2014_groves, feyerherm, & gu_examining cq and cross-cultural negotiation effectiveness

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published online 30 July 2014Journal of Management EducationKevin S. Groves, Ann Feyerherm and Minhua Gu

EffectivenessExamining Cultural Intelligence and Cross-Cultural Negotiation

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Journal of Management Education

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The Author(s) 2014

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Review Article

Examining CulturalIntelligence and

Cross-CulturalNegotiation Effectiveness

Kevin S. Groves1, Ann Feyerherm1,

and Minhua Gu1

Abstract

International negotiation failures are often linked to deficiencies in negotiatorcross-cultural capabilities, including limited understanding of the culturesengaged in the transaction, an inability to communicate with persons fromdifferent cultural backgrounds, and limited behavioral flexibility to adapt

to culturally unfamiliar contexts. Although management educators areconcerned about developing students cross-cultural capabilities, there existsvery little empirical research demonstrating the impact of such abilities onnegotiation performance. To address this limitation while advancing researchon the development of cross-cultural capabilities, we examined the impactof cultural intelligence (CQ) on cross-cultural negotiation performance.Using assessment center and consensus rating methodologies, 113 fullyemployed MBA students participated in a negotiation exercise designed tounderscore key cultural differences with respect to both negotiation styleand substantive issues. Controlling for prior negotiation and internationalexperiences, personality (openness to change and extraversion), andemotional intelligence, our results demonstrated that CQ predictednegotiation performance while interest-based negotiation behaviors partiallymediated the CQnegotiation performance relationship. CQ capabilitiesfacilitated negotiators ability to demonstrate cooperative, interest-based

1

Pepperdine University, Los Angeles, CA, USACorresponding Author:

Kevin S. Groves, Graziadio School of Business and Management, Pepperdine University,

6100 Center Drive, Los Angeles, CA 90045, USA.

Email: [email protected]

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2 Journal of Management Education

negotiation behaviors in a negotiation context that demanded behavioraladaptation. We conclude by discussing a series of practical implications formanagement educators and suggestions for future CQ research.

Keywords

cultural intelligence, negotiation, interest-based negotiation, assessmentcenter, intercultural negotiation

International negotiations often fail due to a lack of understanding and

knowledge of the multiple cultures involved in the transactions (Brett &

Okumura, 1998; Gelfand et al., 2001; Tinsley & Pillutla, 1998). Priorresearch suggests that deficiency in cross-cultural competence is a primary

cause of international negotiations that fail to meet both parties expecta-

tions (Gelfand & Raelo, 1999). Effective negotiators in global contexts pos-

sess the knowledge and skills to work with the nuances of communication,

values, and behavioral cues of individuals from different cultural back-

grounds. As educators of current and future business leaders, we must be

concerned about the development of our students cross-cultural competen-

cies as part of their management education experience. Equally importantfor the business education community is advancing theory and research on

cross-cultural competencies in a business context (Eisenberg, Hartell, &

Stahl, 2013), particularly concerning fundamental management functions

such as negotiating agreements with customers, suppliers, government offi-

cials, and other stakeholders.

Theory and research on cross-cultural competence has evolved from a

focus on cultural knowledge to cross-cultural communication skills (Adair,

2003; Adair & Brett, 2005) to the current formulation of cultural intelligence(Ang et al., 2007; Earley & Ang, 2003). Cultural intelligence (CQ), defined

by Earley, Ang, and Tan (2006) as a persons capability for successful adap-

tation to new cultural settings, that is, for unfamiliar settings attributable to

cultural context (p. 5), has been linked to task performance in cross-cultural

settings such as leadership effectiveness in cross-border contexts (Rockstuhl,

Seiler, Ang, Van Dyne, & Annen, 2011), leadership and team effectiveness

in culturally diverse teams (Groves & Feyerherm, 2011), and international

assignment effectiveness (Kim, Kirkman, & Chen, 2006). However, with

the notable exceptions of Imai and Gelfands (2010) analysis of negotiation

transcripts between parties from different national cultures, and Engle,

Elahee and Tatoglus (2013) findings that higher metacognitive CQ was

related to higher problem-solving scores in cross-cultural negotiations,

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Groves et al. 3

published research on the links between CQ and negotiation processes and

outcomes is largely absent.

Overall, this study addresses three critical gaps in theory and research on

the association between CQ and cross-cultural negotiation processes and per-formance outcomes. First, we extend the very limited empirical research of

the impact of CQ on intercultural negotiation processes. Second, we expand

the nomologial net of CQ theory by illustrating a key mediating process that

partially explains CQs effect on complex intercultural processes. While

empirical studies examining the direct effects of CQ competencies on perfor-

mance outcomes are growing (e.g., Ahn & Ettner, 2013; Chua, Morris, &

Mor, 2012; Eisenberg, Lee, et al., 2013; Salmon et al., 2013), research

addressing the key explanatory mechanisms of CQs effects on interculturalprocesses and performance outcomes is scarce. Third, echoing the sentiment

of a growing number of cross-cultural management education scholars (e.g.,

Blasco, 2009; Eisenberg, Hartel, et al., 2013), this study advances the fields

shift from examining cross-cultural competence as cognitive knowledge

bases to cognitive experiences and transformations via experiential exposure

to intercultural situations. Although our study does not directly address the

efficacy of an experiential, assessment center intervention for enhancing CQ

competencies, we extend cross-cultural management education research byexamining CQs direct and indirect effects on intercultural negotiation pro-

cesses and outcomes in a highly experiential context that facilitates students

affective and cognitive engagement (Jones, 2003). Asserted by numerous

cross-cultural management education scholars (e.g., Blasco, 2009; Molinsky,

2007; Pless, Maak, & Stahl, 2011), intense experiential activities such as

assessment center role-playing exercises and simulations offer a much more

meaningful examination of CQs impact on complex intercultural processes.

To address the research gaps and management education needs discussed

above, we offer an empirical examination of CQ and its impact on negotia-

tion processes and outcomes in a cross-cultural context. In a class dedicated

to developing the managerial skills of fully employed MBA students, we con-

ducted a cross-cultural negotiation simulation in which students completed a

role-playing exercise that was subsequently assessed by a panel of assessors.

