Complex Business Negotiation: Understanding Preparation and Planning

Lindholst, Morten Doctoral Thesis Complex Business Negotiation: Understanding Preparation and Planning PhD Series, No. 30.2015 Provided in Cooperation with: Copenhagen Business School (CBS) Suggested Citation: Lindholst, Morten (2015) : Complex Business Negotiation: Understanding Preparation and Planning, PhD Series, No. 30.2015, ISBN 9788793339439, Copenhagen Business School (CBS), Frederiksberg, https://hdl.handle.net/10398/9198 This Version is available at: https://hdl.handle.net/10419/208947 Standard-Nutzungsbedingungen: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden. Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen. 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If the documents have been made available under an Open Content Licence (especially Creative Commons Licences), you may exercise further usage rights as specified in the indicated licence. https://creativecommons.org/licenses/by-nc-nd/3.0/ COMPLEX BUSINESS NEGOTIATION: UNDERSTANDING PREPARATION AND PLANNING Morten Lindholst The PhD School of LIMAC PhD Series 30.2015 PhD Series 30-2015 COMPLEX BUSINESS NEGOTIATION: UNDERSTANDING PREPARATION AND PLANNING COPENHAGEN BUSINESS SCHOOL SOLBJERG PLADS 3 DK-2000 FREDERIKSBERG DANMARK WWW.CBS.DK ISSN 0906-6934 Print ISBN: 978-87-93339-42-2 Online ISBN: 978-87-93339-43-9 Complex Business Negotiation: Understanding Preparation and Planning Morten Lindholst Supervisor: Professor Anne Marie Bülow PhD School LIMAC Department of International Business Communication Copenhagen Business School Morten Lindholst Complex Business Negotiation: Understanding Preparation and Planning 1st edition 2015 PhD Series 30.2015 © Morten Lindholst ISSN 0906-6934 Print ISBN: 978-87-93339-42-2 Online ISBN: 978-87-93339-43-9 LIMAC PhD School is a cross disciplinary PhD School connected to research communities within the areas of Languages, Law, Informatics, Operations Management, Accounting, Communication and Cultural Studies. All rights reserved. No parts of this book may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording, or by any information storage or retrieval system, without permission in writing from the publisher. iii Abstract Most scholars agree that engaging in preparation and planning is key to a negotiation’s effectiveness but research has largely focused solely on what happens at the negotiation table, rather than in preparation for it. This thesis addresses the balance by clarifying which preparation and planning activities are undertaken to conduct a complex business negotiation. It examines not only what activities are conducted, but also by whom, and when. One important question for both practitioners and researchers alike is the extent to which practitioners follow the recommendations of what is an extensive and highly varied literature on negotiation preparation. A review of the literature enabled a comprehensive activity checklist to be developed which, coupled with a number of propositions about how preparation could be expected to be conducted, formed the foundation for the data collection and analysis. The bulk of research into negotiation uses data drawn from populations in experimental design settings. However, this study follows a qualitative research design, which has multiple sources of inquiry and which draws upon data grounded in a large global, industrial company and, thereby, contributes to the limited selection of negotiation research that is conducted outside of university settings. The results from an open-ended survey with 68 purposefully selected respondents provide an understanding of the preparation and planning activities they conduct as part of their ordinary customer negotiations. These results are further informed by a 13 month, interpretive single case study following a multinational and multilingual negotiation over the sale of a triple digit million iv Euro power generation plant. The case study provides an understanding of team preparation over time which is less readily identifiable through the survey data. Negotiators are found to follow many of the core recommendations of the literature, providing support for these recommendations. The data analysis revealed whether preparation activities were conducted individually or in teams and also when these activities were conducted; as neither aspect appeared to be significant in the review of the literature, these finding add new dimensions to our understanding of preparation practices. These aspects are presented in a new model of Negotiation Preparation and Planning Activities (NePPA) that can be used by practitioners but can also be used to develop new avenues of research. In addition, the temporal aspect of preparation, revealed by the findings, demonstrates the continual nature of preparation and planning. It occurs, as expected, before a meeting with the other negotiating party but also after it, as the first step in preparing for the next meeting. In a finding that reflects the impact of emerging technologies on the conduct of business practices, the case study data shows that the negotiators used communication technology to discuss and prepare their next moves while still at the negotiation table. This at-the-table preparation, coupled with the preand post-preparation meetings and preparation conducted away-from-the-table by individual members of the negotiating team, suggests that negotiators should envisage preparation as being a cyclical process rather than as an episodic event. The study is limited in the sense that it was confined to one company and to a particular type of business negotiation and the analysis is limited by relying, in part, on self-reported data. Nevertheless, the practitioner data has yielded insights that have not been seen from the more v common experimental research. Further avenues of inquiry are suggested by the findings, including the impact of distributive and integrative preparation activities on the subsequent negotiation, the use of communication technology, and the more general question of which activities make the greatest contribution to the quality of the negotiated outcome. vi vii Dansk Resumé Forskere er normalt enige om at planlægning og forberedelse er nøglen til at gøre forhandlinger effektive, men alligevel har forskningen mest fokuseret på det der sker ved selve forhandlingsbordet, og ikke ved forberedelsen til det. Denne afhandling søger at råde bod på den mangel ved at afklare hvilke forberedelsesog planlægningsaktiviteter der indgår i en kompleks kontraktforhandling. Den belyser ikke bare hvilke aktiviteter som forekommer, men også hvem der gør det, og hvornår. Afhandlingen belyser et spørgsmål som er vigtigt både praktisk og akademisk, om i hvilken udstrækning forhandlere i praksis følger de anbefalinger som findes i den brede og stærkt varierede litteratur om forhandingsforberedelse. Litteraturgennemgangen mundede ud i en nyudviklet, alsidig checkliste, som, sammen med et antal ’propositions’ på grundlag af den forventede forberedelse, dannede basis for dataindsamlingen og analysen. Størstedelen af forhandlingsforskningen bygger på eksperimentelle data fra laboratorieforsøg. Modsat følger denne afhandling et kvalitativt forskningsdesign med flere datakilder hentet fra en stor, global industrivirksomhed, og dermed bidrager den til det begrænsede udvalg af forhandlingsforskning som er foretaget uden for universitetslaboratorierne. Resultater fra et åbent spørgeskema med 68 bevidst udvalgte respondenter bidrager med forståelse for den forberedelse og planlægning som de udfører som del af deres normale kundeforhandlinger. Disse resultater perspektiveres af et observeret single case study, et beskrivende og fortolkende studie som over 13 måneder fulgte en multinational og multilingual forhandling om salget af et energiforsyningsanlæg til et trecifret millionbeløb Euro. Casestudiet xiv xv Table of Contents Abstract ................................................................................................................................... iii Dansk Resumé ....................................................................................................................... vii Acknowledgements ................................................................................................................ xi Table of Contents .................................................................................................................. xv List of Tables ........................................................................................................................ xxi List of Figures ..................................................................................................................... xxiii List of Appendices .............................................................................................................. xxiii Table of Abbreviations ...................................................................................................... xxvii 1. Introduction ....................................................................................................................... 29 1.1 The research opportunity ................................................................................................. 32 1.2 Outline of the dissertation ............................................................................................... 34 2. Literature Review .............................................................................................................. 35 2.1 Business negotiation ............................................................................................ 35 2.2 Team negotiation ................................................................................................. 38 2.2.1 Team-on-team negotiation. ............................................................................... 40 2.2.2 Intra-team negotiation....................................................................................... 41 2.2.3 Team negotiation: A summary. ........................................................................ 44 2.3 Process of negotiation ...................................................................................................... 45 2.3.1 The Pre-negotiation phase. ............................................................................... 46 2.3.2 The phases within the negotiation stage. .......................................................... 49 2.3.3 Process of negotiation: A summary and propositions. ..................................... 51 xvi 2.4 Recommended activities of good preparation and planning ............................................ 52 2.4.1 Literature sources to uncover complex business negotiation preparation and planning activities. ..................................................................................................... 53 2.4.2 Preparation and planning themes. ..................................................................... 57 2.4.3 Information gathering. ...................................................................................... 59 2.4.4 Formulation. ...................................................................................................... 73 2.4.5 Strategy development. ...................................................................................... 86 2.4.6 Setting the table: the Process. ........................................................................... 89 2.4.7 Integrative strategy and tactics. ........................................................................ 99 2.4.8 Distributive strategy and tactics. ..................................................................... 111 2.4.9 Preparation. ..................................................................................................... 123 2.5 Literature review: A summary and propositions. .......................................................... 128 3. Research Methodology .................................................................................................... 133 3.1 Philosophical standpoint ................................................................................................ 133 3.2 Research design ............................................................................................................. 134 3.3 Doing empirical research in a closed setting ................................................................. 137 3.4 Open-ended Survey Design ........................................................................................... 139 3.4.1 Survey data collection. .................................................................................... 142 3.4.2 Survey development. ...................................................................................... 144 3.4.3 Survey coding and data analysis. .................................................................... 146 3.5 Case study ...................................................................................................................... 150 3.5.1 Site and case selection. ................................................................................... 151 3.5.2 Case study data collection............................................................................... 153 xvii 3.5.3 Case study data analysis. ................................................................................ 155 3.6 Research methodology: A summary.............................................................................. 157 4. Company Context and Sales Process .............................................................................. 161 4.1 Company context – complex business-to-business negotiations ................................... 161 4.1.1 Environmental context. ................................................................................... 162 4.1.2 Nature of interaction. ...................................................................................... 165 4.1.3 Negotiation context. ....................................................................................... 165 4.2 Sales process of the company ........................................................................................ 168 4.3 The context of the negotiation ....................................................................................... 171 4.3.1 The parties ...................................................................................................... 172 4.3.2 The issues and interests of the parties ............................................................ 173 4.3.3 The parties’ alternatives.................................................................................. 173 4.3.4 The timeline of the negotiation ....................................................................... 174 4.3.5 The context of the negotiation: A summary ................................................... 179 4.4 Company context and sales process: A summary ......................................................... 180 5 Which Preparation and Planning Activities are Undertaken to Conduct a Complex Business Negotiation (RQ1) ................................................................................................ 183 5.1 Which activities are conducted – Findings ........................................................ 184 5.1.1 Which category activities are commonly conducted – Findings Activity propositions). ........................................................................................................... 185 5.1.2 Negotiators do engage in fewer NPP formulation activities from the other side’s perspective than their own – Findings (D.1 proposition). ............................. 198 5.1.3 Negotiators do engage in fewer integrative than distributive NPP activities – Findings (D.2 proposition). ..................................................................................... 199 5.2 Which activities are conducted – Discussion ................................................................ 199 xviii 5.2.1 Which category activities are commonly conducted – Discussion (Activity propositions). ....................................................................................................................... 200 5.2.2 Negotiators do engage in fewer NPP formulation activities from the other side’s perspective than their own – Discussion (D.1 proposition). ................................................ 209 5.2.3 Negotiators do engage in fewer integrative than distributive NPP activities – Discussion (D.2 proposition). .............................................................................................. 210 5.3 Which activities are conducted: A summary of the findings and discussion for RQ1. ............. 212 6 Who undertakes the Preparation and Planning activities to Conduct a Complex Business Negotiation (RQ2) ........................................................................................................................... 215 6.1 Who undertakes the preparation and planning activities – Findings (Level propositions) ....... 215 6.1.1 Information gathering. ................................................................................................ 218 6.1.2 Formulation. ................................................................................................................ 219 6.1.3 Setting-the-table. ......................................................................................................... 220 6.1.4 Integrative strategy and tactics. .................................................................................. 221 6.1.5 Distributive strategy and tactics. ................................................................................. 222 6.2 Who undertakes the preparation and planning activities – Discussion (Level propositions). ... 223 6.2.1 Information gathering. ................................................................................................ 223 6.2.2 Formulation. ................................................................................................................ 223 6.2.3 Setting-the-table. ......................................................................................................... 225 6.2.4 Integrative strategy and tactics. .................................................................................. 226 6.2.5 Distributive strategy and tactics. ................................................................................. 227 6.3 On which level are the activities conducted: A summary of the findings and discussion for RQ2. ......................................................................................................................................................... 228 7 When do Preparation and Planning Activities Occur in Teams. And What Else do Negotiators do to Prepare and Plan (RQ3). .............................................................................................................. 231 xix 7.1 When do preparation and planning team activities occur – Findings........................................ 231 7.1.1 When in the process are the team activities expected to occur (Temporal propositions). ............................................................................................................................................. 233 7.1.2 Preparation and planning activities are primarily conducted in the initial phase of the negotiation (Proposition F.1). .............................................................................................. 241 7.1.3 Distributive and integrative preparation and planning (Proposition F.2.a and F.2.b). 244 7.2 When do preparation and planning activities occur - Discussion ............................................. 246 7.2.1 When in the process are the team activities expected to occur (Temporal propositions). ............................................................................................................................................. 246 7.2.2 Preparation and planning team activities are primarily conducted in the initial phase of the negotiation (Proposition F.1). ........................................................................................ 248 7.2.3 Distributive and integrative preparations and planning activities (Proposition F.2.a and F.2.b). ................................................................................................................................... 249 7.2.4 When do preparation and planning activities occur: A summary of the discussion... 250 7.3 Negotiation process findings not covered in the literature review. ........................................... 251 7.3.1 Post-preparation: Preparation occurs straight after meetings as well as before. ........ 251 7.3.2. The internal use of collaborative technology during customer negotiations ............. 257 7.3.3 Executive and sales management influence on the preparation and planning. .......... 261 8. Conclusion: Preparing and Planning for Complex Business Negotiations ................................. 265 8.1 The findings: how negotiators prepare and plan. ...................................................................... 265 8.2 Theoretical implications. ........................................................................................................... 270 8.2.1 Developing a model of good preparation and planning, according to the literature. . 270 8.2.2 Identifying the “who” and the “when” of preparation and planning. ......................... 271 8.2.3 Method contribution. .................................................................................................. 273 8.3 Practical implications for negotiators. ....................................................................................... 274 xx 8.4 Overall strengths and weaknesses of the study. ......................................................................... 277 8.5 Suggestions for future research. ................................................................................................. 279 8.6 Conclusion. ................................................................................................................................ 281 Appendices....................................................................................................................................... 283 References ........................................................................................................................................ 295 xxi List of Tables Table 1. Selected Literature Sources. ................................................................................................ 56 Table 2. Information Gathering Activities with Author Citing Overview. ....................................... 62 Table 3. Formulation Activities - Author Citing Overview. ............................................................. 74 Table 4. Setting-the-Table Activities - Author Citing Overview ...................................................... 91 Table 5. Integrative Strategy and Tactics - Author Citing Overview .............................................. 101 Table 6. Distributive Strategy and Tactics - Author Citing Overview ............................................ 112 Table 7. Preparation Activities - Author Citing Overview .............................................................. 124 Table 8. How to Negotiate - Author Citing Overview .................................................................... 128 Table 9. Negotiation Preparation and Planning Activities – Recommendations from the Negotiation Literature. ........................................................................................................................................ 130 Table 10. Overview of Activity, Level and Temporal Propositions ............................................... 132 Table 11. Phases of Thematic Analysis ........................................................................................... 147 Table 12. Extract from the Codebook ............................................................................................. 149 Table 13. Primary Data for the Case Study ..................................................................................... 154 Table 14. The Negotiation Time Line ............................................................................................. 178 Table 15. Commonly Conducted Themes and Categories (all levels) – Activity Propositions and Open-Ended Survey Results. ........................................................................................................... 186 Table 16. Information Gathering Theme Activities – Support from Literature, Activity Propositions and Open-Ended Survey Results. .................................................................................................... 187 Table 17. Formulation Theme Activities – Support from Literature, Activity Propositions and Open-Ended Survey Results. ........................................................................................................... 191 Table 18. Setting-the-Table Theme Activities – Support from Literature, Activity Propositions and Open-Ended Survey Results. ........................................................................................................... 195 xxii Table 19. Integrative Theme Activities – Support from Literature, Activity Propositions and OpenEnded Survey Results. ..................................................................................................................... 196 Table 20. Distributive Theme Activities – Support from Literature, Activity Propositions and OpenEnded Survey Results. ..................................................................................................................... 197 Table 21. Level Analysis. Usually Cited Themes and Categories – Support from Literature, Level Propositions and Open-Ended Survey Results per Level and in Total. ........................................... 217 Table 22. Level Analysis. Information Gathering Theme Activities – Support from Literature, Level Propositions and Open-Ended Survey Results. ............................................................................... 219 Table 23. Level analysis. Formulation Theme Activities – Support from Literature, Level Propositions, and Open-Ended Survey Results. .............................................................................. 220 Table 24. Level Analysis. Setting-the-Table Theme Activities – Support from Literature, Level Propositions, and Open-Ended Survey Results. .............................................................................. 221 Table 25. Level Analysis. Integrative Theme Activities – Support from Literature, Level Propositions, and Open-Ended Survey Results. .............................................................................. 222 Table 26. Level Analysis. Distributive Theme Activities – Support from Literature, Level Propositions, and Open-Ended Survey Results. .............................................................................. 222 Table 27. When in the process will the activities primarily occur in teams. Temporal Propositions, Case Study Results, Total Observations, and Normalized Relative Frequency Across Phases. ..... 235 Table 28. When in the process will the activities primarily occur in teams – Detailed View of the Information Gathering and Formulation Themes. (Categories 1.1 and 1.2 excluded.) ................... 240 Table 29. When in the process will the activities primarily occur in teams – Detailed View of the Setting-the-Table, Integrative, and Distributive Strategy and Tactics Themes. .............................. 241 Table 30. Distributive and Integrative Team PP Activites Across Episodic Phases. ...................... 245 Table 31. When in the process will the activities occur in teams – Preand Post-Meetings – No. of Observations and Normalized Relative Frequency. ........................................................................ 254 Table 32. Negotiation Preparation and Planning Activities Conducted by Business Negotiators – the NePPA model. ................................................................................................................................. 267 xxiii List of Appendices Appendix A – Recommended Negotiation Preparation and Planning Activities – Full list with Support from Literature ................................................................................................................... 284 Appendix B – Full Overview of Activity, Level and Temporal Propositions ................................. 286 Appendix C – Open-ended survey (simplified paper version) ........................................................ 287 Appendix D – NePPA Codebook .................................................................................................... 290 Appendix E – Overview of Transcribed Observations .................................................................... 