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Negotiatio
n Theory
Aswini PG
Research Scholar
Department of Management Studies
C en tr a l U n i v e r s i t y o f Ker a l a
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Negotiation
“major public policies are the outcome of a
complex round of negotiation between
interests, choices between values and
resources… there are no single ‘best’
options for any player in this game, for the
‘best’ outcome depends on what others do
and what deals are possible.”
(Davis et.al., 1993).

Many people dread negotiation 1

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Negotiation is a strategic discussion intended to resolve an issue that

both parties find acceptable. Negotiations involve give and take, where
one or both parties will usually need to make some concessions.
Negotiation occurs between buyers and sellers, employers and
prospective employees, two or more governments, and other parties.
In her book The Mind and Heart of the Negotiator, Northwestern
University professor Leigh Thompson defines negotiation as “an
interpersonal decision-making process necessary whenever we cannot
achieve our objectives single-handedly.” This definition stresses the
interdependence that’s fundamental to any negotiation.

The authors of Getting to Yes, Fisher and Ury define negotiating as a

“back-and-forth communication designed to reach an agreement when
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E s s e n t i a l S k i l l s r e q u i r e d f o r E ff e c t i v e
Negotiation

Communication Adaptability

Emotional Persuasion
Intelligence 2019
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 Ty p e s o f N e g o t i a t i o n : 6

There are two relatively distinct types of negotiation. They are known as distributive negotiations
and integrative negotiations.

Distributive Integrative
Negotiation Negotiation
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PRACTICAL STEPS
TO INTEGRATIVE 1. Identifying interests
BARGAINING: 2. People
THE SEVEN
3. Alternatives (Best Alternative to a Negotiated Agreement
ELEMENTS
OF PRINCIPLED NEGOTIATION
(BATNA))

` Incorporating and 4. Identifying the options

extending upon previous
literature on integrative 5. Criteria/Legitimacy
bargaining Fisher and Ury
summed up their approach
to integrative bargaining 6. Commitments
with what they call the
“seven 7. Communication
essential elements” of
principled negotiation:
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The Five Stages of Negotiation

I N F O R M AT I O N
P R E PA R E EXCHANGE N E G O T I AT E CONCLUDE EXECUTE

That’s why we That’s why we That’s why we That’s why we That’s why we
p ro v i d e p o i n t p ro v i d e p o i n t p ro v i d e p o i n t p ro v i d e p o i n t p ro v i d e p o i n t
and click and click and click and click and click
solutions that solutions that solutions that solutions that solutions that
let you choose. let you choose. let you choose. let you choose. let you choose.
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Complex and strategic negotiations involves many conflicting interests. How one handle
such negotiation conflicts determines the outcome of the negotiation.

Y O U C A N W R I T E H E R E

PRODUCT PREVIEW
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Main schools of thought in 14

negotiation
Negotiation
Approaches

1. Structural approach

2. Strategic approach

3. Behavioral approach

4. Processual approach

5. Integrative approach

Daniel Druckman (1997) describes the main

schools of thought in Negotiation theory as
corresponding to four approaches to
negotiation: negotiation as puzzle solving,
negotiations as a bargaining game, negotiation
as organizational management and
negotiation as diplomatic politics.
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Structural approach:
Structural approaches to negotiations consider negotiated outcomes to be a function of the characteristics or structural features

that define each particular negotiation. Thesecharacteristics may include features such as the number of parties and issues involved in

the negotiation and the composition (whether each side is monolithic or comprises many groups) or relative power of the competing

parties (Raiffa, 1982; Bacharach and Lawler, 1981). Structural approaches to negotiation find “explanations of outcomes in patterns of

relationships between parties or their goals” (Zartman, 1976). They can be deterministic in that they often view outcomes as a priori

once structural factors are understood. One of the main theoretical contributions derived from the structural approach is the theory

that power is the central determining factor in negotiations (Bacharach and Lawler, 1981). For example power is sometimes defined as

the ability to win, or alternatively, as the possession of ‘strength’ or ‘resources’. Critics argue however, that structural explanations

tend to emphasize the role of power, and in particular on ‘hard’ aspects of power. Other factors such as negotiating skill can play a key

role in shaping negotiated outcomes. Another limitation of structural approaches to negotiation is their emphasis on taking Positions.
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Strategic approach :
Strategic approaches to negotiation have roots in mathematics, decision theory and rational choice theory, and also benefit from

major contributions from the area of economics, biology, and conflict analysis. Whereas the structural approach focuses on the role of

means (such as power) in negotiations, the emphasis in strategic models of negotiation is on the role of ends (goals) in determining

outcomes. Strategic models are also models of rational choice. Negotiators are viewed as rational decision makers with known

alternatives who make choices guided by their calculation of which option will maximize their ends or “gains”, frequently described as