Our article is organized as follows. First, we offer a brief review of the CQ

construct and its multiple dimensions. Next, we develop a series of hypothe-

ses through a review of the key theoretical and empirical research on CQ,

interest-based negotiation (IBN) behaviors, and negotiation outcomes incross-cultural contexts. After describing our sample, measures, and assess-

ment center methodology, we present the results and discuss a series of man-

agement education implications.

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Cultural Intelligence Background

Cultural intelligence presents a unique framework to study how individuals

successfully adapt in unfamiliar surroundings (Earley et al., 2006, p. 5).CQ not only represents the cultural knowledge that one possesses and behav-

ioral flexibility but also the ability to reason and act on observations and

subsequent cognition in a culturally diverse setting. Similar to studies exam-

ining cognitive intelligence and the nature of emotional intelligence (EQ;

e.g., Cote & Miners, 2006), CQ comprises how ones abstract thinking and

motivation influence his or her behavior. A culturally intelligent individual

possesses the necessary background knowledge of a particular culture, as

well as the motivation to learn about new cultures and create new mental

frameworks in order to expand his or her behavioral repertoire. Earley and

Ang (2003) identified four CQ capabilities (metacognitive, cognitive, moti-

vational, and behavioral), which are discussed below.

Metacognitive CQ is an individuals cultural consciousness and awareness

during interactions with those from different cultural backgrounds (Van Dyne,

Ang, & Koh, 2008, p. 17), which reflects the ability to actively think about key

assumptions as one is engaged in cross-cultural contexts and revise such under-

standing and cultural knowledge accordingly. It not only promotes active cog-

nitive process when one faces a cross-cultural situation, it also drives the criticalthinking behind reasoning, decision making, and judgment regarding the situa-

tion. Metacognitive CQ enables individuals to evaluate and adjust cognitive

schema when cross-cultural situations are involved, particularly complex pro-

cesses such as intercultural negotiations. Recently, Chua et al.s (2012) study of

executives concluded that high cultural metacognition was strongly associated

with positive outcomes in intercultural relationships, including affective close-

ness and creative collaboration. Further discussed below, these results offer

support for examining the potential mediating role of IBN behaviors.Cognitive CQ is an individuals cultural knowledge of norms, practices,

and conventions in different cultural settings (Van Dyne et al., 2008, p. 17).

It reflects ones knowledge of a certain cultural setting, which encompasses

the fundamental knowledge of cultural similarities and knowledge of cultural

differences. Similar to metacognitive CQ, cognitive CQ is closely related to

decision making (Ang et al., 2007). Beyond its effects on decision making,

cognitive CQ consists of the culture knowledge base while helping one to

behave aptly in cross-cultural situations. Recently, two multinational longitu-dinal studies examining the effects of cross-cultural management courses on

students CQ found that in addition to significantly higher student CQ scores

at Time 2 (postcourse), the courses had much stronger effects on cognitive

and metacognitive CQ than on motivational and behavioral CQ (Eisenberg,



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Groves et al. 5

Lee, et al., 2013). The researchers concluded that the cognitive CQ dimen-

sions (cognitive and metacognitive) are affected by traditional academic

classroom interventions while motivational and behavioral CQ are more

readily affected by extensive, purposefully designed experiential learninginterventions or through an intensive direct experience with other cultures,

gained by spending a meaningful amount of time abroad (Eisenberg, Lee, et

al., 2013, p. 616). Ahn and Ettners (2013) recent examination of CQ in MBA

curricula also concluded that intensive experiential activities, such as interna-

tional work experiences and obtaining a degree from a foreign country, are

the most important drivers of enhancing CQ.

Motivational CQ drives attention so that one can focus on both cultural

differences and cultural similarities while also mobilizing energy towardadapting to unfamiliar cultural contexts. Defined by Ang and Van Dyne

(2008) as the ability to direct(s) attention and energy toward cultural differ-

ences, motivational CQ is the foundation of ones self-confidence concern-

ing the ability to deal with people and situations of a different culture. This

self-efficacy effect (Ang & Van Dyne, 2008) is critically important as it

requires a high-level personal confidence to perform successfully in a cross-

cultural setting (Earley et al., 2006). Imai and Gelfands (2010) research on

intercultural negotiations found that integrative information sequences andtheir subsequent joint outcome gains were predicted by the negotiators moti-

vational CQ. Most recently, Salmon et al. (2013) found evidence that motiva-

tional CQ was a significant factor in predicting the effectiveness of

manipulative mediation styles in intercultural disputes. Overall, these

research findings suggest that motivational CQ may affect the efficacy of

negotiation strategies, including manipulative, cooperative, and interest-

based behaviors, for resolving intercultural conflicts.

Behavioral CQ is the ability to act appropriately when interacting with

people and situations in an unfamiliar culture. Behavioral CQ is essentially

how one can play a role very convincingly and consistently (Earley et al.,

2006) in a cross-cultural setting. Such performance demands a wide range of

behaviors that can be flexibly deployed based on the situation. Behavioral

CQ consists of the ability to properly adapt both verbal and nonverbal behav-

ior (Ang & Van Dyne, 2008) in culturally unfamiliar contexts. Ang et al.

(2007) showed that behavioral CQ and motivational CQ are positively asso-

ciated with ones cultural adjustment, well-being, and task performance.

Cultural Intelligence and Negotiation Process Behaviors

Cross-cultural negotiation is increasingly becoming an invaluable manage-

ment competency that often determines an organizations success in the



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global business community. Prior research suggests that international nego-

tiations frequently fail due to an overall lack of understanding and knowledge

of the multiple cultures involved in the transactions. For example, Adair

(2003) indicated that in high context cultures, indirect communication isfavored, while in low context cultures, direct communication is preferred.

She also discovered that it was more difficult for those from low context

cultures to adapt to the negotiation style of those from high context cultures

than vice versa. Tinsley and Pillutla (1998) argued that different cultural

groups developed negotiation strategies that were consistent with their cul-

tural values, and thus, the joint gains of negotiation and negotiator satisfac-

tion were moderated by culture. When Brett and Okumura (1998) examined

the simulated negotiations between Japanese and American managers, theyfound that intercultural negotiation resulted in lower joint gains because both

Japanese and American negotiators used different scripts to communicate

with one another.