293 Appendix F - Formulation Theme Activities – Support from Literature, Activity Propositions and Open-Ended Survey Results ............................................................................................................ 294 30 Jordan and Roloff (1997), Lewicki et al. (2010), Peterson and Shepherd (2010), and other sources have made the observation that despite the extensive research into negotiation, few have focused on what is actually prepared in anticipation of negotiations, and there is scant empirical evidence on the impact careful preparation has upon the negotiation process (Lewicki et al., 2010). Planning ahead, which is what preparation involves, is the process that links cognition with action (Sacerodoti, 1977; Wilensky, 1983) and has been found to help translate an abstract goal into a specific set of actions which pave the way to the goal (Townsend & Liu, 2012). We should expect, then, that a lack of preparation and planning is going to lead to mistakes and poor outcomes, particularly in a complex and dynamic process such as negotiation. It is imperative to better understand what drives the behaviours performed at the negotiation table. Consequently, this thesis examines the preparation practices of a group of experienced commercial negotiators with a view to understanding how they prepare for their negotiations. The practitioners were all employed by a multi-national wind turbine manufacturing company and they negotiated contracts with a customer, typically a private or public utility, independent power producer or a project developer. These supply and servicing contracts could be worth a hundred million Euro or more. The core of the negotiating team would be an expert in sales and a lawyer, though they may be joined by four or five others as the need arises during their preparation and in the negotiations themselves. The initial prospecting to the completion of an agreement may take up to five years with the negotiation phase lasting several months. Clearly, preparation for these major negotiations is crucial; it is in the interests of both parties that the negotiations go well. A distinction is often made between the academic and the practical. By investigating the degree to which experienced practitioners follow the prescriptions of the negotiation literature we 31 can assess the strength of the link between the two. A key area of interest that will be explored in this thesis is whether negotiators follow the advice of the researchers and other writers when preparing for a complex negotiation. Are there aspects of practice that the negotiation literature seems not to have covered? The extent of the link between the academic and the practical will be significant for both researchers and practitioners alike. The evidence presented in this thesis suggests that the practitioners’ preparation activities are broadly consistent with the recommendations offered in the negotiation literature but that some of the activities recommended do not seem to occur, a finding that suggests that there is still room to improve the link between the researcher and practitioner. If negotiation scholars and practitioners consistently consider preparation to be a critical element of negotiation then why did my colleagues and I not follow this advice? Possibly because we did not know all of the possible activities, readily available in the literature, or we did not know how to conduct these activities. Like so many other managers, and others in the world of business, we were time poor (Peterson & Lucas, 2001; Watkins, 1999), which may have led to our not being sufficiently thorough or strategic in our preparation. With little time available for preparation, resource prioritization becomes paramount. Hence, understanding which of the possible preparation activities are the most effective in achieving the desired outcome is essential. This thesis, therefore, in addition to understanding the principles of good preparation and which of those are followed by negotiators, investigates who conducts the activities and when in the process these different activities are conducted. Based on the data from 68 practitioners, this study has found evidence to suggest which activities are usually conducted individually (alone or with colleagues) and which activities are 32 usually conducted by the negotiation team. Using participant observation data over a 13 month period from a multinational and multilingual negotiation over the sale of a triple digit million Euro power generation plant, findings have been discovered to suggest in which phases of the negotiation process the different preparation and planning activities were conducted primarily. Another implication, related to the temporal aspects of preparation and planning, is that negotiators should regard preparation and planning as being a continuous cyclical process, rather than a single event before the negotiation. The findings revealed that preparation and planning occurs individually and with the negotiation team before a meeting with the other negotiating party, but also after it. Furthermore, the case study data shows that the negotiators used communication technology to prepare while still at the negotiation table. This at-the-table preparation, together with the preand post-preparation meetings and preparation conducted away-from-the-table by individual members of the negotiating team, completes the iterative negotiation preparation and planning cycle. These new insights can inform further research and also strengthen the advice offered to negotiators and improve their effectiveness. 1.1 The research opportunity This thesis was made possible thanks to a large industrial company who committed to sponsor the project together with the Danish Ministry of Science, Innovation, and Higher Education as part of the Industrial PhD programme1. Prior to starting the PhD project I had never worked in the company and had only a superficial knowledge of it. The multiparty agreement between company, university, the ministry, and myself made it possible to do a naturalistic inquiry (Lincoln 1 An Industrial PhD project is an industry-focused PhD study where the student is employed by a company and enrolled at a university at the same time. 33 & Guba, 1985) within the setting of the company and, thereby, complement the negotiation research conducted within the university laboratories (Buelens, Van De Woestyne, Mestdagh, & Bouckenooghe, 2008; Pruitt, 2011). On January 1st 2011, I transferred from Denmark to Spain, where the company has one of its global sales business units. This unit spans multiple countries and handles many ongoing, parallel customer negotiations. My initial informal interviews with negotiators consistently revealed that customer negotiations are a sensitive subject due to the financial importance of the outcome both to the negotiators themselves and for the company. As a result, this was a closed setting (Bell, 1969) which made access a challenge for the researcher. To cope with this important obstacle I engaged in offering negotiation advice and training, which turned out to be highly sought after by the negotiators of the company. The negotiators soon started to invite me, as an observer, to both internal preparation meetings and external customer negotiations, possibly as an act of reciprocity. Other negotiators told me that they had invited me because my own experience as a negotiator made me “like one of them”. No matter the reasons for the access granted, the insider approach adopted presented both advantages and challenges (Bryman & Bell, 2007; Dwyer & Buckle, 2009), an aspect of the research that will be discussed in Chapter 4. My initial observations of preparation and customer negotiations revealed a similar pattern, with blunders occurring at-the-table that could have been avoided by efficient preparation and suboptimal agreements being reached that could possibly have been improved by better preparation; this suggests that even in the high Euro amount negotiation, preparation is not always optimal. These preliminary observations in the context of the company under study mirrored my own experience and reinforced my motivation to conduct the study that now comprises this thesis. 34 1.2 Outline of the dissertation Following this Introduction, chapter 2 presents a review of the literature on negotiation. Under the overall theme, concerning which preparation activities are undertaken to conduct a complex business negotiation, the primary purpose of the literature review is to develop the specific research questions and propositions, and to create a comprehensive list of the recommended negotiation preparation and planning activities. The review also served to develop the questionnaire used for the open-ended survey. Chapter 3 explains the methodology employed and the overall interpretive research design. This involved multiple methods of inquiry to capture the widest possible range of insights from the practitioners. The chapter also describes the selection criteria, data collection, and thematic coding and analysis. The two main sources of data were a survey and a case study. The case is described in chapter 4 – Company Context and Sales Process - the purpose of this chapter being to provide background information and to understand the context of the company from which all of the data for this study originates. The chapter also describes one multinational, multilingual complex negotiation over the sale of a large power generation plant. The findings from the case study and the survey are presented in chapters 5, 6, 7, in which each chapter offers an answer to the research questions developed during the literature review; namely: (1) Which preparation activities are undertaken to conduct a complex business negotiation, (2) Who undertakes the preparation and planning activities, and (3) When do preparation and planning activities occur in teams. These findings are brought together in chapter 8 which considers the implications for further research and for practice. 35 2. Literature Review The primary purpose of this dissertation is to advance the understanding of which preparation activities are undertaken to conduct a complex business negotiation. As a first step, this chapter will review the literature on business negotiation, in relation to negotiation preparation and planning. It will examine what the literature recommends, by way of preparation and planning, but also explore aspects that do not feature so strongly in the literature but which are particularly relevant for complex business negotiations; namely at what time during the negotiation process these activities should be conducted, by whom, and the team dimension to preparation activity. This review will form the basis of a list of preparation and planning activities from which a number of propositions can be developed. Aligned with our focus this chapter starts by defining business negotiation followed by a review of the relevant team negotiation literature making an argument for the importance of understanding, not only which preparation activities are conducted, but also which of these are conducted by teams. The process of negotiation is then discussed in order to set the scene for a review of the negotiation preparation activities that are recommended in the literature. This provides the basis for compiling a data collection device for the forthcoming analysis. 2.1 Business negotiation Negotiation emerged as a field of research in the 1960s as a result of the seminal contributions by labour relations experts, economists, social psychologists, and political scientists (e.g. Ikle, 1964; Walton & McKersie, 1965; Sawer & Guetzkow, 1965; Schelling, 1960). More than 1,000 empirical studies, within the area of social psychology alone, had been conducted by the year 1970 (Rubin & Brown, 1975) and few areas in organizational behaviour have developed as 36 profoundly or as rapidly as the field of negotiation (Bazerman, Curhan, Moore, & Valley, 2000; Kramer & Messick, 1995). Negotiation is done by everyone on an almost daily basis (Lewicki, Barry, & Saunders, 2010). It is a social process by which interdependent people, with conflicting interests, determine how they are going to work together or allocate resources in the future (Brett, 2007). Negotiation occurs because the parties cannot achieve their objectives without the help of others (Thompson, Wang, & Gunia, 2010), and they believe a better deal can be reached by negotiating rather than by simply accepting or rejecting an offer from the other party. The process is voluntary in that either party is free to quit at any time (Behfar, Friedman, & Brett, 2008; Brett, 2007; Ghauri & Usunier, 2003). Negotiation is not solely about making business deals. Negotiation skills can be used to make decisions in a multiparty environment and to resolve conflicts (Brett, 2007). The focus of this dissertation is, however, specifically upon business-to-business deal-making negotiation - also called business-to-business transactional negotiation (Adair & Brett, 2005) or buyer-seller negotiations within the field of Industrial Marketing (e.g. Calantone, Graham, & Mintu-Wimsatt, 1998; Herbst, Voeth, & Meister, 2011). Within the field of International Business Negotiation (e.g. Ghauri & Usunier, 2003), the negotiations under scrutiny in this dissertation would be classified as a subgroup within the micro-behavioural paradigm, which focuses on individual negotiators and their behaviour, who typically conduct business transactions (business deals) between buyers and sellers (Weiss, 2004). All of the aforementioned terms are used interchangeably in this dissertation and are defined as exchange negotiations between two or more business parties to buy and sell (Brett, 2007). 37 The term transactional negotiation is employed by some authors (e.g. Sheppard & Tuchinsky, 1996) and is understood as negotiations where no relationship exists according to psychological contract theory (Rousseau & Parks, 1993) and the most important element is the deal itself (Lewicki et al., 2010). The use of the term transactional negotiation is here used only according to the definition by Brett (2007), above, and does not suggest that past, present, and future relationships are of no importance to the negotiation process and its outcome, which is the underlying assumption in some of the negotiation research (Lewicki et al., 2010; Sheppard & Tuchinsky, 1996). As in any other context, business negotiators are engaged in negotiation activities in order to generate mutually beneficial outcomes (Perdue, Day, & Michaels, 1986; Walton & McKersie, 1965). Their negotiations are mixed-motive negotiations (Adair & Brett, 2005; Lax & Sebenius, 1986) where negotiators must cooperate enough to reach an agreement and compete enough to claim sufficient value for themselves (Sebenius, 1992; Lewicki et al., 2010; Thompson et al., 2010). Negotiation, therefore, is here understood as a goal-oriented activity in which corporative (integrative) and competitive (distributive) strategies are used in the quest of both outcome and relationship goals (Wilson & Putnam, 1990). On the cooperative or integrative side, parties are interdependent and must work together to discover creative solutions that increase the total size of the pie of resources to share among the parties (e.g. Fisher et al., 1991; Raiffa, 1982; Lax & Sebenius, 1986), while on the competitive or distributive side, parties represent distinct entities and aspire to get a good deal only for themselves (Walton & McKersie, 1965; Lax & Sebenius, 1986). Lax and Sebenius (1986) noted the inherent tension between value creation and value claiming when they stated: “No matter how much creative 38 problem solving enlarges the pie, it must still be divided; value that has been created must be claimed” (p. 33). Consequently, effective negotiation depends upon the ability of parties to manage both the integrative and distributive components of the negotiation task (Kumar, 1997; Lewicki et al., 2010). This inherent tension between claiming and creating value, termed The negotiator's dilemma by Lax and Sebenius (1986), influences not only the negotiator’s behaviour during the at-the-table negotiation but also the pre-negotiation preparation and planning (Mannix & Innami, 1993) and is, consequently, of importance to this dissertation. In the following section we will discuss how the incorporation of teams in business negotiations can be both a blessing and a curse to the team members and how this influences preparation and outcomes. 2.2 Team negotiation Today an increasing portion of business negotiations are conducted by teams rather than by solo negotiators (Backhaus, van Doorn, & Wilken, 2008; Cummings, 2007; Katrichis, 1998; Zack, 1994). As many as 75% of companies sell in teams (Cummings, 2007). However, teams can be both an asset and a liability in a negotiation, depending on the context (Cohen & Thompson, 2011). The use of teams presents significant challenges in terms of internal conflict (Halevy, 2008), reaching agreement (Cohen, Leonardelli, & Thompson, 2010), and internal alignment (Brett, Friedman, & Behfar, 2009). On the other hand, teams are usually expected to arrive at better, integrative agreements at the bargaining table (Cohen & Thompson, 2011; Morgan & Tindale, 2002; Thompson, Peterson, & Brodt, 1996; Zack, 1994). More specifically, related to our context, research has found that teams are an asset in negotiations in which the context allows for 39 coordination and integrative trade-offs (Morgan & Tindale, 2002; Polzer, 1996; Thompson et al. 1996), such as multi-issue deal making negotiations (Cohen & Thompson, 2011), which may explain the large proportion of companies using a team selling approach. Team-on-team negotiations, also termed group-on-group or inter-team negotiations, occur in the business context in which the two parties (a seller, the company, and a buyer, the customer) are each represented by more than one negotiator, each team having the mandate to construct an agreement which is more beneficial than any of the alternatives (Behfar et al., 2008b; Carnevale & Pruitt, 1992; Cohen, Leonardelli, & Thompson, 2010; Thompson & Fox, 2001; Thompson & Hastie, 1990a; Thompson et al., 1996; Von Glinow, Shapiro, & Brett, 2004). Team-on-team negotiations are not to be confused with multi-party negotiations (Mannix & White, 1992; Polzer, Mannix, & Neale, 1998) where there is a group of three or more people who have to arrive at an interdependent decision. In multiparty negotiations, negotiators act as individuals who represent their own interests; in team negotiations, team members should act in the interest of their respective teams (Behfar et al., 2008b). Team-on-team negotiations have been studied from many perspectives, such as representative negotiations (e.g. Frey & Adams, 1972; Friedman & Podolny, 1992; Gelfand & Realo, 1999; Pruitt & Carnevale, 1993), multiparty negotiations (Polzer et al., 1998; Thompson & Fox, 2001), groups-on-group negotiations (Naquin & Kurtzberg, 2009; Thompson et al., 1996), and intra-group negotiations (Behfar et al., 2008b; de Wit, Jehn, & Scheepers, 2011; de Wit, Greer, & Jehn, 2012). In the context of complex business negotiations with teams on both sides of the table and recurrent meetings within and between teams, we evidently have both intra-team negotiations on both sides of the table and inter-team negotiations amongst the parties. Consequently, team-on- 46 Pre-Negotiation Negotiation Post-Negotiation Figure 1: Negotiation Process Model Based on the Works of Various Authors, Including Graham (1993), Ghuari (1996), and Weiss (1993). The literature offers a number of variations within the three stages of the negotiation process described above (for an overview of the different prescriptive and descriptive models, see Holmes, 1992). While the number of stages and the labels for the different models may vary (e.g. Greenhalgh, 2001; Saunders, 1985), the activities encompassed usually do not, leading to the generally agreed upon conclusion that the negotiation process passes through distinct chronologically bounded stages, each with a characteristic set of activities (Watkins & Rosen, 1996). Watkins and Rosen (1996) and Weiss (2006a) suggest that this underlying assumption that activities are undertaken and completed at a specific chronological phase in a linear negotiation process is ill-fitted to understanding large-scale multi-issue negotiations with multiple rounds where processes and outcomes are intertwined and recurring. 2.3.1 The Pre-negotiation phase. While the process of negotiation is consistently described as being a “from start to finish”, chronologically bounded process with defined activities, the literature offers inconsistent definitions when it comes to what it is that is involved before the parties meet at-the-table. Broadly speaking, the term Pre-negotiation commonly includes all activities from initial contacts to the moment where the negotiators engage in the negotiation phase (e.g. Ghauri 1986; Saunders, 1985; Weiss, 1993; 47 Zartman, 1989). Other authors, however, use a more narrow definition of pre-negotiation (e.g. Fisher, 1964; Raiffa, 1992) which is limited only to the initial interactions between the parties before an agreement to negotiate exists. Breslin and Rubin (1993), who employ the broader definition, divide pre-negotiation into two sub-phases: (1) Creating initial agreement between the parties and (2) coming to the table prepared (Figure 2). The same division can be found in the work of other authors (e.g. Ghauri, 1986; Ghauri & Usiner, 2003; Weiss, 2006b) and is consistent with the prescriptive advice found in most research based negotiation text books (e.g. Fisher & Etrel, 1995; Hames, 2012; Lewicki et al., 2010; Thompson, 2009). This broad definition draws attention to the scope of what is required in conducting an actual negotiation (Figure 2). Pre-Negotiation Negotiation Post-Negotiation Initial agreement to negotiate Planning & Preparation Figure 2: Negotiation and Pre-negotiation Process Model Based on Various Authors. However, this broad conceptual model is operationalised in different ways by organisations to accommodate their other decision making processes. For the sales process of the company in the case study (see page 168), the negotiation preparation and planning and the team-on-team negotiations take place within the so-called negotiation phase, after the quotation stage has been concluded with a gate review. This gate review gives the mandate to make the proposal and approves the resources necessary to do so. Hereafter, we enter the negotiation stage, in which the 48 negotiation with the customer begins. As a result of the nature negotiations with multiple rounds, various iterations between preparation and planning and team negotiations takes place in this phase until an agreement is reached or negotiations are discontinued. Figure 3, shows the negotiation stage of the company’s sale process. Although internal and external negotiations do take place prior to entering into the negotiation stage of the company, this research is focused on the preparation and planning activities conducted within the negotiation stage of the company (within the small box shown in the middle of Figure 3). The returning arrow in the bottom part of Figure 3 represents various iterations between preparation and planning and team negotiations. In conclusion, this research focuses on the Planning & Preparation part of the Prenegotiation phase as depicted in figure 2. However, as a result of the iterative nature of the negotiation the process taking place in the company, the process is not linear but cyclical as suggested by Watkins and Rosen (1996). As a result, what is known as the negotiation stage in the company’s sales process include several iterations of planning and preparation and customer negotiations (Figure 3), where the emphasis in this dissertation will be directed towards these preparation and planning activities in each of these iterations. Negotiation Post-Negotiation Sales Process: Firm contract Initial agreement: Sales Process: Proposal mandate approved Planning & Preparation Sales Process: Negotiation Stage N e g o t i a t i o n P l a n n i n g & P r e p a r a t i o n S a l e s P r o c e s s : N e g o t i a t i o n S t a g e Figure 3: Iterative Negotiation Process within the company’s Sales Process. 49 2.3.2 The phases within the negotiation stage. Although negotiation theory recognises anywhere between three and 12 phases within the negotiation stage (Weingart, Olekalns, & Smith, 2004). Holmes (1992) came to the conclusion that the different models of the negotiation process fit into a general structure with three sequential phases of: initiation, problem solving, and resolution. In a more recent summary of the literature on phases, Fells (2012), suggests that the three phases should be termed: (1) positioning, (2) flexibility, and (3) repositioning, as this terminology better reflects the finding in recent research (e.g. Olekalns & Smith, 2000; Olekalns, Brett, & Weingart, 2003). Two approaches to analysing negotiation phases exist (Weingart et al., 2004). The first, a stage model approach, treats negotiations as being divisible into discrete time segments and considers how the frequency of different strategies changes across segments. The second approach, called an episodic approach, looks for naturally occurring phases. Adopting one or the other is associated with methodological and empirical issues and the decision regarding the choice of approach should be linked to the research question asked, this aspect will consequently discussed in the method chapter (page 155). The patterns that emerge from several studies on negotiation phases suggest that the nature of stages is context sensitive (Weingart & Olekalns, 2004). In mixed-motive negotiations, such as with the sales negotiations in the company under study, proposals have been found to increase in a linear fashion over time (Lytle, Brett, and Shapiro, 1999). Moreover, negotiators also tend iteratively (cycle in and out) to make use of concessions and other distributive strategies throughout the process (Lytle et al., 1999; Olekalns, Smith & Walsh, 1996). As a result, when dealing with complex mixed-motive negotiation with several negotiation rounds, one should expect to see 50 different preparation activities depending on where in the process the given negotiation round is situated. Common to all of these studies is that the study of the preparation and planning meeting is omitted from the analysis. In the present study, the focus is upon the preparation and planning taking place in connection with the negotiation rounds and it is assumed that the preparation and planning activities reflect the seller’s expectations of the upcoming negotiation round. Consequently, preparation and planning is subject to the overall negotiation phases. For this research’s purposes, the context is major business negotiations which pose a challenge to predetermining the phases of the negotiation. Still, the two well-known normative models of negotiation phases researched (Morley & Stephenson, 1977; Walton & McKersie, 1965) suggest that distributive strategies precede integrative strategies. In support of these models, Olekalns et al. (2003) found, in a multiparty experimental setting, that the majority of teams initiated negotiations with the distributive dominated phase and ended with an integrative dominated phase. As suggested above, negotiations in the context of the company under study are expected to take place over several rounds and negotiators are expected to be time poor (Peterson & Lucas, 2001; Watkins, 1999). Moreover, many of the preparation activities are expected to be conducted only once per negotiation (e.g. understanding one’s own and the other party’s interest), except where the composition of the negotiation teams changes. Thus, preparation is likely to change as the negotiations progress and one would expect to see a higher frequency of negotiation activities in the initial phase of the negotiation compared to the final phases of the negotiation. 51 2.3.3 Process of negotiation: A summary and propositions. The process of negotiation has been well researched (Adair & Brett, 2005; Holmes, 1992; Olekalns et al., 2003; Olekalns & Weingart, 2008). Most of the research into the negotiation process is based on experimental research, which gives insights into what negotiators do and when they do it (Fells, 2012). The focus of this research is within the negotiation stage of the sales process, as defined by the company. The phase consists of iterative negotiation rounds and its associated preparation and planning. The strategic planning activities conducted in planning meetings are expected to involve more preparation activities early in the process and to reflect the dominant negotiation strategies of the face-to-face meeting and are expected to follow the suggested differentiation-before-integration pattern suggested by Morley and Stephenson (1977) and Walton and McKersie (1965). Thus, I advance the following overall proposition in relation to the process of negotiation (F for Frequency): Proposition F.1: Preparation and planning team activities will be conducted with a higher frequency in the Initial phase of the negotiation compared to the later ones. Proposition F.2.a: Distributive team preparation and planning activities will dominate in the Initial phase of the negotiation. Proposition F.2.b: Integrative team preparation and planning activities will dominate in the latter phases. In the following section our attention will be turned to uncovering the preparation and planning activities as recommended in the literature. 