‘payoffs’. Actors choose from a 'choice set' of possible actions in order to try and achieve desired outcomes. Each actor has a unique

'incentive structure' that is comprised of a set of costs associated with different actions combined with a set of probabilities that reflect

the livelihoods of different actions leading to desired outcomes. Strategic models tend to be normative in nature. Because they are

grounded in the belief that there is one best solution to every negotiation problem, they seek to represent “what ultra smart,

impeccably rational, super-people should do in competitive, interactive [i.e. bargaining] situations” (Raiffa, 1982). Because they look

for ‘best solutions’ from all perspectives of a negotiation, this approach has been called Symmetrically Prescriptive

(Raiffa, 1982). The strategic approach is the foundation for negotiation theories such as game theory and critical risk theory, described

below (Snyder and Diesing, 1977).

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Behavioral approach:
Behavioral approaches emphasize the role negotiators’ personalities or individual characteristics play in determining the course

and outcome of negotiated agreements. Behavioral theories may explain negotiations as interactions between personality ‘types’ that

often take the form of dichotomies, such as shopkeepers and warriors or ‘hardliners’ and ‘soft liners’ where negotiators are portrayed

either as ruthlessly battling for all or diplomatically conceding to another party’s demands for the sake of keeping the peace

(Nicholson, 1964). The tension that arises between these two approaches forms a paradox that has been termed the “Toughness

Dilemma” or the “Negotiator’s Dilemma”. Another important contribution to come from the behavioral approach (and also addressed

by theorists from other schools) is the work on Framing. Frames refer to the way a problem is described or perceived. Is the glass half

full or half empty? . The behavioral approach highlights human tendencies, emotions and skills.
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Processual approach
Though concession exchange theories share features of both the structural approach (power) and the strategic approach

(outcomes), they describe a different kind of mechanism that centers on learning. According to Zartman, this approach (which Zartman

calls the processual approach) looks at negotiation “as a learning process in which parties react to each others’ concession behavior”

(Zartman, 1978). From the perspective negotiations consist of a series of concessions. The concessions mark stages in negotiations.

They are used by parties to both signal their own intentions and to encourage movement in their opponent’s position. Parties “use

their bids both to respond to the previous counteroffer and to influence the next one; the offers themselves become an exercise in

power” (Zartman,1978).
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Integrative approach :
Integrative approaches, in sharp contrast to distributive approaches, frame negotiations as interactions with win-win potential.

Whereas a zero-sum view sees the goal of negotiations as an effort to claim one’s share over a “fixed amount of pie”, integrative

theories and strategies look for ways of creating value, or “expanding the pie,” [see figure 1b] so that there is more to share between

parties as a result of negotiation. Integrative approaches use objective criteria, look to create conditions of mutual gain, and emphasize

the importance of exchanging information between parties and group problem-solving. Because integrative approaches emphasize

problem solving, cooperation, joint decisionmaking and mutual gains, integrative strategies call for participants to work jointly to

create win-win solutions. The integrative approach to negotiations has roots in international relations, political theory,research on

labor disputes and social decision-making. They frame negotiation as a three-phase process, whose efficiency depends on how

negotiators treat four essential elements: interests, people, options, and criteria.
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Three basic kinds of negotiators have been identified by researchers involved in The
Harvard Negotiation Project.

Types of Negotiators
These people see These people use
negotiation as too close to Individuals who
competition, so they
contentious strategies
bargain this way seek
choose a gentle style of to influence, utilizing
phrases such as "this is integrative solutions,
bargaining. The offers they
make are not in their best my final offer" and "take and do so by
interests, they yield to it or leave it." They sidestepping
others' demands, avoid make threats, are commitment to
confrontation, and they specific positions.
distrustful of others,
maintain good relations They focus on the
with fellow negotiators. insist on their position,
Their perception of others and apply pressure to problem rather than
is one of friendship, and negotiate. They see the intentions,
their goal is agreement. others as adversaries motives, and needs of
They do not separate the and their ultimate goal the people involved.
people from the problem, is victory. Thy do not They base their
but are soft on both. They
separate the people choices on objective
avoid contests of wills and
will insist on agreement, from the problem (as criteria rather than
offering solutions. with soft bargainers), power, pressure, self-
but they are hard on interest, or an
both the people arbitrary decisional
involved and the procedure.
problem.
Soft Bargainers Hard Bargainers Principled Bargainers
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Bringing Value to Negotiation: :