On the basis of CQ theory and research to date, we posit that negotiators

with high CQ should be better equipped to navigate the difficulties of negoti-

ating in a cross-cultural context. We draw on the work of Imai and Gelfand

(2010), Gelfand et al. (2001), Busch (2012), and others in postulating that CQ

capabilities facilitate ones ability to exercise cooperative, IBN behaviors,which are associated with stronger joint gains and overall negotiation effi-

cacy in cross-cultural contexts. Imai and Gelfand (2010) argued that integra-

tive negotiation processes, which draw on IBN behaviors as opposed to

competitive behaviors, are critical for determining overall negotiation effec-

tiveness and mutually agreeable joint gains among the negotiating parties.

Because of the anxiety caused by encountering an unfamiliar culture, it is

often more difficult for negotiators from different cultural backgrounds to

behave cooperatively and flexibly during cross-cultural negotiations

(Hewston, Rubin, & Willis, 2002; Imai & Gelfand, 2010).

In their negotiation simulation study, Imai and Gelfand (2010) found that

individuals with high CQ were more likely to form cooperative relationships

during the negotiation. As demonstrated through prior CQ research, negotia-

tors with high CQ are more agreeable, flexible, and cooperative while also

possessing greater motivation to accurately perceive the nuances inherent in

cross-cultural negotiation contexts (Ang et al., 2007; Chen, Liu, & Portnoy,

2012). When presented with the challenge of a negotiation involving cultur-

ally bound issues (e.g., issues underscored by cultural values such as indi-vidualism/collectivism, power distance, universalism/particularism, etc.) as

well as an opposing party who demonstrates a disparate negotiation style,

negotiators with high CQ will accurately perceive and decode culturally rel-

evant information and adapt their negotiation behaviors accordingly (Hewston



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Groves et al. 7

et al., 2002). The behavioral flexibility demonstrated by high CQ negotiators

is also associated with the relationship-building process, which generates

greater overall joint gains that effectively meet the common interests of both

parties (Fisher & Ury, 1991). Finally, research on simulated negotiationsdemonstrates that negotiation dyads engaging in complementary and coop-

erative relationship management behaviors are more likely to create joint

profits (Imai & Gelfand, 2010). This study concluded that overall CQ is asso-

ciated with complementary and cooperative relationship management behav-

iors in cross-cultural negotiation contexts. On the basis of the theory and

research reviewed above, we present the following hypothesis:

Hypothesis 1:Negotiators with high CQ will demonstrate higher negotia-tion performance outcomes than negotiators with low CQ.

Mediating Effects of Interest-Based Negotiation Behaviors

Extending the work of Imai and Gelfand (2010) and others (Ang et al., 2007;

Chen et al., 2012) on the relationship between cooperative negotiation behav-

iors and negotiation outcomes, we examine the effects of CQ on IBN behav-

iors and subsequent negotiation outcomes. The following review of theoreticaland empirical research suggests that negotiator CQ will predict the ability to

demonstrate IBN behaviors in cross-cultural contexts. In turn, an IBN strat-

egy will partially explain the relationship between negotiator CQ and nego-

tiation outcomes in cross-cultural contexts. Given the nascent stage of

research on the theoretical relationships between CQ competencies and both

negotiation processes and performance outcomes in cross-cultural contexts,

as well as the incredible complexity of intercultural negotiations and disputes

(e.g., Molinsky, 2007; Salmon et al., 2013), we predict that IBN behaviors

will partially explain the positive relationship between CQ and cross-cultural

negotiation performance. Based on existing CQ theory and research, we

acknowledge the likelihood that CQ competencies affect cross-cultural nego-

tiation performance via other explanatory processes, including the interaction

of negotiator individual differences (Barry & Friedman, 1998), interpersonal

trust (Salmon et al., 2013), problem-solving style (Engle et al., 2013), and

other processes. As such, this study adopts a conservative approach to

explaining the causal mechanism between CQ and intercultural negotiation

performance.Negotiation processes, aside from the substantive negotiation issues,

include negotiators motivations, cognitions, behaviors, and emotions

(Thompson, Wang, & Gunia, 2010). A specific type of negotiation, IBN

depends on the parties willingness to explore the other partys interests,



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engage in creatively seeking options for resolution, rely on objective third

party criteria, and separate the people from the negotiation issues (Fisher &

Ury, 1991; Marcus, Dorn, & McNulty, 2012). Cooperative negotiation strate-

gies such as interest-based behaviors demand communication skills such asactive listening and articulating in a way that others can clearly comprehend.

Negotiation processes that capitalize on the explicit or implicit sharing and

processing of information are critical to capturing integrative potential

(Marcus et al., 2012; Pruitt & Carnevale, 1993). Interest-based conflict reso-

lution processes facilitate greater joint gains by engaging each party in reveal-

ing, enlarging, and generating enlightened shared interests, which expand the

range of acceptable solutions to both parties.

We postulate that negotiator CQ will predict overall cross-cultural negotia-tion performance while IBN behaviors will partially mediate the CQ

negotiation performance relationship. The theoretical justification for our

prediction is based on the intersection of CQ and negotiation theory, specifi-

cally the critical role of frames or the cognitive perspective that each party

uses to organize and interpret information about the negotiation issues

(Lewicki, Saunders, & Barry, 2006). Negotiation theorists assert that the

frames or perspectives assembled by each party are self-generated, fundamen-

tally affected by cultural values and assumptions, and reflect both substantiveand symbolic interests (Marcus et al., 2012). As such, the negotiation parties

must achieve a profound understanding of one anothers interests, based on

both substantive negotiation issues and symbolic interests associated with cul-

tural values, to collectively reframe how they perceive and generate the range

of options for arriving at a mutually acceptable solution. Based on the CQ

theory and research reviewed below, we contend that CQ competencies facili-

tate the requisite reframing that drives effective IBN behaviors and ulti-

mately performance outcomes in cross-cultural negotiations.

Recent research supports the contention that CQ competencies are associ-

ated with the ability to demonstrate IBN behaviors in cross-cultural negotia-

tion contexts. Related to metacognitive CQ, Antal and Friedman (2008)

describe negotiating reality as a process whereby people become aware of

their culturally shaped interpretations to a given situation, openly inquire into

the interpretations of others, jointly test their interpretations, and design

action strategies that make sense to all parties (p. 364). Similarly, a series of

quasi-field and experimental studies found strong support for the impact of a

key metacognitive strategycultural perspective takingon interculturalcoordination and cooperation (Mor, Morris, & Joh, 2013). Recently, Imai and

Gelfands (2010) study of intercultural negotiations concluded that integra-

tive information sequences and their subsequent joint outcome gains were

driven by the negotiators motivational CQ.