52 2.4 Recommended activities of good preparation and planning Any review of writings on negotiation will show how important the task of preparation is. Researchers in the field, such as Brett (2007), Lewicki, Minton, and Saunders (2010), Lax & Sebenius (1986), Raiffa (1982), Salacuse (2003), Thompson (2009), Watkins (2006) and Weiss (1993), all make recommendations for good negotiation practice and cover a wide range of activities from monitoring the economic context to conducting logistical preparations. Given the importance of preparation, and the fact that most writers have something to say about it, the pool of potential sources is vast, unmanageable and to a large extent repetitive. An additional consideration is that some writers on negotiation are essentially sharing their own experiences, examples being Cohen (2006) and Trump and Schwartz (2009). In contrast, the writings by academic researchers have the virtue of having been grounded in research, whether in the laboratory or in carefully analysed case studies. This academic grounding gives more authenticity to the recommendations, there being some clear evidential backing to the preparation activities recommended to show that they do work. However it is often the case that the research into what negotiators do does not extend to the exploration of how they prepare to do it (e.g. Peterson & Shepherd, 2010; Roloff & Jordan, 1991). For example, there has been research into decision-making processes (Neale & Bazerman, 1992), cognitive processes, such as heuristics and biases (Caputo, 2013; Tversky & Kahneman, 1974), work on schematic information processing (Carnevale & Pruitt, 1992), and mental models (Bazerman et al., 2000; Van Boven & Thompson, 2003). The implication is that negotiators should take these aspects into account in their preparation. They may, for example, discuss perspective 53 taking as a way to better understand the other party’s viewpoint or consider the effect of anchoring when developing an opening offer. The focus of this research is upon the negotiation preparation and planning activities conducted by the seller’s team of negotiators. Other areas, such as the cognitive aspects of decision making by the team in preparation or the actual execution of the planned tactics at-the-table would be possible subsequent areas of research once what negotiators actually do when they plan and prepare for a complex business negotiation has been made known. The possible effects of, for example, framing and biases will be discussed later when its explanatory force has been alluded to in the findings. 2.4.1 Literature sources to uncover complex business negotiation preparation and planning activities. Literature searches for a comprehensive, yet authoritative, list of preparation activities must be necessarily confined and still wide in scope. One starting point was for writings that specifically addressed the task of preparation. A second foray into the literature related to context. While authors have written about negotiation in many contexts, ranging from international diplomacy to interpersonal disagreements, this paper is concerned with complex business negotiations and so the business negotiation literature was examined for insights into preparation and planning activities. Fortunately, there is significant overlap among some writers who specifically address the task of negotiation and who do so in the context of complex business negotiation. However, as will be seen from Table 1 (page 56), the final selection of key texts was not confined to these authors solely. Peer-reviewed literature on preparation and planning activities in complex negotiations is limited (Peterson & Shepherd, 2011). Peterson, together with Lucas (2001) and with Shepherd 54 (2010, 2011), made it the focal point of their research and their framework was adopted as a starting point because of its simplicity. Weiss, through the lens of international negotiation, addresses both complexity in negotiations and negotiation preparation in peer-reviewed works (Weiss, 1993, 2006b) and non-peer-reviewed works (2004, 2006a). His analysis has shown the importance of multilevel behavioural analysis by suggesting not only that the activities conducted be identified but also by understanding the levels on which the activities take place (e.g. team activity or individual activity) and the arenas in which they take place (e.g. among management) and, consequently, enhances the understanding of the multi-level and cross-level character of organizational phenomena which are often neglected in management research (Rousseau, 1985). This point, made by Weiss (1993), supports our intention to not only look at which activities are conducted but also where in the process they are conducted and by whom. Watkins (1999) draws on the areas of conflict resolution and international diplomacy as well as business to reinforce the need for strategic preparation because of the complexity of negotiations in these contexts. Watkins and Rosen (1996) and Weiss (2006a) believe that the common assumption, that preparation is a specific event, is illfitted to large-scale negotiations with multiple rounds in which processes and outcomes are intertwined. Although peer-reviewed literature covering empirically grounded research into the practice of preparation is limited there is, as has been indicated earlier, extensive research literature into the practice of negotiation itself. This research has been comprehensively reviewed by authors of a number of authoritative textbooks on negotiation such as Brett (2007), Fells (2012), Hames (2012), Lewicki, Barry, and Saunders (2010), Raiffa (1982), and Thompson (2009). These incorporate the insights provided by scholars active in the field of business negotiation such as Bazerman and Neale 55 (1993), Lax and Sebenius (2006), Lum (2010), Malhotra and Bazerman (2007), and Shell (2006). Of the research-based textbooks investigated, four were selected for the review in the search for identifying as many preparation activities as possible. Lewicki et al. (2010) and Thompson (2009) were selected due to the depth of their preparation chapters and their high number of references to peer-reviewed sources. Hames (2012) also provides an extensive chapter on preparation, citing negotiation research and has been included as one of the sources here because the book is the most recent of its kind. Raiffa (1982) offers extensive advice on preparation activities, arguing for both an analytical (Science) and intuitive (Art) approach. Looking further afield in the literature, both scholars and practitioners have contributed with their prescriptions on negotiation and, in some cases, on preparation and planning specifically. In a few cases these works even present frameworks that have influenced the field of negotiation (e.g. Getting to Yes by Fisher et al., 1991). In extending the search, the criteria of selection was firstly that the author is a researcher on business negotiation within the field and secondly that the source would potentially add new preparation activities to the existing list. Initially, Getting to Yes (Fisher et al., 1991) was included in the list, but I finally decided not to include the book as it did not provide any new activities to the list, possibly because the book is so influential and therefore has been integrated into the other sources selected. Books on business negotiation by Watkins (2002, 2006) and by Salacuse (2003) did, however, offer new activities and perspectives not seen in the other works (e.g. in the area of logistical concerns). Additional books were considered as they demonstrated relevance to the negotiation context and were written by scholars active in the field of business negotiation (e.g. Bazerman & Neale,1993; Lax & Sebenius, 2006; Shell (2006); Malhotra 62 which follow, and are in keeping with the structure of Table 2, below, that summarises the findings and visualizes which authors address which categories of activities. Table 2. Information Gathering Activities with Author Citing Overview. 2.4.3.1 Environmental context. The contextual environments are included by Weiss (1993, 2006b), Peterson and Shepherd (2010), Salacuse (2003), and Hames (2012) as being part of the process of Information gathering. The contextual environments of business negotiations refer to the conditions which influence the main factors which are political, economic, institutional-legal, and cultural in nature, according to Fayerweather and Kapoor (1976) and Tung’s (1998) framework of analysis. The Economic context includes many macro-economic factors such as interest rates, inflation levels, and market wages (Hames, 2012) as well as the current conditions of the market and industry (Weiss, 1993). Typical economic or environmental considerations, in the context of the company, include access to external funding and the market attractiveness depending on the state of supply and demand. Authors Activity Category: Support from literature Peterson et al. Thompson Lewicki et al. Hames Raiffa Salacuse Watkins Weiss 1. Information Gathering 100% √ √ √ √ √ √ √ √ 1.1. Environmental Context 50% √ √ √ √ 1.1.1. Economic 50% √ √ √ √ 1.1.2. Political 38% √ √ √ 1.1.3. Institutional-legal 38% √ √ √ 1.1.4. Cultural 63% √ √ √ √ √ 1.2. Nature of Interaction 100% √ √ √ √ √ √ √ √ 1.2.1. Negotiation Nature 100% √ √ √ √ √ √ √ √ 1.2.2. Industry Conventions and Norms 75% √ √ √ √ √ √ 1.3. Negotiation Context 100% √ √ √ √ √ √ √ √ 1.3.1. Scope of the Negotiation 50% √ √ √ √ 1.3.2. Future Relationship 50% √ √ √ √ 1.3.3. Linkage and Precedence 50% √ √ √ √ 1.3.4. Competitive Alternatives 50% √ √ √ √ 1.3.5. Resources and constraints 50% √ √ √ √ 1.3.6. Own Constituents 50% √ √ √ √ 1.4. The Other Party 100% √ √ √ √ √ √ √ √ 1.4.1. Understand the Customer Organization 75% √ √ √ √ √ √ 1.4.2. Understand the Negotiation Team 100% √ √ √ √ √ √ √ √ 1.4.3. Understand the Individual Negotiators 100% √ √ √ √ √ √ √ √ 63 Governmental policies (Hames, 2012) and business-government relationships (Weiss, 1993) are examples of political factors. Some examples from business-to-business transactions would include governmental subsidy schemes and import barriers. The legal environment can influence the negotiator’s attitude towards the law and litigation (Tung, 1998) and may have an impact on the contractual design in the context of the company. The fourth, and final, factor within the environmental context is that of the national culture, for example, its ideology (Weiss, 1993), ethical environment (Hames, 2012), and dominant languages (Weiss, 1993), which may impact upon many aspects of the negotiation, such as decision-making (e.g. Weber & Hsee, 2000), negotiation strategy (e.g. Adair, Brett, Lempereur, Okumura, & Shikhirev, 2004; Brett, Shapiro, & Lytle, 1998), and the negotiation process (e.g. Salacuse, 1999). This part of the cultural Information gathering focuses solely on the national grouping of the people involved, whereas the fourth and final category, The other party, includes the ethnic and organizational cultures of the parties (e.g. Schneider, 1988; Hofstede, 1994). 2.4.3.2 Nature of the interaction. The nature of the interaction (Hames, 2012) also labelled The rules of the game by Lewicki et al. (2010), encompasses the Information gathering activities related to the Negotiation nature and Industry conventions and norms. Every author, with the exceptions of Watkins and Peterson, includes all of these activities under the banner of Nature of interaction. The nature of interaction defines the characteristics of the negotiation, such as exchange or dispute situations (Thompson, 2009), Single-issue or multi-issue negotiation (Raiffa, 1982), necessity or opportunity negotiation (Hames, 2012; Thompson, 2009), multi-round negotiation or single round (Lewicki et al., 2010; Watkins & Rosen, 1996; Weiss, 1993). In the context of the 64 company the negotiations can be defined as buyer-seller, business-to-business exchange transactions of made-to-order solutions with multiple negotiation issues and multiple negotiation rounds. The Negotiation nature, in the context of the company, is constant and is therefore not one that negotiators are expected to conduct as part of their NPP. Industry conventions and norms (Thompson, 2009), also referred to as protocol (Lewicki et al., 2010), define a series of variables such as individual or teams negotiation (Salacuse, 2003; Weiss, 1993), public or private negotiation (Raiffa, 1982; Thompson, 2009), official contracts or handshakes (Thompson, 2009), number of offers made before reaching an agreement (Thompson, 2009), which party makes the first offer (Thompson, 2009), and whether ratification is required (Lewicki et al., 2010; Raiffa, 1982; Thompson, 2009). Although the negotiations are influenced by the aforementioned environmental context (which in the context of the company include the national culture and legal framework), the norms and conventions remain constant over time and across geographies. The protocol for the industry, as is customary in many major negotiations (Salacuse 2003), prescribe private team negotiations with ratification on both sides. Prior to arriving at an agreement, it is expected that the seller will make the opening offer and that it will be followed by concessions on both sides. 2.4.3.3 Negotiation context. The Negotiation context helps the negotiators to assess the attractiveness of the deal and to determine the initial relative power balance between the parties (Raiffa, 1982; Thompson, 2009) and covers a series of activities, which often vary from negotiation to negotiation, even though the nature of the negotiation and industry remains unchanged. The literature review suggests collapsing 65 the activities into six categories: Scope of the negotiation, Future relationship, Linkage and precedence, Competitive alternatives, Resources and constraints and, finally, Own constituents. Scope of the negotiation scope (Weiss, 2006b) covers the high level details about the negotiation, for example, financial structure, scope of supply, the number and origin of the parties who are directly involved (Raiffa, 1982), and other information that will help in the, forthcoming, detailed analysis. Lewicki et al. (2010) and Watkins & Rosen (1996) furthermore encourage looking into similar negotiations with other customers in order to gain insights. Examples from the context of the company are the power purchase agreement (PPA) of the customer, the financial model of the customer, the financial partners of the customer and so forth. Future relationship is concerned with the long term relationship as well as the likelihood of repetitive deals and multiple deals (Raiffa, 1982; Thompson, 2009). The customer project pipeline (multiple deals) is one of the typical key factors in assessing the customer’s attractiveness in the context of the company (e.g. Miller & Heiman, 2004). The future pipeline, in turn, contributes to the increasing relative power of the buyer (reward and coercive power), who, if other alternatives exist, can choose whether or not to award the seller with their future business (French & Raven, 1959; Kim et al., 2005). Linkage effects refer to the fact that some negotiations affect other negotiations (Raiffa 1982; Thompson, 2009) and may constrain negotiators in the context of an on-going relationship (Watkins, 2003). Watkins (2000) claims that most negotiations are linked to other negotiations which take place in the past, the present, or will take place in the future and the ability to use linkages to advance one’s own interests rests on the negotiator’s ability to map the structure of the linked system. Hames (2012) also underlines the importance of understanding how the upcoming 66 negotiation has been influenced by previous negotiations and how the negotiation taking place in the present may influence future negotiations. Furthermore, Thompson (2009) argues that precedence is not only important as an anchor in the negotiation but is also seminal in defining the range of alternatives to the current predicament. In the context of the company’s long lasting relationships, the linkage to preceding negotiations exists both within the same client relationships and also between the individual negotiators who may change employers. Having a strong alternative to a negotiated agreement gives the negotiator power as it makes the negotiator less dependent upon the other party in the negotiation for the acquisition of the outcomes desired (Fisher et al., 1991; Mannix & Neale, 1993; Sondak & Bazerman, 1991). Although there are numerous sources of power applicable to negotiations (French & Raven, 1959), the ability to walk-away is regarded as the key source of one’s bargaining power (Fisher et al., 1991; Raiffa, 1982; Thompson, 2001). Consequently, the competitive alternatives available to the buyer are important to understand in order to assess their relative power in negotiations. Similarly, the seller may have more or less power over the buyer, depending on the state of supply and demand. Resources and constraints (e.g. information, expertise, alternatives, skills, materials, money, time, and procedures) are likely to influence goal setting (Hames, 2012) and more ambitious goals are often suggested to lead to better outcomes (e.g. Kray, Thompson, & Galinsky, 2001). The negotiators with the fewest constraints and the most substantial resources are likely to set more ambitious goals, while those working within tight constraints and with the least amount of resources are more likely to be conservative (Hames, 2012). Time constraints, in the shape of deadlines, are of particular importance to negotiators as the rate of concessions by negotiators increases as the 67 final deadline approaches (Lim & Murnighan, 1994). Although negotiators often consider time pressure to be a strategic weakness, something they tend to hide from the other party (Moore, 2004), the final deadline for one party is also the deadline for the other parties (Roth, Murnighan, & Schoumaker, 1988) and the consequences of deadlines are often predicted incorrectly (Windschitl, Kruger, & Simms, 2003). The final category, Constituents, is related to understanding who, apart from the buying organization, will be affected by or may affect the negotiation (Hames, 2012). Lewicki et al. (2010), put it very bluntly by posing the following question, “Who are my constituents and what do they want me to do?” (p. 120). Even though members of a negotiation team are technically on the same side they may represent different constituencies (e.g. legal, finance, and sales) within the company which have different interests and priorities which do not necessarily align with the overall interests of the company (Brett et al., 2009). Other internal and external constituents (e.g. superiors, other managers, the media, and suppliers) are not at-the-table but can still influence the negotiation for example by imposing constraints or by providing resources. Consequently, in order to negotiate successfully one must first understand one’s constituents. 2.4.3.4 The other party. Negotiators differ in their preferences, values, thoughts, and behaviours (Barki & Hartwock, 2004). The interests and priorities of one negotiator or party may or may not, therefore, be similar to those of the other negotiators or party (Lewicki et al., 2010). Different interests and priorities make integrative negotiations possible (Froman & Cohen, 1970; Thompson, 2009) and misperceptions of the other party’s interests have been suggested as the primary cause of 68 suboptimal outcomes (Thompson & Hastie, 1990a). Consequently, understanding the other party is seminal for the negotiator and is central to negotiation preparation and planning. Not surprisingly, all of the primary authors in this review mention activities related to understanding the other party as part of the Information gathering stage. Following Weiss (1993), the other party can be divided into 3 levels: organization (i.e. the buying organization), team (i.e. the negotiation team of the other party), and individuals (the negotiators and their constituents). Consequently, the activity categories can be labelled as desiring to: understand the customer organization, understand the customer negotiation team, and to understand the individual negotiators. The information can be gathered from various sources, depending on the history and relationship between the buyer and the seller, typically from previous negotiations, from other people who have done business with the buyers, from peers and friends, and from internet sources (Lewicki et al., 2010). Understanding the Customer organization includes understanding, “the decision-making process and the decision-making criteria of the company (Lewicki et al., 2010; Peterson & Shepherd, 2010; Salacuse, 2003), the organizational culture (Weiss, 1993), the customer’s constituents (Thompson, 2009), the parties shared experience (Lewicki et al., 2010), the buyer’s reputation and negotiation style (Lewicki et al, 2010; Thompson, 2009) and other information relevant to the company (e.g. financial statements) (Lewicki et al., 2010). Understanding the Negotiation team includes understanding: who the team members are (Thompson, 2009), who are the constituents which are not present at-the-table (Friedman, 1992; Lewicki et al., 2010), what the issues to be negotiated are (Hames, 2012; Lewicki et al., 2010), what 69 the aligned interests, preferences, and priorities of the team are (Brett et al. 2009; Salacuse, 2003; Thompson, 2009) and, finally, what the best alternative outside the negotiation (Fisher et al., 1991; Salacuse, 2003; Thompson, 2009) and inside the negotiation are (Salacuse, 2003). Furthermore, Information gathering, relating to the negotiation team, should include a review of the negotiation style, strategies, and tactics applied in previous negotiations if applicable (Lewicki et al., 2010; Peterson & Shepherd, 2010; Raiffa, 1982; Weiss, 2006b). The team members negotiating are not solely accountable to each other and their company; individual team members may also be accountable to particular constituencies within the organization (Bhefar et al., 2008). This situation is not limited to seller organizations, but also applies to buyer organizations, where the incentives of the different departments (e.g. legal, finance, and purchasing) are not necessarily aligned (Halevy, 2008; Raiffa, 1982). Consequently, understanding the individual negotiators interests, priorities, preferences, negotiation styles, and other influential conditions are important activities within the Information gathering stage. 2.4.3.5 Information gathering: A summary and propositions. The information gathering theme consists of four different categories. The first category, the environmental context, describes the high level, macro-economic perspective (Hames, 2012) and the second category, nature of the interaction, encompasses the preparation activities related to the nature of the negotiation and to industry norm and conventions. The Negotiation context, the label given to the third category, includes the activities that help the negotiators to assess the attractiveness of the deal and to determine the initial relative power balance between the parties. The last of the four categories, the other party, is concerned with the activities conducted to understand the other party’s organization, negotiation team, and individuals. Three of these four 70 categories that emerged from the literature review include recommendations from all eight authors and all subcategories comprise recommendations from three or more authors, even though the authors apply different terminology, and employ boundaries and categorizations which are inconsistent (Table 1). In total, 50% of the authors cited the environmental context activities, the lowest support provided for any of the categories within this theme. Business negotiators typically work within the same regional areas and are expected to be familiar with the economic, political, institutional, and cultural contexts. Consequently, little change in the environmental context is expected from negotiation to negotiation, and from negotiation round to negotiation round, and therefore negotiators are not expected to conduct many, if any, of the activities listed. The environmental context describes the high level, macro-economic perspective (Hames, 2012), creating a foundation for the subsequent NPP activities (Peterson & Shepherd, 2010). Therefore, where activities are conducted they are expected to take place prior to the first team-on-team negotiation or in the initial phase of the negotiation. Given the investigative nature of the activities, they are expected to be conducted without the team, by consulting various written sources, and possibly by relying upon experts on subject matters inside or outside the company. Hence, the proposition for the Environmental context activities is: (A for activity, the number is referring to the number in the NPP activity model) Proposition A.1.1: Environmental Context activities will not be conducted by the company negotiators. The Nature of interaction category finds support from all the authors selected. Both the Negotiation nature and Industry conventions and norms, in the context of a selling company, are 71 constant over the negotiation period and, hence, are not expected to be part of the negotiation activities conducted by the negotiators. Consequently, experienced negotiators are expected to be familiar with the way in which the negotiations generally unfold. Hence, the propositions for the Nature of the interaction activities are: Proposition A.1.2: The Nature of the Interaction activities will not be conducted by the company negotiators. The NPP activities, related to the Negotiation Context, are cited by all eight authors. All of the six underlying activities are expected to occur, as conditions vary from negotiation to negotiation, which entail the need for preparation initially in the process. Furthermore, three of the activity groups (competitive moves, changes in resources, new constituents) are expected to take place throughout the whole time span of the negotiation, as competitor’s move, the availability of resources, and the number of constituents will typically change over the time line of the negotiation. According to Peterson and Shepherd (2010), the primary purpose of information gathering is to collect information that will facilitate the planning activities that follow in the formulation and strategy development part of the NPP. Consequently, negotiation context activities should usually, most likely be conducted individually or with others rather than as a team activity. On the other hand, given the importance of the negotiation power of competitive alternative in the hands of the customer (Fisher et al., 1991; Mannix & Neale, 1993; Raiffa, 1982; Sondak & Bazerman, 1991), one should expect discussions concerning the competitors to take place as part of team preparations. Hence, the propositions for the Negotiation context are: (T for Temporal, L for Level for activity, the number is referring to the number in the NPP activity model) 78 (Fisher & Ertel, 1995). Identifying the other party’s options and what they are prepared to accept, through the values, and perceptions is an activity of high importance (Watkins, 2000). The best alternative to a negotiated agreement or BATNA (Fischer et al., 1991) is the best one can get outside of the negotiation and is not related to the customer at-thetable. Furthermore, according to Brett (2000), “In transactional negotiations, parties’ BATNAs are frequently unrelated. The buyer has an alternative seller with whom to negotiate and the seller has an alternative buyer with whom to negotiate” (p. 100). This statement assumes that the sellers and buyers have alternative buyers and sellers, which is frequently not the case for the company, as a result of the overcapacity in the market at the time of the study (BNEF, 2014b; GWEC, 2013). The alternative for the Seller outside of the negotiation, the seller BATNA, is not whether to sell to somebody else but rather not to manufacture and to assume the consequences. 