are power unequally shared by individuals in a country or culture
distance, future orientation, institutional collectivism, gender (Waldman, Siegel & Javidan, 2006). People are separated by
egalitarianism, assertiveness, performance orientation, power, authority and prestige (House, Hanges, Ruiz-
humane orientation, in-group collectivism and assertiveness Quitanilla, Dorfman, Javidan, Dickson & Gupta, 1999).
(See Table 1). The nine cultural value dimensions are divided However, it is expected that managers from high power
into values and practices. GLOBE researchers argued that distance culture have less concerned about long-term
both cultural (values) and what actually happens (practices) relationship with stakeholders such as employees and
do not often connected (Shi & Wang, 2011). As mentioned by customers and feel less obligation towards community/state
Brett (2000), most cultural values and norms are related to well-being (Waldman et.al., 2006). Therefore, hierarchy and
negotiation such as individualism versus collectivism, status in high power distance culture are expected to affect the
egalitarianism versus hierarchy, and direct versus indirect negotiation outcome when both parties are from high power
communications. Therefore, Malaysia and China which are distance countries.
both collectivistic countries should have similarities in values
and practices. The second cultural dimension is in-group collectivism. In-
group collectivism is considered to be an indicator of how
Table 1. Nine Cultural Dimensions in GLOBE Model close the relationship between two parties and the amount of
No Items Explanation sharing of information because it concerns of individuals who
1. Power Degree to which a culture’s people are show their pride, loyalty and cohesiveness to their families or
Distance (should be) separated by power, particular groups in a society or organizations that they are
authority, and prestige employed (House, Hanges, Ruiz-Quitanilla, Dorfman,
2. In-group Degree to which a culture’s people Javidan, Dickson & Gupta, 1999; Waldman, Siegel & Javidan,
Collectivism (should) feel loyalty toward their 2006, Shi & Wang, 2011). There is considerable research had
families, organizations, and employers been conducted on how managers in in-group collectivism
3. Institutional Degree to which individuals are (should culture tend to include only those who are in the same group
Collectivism be) encouraged by institutions to be with them (Shi & Wang, 2011). This study analyses how in-
integrated into broader entities with group favoritism influences the attitudes and behavior of the
harmony and cooperation as paramount Chinese and Malaysians. It is expected people prefer to have
principles at the expense of autonomy relationship and cooperation with those people they know.
and individual However, those in the same group may enjoy the privilege of
4. Uncertainty Degree to which a culture’s people in-group due to their similar shared power and status. In in-
Avoidance (should) seek orderliness, consistency, group collectivism, decision-making in business is based on
and structure collective family decision and the members have implanted
5. Future Degree to which a culture’s people are responsibilities towards their family (Gupta & Kinwan, 2013).
Orientation (should be) willing to defer immediate Therefore, this dimension influences the business
gratification for future benefits characteristics as it emphasises on adaptability, open-
6. Gender Degree to which a culture’s people mindedness and long-term collaborative work to build
Egalitarianism (should) support gender equality harmony with each individual in the group that will contribute
7. Assertiveness Degree to which a culture’s people are to the family or in-group (Gupta & Kinwan, 2013).
(should be) assertive, confrontational,
and aggressive The third cultural dimension is institutional collectivism. This
8. Humane Degree to which a culture’s people are institutional collectivism is defined as beliefs that individual
Orientation (should be) fair, altruistic, generous, from the same group should interdependent with others and
caring, and kind toward others an individual should not have personal concerns as duties and
obligations are shared by all the group members (Waldman,
9. Performance Degree to which a culture’s people
Siegel & Javidan, 2006). Past study indicated companies
Orientation (should be) encourage and reward
people for performance which practice high institutional collectivism culture provide
more job security for their employees (Chui & Kwok, 2009).