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Groves et al. 9

Effective IBN behaviors require each party to engage in multidimensional

problem solving that reveals the tangible and intangible gains that each

party hopes to achieve, the relative power and influence of each of the stake-

holders, the experiences that each party brings to the table, and the history ofthe parties relationship to each other (Marcus et al., 2012, p. 340).

Importantly, the breadth of issues relevant to the negotiation will be perceived

differently by each party according to their own perspectives and cultural

assumptions. Prior research suggests that CQ competencies are associated

with more advanced, multidimensional problem-solving skills and a general

willingness to exert cognitive effort for complex, analytical thinking that

leads to a greater range of negotiation solutions addressing mutual interests.

Engle et al. (2013) found that higher metacognitive CQ scores of both Turkishand U.S. students were related to higher problem-solving scores in cross-

cultural negotiations. Along a similar vein, recent research suggests that cog-

nitive motivation and complexity also provide an avenue to successful

cooperative negotiation strategies and the ability to demonstrate IBN behav-

iors. Schei, Rognes, and Mykland (2006) found that cognitive motivation,

defined as a stable individual difference in the tendency to engage in ardu-

ous, analytical thinking (p. 74) helped sellers achieve more integrative out-

comes. Kassin, Reddy, and Tulloch (1990) concluded that high cognitivemotivation aided negotiators in remembering more information cues, while

Osberg (1987) noted that such negotiators are more likely to focus energeti-

cally on cognitive tasks. Berzonsky and Sullivan (1992) found that individu-

als with high cognitive motivation actively searched for and used relevant

information. Pruitt and Lewis (1975) found that individuals with higher cog-

nitive complexity were more likely to reach integrative solutions, when cou-

pled with high levels of communication. Overall, cognitively complex

individuals are more likely to entertain alternative scenarios and gather and

integrate more information into their decision making.

Given that cognitive motivation and complexity are likely to produce IBN

behaviors and integrative negotiation outcomes, in concert with the research

reviewed above, it follows that high CQ negotiators (incorporating metacog-

nitive, cognitive, and motivation dimensions) are more likely to exhibit IBN

behaviors. Individuals with high metacognitive CQ, conceptually similar to

cognitive complexity, are able to evaluate and adjust their cognitive schema

in cross-cultural negotiation contexts. As such, they are more likely to recon-

sider culturally bound thinking and revise their understanding of the negotia-tion context through IBN behaviors that challenge ones own assumptions

about the other party (e.g., asking questions about the other partys goals and

interests, demonstrating active listening skills via reflective and clarification

questions, avoiding discussion of hard positions, etc.). Similarly, individuals



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with high motivational CQ, which is conceptually consistent with key aspects

of cognitive motivation, are more likely to demonstrate the requisite drive,

curiosity, and cognitive attention to exercise IBN behaviors in cross-cultural

negotiation contexts. An individuals attraction to and willingness to sustaineffort in a culturally unfamiliar context is likely associated with the ability to

actively search for relevant information, propose and critically evaluate alter-

native scenarios, and integrate more diverse information into decision mak-

ing, all of which are fundamental IBN behaviors (Fisher & Ury, 1991).

In addition to cognitive complexity and cognitive motivation, other

research streams suggest that individuals with behavioral flexibility are more

likely to demonstrate IBN behaviors. A problem-solving orientation was seen

to have had a positive effect on dyads reaching a more integrative solution byencouraging heuristic trial and error and inhibiting behavior that would lead

to a more distributive solution (Pruitt & Lewis, 1975). This trial-and-error

approach indicated behavioral flexibility on the part of the negotiators who

were able to achieve integrative solutions. Behavioral flexibility is conceptu-

ally consistent with behavioral CQ, which taps ones ability to use a broad

range of verbal and nonverbal behaviors that are appropriate for varied cul-

tural contexts (Van Dyne et al., 2008). Similarly, prior research has demon-

strated that behavioral mimicry improves the joint gains of the party thatinvokes subtle mimicry behavior (Maddux, Mullen, & Galinsky, 2007).

Mimicry requires negotiators to be attentive to the behaviors of counterparts

so that they can make in-the-moment adjustments to their own behaviors.

Based on the research reviewed above, we offer the following hypotheses:

Hypothesis 2:Negotiators with high CQ will demonstrate greater IBN

behaviors than negotiators with low CQ.

Hypothesis 3:Interest-based negotiation behaviors will partially mediate

the relationship between negotiator CQ and negotiation performance.

Method

Sample

A total of 113 fully employed MBA students, each representing a different

organization, participated in this study. The reported ethnic background of

the sample was as follows: 43% Hispanic/Latin American (n = 49), 28%Asian American (n= 32), 15% Multiethnic (n= 17), 5% Caucasian (n= 6),

4% African American (n = 5), and 3.5% Native Hawaiian/Other Pacific

Islander (n= 4). The reported nationality was as follows: 40% United States

(n= 45), 17% China (n= 19), 13% Mexico (n= 15), 6% Philippines (n= 7),



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Groves et al. 11

5% El Salvador (n= 6), 3% Saudi Arabia (n= 3), 4% Vietnam (n= 5), 3%

Armenia (n= 3), and 9% other nationalities (n= 10). Fifty-eight percent (n=

65) of the participants were female, and the mean age was 33.21 years (SD=

3.96). Drawn from a diverse mix of industries, including financial services(n= 19, 17%), aerospace (n= 16, 14%), health care (n= 17, 15%), hospitality

(n= 14, 12%), government services (n= 14, 12%), the participants reported

their position title as department supervisors or frontline managers (n= 45,

40%), project team leaders (n= 42, 37%), regional or district managers (n=

15, 13%), and executive-level managers (n= 11, 10%).