2.4.4.3 Reservation points. The reservation point, as with alternatives inside and outside the negotiation, operates on two levels: the deal level and the issue level. The BATNA is the basis for determining reservation points (also called resistance points, reservation price or walk away prices) of the deal and of the individual issues. The reservation point (hereafter RP) is a negotiator’s subjectively determined bottom line—the point at which negotiators are indifferent to reaching agreement or to walk away (Thompson et al., 2010). The reservation point is the quantification of the BATNA and specifies what the BATNA represents with respect to other alternatives (Raiffa, 1982; Thompson, 2009; Walton & McKersie, 1965). Quantifying the BATNA is not always simple and the computation of subjective values, or the expected probabilities of obtaining certain outcomes, may be necessary (Lax & Sebenius, 1986; Thompson, 79 2009). The concept of BATNA applies to the entire negotiation, save for the situation in which the negotiators can satisfy their interest in different issues by individual parties (e.g. in the context of the company, the wind farm infrastructure can be supplied by the seller or a third party) making the BATNA issue-specific. When conducting major negotiations in the context of the company, as in most organizations (Salacuse 2003), the deal reservation point is the minimum contribution margin accepted in the individual deal and is defined by management according to the negotiation mandate given. The deal reservation point or deal mandate sets the limits that preclude the negotiator from agreeing to a deal where the costs of the agreement proposed exceed the benefits (Fisher & Ertel, 1995; Hames, 2012; Lewicki, 2010). Furthermore, the reservation point has, in one study, been found to have the most direct effect on the negotiated outcome when it was made available to negotiators together with their aspiration level and market price (Blount-White, Valley, Bazerman, Neale, & Peck, 1994), suggesting that the development of the reservation point is an important activity. Similarly, limits on the individual issues, often referred to as deal-breakers (e.g. Fells, 2012; Watkins, 2002), will help the negotiator from entering into agreements beyond his or her authority (e.g. extended warranty). Conversely, setting a threshold on the individual issues, in the shape of deal-breakers or non-negotiable issues, tend to have a negative influence on the possibility of reaching integrative agreements as opposed to the more holistic overall integrative approach (Froman & Cohen, 1970; Lax & Sebenius, 1986). Understanding one’s own and the other party’s estimated issues, interests, priorities, and RP will help to identify the range of possible settlement, the zone of possible agreement (hereafter ZOPA), and the range between the negotiators´ reservation points (Lax & Sebenius, 1986; Hames 80 2012). In a single-issue negotiation between a buyer and a seller, the ZOPA (also known as bargaining zone or settlement range, Lewicki et al., 2010) will be between the highest price a buyer is willing to pay and the lowest price a seller is willing to sell for (Thompson et al., 2010). If the ZOPA is positive, that is that the buyer is willing to pay a higher price than the lowest price the seller is willing to sell for, the possibility to create a mutually beneficial agreement can be arrived at. The bargaining zone only tells us whether it is possible for parties to agree, but not if agreement will be reached (Thompson & Fox, 2001). Negotiators are motivated to cooperate with the other party to ensure that an agreement is found by creating a positive bargaining zone (creating value), but they are also motivated to compete with the other party to claim as much of the bargaining surplus for themselves, which illustrates the mix-motive nature of negotiation (Lax & Sebenius, 1986; Thompson, 2009). 2.4.4.4 Goal setting. Tasa, Whyte, and Leonardelli (2013) have, in a recent review on goals and negotiation, concluded that the extant research supports the notion that goal setting is an integral part of successful negotiation preparation and planning, which is in line with the recommendations offered in the textbooks included in this review (e.g. Hames, 2012; Lewicki et al., 2010; Thompson, 2009) as well as the more general research on the relationship between goals and performance (Locke & Latham, 1990). While the evidence on the effect of goal setting on the outcomes negotiated suggests that goals are potentially highly influential, these effects may be positive or negative depending on the type of negotiation, the type of goal, and how these goals are formulated and perceived (Tasa et al., 2013). Consequently, the above suggests that the standard advice to 81 negotiators to set optimistic but realistic goals as part of the negotiation preparation (e.g. Thompson, 2009), needs to be more nuanced in order to reflect the context in which it is offered. According to Locke, Shaw, Saari, and Latham (1981) goals are “what an individual is trying to accomplish; it is the object or aim of an action” (p. 126). Therefore, in negotiation aspirations, objectives, and target points all fit the definition of a goal (Zetik & Stuhlmacher, 2002). Goal setting, although it is part of an iterative process, ideally takes place when the information has been gathered and issues, interests, priorities, and options have been developed (Tasa et al., 2013). Whereas a large body of research has focused on the relationship between goals and performance in the measure of substantive outcomes, other goals related to the subjective outcomes should be equally considered as being part of the negotiation preparation and planning (Hames, 2012; Lewicki et al., 2010). Examples of the substantive goals might include the price or the contribution margin; examples of subjective goals, in turn, might include the development of the agenda and the desired negotiator behaviour at-the-table (process or procedural goals) or the maintaining of the relationship, establishing precedence or determining satisfaction with the outcome. Effective goals are those that are clear, specific, measurable, and challenging but which are still attainable (Locke & Latham, 1990; Mitchell, Thompson, & George-Falvy, 2000; Roloff & Jordan, 1991) and serve many purposes such as: clarifying expectations, determining priorities, and understand which information is missing. Consequently, effective goals guide the tactical choices and behaviour at-the-table (Hames, 2012; Lewicki et al., 2010). All of the sources consulted as part of this literature review include goal setting as part of the recommended preparation and planning in some form. Some authors, for example, Hames (2012) and Lewicki et al. (2010), use the label goal to define the overall objective of the negotiation 82 – what the negotiator wants to accomplish by negotiating – and use the label aspiration level of target point to define the narrower specific goal for each issue. Polzer and Neale (1998) use a similar differentiation when examining the impact of goal scope on negotiation performance, that is, the difference between having one overarching goal versus having sub-goals on each issue. Most authors, however, tend to focus their prescriptive advice on the aspiration level, target points or bargaining objectives which are defined as what one can realistically achieve on each issue (Lewicki et al., 2010; Hames, 2012). 2.4.4.5 Formulation: A summary and propositions. Formulation builds upon the knowledge acquired in the information gathering phase and contains four distinct, consistent, and coherent categories: (1) Issues, Interests, Positions and Priorities, (2) Options, (3) Reservation Points, and (4) Goal Setting. All categories are supported by the totality of the literature selected (Table 3, page 56). Similarly, each of the nine subcategories comprised under formulation are addressed by seven or more of the eight authors. The formulation planning should ideally take place as a process which begins with the issue development and ends with the goal setting in one or more iterations and all four categories are expected to be represented with planning activities in the context of the company. The importance of understanding the customers’ perspective is emphasised in both the academic (e.g. Thompson & Hastie, 1990a; Galinsky & Mussweiler, 2001) and practitioner’s literature (e.g. Fisher & Ertel, 1995; Lempereur & Colson, 2010). Conversely, the fixed-pie error, or “[...] the tendency to assume that the other party places the same importance – or has the same priorities as the self – on the to-be-negotiated issues when the potential for mutually beneficial trades exists” (Thompson & Hastie, 1990a, p. 101), suggest that negotiators spend more time 83 preparing their own perspective. Likewise, Rackham and Carlisle (1978) in one of the few studies investigating the content of the preparation and planning session found that average negotiators spent only 11% of their time anticipating the existence of common ground. In the case of the skilled negotiators, the time invested was 38% in a study. Hence, the proposition for the Formulation activities is: (D for dual concern) Proposition D.1: Negotiators engage in fewer NPP formulation activities from the other side’s perspective than their own. Proposition D.2: Negotiators engage in fewer integrative than distributive NPP activities. The category Issues, Interests, Positions, and Priorities gets support from all authors selected. Negotiation issues are specific components of the negotiation situation (Lax and Sebenius, 1986), these preparation activities are necessary to be able to develop options, reservation points and goals (Tasa et al., 2013). Consequently, the activities are expected to be conducted and conducted primarily in the initial phase of the negotiation. As a result of the criteria for the composition of a team, where each member participates with their expert knowledge in their unique subject matter, it is expected that the activities concerning interests, positions, and on the priorities activities are usually conducted without the team. More formally, the propositions for this category may be stated as follows: Proposition A.2.1: Issues, Interests, Positions, and Priorities NPP activities will commonly be conducted by the negotiators. Proposition T.2.1: Issues, Interests, Positions, and Priorities NPP team activities will primarily be conducted in the initial phase of the negotiation. Proposition L.2.1: Issues, Interests, Positions, and Priorities NPP activities will usually be conducted without the team. 84 The activities bundled under the term Options finds support by all of the authors selected. Option generation is expected to happen throughout the negotiation process as potential solutions may appear at virtually any time during the negotiation (Moore & Woodrow, 2010), such as when either party has dropped some of their goals (Pruitt, 1981). Consequently, it is expected that option development activities will take place throughout the process. To develop options, that will satisfy the needs of all parties, one needs to understand the underlying interests and priorities of all of the stakeholders (Watkins, 2000). To do so in the best possible manner it should be conducted including the knowledge and perspective of the full negotiation team and this group of activities is therefore usually expected to take place as a team activity. Consequently, I predict: Proposition A.2.2: Option NPP activities will commonly be conducted by the negotiators. Proposition T.2.2: Option NPP team activities will be conducted on an ongoing basis throughout the process. Proposition L.2.2: Option NPP activities will usually be conducted as team activities. The Reservation Point (RP) category finds support from all of the authors selected. In the context of seller business negotiations, the reservation point on item level and deal level are expected to be given through a mandate from management and through internal policies and possible deviations are expected to be discussed in advance of the negotiation. The RP’s of the buyer will probably change from customer to customer and from deal to deal, which should encourage negotiators to prepare for the customer’s perspective unless negotiators are affected by the fixed-pie error and, therefore, assume that the other party’s interests and priorities negotiators are similar to their own (Gelfand & Christakopoulou, 1999; Pruitt & Lewis, 1975). Assessing one’s reservation point is a prerequisite to goal setting which, in turn, is a prerequisite to conducting 85 strategy planning activities (Tasa et al., 2013). Consequently, the RP activities are expected to be conducted in the initial phase of the negotiation primarily. Just as in the category of Issues, Interests, Positions, and Priorities, each team member participates with their expert subject matter knowledge and are, hence, expected to prepare the reservation points on issues with colleagues within their area prior to meeting with the negotiation team. Similarly, the reservation point at the deal level is expected to be the sales manager’s responsibility, not the whole team’s responsibility. In sum, the propositions for this category may be stated as follows: Proposition A.2.3: Reservation Points NPP activities will commonly be conducted by the negotiators. Proposition T.2.3: Reservation Points NPP team activities will be conducted in the initial phase of the negotiation process. Proposition L.2.3: Reservation Points NPP activities will usually be conducted without team. As a result of abundant evidence that goals increase performance (Locke & Latham, 1990; Locke et al., 1981), Goal Setting is expected to be a dominant planning activity. Strategy can be defined as the overall plan to accomplish one's goals in a negotiation (Lewicki et al., 2010) and research has found that specific goals are frequently developed prior to negotiation (Putnam, Wilson, & Turner, 1990; Rackham & Carlisle, 1978). Thus, Goal Setting is expected to take place primarily in the initial phase of the negotiation. Moreover, as participative goal setting is suggested to be related to higher performance (Erez, Earley, & Hulin, 1985), it is expected that most preparation activities will be conducted as team activities. Thus, I advance the following proposition: Proposition A.2.4: Goals NPP activities will commonly be conducted by the negotiators. 86 Proposition T.2.4: Goals NPP team activities will be conducted in the initial phase of the process. Proposition L.2.4: Goals NPP activities will usually be conducted as team activities. Having established what the negotiator wants from the negotiation and why, together with the best possible knowledge about the other party and about the situation, the next three themes are concerned with how the goals can be converted into a reality. 2.4.5 Strategy development. According to Mintzberg and Quinn (2003) the definition of strategy is "the pattern or plan that integrates an organization's major goals, policies and action sequences into a cohesive whole" (p. 10), Lewicki et al. (2010) translate this definition into a negotiation context in the following way, “The overall plan to accomplish one's goals in a negotiation and the action sequence that will lead to the accomplishment of those goals” (p. 110). Similarly, Calantone et al. (1998) have stated that, “The negotiation strategy […] refers to the overall game plan that negotiators employ to accomplish their goals” (p. 33). This part is, hence, the last part of the planning where it all comes together in anticipation of the customer negotiation meeting. So far the focus of prescriptive advice has been related to how to plan and to prepare to negotiate the issues of the negotiation. In addition, some authors such as Fells (1996), Lax and Sebenius (2006), Lewicki et al. (2010), and Watkins (2006) for example, stress the importance of orchestration to the process of the deal – how to conduct negotiation processes by taking the contextual and structural elements into consideration. Lax and Sebenius (1986) describe this dimension of the negotiation as setting-the-table, a term that will be used in this dissertation from this point on. When using the term setting-the-table, the “table” may be a virtual table, as most of 87 the customer interactions take place via conference call and videoconference in the context of the customer. Fells (1996), in a personal review on the preparation taken for a negotiation, has made the following statement: While the focus of preparation will inevitably be on the issues being negotiated, giving greater and more specific attention to the process of how the agreement might be achieved will open the way for a better management of the negotiation. This will enhance the effectiveness of the interaction between the parties and enable them to achieve more than otherwise would be possible. (p. 59) Furthermore, agreeing upon how to negotiate can be an important negotiation in itself especially when teams are involved because it enables the negotiators to effectively coordinate and manage the additional challenges (Hames, 2012). Consequently, strategy development contains two primary groups, the strategies and tactics at-the-table and strategies and tactics deployed to set-the-table in order to achieve the goals of the negotiation. The term tactics is applied in this dissertation to define specific, short-term actions that serve to implement the broader negotiation strategy (Lewicki et al. 2010). Two main strategies currently dominate the theorizing of negotiation: integrative strategy, behaviours motivated by concern for one’s own and other’s interests, and distributive strategy, behaviours motivated by concern for their own interests (Pruitt, 1983; Putnam, 1990). Similarly, two classes of models—the dominant strategy (distributive or integrative) and the mixed strategy (distributive and integrative)—capture differences in how the negotiation process is conducted (Putnam, 1990). The central tenet of the dominant strategy model is that the negotiation process is static over time; that is, negotiators consistently use either an integrative or a distributive strategy for the duration of the negotiation (e.g. Pruitt & Lewis, 1975), which is inconsistent with the dominant view of the processes required to resolve mixed-motive tasks (Putnam, 1990). Although 94 Size and composition of the team. A larger team obviously helps to ensure that the necessary knowledge is available to the team, but at the same time increases the complexity in terms of coordination and communication (Cohen & Thompson, 2011; Hames, 2012; Thompson, 2009). The ideal size of the team depends on the skills of its members and the nature of the task (Thompson, 2011), but generally teams should have fewer than ten members and not more than the smallest number of people who are capable of solving the task (Hackman, 1987; Thompson, 2011). Latané (1981) referred to by both Hames (2012) and Thompson (2009) argues that team performance peaks at around four to five members. When composing the team with the right number of members, Thompson (2009) suggests considering three key criteria: Negotiation expertise, technical expertise, and interpersonal skills. Roles and responsibilities Research by Behfar, Peterson, Mannix, and Trochim (2008) suggests that teams should assign roles to members who have relevant task experience rather than assigning them based on convenience or volunteering. Thompson (2009) recommends that teams at least assign the role of timekeeper, process manager, and scribe. Lewicki et al. (2010), furthermore suggest that the spokesperson’s role is to reduce unintentionally revealing information. Alignment of the team The parties to a complex negotiation are rarely monolithic (Halevy, 2008) and parties must often conduct complicated and delicate internal negotiations as part of their effort to create consensus for an upcoming external negotiation (Watkins & Rosen, 1996). 95 Even though team members should be on the same side, research by Brett et al. (2009) has found that negotiation teams often have different interests which makes the team preparation important as teams which have different interests have been shown to lead to less integrative outcomes (Halevy, 2008). Furthermore, team preparation has been suggested to increase team members shared understanding of the underlying interests (Swaab, Postmes, Beest, & Spears, 2007; Swaab et al., 2011). According to Brett et al. (2009): Gaffes made at the bargaining table are usually the result of genuine differences in participants’ negotiation styles, a lack of preparation, or frustration. Although rarely intentional, breakdowns in discipline sabotage a team’s strategy in ways that are almost impossible to recover from. Such breakdowns reveal fissures that the other party eagerly exploits. (p. 107) Consequently, effective teams need to reach agreement between the members on goals, issues, interests, targets, etc. (Hames, 2012). 2.6.6.3 What to negotiate – preparing the agenda. When negotiating, the parties can explicitly or implicitly follow an agenda (Thompson, 2009). Preparing an agenda is valuable because it forces negotiators to consider objectives and positions (Lewicki et al., 2010) and is considered to be one of the most important, structural aspects of any negotiation (Busch & Horstmann, 2002; De Dreu, Giacomantonio, Shalvi, & Sligte, 2009; Pendergast, 1990). Furthermore, planning and controlling the agenda will also allow the negotiator to both create value and to claim value on his or her high priority issues (Thompson, 2009). Research on mixed motive negotiation by Thompson, Mannix, and Bazerman (1988), however, found that fewer integrative agreements were created by groups who used an agenda than groups who did not, due to the agenda forcing negotiators to negotiate issue by issue. Rackham and 96 Carlisle (1978) have also found that the tendency of skilled negotiators to think about the negotiation agenda in a seemingly disorganised rather than linear fashion enabled them to identify more linkages between issues and thus to be more creative during the negotiation itself. Pendergast (1990) proposes five major tactical and strategic topics for negotiators, who have decided to work with an agenda, and which ought to be prepared prior to a negotiation: (1) Scope, (2) sequence, (3) framing, (4), packaging, and (5) formula. x Scope. Which items should be included on the agenda (Salacuse, 2003; Watkins, 2002)? x Sequence. In which order should the items be discussed (Flamini, 2007; Malhotra & Bazerman, 2007; Salacuse, 2003)? In the crescendo approach the topics are addressed in order of increasing difficulty. The decrescendo approach is the inverse method, where the most sensitive item is dealt with at the start (Flamini, 2007; Lempereur & Colson, 2010). x Framing. How should the items be presented to the other party (Lewicki et al., 2010)? x Packaging. Should the agenda follow the common one-by-one issue approach or package the issues as recommended by most authors in this literature review (Bazerman & Neale, 1993; Thompson, 2009)? x Formula. Should the agenda be agreed upon prior to the meeting (Salacuse, 2003)? Does the agenda allow for surprises and topics people would rather not discuss (Salacuse, 2003)? What will the opening stance be (Lewicki et al., 2010)? 97 2.4.6.4 Setting the table: A summary and propositions. Setting-the-table is concerned with how to work together and what to negotiate about (Fortgang et al., 2003; Kolb & Williams, 2001) and negotiators are encouraged to have an impact on the setting of the table both at-the-table and away-from-the-table (Watkins, 2006). The theme is divided into three categories: (1) How to Negotiate, (2) How to Organize the Team, and (3) What to Negotiate – the Agenda. The need to think ahead and to prepare How to Negotiate enjoys the full support of the authors selected and sounds like good advice to follow intuitively, as suggested in more recent books and articles directed towards the field of practitioners (e.g. Lax & Sebenius, 2006). Still, negotiation research on executives reveals that negotiators often ignore how to negotiate (Kolb & Williams, 2001), which corroborates my own experience as a negotiator in team negotiations with the same characteristics as those of the company. Research group dynamics suggests that there is a recognised gap between where groups are headed and where they wanted to be and triggers a redirection of group processes (Jett & George, 2003; Okhuysen & Eisenhardt, 2002). Similarly, in dyadic negotiations, such as the negotiations under study here, temporary impasses have been found to trigger a shift in negotiators’ strategies (Harinck & De Dreu, 2004). Turning points, defined by Druckman and Olekalns (2011) as “events or activities that change the direction of negotiation, usually moving from impasse to progress” (page 2), take the form of clear, self-evident departures from earlier events or patterns during the negotiation process, sometimes appearing rather suddenly, and more gradually at other times (Olekalns and Weingart, 2008; Druckman, 2004). Consequently, it is expected to see increased setting-the-table activities after an impasse or deadlock and prior to turning point in the negotiation. Given the need to work together at the negotiating table, agreeing 98 on the ground rules and on the agenda is expected to be conducted as a team preparation activity, given the need for input from all parties. One would expect the team to be together in the event that an impasse occurs and, therefore, the negotiating team will also need to work together after any impasse to determine how they will manage the next steps in the negotiation. Hence, the propositions for How to Negotiate are: Proposition A.3.1: How to Negotiate NPP activities will commonly be conducted by the negotiators. Proposition T.3.1: How to Negotiate NPP team activities will primarily take place after an impasse or deadlock in the negotiation. Proposition L.3.1: How to Negotiate NPP activities will usually be conducted as team activities. The category of How to Organize the Team obtains support from all of the authors selected. Who should constitute the negotiation team is a key decision for the negotiation team (Watkins, 2000) and roles should be assigned to members who have relevant task experience (Behfar et al., 2008a). Therefore, activities are primarily expected to be conducted before the first rounds of negotiations and during the negotiation, in the event re-alignment, and the redistribution of roles and responsibilities is required (e.g. change of strategy or change in team members). The discussion concerning the alignment of the team is also considered to be an important part of team NPP according to recent research by Brett and colleagues (2009). As a result, the proposition for this category may be stated as follows: Proposition A.3.2: How to Organize the Team NPP activities will commonly be conducted by the negotiators. Proposition T.3.2: How to Organize the Team NPP team activities will primarily be conducted in the initial phase of the negotiation, and if there is a change in the members of the team or in the strategy. 99 Proposition L.3.2: How to Organize the Team NPP activities will usually be conducted as team activities. The activities bundled under the banner of What to Negotiate also finds support by all of the authors selected. Given the important structural aspects of the negotiation agenda (Busch & Horstmann, 2002; De Dreu et al., 2009; Pendergast, 1990), and the need to adapt the agenda from negotiation to negotiation, the activities within this category are expected to be commonly conducted by the negotiators. Discussing the agenda items is expected to be a team activity where each team member will bring their perspective and skills to the table. Similarly to the How to Negotiate category, activities are expected to take place after an impasse to adapt the agenda to the new strategy and to possibly reduce the number of substantive issues, as suggested by Lewicki et al. (2010). Hence, the propositions: Proposition A.3.3: What to Negotiate NPP activities will commonly be conducted by the negotiators. Proposition T.3.3: What to Negotiate NPP team activities will take place primarily after an impasse or deadlock in the negotiation. Proposition L.3.3: What to Negotiate NPP activities will usually be conducted as team activities. Following the Setting-the-Table theme, we will now explore how to prepare and plan for the first of the two main strategies that currently dominate the theorizing of negotiation – the integrative strategy. 