Negotiation Tactics
Merit Based Rule If I Do this Will You Do That

Krunch Tactic Deadlines

Be Willing to Walk Away Bogey Don’t Make First Offer

Auction Barter Good Cop/Bad Cop

Use Silence When

Brinksmanship Bundle
Necessary
Bad Faith Negotiation
Chicken Tactics High Ball / Low Ball

Leaking Information
The Nibble

Limiting Your Authority Technique

Keep It Light
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Day-to-day negotiations
COMMON (including managerial negotiations)

EXAMPLES OF
Commercial negotiations
WORKPLACE

NEGOTIATIONS Legal Negotiations

Depending upon the situation and
time, the way the negotiations are
conducted differs. The skills of
negotiation depends on and differs
widely from one situation to the
other. Basically the types can be
divided into three broad
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Day-to-day negotiations (including managerial negotiations):

Such types of negotiations are done within the organisation and are related to

the internal problems in the organisation. It is in regards to the working relationship

between the groups of employees. Usually, team members needs to interact with

each other and with their managers at different levels in the organisational structure.

For conducting the day-to-day business, internally, the managers also need to allot

job responsibilities, maintain a flow of information, direct the record keeping and

many more activities for smooth functioning. All this requires entering into

negotiations inside the team itself.

Example for Managerial Negotiation:- 24

Trade Union Negotiation

In representative negotiations, trade unions take the workers' side and discuss with
workers the content for negotiation, approaches and strategies, and then come to a
decision with the workers. Then the trade unions represent the workers during the
collective bargaining process.
Collective Bargaining is the process in which working people, through their unions,
negotiate contracts with their employers to determine their terms of employment,
including pay, benefits, hours, leave, job health and safety policies, ways to balance
work and family, and more.
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Commercial negotiations:
Such types of negotiations are conducted with external parties. The driving forces

behind such negotiations are usually financial gains. They are based on a give-and-

take relationship. Commercial negotiations successfully end up into contracts. It

relates to foregoing of one resource to get the other.

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Legal negotiations:
These negotiations are usually formal and legally binding. Disputes over

precedents or contradictory national laws can

become as significant as the main issue. They are also contractual in nature and relate

to gaining legal ground.

 Negotiating in Different Contexts 28

Negotiating Negotiating in a Negotiating with

internally - intra- multicultural your
organisational context boss/hierarchica
negotiation l superior

Multilateral Peer-to-peer Negotiating with

negotiation - negotiation subordinates
negotiating in a
team
(with/without your
manager)
Negotiating internally -
Intra-organisational 29

Negotiation:

When you are engaged in an

inter-organisational negotiation

(for example with another

employee, another unit, another

institution, or an outside

supplier), you should be aware

that each of the parties is in fact

conducting a double negotiation:

an inter-negotiation and an

intra-negotiation. An inter-

organisational negotiation thus

gives rise to three negotiations.

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Negotiating in a multicultural context:

The term “culture” tends to be used in a rather narrow way in the EU institutional setting - being limited to
“national culture”. We suggest the definition should be also widened to include: organisational, professional, gender,
ethnicity, educational, ideological, contractual, religious, political, class culture and many others. This makes the EU
organizational context an extremely complex one in which to negotiate. People who work across cultures, whether
internationally or within nations, need general principles -a cultural compass if you will- to guide their negotiation
strategies.
Such a compass will help them to:
• identify the general elements of cultures - the beliefs, attitudes, behaviours, procedures, and social structures that
shape human interactions;
• avoid the fallacy of cultural homogeneity (“all the people from this country are like this”). All of us rely on various
elements of culture (national, professional, familial, etc.) on which we build our personality throughout our lives.
For this reason we are all unique and working with culture is about interacting with others more than about using
models that would give us “one size fits all” explanations;
• recognise potential hazards, obstacles, and pleasant surprises that intercultural travellers and negotiators might
miss without a guide;
• select responses that will be more likely to achieve successful interactions and outcomes.
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Negotiating with the boss/hierarchical superior:

One’s relationship with their boss or hierarchical superior is probably the important factor in their job satisfaction and motivation at

work. Negotiating with one’s boss, then, can be very nerve-wracking but should not be approached as if the result is a foregone

conclusion (i.e. that the boss “wins”).