Procedure

Participant Recruitment. The participants were recruited from the part-time

MBA program at a medium-sized public university in Southwestern United

States. The participants were fully employed MBA students enrolled in three

sections of a Managerial Skills course taught by the first author over the

course of three consecutive academic quarters. The three sections consisted

of 36, 38, and 39 students (113 overall), respectively. The learning objectives

of the course centered on the assessment and development of a series of man-

agement skills, including performance feedback, conflict mediation, devel-oping teams, and negotiation. During the first week of the course, students

were asked to complete an online survey that measured CQ and a series of

demographic, work background, and psychometric questions. During the

first 3 weeks of the course, students were also asked to participate in an

assessment center negotiation exercise that would elicit important feedback

on their negotiation skills in a cross-cultural context. As detailed below, all

students completed the negotiation exercise prior to the delivery of any

course content or learning activities addressing negotiation skills. The course

content and learning activities addressing negotiation skills was delivered

during the final 2 weeks of the term. No part of the course addressed CQ,

leading diverse teams, or other topical areas related to cross-cultural skills.

Assessment Center Development.The assessment center was developed by

first selecting a cross-cultural negotiation exercise from the Dispute Reso-

lution Research Center at Northwestern Universitys Kellogg School of

Management. The selected negotiation exercise, International Lodging

Merger (negotiationexercises.com/Details.aspx?ItemID=116), was modi-fied to suit the present studys goals. This exercise was an integrative nego-

tiation about the merger of U.S. and Brazilian hotel chains. The exercise

was designed to motivate culturally different behaviors from the negotia-

tors, as key cultural differences between the United States and Brazil (e.g.,



14/37


power distance, individualism/collectivism, universalism/particularism)

are integrated into the exercise. For the purpose of the present study, the

exercise was modified so that each participant (n= 113) performed the role

of the negotiator for the U.S. hotel chain (Lambert Hotel) and a trainedgraduate student played the role of the negotiator for the Brazilian hotel

chain (AAA Hotel). The exercise instructions for each role included general

background information on both hotel chains and Lamberts recent over-

tures to AAA for the purpose of acquiring AAAs chain of properties.

Although the original exercise included seven substantive negotiation

issues, the exercise was modified to include three such issues: (a) number

of voting seats on the 8-person executive board for each firm, (b) the man-

agement of AAA hotels after the merger, and (c) the incentive compensa-tion plan for AAA hotel managers. These three issues were selected for the

exercise because they underscored key cultural differences between nego-

tiators from national cultures that diverge across national values (e.g.,

power distance, individualism/collectivism, universalism/particularism,

masculinity, low/high context communication, etc.).

Given the present studys goal of assessing the impact of CQ on negotia-

tion performance outcomes, we sought to create a cross-cultural negotiation

context whereby participants engaged with a negotiator demonstrating anegotiation style that was significantly different from their own style. The

behavioral manipulation of the AAA managers negotiation style served the

purpose of testing the participants adaptation to an unfamiliar negotiation

context attributable to the cultural context, which meets Earley et al.s (2006)

definition of CQ. The role for the AAA hotel negotiator included several

behavioral instructions intended to emphasize cultural differences concern-

ing aspects of negotiation style. Supported by theory and research (e.g., Brew

& Cairns, 2004; Gelfand & Christakopoulou, 1999; Volkema & Fleury, 2002)

on negotiation style differences between negotiators whose values are aligned

with the United States (low power distance, high individualism, high mascu-

linity, high universalism, low-context communication, etc.) in contrast with

negotiators whose values are aligned with Brazil (high power distance, high

collectivism, low masculinity, high particularism, high-context communica-

tion, etc.), the AAA negotiator was instructed to negotiate indirectly, patiently,

unemotionally, and passively (see the appendix).

The participants were instructed to complete the exercise within a

20-minute time limit. The participants were provided the role play instruc-tions for the Lambert Hotel manager on arriving at the conference room

facility. They were given 30 minutes to review the role play instructions and

prepare for the negotiation. Each negotiation was recorded via video camera

for subsequent assessment by a panel of three assessors. To minimize the



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Groves et al. 13

effects of AAA negotiator fatigue, a maximum of six negotiation exercises

were conducted in a single session.

The graduate student playing the role of the AAA Hotel manager com-

pleted several training sessions conducted by the first author. The goal of thetraining sessions was to prepare the student to demonstrate the negotiation

style of the AAA negotiator role. The AAA Hotel managers stated goals were

to (a) obtain multiple members on the executive board as . . . this issue is a

point of pride . . . you do not want to be taken over by Lambertyou desire a

merger that is respectful of your identity and accomplishments as AAA; (b)

minimize any disruption to the existing management of the AAA Hotel prop-

erties (you are proud of AAAs success, and you see little need to change the

way you operate your hotels . . . you realize that a merger will probably involvesome standardization of practices); and (c) minimize contingent incentives

for AAA property managers (. . . you want to continue the family atmosphere

among managers and discourage competitive behaviors whereby they refuse

to help one another, or lobby for specific properties [that are easier to make a

profit]). The graduate student completed readings on cross-cultural negotia-

tions, reviewed films of cross-cultural negotiations, and conducted 10 mock

negotiations using the modifiedInternational Lodging Mergerexercise. The

mock negotiations were video-recorded and subsequently reviewed and eval-uated by the graduate student and first author for the purpose of role perfor-

mance improvement. The video-recorded mock negotiations were also used to

develop assessment instruments concerning negotiation process skills (inter-

est-based behaviors) and negotiation performance outcomes.

Assessor Training. Three assessors were trained to provide assessments of the

video-recorded negotiations. The assessors included the first author and two

faculty members from the universitys business school with disciplinary

training in organizational behavior and cross-cultural/comparative manage-

ment. The assessors completed a 1-day intensive workshop for the purpose of

developing skills in methods of observation and recording and categorizing

negotiation behaviors reflecting the negotiation variables (e.g., interest-based

skills and negotiation performance outcomes). The assessors conducted

assessments of the 10 video-recorded mock negotiation exercises completed

by the graduate student and several volunteer graduate students (none of

whom were participants in the present study). The training workshop was

intended to assist the assessors with developing a common understanding ofthe negotiation behaviors and dimensions being observed and evaluated. The

workshop was also designed to teach the assessors which negotiation behav-

iors to observe and how to observe them accurately using the behavioral

instruments described below.