2.4.7 Integrative strategy and tactics. Distributive tactics, or value claiming tactics, are used to achieve unilateral concessions from the other party (Pruitt, 1981) and to maximally distribute the resources generated in one's favour (Lax & Sebenius, 1986). Integrative tactics, on the other hand, typically address the 100 underlying interests of one or both parties and contribute to the development of integrative deals (Pruitt, 1981). These tactics, commonly effective when negotiators value issues differently, provide negotiators with the opportunity to trade concessions on less important issues in order to achieve gains on more important issues. Success in integrative negotiation is measured by the degree to which both negotiators accomplish their goals (Lewicki et al., 2010) and the focus in this section is, consequently, on how to prepare for the value creating part of the negotiation. Assessing ones reservation point and target point in addition to estimating the BATNA, reservation point, and targets of the other side, are important distributive tasks within the formulation theme. These tasks, and many others from the Information gathering and Formulation themes, are important to integrative negotiations, but interests and priority remain the primary focus. For this reason integrative negotiation is sometimes called interest-based negotiation (e.g. Menkel-Meadow, 2006). This section is classified into three different categories: (1) Understand the Underlying Interests and Needs, (2) Generate Integrative Solutions, and (3) Legitimacy (Table 5). 101 Table 5. Integrative Strategy and Tactics - Author Citing Overview 2.4.7.1 Understand the underlying interests and needs. As part of the formulation activities issues and their underlying interest were assessed and estimated prior to the face-to-face negotiation. This section is concerned with how to plan the interaction. Three key tactics in relation to the first step in the integrative process permeates the literature and include the practices of, (1) Asking questions about interests and priorities, (2) Sharing information about one’s own interests and priorities, and (3) Unbundling the issues. Asking questions about interests and priorities Thompson (1991) found that negotiators who ask the other party about their preferences are much more likely to reach integrative agreements than negotiators who do not do so. Similarly, planning to ask questions about the opponent's interests was found to enhance learning about the opponent's priorities and thereby facilitate the discovery of integrative agreements (Tutzauer & Roloff, 1988). This finding corroborates the prescriptive advice by Fisher et al. (1991) to probe, in order to understand, the interests and priorities of the other party as well as the advice given by Fisher and Ertel (1995) of testing your assumptions about the other party´s interests and priorities. Asking questions about the interests and priorities of the other party is, furthermore, aligned with refocusing questions suggested by Pruitt and Rubin (1986) (e.g. What issues are higher and lower Authors Activity Category: Support from literature Peterson et al. Thompson Lewicki et al. Hames Raiffa Salacuse Watkins Weiss 4. Integrative Strategy and Tactics 100% √ √ √ √ √ √ √ √ 4.1. Understand the Underlying Interests and Needs 100% √ √ √ √ √ √ √ √ 4.1.1. Ask Questions about I & P 100% √ √ √ √ √ √ √ √ 4.1.2. Share Information about I & P 75% √ √ √ √ √ √ 4.1.3. Unbundle Issues 75% √ √ √ √ √ √ 4.2. Generate Integrative Solutions 88% √ √ √ √ √ √ √ 4.2.1. Methods for Achieving Integrative Agreements 75% √ √ √ √ √ √ 4.2.2. Multiple Equivalent Simultaneous Offers 75% √ √ √ √ √ √ 4.2.3. Using Differences to Create Integrative Agreement 63% √ √ √ √ √ 4.3. Legitimacy 88% √ √ √ √ √ √ √ 102 priority to the other party?) and the advice given by Bazerman and Neale (1993) to ask questions to find the information needed to create integrative agreements. Sharing information about one’s own interests and priorities Research has suggested that sharing interests and priorities increases the likelihood of reaching integrative agreements (Thompson, 1991; Tutzauer & Roloff, 1988) and creates a positive relationship between the parties (Bazerman & Neale, 1993). Sharing information, on the other hand, may also lead the other party to use the information distributively (Neale & Bazerman, 1991). Consequently, negotiations should not consider whether to reveal information, or not, but rather what information they would like to share (Thompson, 1990). Unbundle the issues Unbundling entails separating a single issue into more issues (Lax & Sebenius, 1986; Pruitt, 1981). Research suggests that better agreements are achieved as the number of issues being negotiated increases (Lewicki et al., 2010; Naquin, 2003) which corroborates the advice given by Lax and Sebenius (1986) “where different interests are bundled into a negotiating issue, a good strategy can be to unbundle and seek creative ways to dovetail them” (p. 94). Through the unbundling process the smaller issues can be reprioritized and can form the basis for logrolling or bridging (bridging will be explained in more detail in the following section) (Carnevale, 2006). Unbundling is also known as disaggregation (Hopmann, 1996), fractionation (Fisher, 1964) or unlinking (Pruitt, 1981; Pruitt & Carnevale, 1993). 103 2.4.7.2 Generate integrative solutions. Having a shared understanding of each party´s interests and priorities, ideally, opens up the possibility of inventing options which benefit both parties (Fisher el al., 1991). In this process negotiators must be firm with their primary interests and flexible on how these interests can be met and, thereby, make integrative solutions possible (Fisher et al., 1991; Pruitt & Rubin, 1986). Each party has, presumably, developed options during the preparation and planning phase with the knowledge at hand, but how should the parties engage in capitalizing on the new knowledge acquired in the face-to-face interaction? After interests have been identified, the parties need to work together cooperatively to identify the best ways to meet those interests. Methods for achieving integrative agreements Carnevale (2006) lists eight different, commonly mentioned methods for achieving integrative agreements which range from simple distributive agreements to more complex integrative agreements. Negotiators should consider which methods to use and how to use them as part of their strategic planning. The methods will briefly be described below with references to other authors describing the same methods, although not always under the same label: x Compromise. A compromise is defined as a middle ground on an obvious dimension connecting the party’s initial offers (Pruitt & Carnevale, 1993) and is only included here to serve as a baseline to judge more integrative solutions. x Logrolling. Also known as trade-offs or trading of differences (Lax & Sebenius, 1986), occurs when both parties make concessions on differentially important issues in order to reconcile their interests (Tutzauer & Roloff, 1988; Weingart, Hyder, & Prietula., 1996). When there are differing priorities on issues, one party may concede 110 negotiation will require complementary skills to generate integrative solutions (Behfar et al., 2008a). Therefore, negotiators would probably conduct Generate Integrative Solutions as a team preparation activity. Hence, the propositions for Generate Integrative Solutions are: Proposition A.4.2: Generate Integrative Solutions NPP activities will not commonly be conducted by the negotiators. Proposition T.4.2: Generate Integrative Solutions NPP activities, if conducted, will primarily take place following a distributively dominated phase of the negotiation. Proposition L.4.2: Generate Integrative Solutions NPP activities will usually be conducted as team activities. As for the previous category, Legitimacy finds support from seven of the eight authors selected. Persuasion through legitimacy (e.g. referring to fairness) is expected to take place in the face-to-face negotiation (Sycara, 1990) which is an indication that negotiators understand the persuasive power of legitimacy. For the seller negotiators, who are engaging in similar negotiations on a continuous basis, one should expect them to be familiar with the objective criteria that may be used to justify the solutions suggested. This would suggest that negotiators would not be conducting planning activities for a typical negotiation. Hence, the proposition for the legitimacy activities is: Proposition A.4.3: Legitimacy NPP activities will not commonly be conducted by the negotiators. Having discussed how negotiators are expected to prepare for integrative tactics, we will turn our attention to understanding how to prepare distributive tactics and, thereby, maximize the resources generated in their own favour. 111 2.4.8 Distributive strategy and tactics. The distributive bargaining tactics are applied when the unavoidable distribution of resources, the claiming of the value, takes place (Thompson 2009). The goal in distributive bargaining is to maximize ones share of fixed resources, by settling as close to the other party´s reservation point as possible (Walton & McKersie, 1965), thus the estimations about one’s own and the other party´s position, reservation point and goals are essential (Lewicki et al., 2010). Whether or not one or the other will achieve their goals depends upon the strategies and tactics applied (Walton & McKersie, 1965). The literature on negotiation suggests several task-specific defensive and offensive distributive tactics that can, potentially, influence negotiation outcomes. The textbook recommendations are built up as general recommendations which apply in most kinds of negotiation situations (e.g. Hames, 2012; Thompson, 2009; Lewicki et al., 2010). As discussed previously, complex team-on-team business negotiations are contexts in which negotiations are multi-issue, mixed motive, and iterative. Distributive tactics are, consequently, ideally applied as the last step of the process where the solutions is selected and claiming takes place (Lewicki et al., 2010). Understanding distributive tactics is essential when a negotiator wants to maximize the deal value, but negotiators need to recognize that these tactics, especially the ones deemed to be inappropriate by the other party, can also harm the user´s reputation and jeopardize the relationship between the parties (Hames, 2012). Using thematic analysis (Braun & Clarke, 2006) the preparation and planning for distributive tactics was divided into four distinct categories: (1) Reservation Point and Goals, (2) Positions and Concessions, (3) Develop Arguments and Counterarguments, and (4) Hard-Bargaining Tactics (Table 6). 112 Table 6. Distributive Strategy and Tactics - Author Citing Overview 2.4.8.1 Reservation points and goals. According to the textbooks on negotiation, three important distributive tactics exist in relation to reservation points and goals (Lewicki et al., 2010; Hames, 2012): (1) Validate the other party´s reservation points and goals, (2) Influence the other party´s impression of one’s own reservation points and goals, and (3) Influence the other party´s perception of his or her own reservation point and goals. Each of the three tactics should, accordingly, take part in the negotiator’s planning. Validate the other party´s reservation points and goals. Part of this distributive tactic was covered in the formulation phase (see page 73) where the others party’s BATNA, reservation point and goals were assessed with the information available. The reason for covering these activities under formulation is linked to the definition of strategy as the overall plan to achieve the goals of the negotiation. The aforementioned activities are activities necessary in order to set one’s own negotiation goals and, consequently, do not belong under the strategy development section, but in a previous phase. What should be planned, as part of the negotiation strategy, is how to validate the assumptions made in the formulation phase and thereby Authors Activity Category: Support from literature Peterson et al. Thompson Lewicki et al. Hames Raiffa Salacuse Watkins Weiss 5. Distributive Strategy and Tactics 100% √ √ √ √ √ √ √ √ 5.1. Reservation Points and Goals 75% √ √ √ √ √ √ 5.1.1. Validate of the Other Party´s RPs and Goals 63% √ √ √ √ √ 5.1.2. Influence the Other Party´s Impression of Own RPs and Goals 50% √ √ √ √ 5.1.3. Influence the Other Party´s Perception of his or her Own RPs and Goals 50% √ √ √ √ 5.2. Positions and Concessions 100% √ √ √ √ √ √ √ √ 5.2.1. Opening Offer and Responses to Other Party's Opening Offer 88% √ √ √ √ √ √ √ 5.2.2. Concession Plan 75% √ √ √ √ √ √ 5.2.3. Closing Tactics 38% √ √ √ 5.3. Develop Arguments and Counterarguments 75% √ √ √ √ √ √ 5.4. Hard-Bargaining Tactics 63% √ √ √ √ √ 113 the goals of the negotiation (e.g. by asking distributive questions as suggested by Malhotra and Bazerman, 2007; Hames, 2012; Lewicki et al., 2010). Influence the other party´s impression of one’s own reservation points and goals. To influence the other party´s impression of one’s own reservation points and goals negotiator’s needed to control the information revealed, especially during the initial phase of the negotiation (Lewicki et al., 2010). The use of silence is one way to limit the information revealed to the other parties and to learn about his or her interests and priorities (Hames, 2012; Malhotra & Bazerman, 2007). One cannot keep silent throughout the negotiation, obviously, and the negotiation team, consequently, needs to agree on what information can and cannot be disclosed (Young, Bauman, Chen, & Bastardi, 2011). Other ways to conceal information from the other party include the use of a team spokesperson (Lewicki et al., 2010) and overloading the other party with information as a way of screening important information (Lewicki et al., 2010). Other, more direct, ways to alter the other party´s impression of one’s own reservation point and goals include the use of selective disclosure (Hames, 2012; Lewicki & Robinson, 1998), where the negotiators only use the facts supporting their own case. Selective disclosure, combined with the use of objective standards (as discussed under Integrative tactics, page 99), is especially influential even though the other party may not agree with the argument presented (Lewicki et al., 2010). Influence the other party´s perception of his or her own reservation point and goals. Tactics can also focus on the other party’s alternatives and goals. One way to focus on the other party’s goals is to make the other party perceive his or her alternative to be less attractive by 114 revealing unfavourable information about the competitor representing the alternative (Lax & Sebenius, 1986) or by highlighting possible unforeseen consequences of the requests made by the other party (Ury, 1993). Exhibiting real or feigned emotions is another way to influence the other party, for example by using the tactic known as the flinch (Hames, 2012; Lum, 2011), where the negotiator pretends to be surprised or shocked when the other party presents a fact or proposal. Concealment of information, which could increase the value of the other party’s reservation point, is another way to manipulate the perception of the other party (Lewicki et al., 2010). Lastly, the amount of detail and time devoted to an issue is another way of signalling real or feigned interest and, thereby, influences the other party (Lewicki et al., 2010). All the above tactics may be considered to be unethical by the other party and by some authors, Thompson et al., (2010), for example, cautions against the manipulation of the other party’s reservation point. 2.4.8.2 Positions and concessions. Positions are the primary focus in distributive bargaining which has given rise to the name of the alternative label: positional bargaining (Fisher et al., 1991). In distributive negotiations negotiators adopt a position and try to persuade other sides to give in and to accept it (Hames, 2012). Concessions are central to negotiations and negotiators on both sides enter negotiations expecting concessions from the initial positions of either party (Deutsch, 1958; Hames, 2012; Lewicki et al., 2010; Rubin & Brown, 1975). A series of position and concession tactics are recommended when engaging in distributive negotiation in most of the selected textbooks, some of which negotiators may consider planning ahead for, namely: (1) Opening offer, (2) Concession plan, and (3) Closing tactics. 115 Opening offer (and responses to other party's opening offer) Some lay experts argue that negotiators should let the other party make the opening offer, as it will enable them to learn more about the other party’s expectations before making the first move (Dell & Boswell, 2009; McCormack, 1990). Others, grounded in empirical research, suggest that the party making the first offer will usually secure a better outcome because the first offer acts as a strong anchor in negotiations (Galinsky & Mussweiler, 2001; Gunia, Swaab, Sivanathan, & Galinsky, 2013). When preparing the opening offer the negotiator should consider how aggressive the offer should be. Exaggerated offers have both advantages and disadvantages (e.g. Pruitt, 1981; Tutzauer, 1991). The advantages include making room for concessions and possibly making the other party revise their reservation point in the favour of the party who made the opening offer (Lewicki et al., 2010). The disadvantages of an exaggerated opening offer are that it may make the other party stop the negotiations or might damage the relationship (Lewicki et al., 2010). Negotiators should, in all cases, prepare an opening offer prior to the negotiation, as this will possibly prevent them from being anchored by the other party´s opening offer (Galinsky & Mussweiler, 2001). The tactic of opening first may also be used by the other party as an attack tactic. According to research by Galinsky and Mussweiler (2001), the best defence tactic is then to quickly re-anchor, using the previously planned opening offer, thereby showing a willingness to negotiate and, at the same time, diminish the anchoring effect of the other party´s opening offer. Concession plan Also referred to as concession strategy by Peterson & Shepherd (2010). Concessions are the adjustments in the form of counteroffers negotiators make during the course of the negotiation 116 (Thompson, 2009). Research suggests that negotiators should consider three things as part of the planning when developing concessions: (1) the pattern of concessions (Malhotra & Bazerman, 2007; Yukl, 1974) including the packaging of concessions (e.g. Froman & Cohen, 1970; Neale & Bazerman, 1991), and contingent concessions (Malhotra & Bazerman, 2007), (2) the magnitude of concessions (Hilty & Carnevale, 1993; Malhotra & Bazerman, 2007; Yukl, 1974), and (3) the timing of concessions (Kwon & Weingart, 2004; Mannix & Innami, 1993). Closing tactics Finally, to close the deal a concession is typically used to overcome the final objections and to make the other party accept the terms willingly (Hames, 2012). Closing the deal tactics are included in the section under distributive tactics as closing tactics are often distributive in nature and follow the claiming phase of the negotiation (Hames, 2012). The use of multiple (final) equivalent offers (e.g. Medvec et al., 2005), however, is an exception being an integrative tactic, for the reasons explained. Prior to the closing off of the negotiation, negotiators should not only consider which closing tactics to use but also how to react if these tactics are applied by the other party (Robinson, 1995; Thompson, 2009). Below are the four most common distributive closing tactics: x Compromise. Compromise implies splitting the difference between each of the most recent offers from both sides (Hames, 2012; Lewicki et al., 2010; Thompson, 2009). x Sweetener. Offering a final concession to obtain the close is known as a sweetener (Hames, 2012; Lewicki et al., 2010). 117 x Assume the close. This tactic assumes that the other party is ready to agree and proceeds with detailed discussions as though the agreement exists (Cellich & Jain, 2012; Hames, 2012; Lewicki et al., 2010). x Exploding offers. The tactic of exploding offers uses artificially imposed time limits to close the deal and risks harming the relationship (Hames, 2012; Lewicki et al., 2010; Robinson, 1995). 2.4.8.3 Develop arguments and counterarguments. Arguments and counterarguments planning play a central role in distributive negotiation (Mannix & Innami, 1993) and finds support from six of the eight authors. The primary strategy available to participants in distributive negotiation is persuasion, and underlying persuasion is the careful preparation and planning of arguments (Bacharach & Lawler, 1981; Neale & Northcraft, 1991; Raiffa, 1982). Convincing the other party that the offer is a valuable one and is reasonable is a frequent occurrence during negotiations (Lewicki et al., 2010) and most textbooks suggest supporting concessions and offers with facts (Hames, 2012; Lewicki et al., 2010; Thompson, 2009) and appeal to norms of fairness (Thompson, 2009; Hames, 2012). Negotiators may, furthermore, want to influence the other party´s beliefs to recognize the weakness of his or her own position (Lewicki et al., 2010) and can, thereby, achieve a concession in their favour (also referred to as posturing strategy) (Brett, 2007). The best defensive system against persuasion, including hard-bargaining tactics (covered below) from the other party is, however, the awareness of persuasive tactics and thorough preparation and planning as covered under the formulation theme, that is, knowing one’s own 118 interests, priorities, and reservation point (Hames, 2012; Thompson, 2009). Furthermore, research reveals that one effective way negotiators can protect themselves from being influenced by the other party is to develop arguments in favour of their original position and against it, and then counterarguments to refute both (Lewicki et al., 2010; Pfau, Szabo, Anderson, Morrill, Zubric, & H-Wan, 2001). In addition to the development of arguments and counterarguments, negotiators should also devote time to consider how the message is presented and who should be the source and the receiver (Lewicki et al., 2010). 2.4.8.4 Hard-bargaining tactics. Hard-bargaining tactics, also referred to as dirty tricks (Kolb, 2004) or hardball tactics (Lewicki et al., 2010), are used by distributive negotiators to pressure the other party into taking actions they otherwise would not take (Hames, 2012; Lewicki et al., 2010). When deciding on whether to use these tactics, negotiators evaluate tactics on a continuum of “ethically appropriate” to “ethically inappropriate” (Robison, Lewicki, & Donahue, 2000) and many consider hardball tactics to be inappropriate (Lewicki et al., 2010). One should, however, not make the mistake of thinking that the other party will respond to the same ethical norms as oneself. It is probably for this reason that many popular books on negotiation (e.g. Lum, 2010; Mnookin, Peppet, & Tulumello, 2000), and negotiation textbooks alike (e.g. Hames, 2012; Lewicki et al., 2010), devote attention to understanding the tactics and how to deal with those tactics, although the same authors do not recommend the use of these tactics (e.g. Lewicki et al., 2010; Thompson, 2009). Consequently, negotiators should contemplate (1) How to understand and detect, (2) If and how to apply, and (3) How to counter the hard ball tactics. 119 The different hardball tactics that negotiators should recognize and understand, as suggested in the literature, include among others: good cop-bad cop (Hilty & Carnevale, 1993), the nibble (Cohen, 2006), snow job (Karrass, 1970; Lewicki et al., 2010), bogey (O´Conner & Carnevale, 1997) and commitment (Lax & Sebenius, 1986; Moonkin et al., 2000). The use of intimidation and other aggressive behaviours (e.g. threats and take-it-or-leave-it offers, Moonkin et al., 2000; Lewicki et al., 2010) are other hardball tactics that negotiators use to appear more powerful and, thereby, impose their own positions or attack the other party´s position (Hames, 2012; Lewicki et al., 2010). Finally, hard-bargaining tactics include the misrepresentation and the distortion of information, selective presentation, and bluffing with the purpose of gathering information about the other party or to manipulate the other party´s perception of the deal (Hames, 2012; Lewicki et al., 2010; Moonkin et al., 2000; O´Connor & Carnevale, 1997). According the Lewicki et al. (2010), who primarily build upon the work of Fisher et al. (1991) and Ury (1993), negotiators have at least three options when dealing with hardball tactics: (1) ignore the tactic and pretend nothing has happened, (2) naming the tactic openly to the other party or (3) to respond in kind (reactive countermove). A fourth option, to respond to a hardball tactic, is to discuss the negotiation process itself as discussed under the process category (see page 89) (Kolb, 2004; Lewicki et al., 2010). None of the responses will work in every situation and it is important for the negotiators to take the broader context and the goals of the negotiation into consideration before choosing one response or the other (Lewicki et al., 2010). As an example, the most commonly used option of responding in kind will possibly reinforce the previous move (Kolb, 2004) and could be counterproductive, but it may also be the best answer in some situations (e.g. to exaggerated positions taken by the other party) (Lewicki et al., 2010). 126 Physical arrangements are equally important to negotiators as siting on opposite sides of the table predicts competition contrary to sitting side-by-side (Rubin & Brown, 1975). Other arrangements, such as breakout rooms, food, and drinks should also be considered by negotiators (Lempereur & Colson, 2010; Peterson & Shepherd, 2010). Timing of the negotiation is mentioned by several authors who include preparation considerations such as: duration of the meeting (Lewicki et al., 2010; Salacuse, 2003), scheduled departure time (Salacuse, 2003), when negotiators can call for breaks and internal caucus coffee (Lewicki et al., 2010). 2.4.9.3 Role-play and Rehearsal. Books have been written on role-play (e.g. Van Ments, 1999) and research outside the field of negotiation suggests rehearsing encounters which are confrontational enhances control over emotions and overall performance during encounters which followed (Stutman & Newell, 1990). Moreover, simulated role-playing has already been suggested to be valuable in planning the negotiation strategy in Raiffa’s seminal book The Art and Science of Negotiation (1982). One way that role-playing has been found to generate a better understanding of the other party’s situation, thereby improving communication, is through role reversal (e.g. Johnson, 1971; Shell, 2006), where the negotiator puts him or herself in the shoes of the other party, in a manner of speaking. In addition, Salacuse (2003) encourages negotiation teams to engage in role-play to “anticipate the situations they expect to meet” and Peterson and Lucas (2001) suggest that rehearsing the introduction of demands and concessions are an important preparation activity. In contrast, Fisher and Ertel (1995) caution against rehearsing lines, as this effort may take focus away from preparing their own perspective. 127 Scholars recognize the importance of opening statements, in most legal communication, and research has demonstrated that it is important because it creates a schema or “framework” through which jurors filter the subsequent presentation of evidence (Moore, 1989). Although the opening statement is not formalized in negotiation, the researchers advise negotiators to plan and rehearse an opening statement in any event (Lewicki et al., 2010; Peterson & Shepherd, 2010). 