Derived from: House R.J. and Hanges P.J., Javidan M.,
For example, those who practices institutional collectivism
Dorfman P.W., Gupta V. (2004). Culture, Leadership, and
tends to encourage and reward collective distribution of
Organizations. The GLOBE Study of 62 Societies. Thousand
resources and collective action in organizational and societal
Oaks, CA: Sage
institutional levels (House, Hanges, Ruiz - Quitanilla, Dorfman,
Javidan, Dickson & Gupta, 1999). Therefore, this dimension

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focuses on interdependent between two parties which share a The seventh cultural dimension is humane orientation
common goal. dimension. Humane orientation dimension is defined as the
degree to which a culture encourages and rewards those who
The fourth cultural dimension is uncertainty avoidance are fair, altruistic, generous, caring and kind to other people
dimension. Uncertainty avoidance dimension is defined as the (House, Hanges, Ruiz-Quitanilla, Dorfman, Javidan, Dickson
extent to which members of an organization or society strive & Gupta, 1999). However, humane orientation is more
to avoid uncertainty by relying on established social norms, appropriate to examine out-group members as out-group
rituals, and bureaucratic practices (Stankov, 2015). Due to member tends to be considered as outsider by in-group people
globalization, the changes in uncertainty avoidance practices (Scholosser et al., 2012).Therefore, humane orientation
and values have prevented people to collaborate (Hofstede, dimension is important dimension to analyse to understand the
Jonker & Verwaart, 2008). A culture that scores low in behaviour of negotiators during negotiation process.
uncertainty avoidance culture practices risk-taking, tolerance
to innovation and new ideas, willingness to change and adapt, The eighth cultural dimension is performance orientation
more comfortable with the unknown and feeling positive about dimension. Performance orientation is defined as which
the future (Kailani & Kumar, 2011). Therefore, this dimension relates to how an organization or society encourages and
is a vital factor that influences how people behave during rewards group members for performance improvement and
negotiation as some people prefer to avoid than telling directly excellence (House, Hanges, Javidan, Dorfman & Gupta,
of what they want. 2004). This culture is about how people work hard to achieve
challenging goals being set for them. The competitiveness
The fifth cultural dimension is future orientation dimension. In culture influences performance orientation which boasts the
future orientation, a collective’s behaviours are delaying country’s level of economic prosperity and modernization
gratification, planning and investing in the future (House, (House et. al., 2004). Therefore, performance oriented culture
Hanges, Ruiz-Quitanilla, Dorfman, Javidan, Dickson & Gupta, affects a business negotiation process and outcome because
1999). An individual who practices future oriented culture will the negotiators will be awarded and rewarded from their
control their own destiny than depend on others to help them success in negotiation.
to achieve success (Chui & Kwok, 2009). Recent studies by
Stankov (2015) and Seo-Yoo (2015) explained future The ninth cultural dimension is assertiveness dimension.
orientation dimension culture encourages and rewards those Assertiveness is defined as the degree to which individuals in
who plan ahead of time and some of their activities are like organizations or societies are assertive, confrontational, and
future plan, investment and delaying gratification. aggressive in social relationships (Stankov, 2015). Bluszcz
Globalization has been widely occur which creates and Quan (2016) further explained that this culture shows
international trade, cultural exchange and the worldwide power is being distributed unequally in the society in which
telecommunication systems and thus, it increases the powerful members will have more status and power on others.
interdependence between nations. One country which is Past literature emphasized that assertiveness is viewed as
influenced by globalisation is China which has also changed competitive style in negotiation (Semnani-Azaid & Adair,
their present Chinese’s behaviour (Phillipsen & Littrell, 2011). 2011). Even though, there was research on the influence of
The Chinese are found to be more interested in immediate assertiveness on international business negotiations, there is
rewards due to highly competitive business opportunities in lack of comparison between two collectivistic cultures on how
China and other countries (Bluszcz & Quan, 2016).Therefore, they behave and think during conflict especially both parties
globalization has changed people’s behaviour such as China do not have high score in assertiveness dimension which is
has lower future orientation practice (Phillipsen & Littrell, the focus of this study.