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Assessment Center Instruments.Two assessment instruments were developed

for the purpose of measuring the IBN behaviors and performance outcomes of

the Lambert Hotel negotiator (participant role). Based on the scoring sheet that

accompanied theInternational Lodging Mergerexercise, the first assessmentinstrument was developed to measure the negotiation performance outcomes

for the Lambert Hotel negotiator. Based on the three substantive negotiation

issues addressed in the exercise, as well as analysis of the video-recorded mock

negotiations that were used in the AAA Hotel negotiator training sessions, the

negotiation performance instrument consisted of three assessment items (one

for each substantive negotiation issue). The first assessment item rated the

Lambert Hotel negotiators performance according to the number of AAA

Hotel voting seats on the 8-person executive board. The second assessmentitem rated the negotiators performance according to the management of the

AAA Hotel properties after completion of the merger. The third and final

assessment item rated the negotiators performance according to the manage-

ment incentive policy for AAA Hotel properties after completion of the merger.

Each assessment item was measured on a 6-point scale according to the

stated goals of the negotiation for the Lambert Hotel manager (see the appen-

dix). The Lambert Hotel managers goals (as stated in the exercise role play

instructions) were to (a) obtain as many voting seats on the board as possible(to prevent . . . a voting block of [AAA board members] that could disrupt

the delicate dynamics of Lambert boards decision-making); (b) improve the

management practices at the AAA Hotel properties (Lambert has built its

reputation on the consistency of its properties and services . . . you would like

to see experienced Lambert managers operating all of the AAA properties,

but you are willing to consider other approaches to the consistency and man-

agement efficiency challenges); and (c) implement a contingent pay plan for

AAA property managers (. . . you prefer to pay your managers contingent on

the performance of their properties.). The instrument was pilot tested with

the 10 mock negotiation exercises conducted during the training session for

the AAA Hotel negotiator role. After the assessor panel conducted consensus

ratings (described in detail below) of each negotiation performance item as

part of the training session for the AAA Hotel negotiator, we conducted an

internal reliability test of the three negotiation performance items. The result-

ing Cronbach alpha of .86 for the pilot test demonstrated support for the

internal reliability of the instrument.

The second assessment instrument was developed to measure the fre-quency of the participants demonstrated IBN behaviors. Based on existing

theoretical and empirical research on IBN behaviors (Fisher & Ury, 1991;

Kolb, 2004; Kopelman & Olekalns, 1999; Leventhal, 2006; Maddux et al.,

2007; Senger, 2002), a seven-item measure was developed (see the appendix)



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Groves et al. 15

and pilot tested with the 10 mock negotiation exercises conducted during the

training session for the AAA Hotel negotiator role. The seven behavioral

items were assessed according to the frequency of behaviors demonstrated

during the exercise (1 = not at all, 2 = rarely, 3 = occasionally, 4 = fairlyoften, and 5 = very frequently). After the assessor panel conducted consensus

ratings (described in detail below) of each individual item as part of the asses-

sor training session, we conducted an internal reliability test of the seven-

item scale. The resulting Cronbach alpha of .83 for the pilot test demonstrated

support for the internal reliability of the scale.

Consensus Ratings. On the basis of prior validation research concerning the

aggregation of assessor ratings of behavioral exercises, we opted to conductconsensus ratings for measuring negotiation performance outcomes and IBN

behaviors. After viewing each video-recorded exercise, the assessors com-

pleted individual ratings of the behavioral exercises and then immediately

conducted consensus ratings. Used in prior empirical studies (Earley, 1999;

Gibson, 1999; Tziner, Ronen, & Hacohen, 1993), the consensus method

involves presenting a panel with a rating scale for the purpose of forming a

single group response to a set of items. After discussing each item, the panel

uses consensus decision-making techniques to determine an agreed on ratingon a Likert-type scale.

Prior empirical research by Kirkman, Tesluk, and Rosen (2001); Pulakos,

Schmit, Whitney, and Smith (1996); and Kleiman, Lounsbury, and Faley

(1987) demonstrates the incremental validity of consensus ratings beyond the

aggregation method of individual ratings. Because the consensus process

demands that assessors discuss their ratings for each scale item, rich contex-

tual and nuanced information concerning the behavioral performance is

shared and deliberated across panel members (Kirkman et al., 2001). Gibson,

Randel, and Earleys (2000) experimental study of a negotiation task con-

cluded that, regardless of whether consensus ratings occurred before or after

individual ratings were completed, the consensus method was a superior pre-

dictor of multiple performance indicators compared with aggregated indi-

vidual ratings. Kleiman et al.s (1987) study of job performance ratings found

that consensus ratings possessed significantly fewer halo and leniency errors

and greater validity compared with aggregated ratings. Finally, Pulakos et al.

(1996) found that consensus ratings demonstrated significantly higher validi-

ties of interviewer ratings compared with an aggregation of individual inter-viewers ratings. The authors concluded that consensus ratings may produce

significantly higher validities because . . . the consensus process increased

interviewers accountability (to their peers) and hence the accuracy of their

ratings (Pulakos et al., 1996, p. 99).



18/37


Manipulation Check. On completion of the negotiation exercise, participants

completed a short survey that included two manipulation check items. On a

Likert-type scale (1 = Strongly disagree, 2 =Disagree, 3 =Neither disagree

nor agree, 4 =Agree, and 5 = Strongly agree), participants responded to thefollowing statements: The AAA negotiator had a very different negotiating

style than my own (M= 4.56, SD= 1.02; 93% responded either Agreeor

Strongly agree), and The AAA negotiator demonstrated significantly differ-

ent cultural values than my own (M= 4.43, SD= 1.04; 90% responded either

Agreeor Strongly agree).

Measures

Negotiation Performance. A panel of three assessors observed each of the

video-recorded negotiations and conducted group consensus ratings using the

negotiation performance assessment instrument (see the appendix). To limit

the effects of assessor fatigue, the panel conducted assessments for no more

than six exercises in a single session. The assessor panel conducted consen-

sus ratings of each negotiation performance item: (a) number of voting seats

on the 8-person executive board to be controlled by AAA Hotel, (b) manage-

ment of AAA Hotel properties, and (c) management incentives for AAAHotel property managers.