2.4.9.4 Preparation: A summary. Preparation receives little attention in the selected literature and in the negotiation literature in general. The theme consists of three categories: Support Material, Logistical Concerns, and RolePlay and Rehearsal. Although role-play and rehearsal prior to negotiation encounters has been suggested to make the negotiation meeting more efficient (Peterson & Lucas, 2001) the literature selected ignores role-play, almost entirely, as a possible preparation activity. Similarly, and to a greater extent, support material is almost completely overlooked in the literature. In this case the possible reason is clearer as one could expect the support material to be developed as a product of the previous themes. The second category, logistical concerns, receives more scholarly attention and is to be found in seven of the eight primary sources (Table 7). Logistical concerns are closely linked with the procedural negotiation activities covered under the heading of the process. The fact that three sources (Raiffa, 1982; Lewicki et al., 2010; Salacuse, 2003) propose logistical concerns as being part of the procedural activities, suggests that they ought to be moved from Preparation to Strategy development in the Peterson and Lucas framework. Based on the above reasoning, there is little justification to maintain preparation as a theme in its own right. Consequently, as Support Material is not an activity but rather a product of other activities, this category will be excluded from the model. Furthermore, Logistical Concerns will, as 128 suggested by Raiffa (1982), Lewicki and colleagues (2010), and Salacuse (2003), be moved to the category of How to Negotiate (M3.1.1), as a subcategory, including Communication medium described on page 91. Similarly, Role-play and Rehearsal, which includes preparing an opening statement, can be considered to be part of the processual preparation and will also move to How to Negotiate. The How to Negotiate category will now have 4 subcategories, as shown in Table 8. The propositions brought forward under the category remain unchanged. Table 8. How to Negotiate - Author Citing Overview 2.5 Literature review: A summary and propositions. A total of 58 distinct activities categories have been identified in the literature. These are categorised using five broad themes: Information Gathering, Formulation, Setting-the-table, Integrative Strategy and Tactics, and Distributive Strategy and Tactics. These five themes can then be further divided into 18 categories (Table 9), for example, Environmental Context (M1.1) and Positions and Concessions (M5.2). More detailed activities (subcategories) can then be seen in Appendix A (page 284). This comprehensive model of preparation activities provides a preliminary indication of what might constitute good preparation practice. The need for a comprehensive approach to preparation is clear: negotiators must research the context as well as researching the other party; formulate their approach on the subject matter for negotiation; develop a strategy with Authors Activity Category: Support from literature Peterson et al. Thompson Lewicki et al. Hames Raiffa Salacuse Watkins Weiss 3. Setting-the-Table 100% √ √ √ √ √ √ √ √ 3.1. How to Negotiate 100% √ √ √ √ √ √ √ √ 3.1.1. Logistical Concerns 100% √ √ √ √ √ √ √ √ 3.1.2. Participants 38% √ √ √ 3.1.3. Procedural and Ground Rules 75% √ √ √ √ √ √ 3.1.4. Role-Play and Rehearsal 63% √ √ √ √ √ 129 due consideration being given to distributive and integrative approaches and, finally, develop and plan for how to run the process. The review confirmed that the empirically grounded literature on preparation and planning for business negotiations is limited. Furthermore, the large, extant body of research is concerned with the effect of the different face-to-face strategies on the negotiated outcomes is primarily laboratory based with students that either possess some or no working experience and for whom the results of the negotiation has little or no consequences beyond the classroom. Consequently, the elaborated model on negotiation preparation and planning deriving from this literature review offers an opportunity to compare which activities are recommended according to the academic literature and the activities that takes places in business negotiations and, thereby, complement and advance the understanding of how negotiation preparation and planning is being conducted, which is what is sought by researchers (e.g. Weiss 2006b; Peterson & Shepard, 2010). 130 Table 9. Negotiation Preparation and Planning Activities – Recommendations from the Negotiation Literature. Source: Hames (2012); Lewicki et al. (2010); Peterson and Lucas (2001); Peterson and Shepherd (2010); Raiffa (1982); Salacuse (2003); Thompson (2009); Watkins (1996, 1999, 2000, 2002, and 2006); Weiss (1993, 2004, 2006a, and 2006b). The literature review of the recommended activities of good preparation yielded a series of propositions in relation to the primary aim of this research: to understand which activities are undertaken by negotiators to conduct complex business negotiations. The review of the literature on team negotiation, and the context of the company with teams negotiating on both sides of the table made it clear that not only is it of interest to know which activities are conducted, but also by whom they are conducted, whether with or without the negotiation team. The review of the process of the negotiation, in the context of the company with several negotiation rounds and their accompanying preparation and planning, makes it clear that the temporal dimension could yield interesting results. Consequently, within the overall aim of this study, that is, to understand which preparation Authors Activity Category: Support from literature Peterson et al. Thompson Lewicki et al. Hames Raiffa Salacuse Watkins Weiss 1. Information Gathering 100% √ √ √ √ √ √ √ √ 1.1. Environmental Context 50% √ √ √ √ 1.2. Nature of Interaction 100% √ √ √ √ √ √ √ √ 1.3. Negotiation Context 100% √ √ √ √ √ √ √ √ 1.4. The Other Party 100% √ √ √ √ √ √ √ √ 2. Formulation 100% √ √ √ √ √ √ √ √ 2.1. Issues, Interests, Positions and Priorities 100% √ √ √ √ √ √ √ √ 2.2. Options 100% √ √ √ √ √ √ √ √ 2.3. Reservation Points 100% √ √ √ √ √ √ √ √ 2.4. Goals 100% √ √ √ √ √ √ √ √ 3. Setting-the-Table 100% √ √ √ √ √ √ √ √ 3.1. How to Negotiate 100% √ √ √ √ √ √ √ √ 3.2. How to Organize the Team 100% √ √ √ √ √ √ √ √ 3.3. What to Negotiate - Agenda 100% √ √ √ √ √ √ √ √ 4. Integrative Strategy and Tactics 100% √ √ √ √ √ √ √ √ 4.1. Understand the Underlying Interests and Needs 100% √ √ √ √ √ √ √ √ 4.2. Generate Integrative Solutions 88% √ √ √ √ √ √ √ 4.3. Legitimacy 88% √ √ √ √ √ √ √ 5. Distributive Strategy and Tactics 100% √ √ √ √ √ √ √ √ 5.1. Reservation Points and Goals 75% √ √ √ √ √ √ 5.2. Positions and Concessions 100% √ √ √ √ √ √ √ √ 5.3. Develop Arguments and Counterarguments 75% √ √ √ √ √ √ 131 activities are undertaken in order to conduct a complex business negotiation, the research questions and their underlying propositions that emerged from the literature review are as follows: Research Question 1: Which preparation activities are undertaken to conduct a complex business negotiation? Which category activities are commonly conducted? (Activity propositions per category as summarized in Table 10, below). Negotiators engage in fewer NPP formulation activities from the other side’s perspective than their own. (Proposition D.1). Negotiators engage in fewer integrative than distributive NPP activities (Proposition D.2) Research Question 2: Who undertakes the preparation and planning activities? (Level propositions per category as summarized in Table 10, below). Research Question 3: When do preparation and planning activities occur in teams? When in the process will the activities primarily occur in teams? (Temporal propositions per category as summarized in Table 10, below) Preparation and planning team activities will be conducted with a higher frequency in the initial phase of the negotiation than compared to the later ones (Proposition F.1). Distributive team preparation and planning activities will dominate in the Initial phase of the negotiation (Proposition F.2.a). Integrative team preparation and planning activities will dominate in the later phases (Proposition F.2.b). Activity, level, and temporal propositions were developed for all 18 categories as summarized in in Table 10 (see Appendix B, page 286, for an overview of the propositions in full length). 132 Table 10. Overview of Activity, Level and Temporal Propositions Note: Categories with no temporal or level proposition are termed N/A. Having outlined the research questions and propositions, as well as the literature review necessary to build the model of recommended activities of negotiation preparation and planning at length, we will now turn to the method chapter which will describe the steps required in addressing the research questions and propositions presented here. Activity Category: Support from literature Which category activities are commonly conducted Activity Propositions Who undertakes the preparation and planning activities Level Propositions When in the process will the activities primarily occur in teams Temporal propositions 1. Information Gathering 100% 1.1. Environmental Context 50% No N/A N/A 1.2. Nature of Interaction 100% No N/A N/A 1.3. Negotiation Context 100% Yes Without team Initially 1.4. The Other Party 100% Yes Without team Ongoing 2. Formulation 100% 2.1. Issues, Interests, Positions and Priorities 100% Yes Without team Initially 2.2. Options 100% Yes Team Ongoing 2.3. Reservation Points 100% Yes Without team Initially 2.4. Goals 100% Yes Team Initially 3. Setting-the-Table 100% 3.1. How to Negotiate 100% Yes Team After Impasse 3.2. How to Organize the Team 100% Yes Team Initially 3.3. What to Negotiate - Agenda 100% Yes Team After Impasse 4. Integrative Strategy and Tactics 100% 4.1. Understand the Underlying Interests and Needs 100% Yes Team Initially 4.2. Generate Integrative Solutions 88% No Team After distrib. phase 4.3. Legitimacy 88% No N/A N/A 5. Distributive Strategy and Tactics 100% 5.1. Reservation Points and Goals 75% Yes Team Initially 5.2. Positions and Concessions 100% Yes Team Initially 5.3. Develop Arguments and Counterarguments 75% No Team Initially 5.4. Hard-Bargaining Tactics 63% Yes Team Initially 133 3. Research Methodology Negotiation research, much of which uses student populations in experimental designs (Buelens et al., 2008), will often seek to have relevance for managerial processes. This dissertation complements experimental studies as it makes its contributions on the basis of data derived from negotiators engaged in business negotiations and, thereby, contributes to the limited portion of negotiation research conducted outside university laboratories (Buelens et al., 2008; Pruitt, 2011). The reliance of this research on practitioner data shapes the methodology that I have adopted. This chapter begins by presenting my philosophical standpoint, followed by the presentation of my research design, and a discussion of the consequences of doing empirical research in a closed setting. This is followed by an explanation of the two methods of inquiry chosen: open-ended survey and case study, including the data collection and analysis applied. 3.1 Philosophical standpoint The research design has been highly influenced, whether consciously or unconsciously, by the philosophical standpoint on which any given study is based. The appropriateness of a particular philosophical standpoint is defined by the specific research objectives, as well as by the researcher’s own philosophical assumptions about the nature of the world (ontological foundation), as well as by the possible ways of acquiring knowledge about it (epistemological foundation) (Orlikowski & Baroudi, 1991). According to Orlikowski and Baroudi (1991), “Social processes can be usefully studied with an interpretive perspective, which is explicitly designed to capture complex, dynamic, social phenomena that are both context and time dependent” (p. 18). Interpretive methods of research start 134 from the position that our knowledge of reality, including the domain of human action, is a social construction by human actors and this also extends as far as the researcher examining the phenomenon. Thus, there is no objective reality which can be discovered by researchers and replicated by others (Walsham, 1993). Access to negotiators and their negotiation preparation activities within a large global industrial company provided an opportunity to investigate the complex social processes which are characteristic of negotiation (Schneider & Honeyman, 2006). Furthermore, the role of the researcher in interpretive studies is active and engaging (Walsham, 1995), which was in keeping with the expectations of the company. Reflecting on my own predispositions, I do believe that there is a physical world out there; however, this physical world does not “have an independent, objective and ‘true’ expression” (Kjærgaard 2004, p. 41). Rather, my position is that our knowledge of reality is a social construction by human actors (Walsham, 2006). Consequently, in accordance with my own ontological and epistemological predispositions and appropriate to the research topic and goal, this study uses interpretivism as the philosophical standpoint from which to construct knowledge. 3.2 Research design In most cases the research into what negotiators do does not extend into an exploration of how they actually prepare to do it (e.g. Peterson & Shepherd, 2010; Roloff & Jordan, 1991). The lack of literature describing which preparation activities are undertaken in conducting a complex business negotiation calls for a descriptive and explorative approach. Consequently, and to fulfil these research aspirations, I have employed a strategy which has substantiated the exploratory and descriptive nature of this interpretive research. 135 This dissertation relies primarily on qualitative data collected through various methods of inquiry within the company combined with a thorough literature review, which is consistent with the interpretive research approach (Creswell, Clark, Gutmann, & Hanson, 2003). The research methodology described in this chapter was designed to answer the research questions formulated below, as well as the propositions developed during the literature review, that is: Research Question 1: Which preparation activities are undertaken to conduct a complex business negotiation? Research Question 2: Who undertakes the preparation and planning activities? Research Question 3: When do preparation and planning activities occur in teams? The literature review contributes to the process of understanding the research phenomenon through the synthesis of previously documented studies (Mathiassen, 2002) as well as to the development and illustration of the most appropriate concepts (Webster & Watson, 2002). In this case, the literature review served to identify gaps in the literature which allowed for the advancement of the propositions summarized on page 128, and to identify and categorize more than 50 activities, which were recommended as part of the preparation process. The resulting NPP activity model served as a data collection device throughout the empirical part of the study. The primary means of developing an understanding of a problem, however, is through engaging with the interpretation of practice (Mathiassen, 2002). This requires either that data be collected about a phenomenon in its real life settings, and later interpreted using concepts that usually emerge from the literature, or that might emerge from the data itself. Open-ended survey responses are extremely useful in helping to explain or to gain insight into organizational issues 142 in this explorative study (e.g. Schuman & Presser, 1979). Firstly, the need to discover the responses that individuals give spontaneously and secondly the desire to avoid the bias that may result from suggesting responses to individuals (Reja, Manfreda, Hlebec, & Vehovar, 2003). Consequently, I adopted and open-ended survey approach, which still would allow the respondents to speak aloud and candidly about their experiences. On the basis of 68 open-ended surveys from negotiators within the company, the study embraced a rigorous thematic analysis within the interpretive paradigm (Braun & Clarke, 2006) in order to: (1) generate a comprehensive self-reported model describing which activities negotiators undertake when preparing for a customer negotiation, and (2) to understand who usually conducts these activities (with or without team). 3.4.1 Survey data collection. The practitioners were purposively selected according to two firm inclusion criteria (Creswell & Clark, 2007; Kemper, Stringfield & Teddlie, 2003). Firstly, they must continuously participate in negotiation preparation and planning within the company (though not necessarily be present at the negotiation itself) and secondly, they must have successfully completed the internal two-day negotiation training which was taught by me. This ensured that all the respondents were cognisant of the basic terms, principles, and activities of good negotiation preparation and which allowed for a better understanding of their self-reported answers to be given. Experience in negotiation preparation does not necessarily mean that the respondent knows the customer, only that they continuously participate in negotiation preparation. At the time the survey was launched, the company was going through a period of a high degree of uncertainty, primarily due to the prediction that there would be upcoming layoffs. This 143 context underlined, and possibly aggravated, the issues of honesty and the willingness to respond (DeMaio, 1984; Jones & Pittman, 1982; Nederhof, 1985). The remedy chosen was to emphasise the fact that the survey was confidential and for academic purposes exclusively. Furthermore, I used a non-company e-mail address to submit the survey in addition to eliminating the company’s name throughout the survey. Moreover, I spoke to and privately e-mailed more than 50 of the potential respondents after the survey’s launch with the purpose of increasing both the number of surveys completed and their quality. An important element of timing concerns the knowledge, perception or experience we wish to measure with our survey (Druckman, 2005). The experiences that were sought out in this survey occur on a continuous basis and are not related to any one single event, but this is not so for the negotiation skills as the training took place only once, which led me to launch the survey as soon as my sample size reached over 100 individuals. Still, it is important to identify a period in which the respondents were more amenable to collaborate (Druckman, 2005), and for this reason the survey was launched on April 11th, 2012 - following the closing of the first financial quarter and in the middle of the week, where the respondents were expected to experience less work pressure. At the time of the survey’s launch all respondents had received the negotiation training within the previous 14 months. The final number of complete surveys was 68 out of 101, far above the defined minimum of 50. The length of the respondents’ answers to the 13 open-ended questions ranged from between 78 to 900 words, with an average of 370 and a standard deviation of 203. The 68 respondents who completed surveys were functionally distributed with 35 (51%) from sales, 15 (22%) from service, 12 (18%) from legal contracting, and six from other areas (9%). 50 of the respondents were 144 working in the south region (the Mediterranean and South and Central America) and 18 in the north region (UK, Denmark, and Sweden). Ten (15%) of the respondents were female; 58 (85%) were male. All of the participants had a Batchelor degree or Master’s degree in engineering, law, business or comparable. The 33 participants who did not fully complete the survey and, hence, were not included in the analysis were representative of the sample in so much as they belonged to all four functional groups and both geographical areas. 3.4.2 Survey development. The purpose of the survey was to make the respondents speak aloud and candidly about their experiences, which meant that the questions needed to be open-ended questions. No questions relating to age, gender, education, seniority, etc., were asked as the configuration of the survey using www.surveyXact.com and the access to the company employee database gave me the identification of the respondent and, thereby, to all relevant non-confidential, personal information. The survey questions were developed with the explorative nature of the study, the research questions and propositions in mind and after I had been privy to extensive preparation meetings and customer negotiation observations at the company for a period of over 15 months. The initial questionnaire was reviewed by four people from the company who all qualify as having extensive experience with negotiation preparation and planning (two from sales, one from legal, and one from another department). On the basis of their inputs the survey was amended where it was deemed appropriate. As a concluding pilot test the survey, in its final web format, was sent to two sales managers of the company and one negotiation academic, and minor amendments were made. The survey questions used to collect survey data, to respond to research questions one and two, amounted to a total of four open-ended questions (Appendix C on page 287, shows a 145 simplified paper version of the survey questionnaire which include questions not used for this analysis as they were not related to the final research questions): Q1: How and what do you typically Prepare and Plan for your negotiations? - Individually (working on your own)? Q2: How and what do you typically Prepare and Plan for your negotiations? - With colleagues or external consultants (not necessarily part of the negotiation team)? Q3: How and what do you typically Prepare and Plan for your negotiations? - With the entire negotiation team (2 or more persons)? Q11: If you use any tools (worksheets, checklists, Company tools...) as part of you Prenegotiation Preparation and planning; if so why did you use them? Please also briefly describe the key figures of the tools you used. In the answers to Q11, some respondents specifically mention the activities undertaken individually, among others or with the team to questions other than those which addressed that specific topic in their answers. In order to get a more complete picture, then, these quotations have been added to the quotations from Q1, Q2, and Q3 respectively. The new larger dataset for activities is labelled Q1’ for individual activities, Q2’ for activities done with others, and Q3’ for activities undertaken with the team. The collective data from Q1’, Q2’ and Q3’ will be used to answer the first research question: Which preparation activities are undertaken to conduct a complex business negotiation. The remaining research question, When do preparation and planning activities occur in teams, can only be answered with longitudinal data and will, hence, rely on the case study observation as its only data source (see page 150, later in this chapter). 146 3.4.3 Survey coding and data analysis. The analysis of collected data is influenced by pre-existing theories and models that drive the entire research project (Mason, 2002), but also the by the researchers’ own inclusive and focus on interpreting what the data is telling him (Braun & Clarke, 2006). Consequently the task of analysis, rather than exclusively adapting to theoretical frameworks, calls for a method that allows for both deductive and inductive coding. Thematic analysis was chosen as it presents a good fit to my data sources and to my research questions through its capacity both to generate salient themes and categories and allows for both deductive and inductive coding. Thematic analysis is a method for identifying, analysing, and reporting patterns (themes) within data. It minimally organizes and describes the data set in rich detail. However, it frequently goes further than this and serves to interpret various aspects of the research topic (Boyatzis, 1998). The development of the themes themselves involved interpretive work and produced not just a descriptive analysis but, instead, a theorized analysis (Braun & Clarke, 2006). Computer Assisted Qualitative Data AnalysiS (CAQDAS) tool ATLAS.ti was used to manage the survey data, for code generation, and to support the thematic analysis through various data queries which applied Boolean and proximity operators (Friese, 2012; Saldaña, 2009). There are six phases in thematic analysis (Braun & Clarke, 2006) as shown in Table 11. 147 Table 11. Phases of Thematic Analysis Source: Braun and Clarke (2006). After the first reading of the survey material, and prior to commencing the initial coding generation, a series of deductive codes deriving from the work of Peterson and Lucas (2001) and from dual concern theory (e.g. Blake & Mouton, 1962; Carnevale & Pruitt, 1992; Pruitt & Rubin; Thomas, 1992) were introduced as free codes and served as my sensitizing devices (Blumer, 1954; Patton, 2001). The data was primarily inductively coded, apart from the deductive codes mentioned, and was undertaken with a view to applying both descriptive coding (Saldaña, 2009; Miles & Huberman, 1994) and in-vivo coding (Saldaña, 2009; Charmaz, 2006). This coding process was already factored into the analysis (Miles & Huberman, 1994) as the data was organized into meaningful groups (Tuckett, 2005). The focus lay on giving full and equal attention to the full data set for the purposes of identifying aspects which could form the basis for categories and themes in the subsequent steps of the analysis (Braun & Clarke, 2006). Recognizing that qualitative analysis guidelines should allow for flexibility (Patton, 2002) phases 3, 4, and 5 (Table 11) were conducted more as a recursive process (Braun & Clarke, 2006) and involved moving back and forth between the phases. During the second cycle process the codes 148 were likewise amended, merged, and generated as part of the cyclical coding process (Saldaña, 2009). Focused coding was used to derive the most salient themes (Charmaz, 2006) as this type of coding is a way to extend the thematic analysis, which is recommended (Saldaña, 2009). In addition CAQDAS programs like ATLAS.ti lend themselves very well to focused coding since they simultaneously enable coding, category construction, and analytic memo-writing (Saldaña, 2009) and they help to systematise and order the data which enables for a more thorough and reliable analysis to be constructed (Ghauri, 2009). The thematic analysis described above (phases 1 to 5) was first applied to the survey data which created codes and themes in relation to the research questions. Secondly, thematic analysis was used to create the list of negotiation preparation activities according to the recommendations in the literature (Table 9, page 130. Full overview Appendix A, page 284). The list from the survey and the list from the literature review were, consequently, compared and this created a comprehensive model and avoided the use of idiosyncratic terms and definitions (Yin, 2009). The results of the thematic analysis for both research questions were reported as frequency tables, cross-tabulations, or correlations, as is typically the case with thematic analysis (Jackson & Trochim, 2002). To avoid overrepresented or underrepresented counts, I followed Kraut’s suggestion (1996) to calculate occurrences on the basis of the number of respondents rather than on the number of comments. The respondents had the opportunity to write an unlimited number of activities in response to any question, but each respondent was only counted once within each theme, category, and subcategory. Therefore, if some respondents mention activities in more than one subcategory, within the same category, the sum of respondents in the subcategories will exceed the number of total respondents in that category (Friese, 2012). 149 MacQueen, McLellan-Lemal, Bartholow, and Milstein (2008) found that the use of a structured codebook fosters a reflexive approach which serves to verify whether, how, and why, one piece of text is similar or different to another. Consequently, to increase the reliability and validity of this study where the coding was conducted by a single researcher (Seidel & Kelle, 1995), an exhaustive codebook was developed with the purpose of maintaining consistency throughout the coding process by defining when and when not to use a specific code (Saldaña, 2009). The process of developing the codebook, the term for a coding manual used by several researchers (Braun & Clarke, 2006; Seidel & Kelle, 1995; Weingart, Thompson, Bazerman, & Carroll, 1990), was complex and dynamic guided by the simple and stable structure proposed by MacQueen et al., (2008). MacQueen’s structure includes: (1) a definition of the activity, (2) inclusion criteria, (3) exclusion criteria, and (4) a contextual example. An extract of the codebook is included in Table 12 (Full codebook in Appendix D on page 287). Table 12. Extract from the Codebook It was expected that the open-ended design of the survey would harbour fewer responses in each activity than when compared to a closed-ended survey (e.g. respondents may simply forget some activities or not consider an activity to be relevant) as a trade-off for the rich descriptive Activity Category: Definition Inclusion criteria Exclusion criteria Contextual examples 1.4. The Other Party 1.4.1. Understand the Customer Organization The customer organization excluding the team and the individuals. Decision-making criteria and process, culture, constituents, financial health, shared/joint history of the parties. Customer intelligence. Pipeline, the customer team, the individual negotiators. "I collect the background information with customer if exists, if not then I make a quick web research of customer´s profile and activities." 1.4.2. Understand the Negotiation Team The customer negotiation team and its constituents. The members, team constituents, team interests, preferences and priorities, history of team style, strategy and tactics. Customer organization, the individual negotiators. "Who from the client is coming to the negotiation, and what are their roles, preferences and position in the buying centre." 