This article was produced and financed by BI Norwegian Business School
Opposites do best in negotiations
The best results are achieved when a cooperative negotiator meets one who is only concerned with his own profit.
BI Norwegian Business School
Negotiations play a key role both in our private life and at work. Most people want the best possible outcome, whether they are thinking of wage negotiations, negotiations on buying or selling goods and services, negotiations for a business agreement or whatever else they might be negotiating.
People can enter negotiations with various motives. Two examples:
- Individualistic motive: Some negotiators focus solely on their own interests and will do everything in their power to secure the best possible outcome for themselves. They care precious little about the interests of the other party.
- Cooperative motive: Other negotiators are keen to create a good climate for cooperation. They are able to see the other party’s interests also, and will be keen to find a solution that serves both parties well.
Pleasant, tough or something in between
Things can get heated when two negotiators meet and both are eager to grab as much as possible. The negotiation climate may become tough and frequently also aggressive.
The waters are smoother when the two negotiators are keen to cooperate in finding a solution that benefits both parties. The atmosphere is easy-going and the negotiation climate far more pleasant.
When opposites meet, one party driven by an individualistic motive while the other is motivated for cooperation, the ensuing negotiation climate will be somewhere between the aggressive and the pleasant.
Will the negotiation outcomes be impacted by the negotiators’ motives? What combination(s) of negotiators will give the best results?
Negotiations in the lab
In her PhD project at BI Norwegian Business School, marketing scholar Sinem Acar-Burkay has conducted a field experiment to determine what combinations of negotiation motives will yield the best results, measured in economic results (profit) as well as in relational capital.
Acar-Burkay recruited 216 students, as many women as men of more than 50 different nationalities, to conduct 108 negotiations. The participants were told that the better their result, the more raffle tickets they would receive in the draw for an e-reader.
One buyer and one seller were recruited for each negotiation, and they were instructed at random either to go for the best possible result for themselves, or to also create a good collaboration with the other negotiating party. Participants were paired off in three different ways:
1) Both were keen on their own profit only, 2) both were motivated to cooperate, and 3) the two negotiators had different motives.
All negotiations were audiotaped, transcribed and coded for analysis of how the negotiations were conducted and what was their outcome.
Seven months later the participants were asked if they would like to negotiate with the same party once more.
Best in negotiations
The study shows that opposites – a tough, individualistic negotiator versus a soft, cooperative negotiator – engage more in problem-solving than like-minded negotiators do, whether they are motived for their own gain or for cooperation.
Through problem-solving, the opposites discover the solutions that give the best financial results. On top of that, they also build good relational capital, which means they want to negotiate again with the same person.
Two negotiators who are both motivated for cooperation will also build relational capital, but they will not be able to find the solutions that optimise profit. They are more focused on cooperation than on finding the best solutions, and the best solutions are not immediately evident.
Not unexpectedly, there is little relational capital to be gained when two individualistic negotiators meet. It is more surprising, though, that they do not succeed that wonderfully in economic terms, either.
“We often hear how important it is to create a good climate in negotiations. But if both parties focus on that, they will not find the best solutions,” the BI researcher underlines.
Seven months later, participants still remember their relationship with the other party, although they no longer remember the economic profit. The study indicates that the relational capital is of a longer-lasting nature than the memory of the economic result.
Three tips to leaders
Based on this study, Sinem Acar-Burkay has developed three practical tips to leaders:
1. Don’t just look at the economic results of negotiations, but also at the relationships that are developed. Good relational capital can lead to income in the future.
2. If you are able to read/predict the motives of the other negotiation party, you would benefit from sending someone with the opposite motive. Send an individualistically motivated negotiator to meet a cooperation-minded negotiator and vice versa.
3. If you do not know the opposing party’s motivation, it will be best to send a negotiator who goes for good cooperation. When two negotiators with individualistic motives meet, both the economic result and the opportunity to build long-term relationships will suffer.
Read the Norwegian version of this article at forskning.no
- Sinem Acar-Burkay: Essays on relational outcomes in mixed-motive situations. Series of Dissertation 7/2014, BI Norwegian Business School. (Abstract)