Interest-Based Negotiation Behaviors. The same three-assessor panel observed

each of the video-recorded negotiations and conducted group consensus ratings

using the IBN behaviors assessment instrument (see the appendix). The asses-

sor panel conducted consensus ratings of the seven IBN items according to the

following scale (1 = not at all, 2 = rarely, 3 = occasionally, 4 =fairly often, and

5 = very frequently). The Cronbach alpha for the seven-item scale was .85.

Cultural Intelligence. Cultural intelligence was measured by Ang et al.s (2007)

20-item self-report scale comprising the following subscales: metacognitive

(checks the accuracy of his/her cultural knowledge as he/she interacts with

people from different cultures; four items; = .88), cognitive (knows the

rules for expressing nonverbal behaviors in other cultures; six items; =

.91), motivational (enjoys interacting with people from different cultures;

five items; = .86), and behavioral (changes his/her non-verbal behavior

when a cross-cultural situation requires it; five items; = .87). Respondentscompleted the scales according to a 7-point scale (1 =strongly disagree; 7 =

strongly agree). Overall, the CQ scale demonstrated strong internal reliability

( = .90). The means of the four subscales were calculated and then averaged

to produce an overall CQ mean.



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Groves et al. 17

Control Variables

Emotional Intelligence. Emotional intelligence was measured by Wong and

Laws (2002) 16-item, self-report measure based on the Mayer and Salovey(1997) model of EQ. EQ was included as a control variable to more readily

demonstrate the incremental validity of CQ in a cross-cultural performance

context beyond the effects of a competing competency. Earley and Angs

(2003) seminal work on CQ asserts that EQ competencies should not transfer

across nationalities because a persons ability to anticipate and react to the

affective states of work colleagues differs considerably across cultures. Con-

sistent with prior research that assessed the predictive validity of CQ beyond

the effects of EQ in cross-cultural performance contexts (e.g., Crowne, 2013;

Groves & Feyerherm, 2011; Rockstuhl et al., 2011), and specifically cross-

cultural negotiation (Imai & Gelfand, 2010), the present study included EQ

as a control variable for hypothesis testing. The measure includes the follow-

ing four-item subscales: self-emotion appraisal (I have a good understand-

ing of my own emotions; = .88), others emotion appraisal (I am sensitive

to the feelings and emotions of others; = .84), use of emotion (I am a

self-motivated person; = .90), and regulation of emotion (I have good

control of my own emotions; = .91). Respondents completed the scales

according to a 7-point scale (1 =strongly disagree; 7 =strongly agree). Over-all, the EQ scale demonstrated strong internal reliability ( = .92). The means

of the four subscales were calculated and then averaged to produce an overall

EQ mean (M= 5.36, SD= 1.00).

International Experience. Prior research suggests that length and intensity of

international experiences may be associated with the development of cul-

tural intelligence (Ang & Van Dyne, 2008; Crowne, 2013). To control for

the influence of negotiators prior international experiences, we usedTakeuchi, Tesluk, Yun, and Lepaks (2005) measure of international experi-

ence as the total length of time the participants spent living abroad. Partici-

pants were asked to list in chronological order the countries and duration of

living experiences abroad. The total list of living experiences abroad were

summed and converted to weeks as the international experience variable (M=

28.05, SD= 5.99).

Negotiation Experience. To control for the depth of the negotiators priornegotiation experiences, which may influence the relationships among the

study variables (e.g., Imai & Gelfand, 2010), participants were asked to

report the level of prior negotiation experiences with the following question:

According to the following scale, how much prior experience do you have



20/37


in formal negotiations? The scale consisted of the following: 1 = no experi-

ence, 2 = little experience, 3 =some experience, 4 =significant experience,

5 =substantial experience, and resulted in a mean of 2.55 (SD= 0.89).

Openness to Experience and Extraversion. To control for individual difference

characteristics that prior research has found to affect CQ and negotiation out-

comes in intercultural contexts (e.g., Ang, Van Dyne, & Koh, 2006; Imai &

Gelfand, 2010; Ma & Jaeger, 2005), the present study included openness to

experience and extraversion as control variables in hypothesis testing. The

inclusion of these personality traits allows for a more conservative assess-

ment of whether CQ is associated with IBN behaviors and performance out-

comes in a cross-cultural negotiation context. The personality traits opennessto experience and extraversion were measured with John and Srivastavas

(1999) Big Five personality assessment. Respondents completed the scales

according to a 7-point scale (1 = extremely uncharacteristicto 7 = extremely

characteristic). The 10-item openness to experience scale (Is curious about

many different things; = .88) and 8-item extraversion scale (Is outgoing,

sociable; = .89) demonstrated acceptable Cronbach reliability estimates.

The mean scores for openness to experience and extraversion were 4.59

(SD= 0.91) and 4.68 (SD= 0.67), respectively.

Results

Preliminary Analyses

Potential Interactive Effects of Ethnicity and Nationality. Given the potential for

participant ethnic background and/or nationality to significantly interact with

the studys key variables, we tested for any significant differences between

the major ethnic backgrounds or major nationalities across IBN behaviorsand negotiation performance. Tukeys honestly significant difference (HSD)

test identified no significant differences across the major ethnic backgrounds

(Hispanic/Latin American, Asian American, Multiethnic, Caucasian, African

American, Native Hawaiian/Other Pacific Islander) for IBN or negotiation

performance. Similarly, Tukeys HSD test again revealed no significant dif-

ferences between the main nationalities represented in the sample (United

States, China, Mexico, Philippines, El Salvador, Saudi Arabia, Vietnam, and

Armenia) for IBN or negotiation performance.

Measurement Model. Prior to testing the hypotheses, confirmatory factor

analyses (CFA) were conducted to provide support for the construct validity

of the study variables. Given consistent research findings regarding the most



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Groves et al. 19

appropriate fit indices for conducting CFA analyses (Sharma, Mukherjee,

Kumar, & Dillon, 2005; Shevlin & Miles, 1998; Wolf, Harrington, Clark, &

Miller, 2013), we tested a measurement model using the following goodness-

of-fit indices: TuckerLewis index (TLI), relative noncentrality index (RNI),normed noncentrality parameter (NNCP), and root mean square error of

approximation (RMSEA). The measurement model tested the self-report

variables, which included the four CQ capabilities (metacognitive, cognitive,

motivational, and behavioral), EQ, openness to experience, extraversion, and

IBN behaviors. Using Amos software, (Arbuckle, 1999), the measurement

model was tested to assess whether each of the measurement items would

load significantly onto their respective scales. Consistent with prior structural

equation modeling (SEM) research concluding that measurement modelswith three indicators per latent construct are ideal while such models can

carry up to five indicators without estimation problems, we completed a par-

celing procedure for those constructs with more than five items. Parceling

offers the benefits of reducing random errors, simplifying the measurement

model, and maintaining the structural integrity of models that include multi-

ple-indicator constructs. For those variables with more than five items (EQ,

openness to experience, extraversion, and IBN behaviors), the items for each

variable were randomly parceled into three composite indicators and enteredinto the measurement model. For cultural intelligence (four subscales), the

respective subscales were entered into the model as indicators of the latent

construct.