2011). In addition, most previous international negotiation
studies focused on United States and other western countries, GLOBE model provides a platform for researchers and
the pursuit of this study is very significant to accomplish practitioners to understand the challenging relationships
comparative research on South Korea, Thailand other Asian among societal culture, organizational behaviour and
countries (Seon-Yoo, 2015). leadership processes (Dorfman, Javidan, Harges,
Dastmalchian & Houwe, 2012). As a result, this study focuses
The sixth cultural dimension is gender egalitarianism on the influence of cultural norms on international business
dimension. Gender roles are defined in various ways negotiators’ behaviours using GLOBE model.
according to different countries and cultures. Gender
egalitarianism is the degree to which a collective minimizes Interaction Goals
gender inequality (House, Hanges, Ruiz-Quitanilla, Dorfman, As our emphasis in this article is upon Malaysia-China
Javidan, Dickson & Gupta, 1999). Past studies portrayed the business negotiations, we focus on cultural differences which
role relationships between men and women which indicated likely influences the international business negotiations. Past
the gender roles (Bertsh, 2012). Bertsh (2012) explained that studies revealed that cultural differences influence negotiators
in traditional thinking culture, men are known to be more in reciprocating, complementing and transforming their
superior compared to women and thus, they dominate most counterpart’s strategic approach which resulted the
positions. Therefore, with the gender gap and barrier are still counterpart’s interaction goals (Liu & Wilson, 2011 & Lee,
existing in the collectivistic country, it will impact female Adair & Seo, 2011). Interaction goals refer to the capacity of a
business negotiators. person to be able to believe and perform in such a way that
describes why negotiators create message in a way that
influences the attitudes or behaviours of other people (Liu &

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ISSN: 2716-7089, Volume-2, Issue-4,
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https://journal.unisza.edu.my/jmtp
Wilson, 2011). However, neither of these studies shows how Table 2. Respondents’ characteristics
cultural differences influence interaction goals between Item Frequency % Item Frequency %
Malaysian and Chinese international business negotiators. Education Primary 1.0 Industries Trading 30.7
Level Secondary 3.6 Tourism 5.2
We seek to explain the differences of both countries in STPMA-Level 2.1 Education/ 5.9
international business negotiations and past research had Certificate/ Training
proven that differences in national culture have proven to Diploma 10.6 Construction 3.4
result differences in organization and administration (Lincoln, Bachelor Manufacturing 37.4
degree 64.9 Others 17.5
Handand & Olson, 1981). Unquestionably, an interaction Masters 15.7 Working 1-5 years 46.2
goals will be affected by cultural differences. For a business PhD 2.1 Experiences 6-10 years 24.6
collaboration to happen, both parties should find ways to share Nationality Malaysian 50.5 11-15 years 12.3
and solve the problem. For this reason, the following analysis Chinese 49.5 16-20 years 12.3
Age 18-25 years 5.4 21 years and above 4.6
tests the relationship between cultural norms and interaction old
goals are under one hypothesis: 26-35 years 38.4 Negotiation 1 -5 years 51.8
old Experiences 6-10 years 28.6
H1: Cultural norms associate with interaction goals in 36-45 years 39.9 11-15 years 16.2
old 16-20 years 2.3
international business negotiations. 46 and above 16.2 21 years and above 1.0
Religion Islam 28 Number of 1-10 persons 67.8
METHODOLOGY Buddhism 49.0 Business 11-20 persons 15.7
Construct Measurement Hindu 1.0 Partners 21-30 persons 2.1
Christianity 8.5 31-40 persons 0.8
A survey was carried out to test the model of GLOBE and Others 39.4 41 persons and above 13.7
interaction goals. A survey instrument was developed Ethnicity Malay 1.8 Years of 1-5 years 60.0
incorporating items for each questions for the respondents. Chinese 96.9 Collaboration 6-10 years 27.7
The items were adapted from the current literature. We had Indian 1.3 11-15 years 6.2
Others 0 16-20 years 6.2
changes some words of the measures considering the context.
The measurement for all items for cultural norms were
Data Analysis Methods
adapted from Bertsh (2012) while all items for interaction goals
The final data set is out of outlier and influential problems. The
were adopted from Wilson and Putnam (1990). Each item was
actual data set was of 400 respondents and 12
measured using a 5-point likert scale ranging from 1 – strongly
respondents were deleted due to the problems. Normality of
disagree to 5 – strongly agree. The reliability of the scales
the data was measured using Pearson's Skewness and
have been found to be reliable in previous studies. The
Kurtosis parameters. Table 3 shows that the data is normally
reliability of the two instruments was obtained as .417 to .790
distributed when skewness is between -2 to +2 and kurtosis is
for cultural norms using Cronbach alpha approach (Bertch,
between -7 to +7 (Hair, Black, Babin & Anderson, 2010).