1.4.3. Understand the Individual Negotiators The individual negotiator and his or her constituents. The Individual Negotiators interests, needs, priorities, preferences, negotiation styles and other influential conditions. Customer organization, the negotiation team. "I spend a lot of time analysing the buying centre to find out how to meet all the participants, and best identify their needs (incl. individual needs)." 150 responses sought after in this explorative study. In light of this, the criterion for an activity being counted as commonly performed was set lower. For this study, a minimum of 15% of the respondents (ten or more) must report the activity under the relevant questions in order for it to count as being commonly cited (Research question 1, Activity propositions). A category is considered as usually conducted, with or without the team, when 50% or more of the total respondents in the given category cite it (Research questions 1, Level propositions). With this definition, and following Weiss (1993), an activity can usually be conducted both without and with the team. By means of the survey data, we are able to answer the propositions of research questions one and two. However, the temporal propositions in relation to research question 3 require data generated over time. We, therefore, turn to the final method of data collection, the case study. 3.5 Case study According to Yin to conduct a case study is to make an “empirical inquiry that investigates a contemporary phenomenon in depth and within its real-life context, especially when the boundaries between phenomenon and context are not clearly evident” (2009, p. 18). Hence, this case study will enable me to obtain a thorough understanding of real-life negotiation preparation and its encompassing activities and, thereby, create context dependent knowledge (Flyvbjerg, 2006). Whereas the self-reported answers from the survey are most likely subject to social desirability (DeMaio, 1984; Nederhof, 1985; Thomas & Kilmann, 1975) and other biases. The case study’s observations will allow for the understanding of a real-life phenomenon and its pertinent contextual conditions (Yin, 2009) and will add the temporal dimension to understand at what point 151 in the negotiation process activities are conducted in the negotiation team, which was not captured through the survey. The case study is focused on a specific event while the survey reflects a general experience. Still, because the case is representative of the ongoing seller negotiations (see below) it also serves to complement the survey findings as a secondary purpose. Activities, possibly forgotten or not considered relevant by respondents of the survey, may be observed or identified through other secondary sources (e.g. e-mails). This contributes to, and most likely expands upon, the preparation activities identified through the analysis of the survey data. In summary, the case study enables me to understand when and by whom activities are conducted. In addition, it will serve as a validation check of the survey analysis’ findings. 3.5.1 Site and case selection. The decision to focus on an exploratory single case study makes the case selection central. Four criterions were identified: (1) the case should be representative (Farquhar, 2012), (2) critical (Flyvbjerg, 2006), (3) have the potential to become longitudinal (Yin, 2009), and (4) participants and management should be supportive of the research. The rationale for the choice of case was to identify a negotiation case that would be representative for the industry, with the purpose of capturing circumstances and conditions of a typical negotiation (Yin, 2009). According to Flyvbjerg (2006) various strategies of case selection are not necessarily mutually exclusive and may provide a unique wealth of information as one adopts various perspectives and conclusions on the case according to whether it is viewed and interpreted as one or other type of case. With this in mind another selection criterion was added, the critical case criterion that would allow me to make the logical deduction: If this is (not) part of the preparation for this negotiation, then it applies to all 254 Table 31. When in the process will the activities occur in teams – Preand Post-Meetings – No. of Observations and Normalized Relative Frequency. The table shows there is a similar relative frequency in the preand post-meetings in the first four themes (Information Gathering, Formulation and Setting-the-Table, and Integrative Strategy and Tactics) even though the majority of occurrences took place in the pre-meetings (73 vs. 42); 61% vs. 39% relative frequency). The Distributive Strategy and Tactics activities, however, are almost entirely conducted in the pre-meetings (16 vs. 2 occurrences), and primarily stem from the preparation of Arguments (9) and Hard-Bargaining considerations (6). Carnevale and Lawler (1986) found that negotiators who had an individualistic orientation produced greater competitiveness, reduced information exchange, and had firm negotiator aspirations when under time pressure. Druckman (1994) also found that constrained time impacted Activity Category: Observation: Total no. of observed occasions of the activity Pre-meeting Observations Pre-meeting Relative frequency Post-meeting Observations Post-meeting Relative frequency 1. Information Gathering 29 16 52% 13 48% 1.1. Environmental Context 00 0 1.2. Nature of Interaction 000 1.3. Negotiation Context 13 6 43% 7 57% 1.4. The Other Party 17 11 62% 6 38% 2. Formulation 38 22 55% 16 45% 2.1. Issues, Interests, Positions and Priorities 20 12 57% 8 43% 2.2 Options 8 3 35% 5 65% 2.3 Reservation Points 11 7 61% 4 39% 2.4. Goals 1 1 100% 0 0% 3. Setting-the-Table 35 20 54% 15 46% 3.1. How to negotiate 17 6 33% 11 67% 3.2. How to organize the team 13 11 83% 2 17% 3.3. What to Negotiate - Agenda 5 3 57% 2 43% 4. Integrative Strategy and Tactics 9 5 53% 4 47% 4.1. Understand the underlying interests and needs 4 3 73% 1 27% 4.2. Generate integrative solutions 5 2 37% 3 63% 4.3. Legitimacy 000%00% 5. Distributive Strategy and Tactics 18 16 88% 2 12% 5.1. Reservation point and goals 2 2 100% 0 0% 5.2. Positions and concessions 1 1 100% 0 0% 5.3 Develop arguments and counterarguments 9 9 100% 0 0% 5.4. Hard-bargaining tactics 8 6 73% 2 27% ALL THEMES 115 73 61% 42 39% Observed time planning and preparing [% of total] 100% 53% 53% 47% 47% Observed time planning and preparing [hh:mm:ss] 12:23:00 6:33:00 6:33:00 5:50:00 5:50:00 255 strategic choice and hindered the development of integrative agreements. Similarly, studies by De Dreu (2003) revealed that negotiators under time pressure were less motivated to process information systematically and were less likely to question the fixed-pie perception during negotiation, which leads to the assumption that the negotiation does not have an integrative potential and must be successfully completed with distributive bargaining (Donohue & Taylor, 2007). The pre-meetings are typically conducted only minutes or a few hours before the customer meetings and are of a short duration (average 23 min, maximum 45) and, therefore, a situation in which the negotiators have little time to engage in careful processing as a result of the deadline created by the upcoming customer meetings. When under time pressure, negotiators often fall back on positional bargaining and so, one might hypothesize, that the temporal constraints can in part explain why the negotiators are more distributively oriented in the pre-meeting, compared to the post-meetings. If this hypothesis is confirmed, the practical implication would then be that the seller team should ensure sufficient pre-meeting time, thereby improving the quality of the integrative agreements. Still with the majority of the Setting-the-Table activities conducted in the pre-meetings (54% vs. 46%) there are a considerable number of activities that take place during the postmeetings. How to Organize the Team, typically Alignment of the Team right before entering into the customer negotiation, is almost exclusively done in the pre-meeting (11 vs. 2). On the other hand, some of these activities take place primarily during the post-meeting, most notably How to Negotiate (M3.1) with 11 observations in the post-meeting and only six in the pre-meetings. More specifically, discussing who should Participate (M3.1.2) and the Procedural and Ground Rules (M3.1.3) almost exclusively occurred in the post meetings with six and five occurrences in the post- 256 meetings vs. two and zero occurrences in the pre-meetings respectively. In addition, all 11 of the Participants and Procedural and Ground Rules activities were observed in the Open Issue phase after an impasse. It makes sense to focus intuitively on the process in a post-meeting, rather than in a pre-meeting imminently before the customer meeting, as many of the levers by which to change to process are no longer available at the time of the pre-meeting (e.g. participants). Still, as mentioned previously, the process moves (such as changing participants or venue) and should not only be considered after an impasse, but more proactively throughout the process. Moreover, one reason for the extended use of the post-meetings as a preparation meeting generally may stem from the convenience of logistics as the team is already gathered (physically, by video, by phone…). Furthermore, in today’s business world of crowded calendars the postmeetings save the often tedious exercise of scheduling (Janicik & Bartel, 2003) and allow for speedy progress by agreeing on what to do in the shortest possible time frame. The importance of these meetings, coupled with the feeling of being emotionally charged even after venting frustrations, suggests the need for careful management with special focus on how to handle the overall process of the customer negotiation. In summary, this temporal finding contributes to our understanding of preparation by suggesting that preparation occurs after as well as before a meeting with the other party and has, therefore, been termed pre-preparation and post-preparation. Furthermore, the temporal findings suggest that, their being time poor and faced with logistical problems notwithstanding, negotiators regard post meetings as being important. These meetings are not used for reflections, as suggested in the literature, but rather as preparation for the next meeting; particularly, tasking who should participate and does what in the upcoming negotiation round. The short period invested in both pre- 257 and post-meetings suggests that negotiators may be foregoing opportunities to develop more integrative approaches in the remainder of that negotiation. 7.3.2. The internal use of collaborative technology during customer negotiations The behavioural technique of going to the balcony (Ury, 1993) or taking a time-out is widely known as a method by which to cool-off and to avoid reacting to one’s own immediate natural impulses and emotions (Brett, 2007; Hames, 2012; Luecke, 2003; Hillesøe & Jensen, 2009; Thompson, 2014). Moreover, a pause in the negotiation can also serve as an opportunity to assess the situation and adjust the strategic plan accordingly (Lempereur & Colson, 2010). During longer negotiations these break-outs may happen more naturally, for example at lunch time, or by the end of the day, as happened during the case study on various occasions. Interruptions can similarly be called for when one of the teams feels the need to hold an internal caucus, which might be perceived by the other party as being a signal of weakness to be exploited unless the team has an established, non-verbal communication sign in place (Behfar et al., 2008a). This study uncovered an alternative way of going to the balcony not describe above and not found in the literature reviewed. During the customer negotiations, the seller’s negotiation team consistently used instant messaging (in the industry it is customary to negotiate with your computer in front of you, thereby making the use of IM possible during face-to-face and teleconference meetings). The participants in the group chat not only included the direct seller participants but also sales management as well as internal specialists on occasions. In addition to agreeing upon the point at which to call for an internal caucus, the internal chat room served many other purposes, as exemplified in the quotation below by the Head of Sales during a post-meeting. 258 Mais ce qui est très important c’est effectivement ce petit outil (Group Chat / Group Instant Messaging) qui permet vraiment d’être en phase, de qui prend le relais quand, quand est-ce qu’on arrête le sujet, quand est-ce qu’on arrête l’émotionnel, quand estce qu’on reprend sur le factuel, vraiment pour améliorer l’efficacité de ce qu’on attend de ce genre de réunion. Et les trois personnes étant assez informées sur les détails du contenu de ce à quoi on doit arriver, je trouve que la préparation d’une telle réunion qui se fait toujours en deux étapes: en amont, avec le petit call toi tu fais ça, ça et ça ; et pendant la réunion, quelque part pour réorienter, réorganiser ou appuyer ce qu’un collaborateur va expliquer… (Head of sales, post-meeting, document P88-15:05)3 In other words the Head of Sales perceived an improvement in customer meeting efficiency as a result of the use of group chat during the customer negotiation. He mentions several reasons for this improvement, such as alignment (“en phase”), by using the chat room to define who does what, when, and how. Furthermore, he perceived an improvement in meeting efficiency due to the fact that the chat room allowed for the reassessment of the situation and the strategic plan. Consequently, the Seller’s Head of Sales saw this use of technology as a way to convert the team reflection, which would take place during a break, into a reflection in real-time which is similar to the concept of reflection-in-action (i.e. reflection in the midst of action) developed by Schön (1983, 1987) in the area of reflective practice. There are numerous examples, from the internal chat log during the customer negotiation, that support the view that the chat room was used for both alignment and a reassessment of the situation: SSS: On le laisse parler de ce point ou on l'aborde nous? 3 English translation: But this little tool (Group Chat) is actually very important because it really allows you to do things in phases: who takes over when, when will we stop discussing this or that subject, when is it that emotions are running high, when can we return to the matter at hand which really improves the effectiveness of what is expected of us at these meetings. Even with three people who are sufficiently informed about the details of the content of what is going to happen, I still find that the preparation for such a meeting is always done in two stages: first, which calls you makeyou do this, you do that, and later on, during the meeting where you can reorient, reorganize, or support what a collaborator will need to explain ... (Head of sales, post -meeting, Document P88-15:05 min). 259 SLN: On le laisse parler de ce point-. (Customer negotiation, sales lead negotiator, case study protocol, chat log, January 2012)4 Dis à SHS de poser juste une question: quid de la date de signature? Quel est ton avis? (Customer negotiation, sales lead negotiator, case study protocol, chat log, January 2012)5 The first example demonstrates how service sales (SSS) consults with the sales Lead Negotiator (SLN) on how to proceed (alignment) and the second example is an illustration of distributive strategic concession planning, in which the Lead Negotiator consults with the team regarding their opinion (SHS – Head of Sales). Furthermore, and not mentioned in the survey, the case study reveals the chat room to be something which is used on various occasions to give feedback in relation to the strategic plan of the meeting and to give, and seek, individual feedback. Super, il s'approprie l'agenda. (Customer negotiation, sales lead negotiator, case study protocol, chat log, January, 2012)6 Any feedback? (Customer negotiation, sales lead negotiator, case study protocol, chat log, January, 2012) Finally, examples of re-setting-the-table, or shaping the game in the terminology of Watkins (2006), were identified in the chat room logs: SLN: “Dis à SHS de poser juste une question: quid de la date de signature? Quel est ton avis? (Customer negotiation, sales lead negotiator, Case Study Protocol, Chat log January, 2012)7 4 English translation: SSS – Should we let him talk about this or should we do it? SLN – We let him talk about it - 5 English translation: Tell SHS to ask just one question: what about the date of the signature? What do you reckon? What do you think about that? 6 English translation: Great. He has taken ownership of the agenda 7 English translation: Tell SHS to ask just one question: what about the date of the signature? What do you reckon? What do you think about that? 260 Here the Lead Negotiator questions whether the team should call in the Head of Sales (who was on stand-by in the building) to pose critical questions to the customer, thereby making a 3-D move (Lax & Sebenius, 2006) or game changing move (Watkins, 2006) by adding a participant of superior status from the seller’s organization. Another example of the use of collaborative technology to align the seller team was the screen sharing facility in the chat room, on which the note taker (in this negotiation the Lead negotiator) shared his internal minutes of meeting with the rest of the team (e.g. case study protocol, page 41). The use of chat rooms was limited to the duration of the customer negotiations and not used as a medium for NPP in the periods between customer meetings. The use of chat rooms as a way to perform real time preparation and planning was not an aspect that appeared from the literature review, maybe as a result of the arrival upon the scene of various new technologies, and was thus an unanticipated finding. A broader review of the academic literature showed the same result, although Brett (2007) reports an interview in which the team leader of a buying team used a closed chat room during a conference call negotiation. The team leader expressed with certainty that “this electronically enhanced process had given his team a strategic advantage” (Brett, 2007, p. 20). The team leader's perception supports the statement by the SHS in the case study and confirms that the practice of using internal chat rooms during buyerseller negotiations is not limited to the company under study. On the other hand, the other party may perceive that seller negotiation team is communicating away-from-the-table which may have a negative influence on their feeling about the relationship. Consequently, understanding how the use of internal chat rooms contributes to a negotiation’s effectiveness in different contexts looks like a promising avenue of research of interest to academics and practitioners alike. 261 7.3.3 Executive and sales management influence on the preparation and planning. In this study, executive and sales management was found to have an influence on how the team prepared and planned for negotiations. Firstly, the findings suggest that executive participation in the preparation and planning meetings leads to more individual preparation prior to the meetings. Secondly, the findings indicate that the presence of sales management significantly prolongs the duration of preand post-negotiation meetings. For clarification and simply put, sales management leads the local sales force within a given mandate set by the executives within each function. According to the SNL, he spent one day of individual preparation for the preparation and planning meeting with the participation of the Regional Head of Sales and the Regional Head of Service (both executives and members of the regional management), prior to an upcoming customer meeting: Yesterday I spent the whole day preparing the negotiation. I have informed them (the regional head of sales and the regional head of service) about the context of the project, description of the customer organization providing updated strategic account plan and curriculum of the actors. I think that all of this preparation helped us in order to be more efficient and we have avoided mistakes, such as contradictions in front of the customer. 1 day of preparation for 1 day of negotiation. Hard to do, but very beneficial in the end. (Survey, P1, Q4) The information prepared by the SLN gave the regional heads an insight into all of the elements of the Information Gathering activities, included under Negotiation Context and The Other Party. This was the first time during the case study where such a structured and comprehensive approach was taken. Furthermore, this was the only time for which an agenda existed for an internal meeting (e-mail 4/12/2012) and is possibly the best example of increased investment in individual preparation for the preparation and planning meeting as a result of the presence of management. 262 This finding is consistent with the impression management theory which refers to the process by which individuals attempt to control the impression others form about them (Leary & Kowalski, 1990) and the self-monitoring theory (Snyder, 1974) which predicts that people who closely monitor themselves can be thought of as social pragmatists who project images in an attempt to impress others and to receive positive feedback. The data from the case study demonstrates that the average duration of the preand postmeetings is almost doubled when sales management is participating (26:25 min vs. 13:44). This pattern is reproduced in both the pre-meetings (28:57 min vs. 12:56 min) and post-meetings (23:37 min vs. 14:30 min). The expected explanation for this significant difference in the meeting duration can, as in the case with executive participation described above, be found in impression management theory (Leary & Kowalski, 1990). The data from the case study does not, however, support the notion that sales management participation in the preparation and planning meetings leads to more activities being conducted. Analysing the number of activities conducted in meetings with sales management gives a slightly higher frequency in post meetings (One activity every 6:55 min vs. every 7:09 min) and a slightly lower frequency in pre-meetings (one activity every 5:18 min vs. every 4:36 min) compared to meetings without the management. Similarly, reviewing the activities generated by the different negotiators does not suggest that management is instrumental in creating NPP activities. What the data shows is that the Lead Negotiator covers all but one activity during his chairing of the negotiation and that sales management has a strong participation in terms of NPP activities compared to service and legal. The sales management individual is the only participant who raises activities not already done by the Lead Negotiator (e.g. Generating Integrative Solutions, 263 by suggesting the use of differences between the parties to create an integrative agreement, Postmeeting, P87). Other findings do point to the importance of sales management to NPP effectiveness, as sales management interventions had a lasting impact on the negotiation process. One example is the introduction of weekly meetings with the customer and the creation of a shared open issue log. This strategic sales management intervention to redirect the process, first suggested in the preparation and later proposed to the customer, served as a turning point in the negotiation which may have helped the parties to reach an agreement (Druckman, Olekalns, & Smith, 2009; Druckman & Olekalns, 2011). In summary, the case study gives an indication that the presence of executives may increase the time invested in individual negotiation preparation and planning and that the presence of sales management in preparation and planning meetings increases their duration. Both of these findings are consistent with impression management theory. Sales management may also have influence in positively affecting the outcome of the negotiation by proposing NPP activates which have not been proposed by other participants, such as moves to redirect the process. Having finished the final part of the findings’ analysis and discussion, we will now turn to the final chapter of this dissertation, the overall discussion. 270 Finally, it should be noted that the negotiators really only focused on the task of How to Negotiate once they had experienced a deadlock. This finding about preparation is consistent with findings by other researchers’ observations (e.g. Kolb & Williams, 2001) of actual negotiations, in which the negotiators do not address process issues until after an impasse. This suggests, perhaps, that based on their past experience the negotiators in the study had presumed how the negotiations would unfold and only paid attention to this aspect once they realised that the negotiations had not progressed as anticipated. 8.2 Theoretical implications. In this section I discuss how this study, and the findings derived therefrom, contribute to our understanding of the task of preparing and planning for a complex business negotiation. 8.2.1 Developing a model of good preparation and planning, according to the literature. Preparation and planning for negotiations has been written about widely as it is regarded as an essential first step in negotiation. However this literature is diverse, being written from different perspectives and with different negotiation contexts in mind, and it can prove a challenge to any researcher or practitioner to distil the essence of the literature. To this end, the work of eight purposefully selected authors, all scholars in the field of negotiation, were scrutinized to distil 58 recommended preparation and planning activities. The five broad themes of preparation: Information Gathering, Formulation, Setting-the-table, Integrative Strategy and Tactics, and Distributive Strategy and Tactics, divided into 18 categories is sufficiently comprehensive to provide a preliminary indication of what might constitute good preparation practice. The need for a comprehensive approach to preparation is clear: negotiators must research the context as well as 271 researching the other party; formulate their approach on the subject matter for negotiation; develop a strategy with due consideration being given to distributive and integrative approaches and, finally, to develop and plan for how to run the process. By developing a comprehensive and clearly structured checklist of preparation activities this study has provided a framework for further research into the practices of negotiators. The checklist provides structure for the analysis both of the broad aspects of preparation, such as the relative emphasis on distributive or integrative preparation activity and of more detailed investigation of particular preparation tasks, such as the way in which negotiators develop their reservation points. As the study progressed, it became apparent that a checklist of activities approach was going to be insufficient to capture and portray the different dimensions of preparation that were emerging through the analysis of the data. The core checklist remains the foundation of the “what” of preparation, and the NePPA model (Fig 32) encapsulates this, but also presents the “who” and the “when” aspects more clearly. The NePPA model served as a data collection device throughout the empirical part of the study but could also serve as a framework to extend our knowledge of the manner in which negotiators confront preparation and planning, both in experimental and naturalistic research. 8.2.2 Identifying the “who” and the “when” of preparation and planning. The findings of the study, as summarised in Table 32, reveal some aspects of preparation that are not readily apparent in a checklist format. These include the individual/team dimensions and the temporal one. Only on a few occasions, did the literature review uncover recommendations concerning who should conduct the activities (e.g. goal setting was found to be recommend as team 272 effort), so the study makes a contribution by providing additional information on this aspect of the preparation process. In doing so, it indicates the need for future research in the area. The study revealed a temporal aspect to preparation, an aspect that has three dimensions that lead to a cyclical rather than static perspective on preparation. The first dimension is that preparation occurs throughout the duration of the negotiation, not only, as is often inferred, before. To operationalize this aspect of when preparation activities occur, the summary of the extant research by Fells (2012), allowed for the process to be divided into three phases: (1) Positioning, (2) Flexibility, and (3) Repositioning, which has been applied. Again, few recommendations can be found in the literature concerning this specific point, which serves as a reminder of the need for future research. The second temporal finding of the study that contributes to our understanding of preparation is that preparation occurs after, as well as before, a meeting with the other party. This has been termed pre-preparation and post-preparation. The third new temporal aspect of preparation is that negotiators were found to prepare while at the negotiation table; they communicated amongst themselves electronically to discuss the next moves they should make. New technologies make available a means by which to prepare in real time an actual possibility where previously this would have been done in an adjournment or intuitively, rather than in a prepared manner. This at-the-table preparation completes the continuous cycle of preparation activity: individual preparation, leading to pre-preparation team meeting prior to a meeting with the other party, at-the-table preparation; a post-preparation meeting, and then further work by individuals in anticipation of the next pre-preparation meeting. 