Some strategic advice for “negotiating up”:

• Frame the negotiation beforehand

• Tie your request to a goal

• Lead with the business case for what you are asking for. Even if the issue seems personal, e.g. a request for certain holiday dates.

• Bring your boss a solution, not just a problem

• Listen deeply
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Peer-to-peer negotiation:
Successful peer negotiation requires a range of communication and personal skills.
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Negotiating with subordinates:

If one manage others, here are some guidelines for negotiating with subordinates:

• Treat each subordinate as an individual

• Develop trust by listening

• Provide clear objectives

• Involve subordinates in decision making

• Give constructive criticism

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Multilateral negotiation - negotiating in a team (with/without

your manager):
Teams of negotiators can bring important value and should be used when:
1. The upcoming negotiation is very complex and requires a diverse set of knowledge, abilities, and expertise.

2. Diverse constituencies and interests must be represented at the table.

3. It is important for your side to display strength.

4. You want to show the other side that you are serious about the negotiation and you are willing to invest the necessary resources.

5. You have sufficient time to organise a team and build its chemistry.

6. The team has sufficient time to prepare together before the negotiation.

7. The team is trustworthy and can work well together.

8. The ultimate decision-makers have confidence in the team’s ability to get the best possible deal
Conflicts in Negotiations
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Conflict is a situation where an actor (A) experiences a threat to his/her interests,

needs or concerns that s/he attributes to the behaviour of another actor (B)

because A and B have different perceptions, interests and emotions. All

negotiations are based on a disagreement - the presence of divergent interests

(link to first definition of negotiation). A negotiation becomes a conflict when the

consequences of the disagreement (divergent interest) are experienced as

threatening. A conflict may be constructive or destructive.

Sources of Conflict in Negotiations 36

The most frequent sources of workplaces conflict.

 Differences in ideology philosophy, belief and values.

 Differences in character and personality.

 Differences in perception due to: culture, age,

education, gender, status, hierarchical level.

 The very nature of the organisations creates conflict -

even at the largest organisations, there will always be

a fight over limited resources - staff, money, buildings.

Solving conflicts through negotiation
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Constructive Conflict

In a constructive conflict there are three strategic options using the different

styles. We only have three possible strategic objectives to aim for:

Destructive Conflict

With destructive conflicts options become:

1. Change the other (unlikely).

2. Change the situation.

3. Change yourself.
C o n fl i c t C o m m u n i c a t i o n S k i l l s & To o l s 38

When conflict arises, it's easy for people to get stuck in their positions and for tempers to flare,
voices to rise, and body
language to become defensive or aggressive. One way to potentially avoid all of this is by using
the Interest-Based
Relational (IBR) approach.

To use the IBR approach effectively party and the conflicting parties need to follow these six
steps:

1. Make sure that good relationships are a priority. Treat the other person with respect. Do your
best to
be courteous, and to discuss matters constructively.
2. Separate people from problems. Recognise that, in many cases, the other person is not
“being difficult” –
real and valid differences can lie behind conflicting positions. By separating the problem from
the person, you can
discuss issues without damaging relationships.
3. Focus on the different interests, not positions. You'll get a better grasp of why people have
adopted
their position if you try to understand what underlies their point of view.
4. Listen first, talk second. You should listen to what the other person is saying before
defending your own
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Physical
Barriers

Psychological
Barriers

Barriers to Effective Negotiation

Technologic
al Barriers

Perceptual
Barriers

Environm
ental
Barriers
Language and
Cultural
Differences
Overcoming Barriers
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Weaker parties must feel assured that

Fairnes they will not be overpowered in a
s negotiation.
Parties must trust their interests will be
Trust fairly considered

To combat perceptual bias and hostility,

Empath negotiators should attempt to gain a
y better understanding of other party's
perspective.
Negotiators must send feedback and
Communication seek clarification. Use multiple
channels and flexible Communication
styles
Case Study 41

Apple’s Apology in
China
When Apple CEO
Timothy D. Cook
apologized to Apple
customers in China
for problems arising
from Apple’s
warranty policy and
Labour issues, he
promised to rectify
the issue. In a
negotiation research
study, Professor
William W. Maddux of
INSEAD and his
colleagues compared
reactions to apologies
in the United States
and in Japan. They
discovered that in
“collectivist cultures”
such as China and
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THANKYOU

ASWINI PG