Based on these conventional indices, an eight-factor model demonstrated

a reasonable degree of fit: TLI = .94, RNI = .94, NNCP = .92, and RMSEA =

.06. All loadings were statistically significant and the structure coefficients

demonstrated that each item loaded highest with their specified latent factor.

This model was compared with a single-factorial solution, which provided

significantly worse fit: TLI = .77, RNI = .77, NNCP = .72, and RMSEA = .13.

Overall, the results from CFA analyses demonstrated support for the vari-

ables as distinct constructs.

Hypothesis Testing

The following section includes the results of hypothesis tests using hierar-

chical regression analyses. We chose this analysis approach in lieu of SEM

given the considerable research on the impact of sample size, indicators, andfactor loadings on SEM results. Barrett (2007), Bentler (2007), and Wolf

et al. (2013) indicate the significant challenges of using SEM analyses on

small sample sizes, as Bentler (2007) cautions about samples of less than

100 while Barrett (2007) asserts that SEM analyses based on samples of



22/37


less than 200 should simply be rejected outright . . . unless the population

from which the sample is hypothesized to be drawn is itself small or restricted

in size (p. 820). Furthermore, Wolf et al. (2013) assert that mediation mod-

els with smaller direct effects require larger sample sizes to achieve accept-able statistical power. Given the relatively small sample size in the present

study as well as the expectation of relatively modest effect sizes in light of

the current state of research on CQ competencies and cross-cultural negotia-

tion performance, we chose to use hierarchical regression analysis for

hypothesis testing.

Table 1 presents the means, standard deviations, and correlation coeffi-

cients among the primary study variables. Openness to experience, extraver-

sion, and EQ demonstrated significant positive relationships with OverallCQ (range of r= .30 to r= .49) and the CQ dimensions (range of r= .21 to

r= .48). Cultural intelligence was associated with both IBN behavior (r=

.35, p< .01) and negotiation performance (r= .49, p< .01). The CQ sub-

scales were moderately correlated with one another (r= .21,p< .05 to r=

.45,p< .01). Finally, IBN behaviors were related to negotiation performance

(r= .48,p< .01).

Cultural Intelligence and Negotiation Performance

Hypothesis 1 predicted that negotiators with high CQ would demonstrate

higher negotiation performance than negotiators with low CQ. The results

of hierarchical regression analysis testing the effects of the CQ competen-

cies on negotiation performance are presented in Table 2. After entering

international experience, negotiation experience, openness to experience,

extraversion, and EQ into the model (Step 1), Step 2 illustrates that cogni-

tive CQ ( = .29, p< .05) and behavioral CQ ( = .26, p< .05) explained

unique variance in negotiation performance (R2= .28, F= 9.77,p< .05).

In comparison, none of the control variables were significantly associated

with negotiation performance in Step 2. Overall, these results offer support

for Hypothesis 1.

Mediating Effects of Interest-Based Negotiation Behaviors

Hypothesis 2 predicted that negotiators with high CQ would demonstrate

greater IBN than negotiators with low CQ, while Hypothesis 3 predictedthat IBN behaviors would partially mediate the relationship between nego-

tiator CQ and negotiation performance. Table 3 presents the results of a

series of regression analyses testing the mediating effects of IBN behaviors.

To test for mediation, we followed Baron and Kennys (1986) suggested



23/37

21

Table1.

Me

ans,S

tandardDeviations,a

ndCorrelationCoefficientsofStudyVariables.

M(

SD)

1

2

3

4

5

6

7

8

9

10

11

12

13

14

1.G

endera

1.58(0.50)

2.A

ge

33.2

1(3.96)

.1

3

3.I

nternationalExperience

28.0

5(5.99)

.1

3

.67**

4.N

egotiatio

nExperience

2.55(0.89)

.0

3

.0

8

.0

8

5.O

penness

toExperience

4.59(0.91)

.0

9

.09

.09

.18

.88

6.E

xtraversion

4.68(0.67)

.10

.0

6

.0

6

.03

.52**

.89

7.E

motionalI

ntelligence

5.36(1.00)

.12

.0

5

.0

5

.15

.46**

.49**

.92

8.O

verallCQ

4.32(1.07)

.0

9

.1

6

.1

6

.08

.30**

.36**

.49**

.90

9.M

etacognitiveCQ

4.91(1.21)

.0

3

.1

8

.1

8

.09

.28**

.42**

.50**

.66**

.88

10.

CognitiveCQ

3.32(1.39)

.0

9

.1

6

.1

6

.05

.26**

.24**

.32**

.65**

.31**.9

1

11.

Motivation

alC

Q

5.07(1.19)

.01

.0

6

.0

6

.12

.24*

.31**

.48**

.74**

.21*

.36**.8

6

12.

BehavioralCQ

4.29(1.34)

.1

7

.1

0

.1

0

.03

.21*

.27**

.31**

.74**

.40**.2

2**

.45**.8

7

13.

Interest-ba

sedNegotiation

3.49(1.17)

.1

8

.0

3

.0

3

.04

.1

5

.19*.0

5

.35**

.29**.3

2**

.22*

.30**.8

5

14.

Negotiatio

nPerformance

3.90(1.31)

.2

3*

.1

3

.1

4

.08

.0

1

.0

6

.04

.49**

.41**.4

7**

.26**.4

3**.4

8**

.90

Note.

N

=113.ItalicizedcoefficientsareCronbacha

lphas.

a1=Maleand2=Female.

*p

2014_groves, feyerherm, & gu_examining cq and cross-cultural negotiation effectiveness

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