تاثیر فرهنگ در مذاکرات قیمت انتقال Influences of Culture on Transfer Price Negotiation

1. Introduction Transfer pricing, as an accounting research topic, has been the focus of numerous experimental studies for many decades (Kachelmeier & Towry, 2002; Luft & Libby, 1997). The fairness effect in transfer price negotiation posits that negotiators tend to seek smaller spreads in profit between divisional parties than the parties would otherwise achieve by simply adopting the external market price as the transfer price. In other words, negotiators exhibit a bias towards relatively “fair” and equal profit sharing, particularly when extreme market prices would result in a relatively unequal (and thus, in the perceptions of the negotiators, “unfair”) division of profits. However, research on cultural effects suggest that transfer price negotiation studies, originally conducted with American participants, could yield different outcomes when the participant’s cultural background changes (Adair, Brett, & Okumura, 2001; Cravens, 1997; Gelfand et al., 2002). This study examines how the “fairness effect” documented by Luft and Libby (1997) and Kachelmeier and Towry (2002) differs between Americans and Chinese.1 The choice of these two cultures is based on two considerations: (1) the extensive cross-border transactions between the U.S. and China, and (2) significant differences in power distance and the levels of individualism/collectivism between the two cultures. This cross-cultural manipulation is relevant in both a theoretical and an empirical sense, not only because the transfer pricing mechanism is an omnipresent fixture of global firms, but also because transfer prices negotiated by divisional managers in different nations may be influenced by their cultural differences. This topic is a timely one, considering that many international firms are moving large portions of their component manufacturing, sales support, and administrative processes to other countries. Li and Ferreira (2008), for instance, reported that intra-firm trade represented 55% of the trade between the EU and Japan, 40% of the trade between the EU and the U.S., and 80% of the trade between Japan and the U.S. as early as 1993. Urquidi (2008) reported that intra-firm cross border trade in services increased from $26.9 billion in 1997 to $57.6 billion in 2006.