2012). As for interaction goals, the Cronbach alpha ranged
Therefore, the data is out of outlier and influential problems.
from .67 to .85 (Liu & Wang, 2010).
Table 3. Skewness and kurtosis of all variables
Sampling Technique, Sample Size, and Data Collection
The present study is aimed to explore the relationship between Statistics Cultural Norms Interaction Goals
cultural norms and interaction goals between Malaysian and Skewness -030 -028
Chinese business negotiators. Data were collected from two Kurtosis -188 -517
business associations in China. The sample of the research is
business negotiators from Malaysia and China. Participants Discriminant Validity
were from different industries such as manufacturing, trading, CFA discriminant validity assumes that items should correlate
hotel and tourism, education, construction and customer higher among them than they correlate with other items from
services. To ensure mature group membership, our sample other constructs that are theoretically supposed not to
was limited to business negotiators who have a minimum of 1 correlate (Zait & Bertea, 2011). The value of AVE for each
year of negotiation experience with Malaysian or Chinese construct should be 0.50 (Fornell & Lancker, 1981) and for this
business partners. Survey packs were sent to the participants study, the AVE is .426. Therefore, it is adequate for
via email and WeChat apps. It was explicitly stated that convergent validity (Ab Hamid, Said & Mohmad Sidek, 2017).
participation was a voluntary and confidential would be
assured. A total of 220 Malaysian and 220 Chinese business Convergent Validity
negotiators participated in this research. The participants were Convergent validity was confirmed by examining internal
asked to complete the surveys and return by email or WeChat consistency, CR and AVE. As internal consistency,
Apps. Out of the 440 copies of questionnaire distributed, 400 Cronbach's alpha for all constructs was found more than the
copies were retrieved with a retriever rate of 90.9%. During the recommended value of 0.70 (Nunnally, 1978). All indicators’
data entering and cleaning, only 388 survived the analysis. loading in this study were also revealed to exceed threshold
limit, ranging from 0.751 to 0.874. Hair, Black, Babin and
Data Analysis and Results Anderson (2014) stated that CR value 0.70 and more than that
In table 2, there were 61.6% male and 38.4% female. A great indicates convergent validity of the constructs. AVE values
fraction of respondents were adults between the age of 36 to greater than 0.5 also indicates convergent validity (Fornell &
45 years old. Our records were broad in respect of skill Larcker, 1981).
as well as understanding of respondents.

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Structural Model Equation among Malaysian and Chinese business negotiators. This
In this second stage of analysis, the hypothesis will be tested. research is to examine the relationship between cultural norms
Bootstrapping technique with 388 resampling size was and interaction goals. The findings found that cultural norms
operationalized to check the hypothetical relationship (Hair, have immediate impact on interaction goals. Therefore this
Black, Babin & Anderson, 2010). To find the significance of the study suggests the importance of cultural norms as important
hypothesis path coefficients (beta values), t-values, P-values factor in influencing the behavior and thinking of business
were examined. Results indicates that Hypothesis 1 was found negotiators to reach the final decision and outcome of the
to be significant. Hypothesis 1 explains the relationship business negotiation between Malaysian and Chinese
between cultural norms and interaction goals. The business negotiators.
hypothesized relationship is found to be significant between IV
and DV (y=.436, t-value = .663). The test results also shows Based on the findings of the study, we therefore
P-Value =0.001 and thus, the test results indicates this recommended that international business owners should
hypothesis fails to reject because it is significant association consider improvement of cultural intelligence in order to
between cultural norms and interaction goals. improve their business negotiators’ negotiation performance
for global competitiveness. Moreover, business negotiators
DISCUSSION OF FINDINGS need to improve their cross-cultural communication skills that
The result of the findings shows there is positive and bring cooperative communication during process of
significant relationship between cultural norms and interaction negotiation. Lastly, business negotiators should attend cross-
goals. This implies that cultural norms (assertiveness, power cultural training in order to continuous professional
distance, humane orientation, performance orientation, development, self-growth and to enhance their job
gender egalitarianism, institutional collectivism, in-group performance.
collectivism, future orientation and uncertainty avoidance) can
positively influence the interaction goals of Malaysian and Reference
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