273 8.2.3 Method contribution. The decision concerning how to collect data is critical for any researcher and this study demonstrates the benefits of utilising complementary methods; in this case, a case study to supplement an open-ended survey. Surveys provide rich data and are relatively easy to administer. Direct observation of negotiations is more difficult to undertake, with challenges of access, proper recording of events and, subsequently, the generalizability of any findings from the case. However, in this study, participant observation, undertaken while at the company, confirmed that negotiators undertook activities that were not reported in the survey. Had this study relied on data from openended surveys solely, then two categories (How to Negotiate and Hard-Bargaining Tactics) would not have been included as categories conducted by the negotiators. Similarly, two categories (Goal Setting and Positions and Concessions) which emerged from the survey did not appear in the case study’s data. Self-reported answers to surveys and interviews have been found to be influenced by social desirability (DeMaio, 1984; Nederhof, 1985; Podsakoff, MacKenzie, Lee, & Podsakoff., 2003) and, thereby, exaggerate the behaviour which is desired by the research project so that undesirable behaviour can be underestimate in the answers. Furthermore, research on socially desirable responses suggests that the motivation to be normatively appropriate produces the desire to perform impression management (e.g. Lalwani, Shavitt, & Johnson 2006; Paulhus, 1998). Thus, impression management in responding to surveys refers to favourable self-presentations which are designed to maintain a positive and normative image (Paulhus, 1998; Schlenker & Britt, 1999), which may explain why Hard-Bargaining Tactics were not mentioned in the survey. 274 Assuming that the negotiators have an interest in showing that they do many activities as part of their negotiation preparation and planning, the argument above would not explain why the survey failed to capture other key activities. The gap between the results obtained from the survey and the case study is more likely to exist because negotiators are simply unaware of some of the activities they perform when conducting NPP. Furthermore, they may be both cognitively limited in remembering all of what they do and limited in the time that they allocate to answering the survey. Consequently, respondents may be affected by anchoring effects (Eisenhower, Mathiowetz, & Morganstein, 1991), availability heuristics (Tversky & Kahneman, 1974), and other heuristics when responding to the survey and, thereby, might generate answers that only partly answer the research question(s) sought. The experience of this study suggests that when the aim of a research project is to understand intra-organizational phenomenon, then the researchers would benefit from using both open-ended survey and participant observation as the combination generates more comprehensive answers than either of the methods by themselves. 8.3 Practical implications for negotiators. The empirical foundation for this study has involved practitioner experiences drawn from a business negotiation context and the practical implications of the findings are important both to negotiators and their managers. The study has identified a number of aspects of preparation that can usefully be considered by negotiators who find themselves having to manage the challenge of complexity yet also constraints on their time – the typical business negotiator! The first implication for negotiators is that they should regard preparation as a continuous cyclical process (Figure 9). While negotiators could use the NePPA model as a diagnostic tool to 275 guide their preparation and planning activities, the complexity of the model might inhibit them from doing so. The Preparation Cycle model offers a more dynamic perspective to guide negotiators: viewing preparation as cyclical rather than linear will help embed the practice of preparing after meetings with the other party as well as before them. As part of the on-going nature of preparation, negotiators should also explore the use of instant messaging as a means of at-the-table preparation of moves during the meeting with the other party. Figure 9: The Negotiation Preparation and Planning Cycle. To the extent that the negotiators of this study might be considered to be typical, then another practical approach to improving one’s negotiation preparation would be to focus on 276 activities that the research here suggests that business negotiators typically do not do. There are five activities in particular which are recommended in the literature, but which are not conducted, and so should receive more attention from negotiators: 1. Negotiators should give more attention to how they set their goals. Goal setting for the deal as a whole and for individual issues is an integral part of successful negotiation preparation and planning and should be conducted collectively as well as individually and throughout the negotiation. Goal setting should not be confused with developing reservation points or the negotiation mandate given by management. 2. Negotiators should prepare to manage the process. Rather than wait until negotiations reach an impasse negotiators should proactively prepare process moves both individually and in the negotiation team throughout the negotiation, giving careful consideration to how the next session might unfold, including what to do if they do not go as anticipated. 3. Negotiators should collectively agree on their agenda prior to meeting the other party. Giving explicit consideration to their agenda will guard against individual negotiators (e.g. sales or legal) coming to the meeting thinking that their particular area of concern is the critical one. 4. Negotiators should develop a questioning perspective. It was noted that the negotiators did not appear to assess interest and priorities of the other party, nor did they develop legitimacy arguments, nor did they test their own assumptions. One technique to address this would be to develop a questioning perspective in their team discussions, which would also lead to developing questions that can then be used to direct the conversation when meeting the other party. 5. Devote more time to preparation. The implication of the previous points is that negotiators do not allocate enough time to the task of preparation. To enable this, the negotiation lead should ensure that his or her team block out sufficient time before and after the time scheduled for meeting with the other party. This may, for example, mean planning to stay an extra night rather than taking the first available flight once a meeting is finished. Senior managers should periodically actively involve themselves in the preparation process. While it is appropriate for them to delegate the negotiation task to the team, the findings of this study suggests that their participation in preparation meetings does increase the time negotiators engage in the preparation task. 277 Taking these five recommendations together will help negotiators prepare and plan more effectively for forthcoming negotiations. A further implication of these recommendations is that there is a role for the lead negotiator to ensure that this happens. This suggests that the lead negotiator should manage the preparation process with the same diligence that they would apply in the meeting with the other party. 8.4 Overall strengths and weaknesses of the study. A number of features contribute to the strength of this study. First, although the task of preparation is recognised as an important aspect of negotiation by academics and professional negotiators alike, it has been under-researched. This study addresses that deficiency through its access to, and analysis of, practitioner data. Furthermore, the study is one of only a few investigations about negotiators in a non-experimental setting, thereby opening up to the generation of more in-depth data (Dwyer & Buckle, 2009). It makes a particular contribution by providing insights into the business context of negotiation which has previously received less attention than, for example, international and interpersonal negotiations. Despite the literature on preparation being extensive, the qualitative and longitudinal nature of the study enabled new insights to be uncovered, such as the importance of preparation after a negotiation meeting and the distributive orientation for the preparation and planning in the initial phase of the negotiation. These new insights offer new perspectives on the preparation for negotiation, a field of study in need of diversity to ensure further scholarly development (Buelens et al., 2008). A further strength of the study is its methodology which employed multiple methods of inquiry. This allowed for a more thorough understanding of the complex nature of preparation and 278 planning as it occurs in an organizational setting. In so doing, it provides an example for other researchers investigating complex behavioural and organisational topics Finally, the case study is revelatory as the researcher was offered the possibility to investigate a phenomenon previously inaccessible to scholarship (Farquhar, 2012; Flyvbjerg, 2006; Yin, 2009), making the use of the explorative single case study particularly appropriate (Meredith, 1998). The findings in this study are subject to a number of limitations, which emphasises the need for future research. Firstly, the investigation was conducted in a single company setting, which restricted the sample to both industry and negotiation contexts (Patton, 2001) and which may, possibly, have limited the generalizability of the findings to similar organizational contexts exclusively (Piercy, Cravens, Lane, & Vorhies, 2006). It is, therefore, not possible to be assured of the degree to which the findings have been influenced by elements which are unique to the company under study (e.g. its corporate culture). Although a single company research design provides the possibility to control for contextual effects, such as negotiation context and industry, the limitations mentioned above emphasise the need for future research, possibly by applying a multiple-company research design. Moreover, the research design uses a single case study which increases the vulnerability of the findings compared to a multiple case design (Yin, 2009). The study was unable to follow the negotiation until the final contract was signed, due to the entry of a third party into the negotiation and the consequent change of negotiation team. This may have prevented the observation of some negotiation activities which would have been expected to take place, such as the development of an opening offer. With regard to the analysis of the data, data coding and the identification of categories were conducted by only one person, though the 279 analysis was discussed with the research supervisor. Single researcher coding, although mitigated by the development of a thorough codebook, does not allow for testing inter-rater reliability and, thereby possibly, rigour as claimed by some qualitative researchers (Armstrong et al., 1997; Morse, 1997). It is probable that negotiators did make an extra effort in their preparation and planning as a result of the importance given to the research by senior management. Their possible reactions, such as when completing the survey, could be consistent with impression management (Leary & Kowalski, 1990) and self-monitoring theory (Snyder, 1974) and might possibly inflate the findings in terms of activities. Moreover, although steps were taken to mitigate the potential difficulties, the researcher’s dual-role of acting as a researcher and advisor may have resulted in the negotiators who participated in the longitudinal case study, developing additional preparation and planning skills over time, compared to the negotiators who did not participate in the research study. Nevertheless, without this senior management support and researcher/advisor role, it would not have been possible to undertake the research at all. 8.5 Suggestions for future research. Many suggestions for further research have already been posited in the previous sections, in particular the need to replicate the present study through more case studies to enhance our understanding of how negotiators prepare and plan for business negotiations. The NePPA model, presented previously, offers one framework for researchers to test and refine. A further broad question, that still needs to be answered, relates to the effectiveness of the various negotiation activities – which of the range of activities make the greatest contribution to the quality of the 286 Appendix B – Full Overview of Activity, Level and Temporal Propositions Activity Category: Which category activities are commonly conducted Activity Propositions Who undertakes the preparation and planning activities Level Propositions When in the process will the activities primarily occur in teams Temporal propositions 1. Information Gathering 1.1. Environmental Context Environmental Context activities will not be conducted by the company negotiators. N/A N/A 1.2. Nature of Interaction The Nature of the Interaction activities will not be conducted by the company negotiators. N/A N/A 1.3. Negotiation Context Negotiation Context NPP activities will commonly be conducted by the negotiators. Negotiation Context NPP activities will usually be conducted without the team. Negotiation Context team NPP activities will primarily be conducted in the initial phase of the negotiation. 1.4. The Other Party The Other Party NPP activities will commonly be conducted by the negotiators. The Other Party preparation NPP activities will usually be conducted without the team. The Other Party team NPP activities take place on an ongoing basis from start to finish. 2. Formulation 2.1. Issues, Interests, Positions and Priorities Issues, Interests, Positions, and Priorities NPP activities will commonly be conducted by the negotiators. Issues, Interests, Positions, and Priorities NPP activities will usually be conducted without the team. Issues, Interests, Positions, and Priorities NPP team activities will primarily be conducted in the initial phase of the negotiation. 2.2. Options Option NPP activities will commonly be conducted by the negotiators. Option NPP activities will usually be conducted as team activities. Option NPP team activities will be conducted on an ongoing basis throughout the process. 2.3. Reservation Points Reservation Points NPP activities will commonly be conducted by the negotiators. Reservation Points NPP activities will usually be conducted without team. Reservation Points NPP team activities will be conducted in the initial phase of the negotiation process. 2.4. Goals Goals NPP activities will commonly be conducted by the negotiators. Goals NPP activities will usually be conducted as team activities. Goals NPP team activities will be conducted in the initial phase of the process. 3. Setting-the-Table 3.1. How to Negotiate How to Negotiate NPP activities will commonly be conducted by the negotiators. How to Negotiate NPP activities will usually be conducted as team activities. How to Negotiate NPP team activities will primarily take place after an impasse or deadlock in the negotiation. 3.2. How to Organize the Team How to Organize the Team NPP activities will commonly be conducted by the negotiators. How to Organize the Team NPP activities will usually be conducted as team activities. How to Organize the Team NPP team activities will primarily be conducted in the initial phase of the negotiation, and if there is a change in the members of the team or in the strategy 3.3. What to Negotiate - Agenda What to Negotiate NPP activities will commonly be conducted by the negotiators. What to Negotiate NPP activities will usually be conducted as team activities. What to Negotiate NPP team activities will take place primarily after an impasse or deadlock in the negotiation. 4. Integrative Strategy and Tactics 4.1. Understand the Underlying Interests and Needs Understand the Underlying Interests and Needs NPP activities will commonly be conducted by the negotiators. Understand the Underlying Interests and Needs NPP activities will usually be conducted as team activities. Understand the Underlying Interests and Needs team NPP activities will primarily be conducted in the initial phase of the negotiation. 4.2. Generate Integrative Solutions Generate Integrative Solutions NPP activities will not commonly be conducted by the negotiators. Generate Integrative Solutions NPP activities will usually be conducted as team activities. Generate Integrative Solutions NPP activities, if conducted, will primarily take place following a distributively dominated phase of the negotiation 4.3. Legitimacy Legitimacy NPP activities will not commonly be conducted by the negotiators. N/A N/A 5. Distributive Strategy and Tactics 5.1. Reservation Points and Goals Reservation Points and Goals NPP activities will commonly be conducted by the negotiators. Reservation Points and Goals NPP activities will usually be conducted as team activities. Reservation Points and Goals NPP team activities will be conducted in the initial phase of the process. 5.2. Positions and Concessions Positions and Concessions NPP activities will commonly be conducted by the negotiators. Positions and Concessions NPP activities will usually be conducted as team activities. Positions and Concessions NPP team activities will be conducted in the initial phase of the process. 5.3. Develop Arguments and Counterarguments Develop Arguments and Counterarguments NPP activities will not commonly be conducted by the negotiators. Develop Arguments and Counterarguments NPP activities, if conducted, will usually be conducted as team activities Develop Arguments and Counterarguments NPP activities, if conducted, will primarily be conducted in the initial phase of the negotiation. 5.4. Hard-Bargaining Tactics Hard-Bargaining Tactics NPP activities will commonly be conducted by the negotiators. Hard-Bargaining Tactics NPP activities will usually be conducted as team activities. Hard-Bargaining Tactics NPP team activities will primarily be conducted in the initial phase of the negotiation. 287 Appendix C – Open-ended survey (simplified paper version) 288 289 290 Appendix D – NePPA Codebook Activity Category: Definition Inclusion criteria Exclusion criteria Contextual examples 1. Information Gathering 1.1. Environmental Context 1.1.1. Economic Macro economic factors and market and industry conditions. Interest rates, inflation levels and market wages. Available external funding, banking system, insurance, market attractiveness, state of energy supply and demand. Specific banks, IRR, NPV, and interest rate for the project. "In another project in Brazil we sat down with insurance brokers and banks before we went to the customer." 1.1.2. Political Governmental policies and business-government relationships. Governmental subsidy schemes, import barriers, local contents requirement. Internal customer political issues. "We needed to have a view on Argentina tax legislation and market situation." 1.1.3. Institutional-legal Legal and institutional environment. National contractual design, IP rights, litigation rules, law enforcement, tax rules, customs. Deal contractual design. "I sat down with lawyers and banks in the country before we seated with the customer." 1.1.4. Cultural National culture. National ideology, national culture, ethical environment and dominant languages. Company, team and individual negotiator culture. "Careful and detailed strategies for all difficult aspects of the negotiation: cross cultural guidance…" 1.2. Nature of Interaction In the context of the company the Nature of the Negotiation is constant and consequently not coded. 1.2.1. Negotiation Nature Characteristics of the negotiation. Exchange or dispute situations, Single-issue or Multiissue negotiation, Necessity or opportunity negotiation, multi-round negotiation or single round. Aspects related to environmental context. N/A 1.2.2. Industry Conventions and Norms Industry conventions and norms for how to negotiate deals. Individual or teams negotiation, public or private negotiation, official contracts or handshakes, number of offers made before reaching an agreement, which party makes the first offer, ratification required? Aspects related to environmental context. N/A 1.3. Negotiation Context 1.3.1. Scope of the Negotiation The characteristics of the negotiation Scope of supply, financial structure, the parties, partners, project schedule/definition/profile, contractual structure, PPA, permits. Information about the parties (organizations and people) , customer pipeline. "Understand project details and peculiarities as regards to permitting, energy production, financing etc." 1.3.2. Future Relationship The long-term relationship with the customer. Project pipeline, future/potential/long-term business/projects/orders/revenue/opportunity/profit/S oW, customer, attractiveness. Linked negotiations, past agreements, track-record. "Potential pipe of projects they could have on top of the one negotiated." 1.3.3. Linkage and Precedence Parallel, future and past negotiations linked to the present negotiation. Past/parallel/future deals/negotiations/agreements/business. Both with the customer and others (precedence). Future deals not linked to the present negotiation. Customer intelligence. Shared/joint history. "...preparing a synthesis of the current commercial conditions, comparing with historical conditions with the same customer." 1.3.4. Competitive Alternatives The alternatives for the customer for the given project Competitors, competition, names of the competition Only the customers alternatives not the seller. "Deep analysis of competitor's positioning in the deal." 1.3.5. Resources and constraints Contextual constraints and resources for both parties. Information, expertise, alternatives, skills, materials, money, time and procedures. Mandate, authority, deal-breaker, limits. "Argue about why the time/resources available for pursuing the sale is insufficient!" 1.3.6. Own Constituents The constituents of the buyer affected by the negotiation Corporate/Group/DK/Denmark/HQ, suppliers, partners, media, manager, boss, superior, departments and individuals of the buying organization not directly involved in the negotiation (e.g. finance, R&D). Customer stakeholders. "Involving people at Group, as they will be the final approvers, also save time when the final review process comes." 1.4. The Other Party 1.4.1. Understand the Customer Organization The customer organization excluding the team and the individuals. Decision-making criteria and process, culture, constituents, financial health, shared/joint history of the parties. Customer intelligence. Pipeline, the customer team, the individual negotiators. "I collect the background information with customer if exists, if not then I make a quick web research of customer´s profile and activities." 1.4.2. Understand the Negotiation Team The customer negotiation team and its constituents. The members, team constituents, team interests, preferences and priorities, history of team style, strategy and tactics. Customer organization, the individual negotiators. "Who from the client is coming to the negotiation, and what are their roles, preferences and position in the buying centre." 1.4.3. Understand the Individual Negotiators The individual negotiator and his or her constituents. The Individual Negotiators interests, needs, priorities, preferences, negotiation styles and other influential conditions. Customer organization, the negotiation team. "I spend a lot of time analysing the buying centre to find out how to meet all the participants, and best identify their needs (incl. individual needs)." NePPA Codebook (MacQueen, McLellan-Lemal, Bartholow, & Milstein, 2008:121; Saldaña, 2009:21) 291 Activity Category: Definition Inclusion criteria Exclusion criteria Contextual examples 2. Formulation All categories in this theme has sub-categories with customer and seller perspectives. Only coded as customer if customer/other side/other party/they /them/opponent/ is specifically mentioned. 2.1. Issues, Interests, Positions and Priorities 2.1.1. Issues and interests Issues are what one wants in the negotiation and interests are why we negotiate Issues: topics, agenda items, (discussion/key) points, list, items, components, dimensions of the negotiation. Interests: Motivations, expectations, needs, desires, fears. Positions and demands. "Go through all the open issues and try to understand their needs and position on them." 2.1.2. Positions The demands and offers a party makes during a negotiation. Position, demand, requirements, input, request, query, whish. Interests, priorities, target, aim, objective. "...Work on our position on all these topics and anticipate the other company's position on these topics." 2.1.3. Priorities Understanding the order of priority of the issues. Priority, preference, principal, valuable, important, key, fundamental, vital, crucial, primary, chief, main. Positions, demands and interests. "Prepare open questions for discovering the priorities and values for the Customer instead of proposing an already detailed solutions." 2.2. Options 2.2.1. Options - Issues Possible solutions to individual issues of a negotiation. Issue: Solution, alternative, scenario, quotation, offer, answer, possibility, opportunity. BATNA, no-agreement alternative, alternatives outside the negotiation. Deal solutions or options. "Read contracts and annexes, ask colleagues who participated about how special issues were solved or what they would do." 2.2.2. Options - Deal Possible solutions to a negotiation. Deal: Solution, alternative, scenario, quotation, offer, answer, possibility, opportunity. BATNA, no-agreement alternative, alternatives outside the negotiation. Issue solutions or options. "Prepare different scenarios taking into account expectations from customer and our expectations." 2.3. Reservation Points 2.3.1. RP - Issues The negotiator’s subjectively determined bottom line on a specific issue. Issue: Resistance point, reservation price, bottom line, limit, walk-away point, mandate, deal-breaker, authority, threshold, non-negotiable, fall-back, BATNA (when used incorrectly). Deal RP, options, target, goal. "Identify potential deal breakers." 2.3.2. RP - Deal The negotiator’s subjectively determined bottom line for the deal. Deal: Resistance point, reservation price, bottom line, limit, walk-away point, mandate, deal-breaker, authority, threshold, non-negotiable, fall-back, exit strategy, contribution margin (CM), BATNA (when used incorrectly). Issue RP, options, target, goal. "…Defining limits of our offer(not being able to go deeper). This include of course a good knowledge of market conditions and potential other alternatives for the customer..." 2.4. Goals 2.4.1. Goals - Issues The aim of the negotiation in relation to a specific issue. Issue objective/target/aim/aspiration/expectation/ambition/w ish/hope. Overall objective/goal/aim of the negotiation. Opening offer, position, BATNA, limit, reservation point (RP). "Colleagues managing the daily work with that customer can give you some feelings and expectations coming from previous experiences with the customer." Goals Issues Issues 2.4.2. Goals - Deal The overall aim of the negotiation. Overall objective/target/aim/aspiration/expectation/ambition/w ish/hope. Issues aspiration level. Opening offer, position, BATNA, limit, Reservation points (RP). "Really understand what the customer wish to achieve. The customers ambitions and fears in the project." NePPA Codebook (MacQueen, McLellan-Lemal, Bartholow, & Milstein, 2008:121; Saldaña, 2009:21) 292 Activity Category: Definition Inclusion criteria Exclusion criteria Contextual examples 3. Setting-the-Table 3.1. How to Negotiate Structure and the rules of the negotiation and how to alter process in ones favour. Divided into 4 categories: Communication medium, participants, procedural/ground rules (drafting, notes, language, delegation…), Do's and Don'ts - what is OK and not OK (e.g. breaks to cools off, reassess the process, don't reciprocate contentious actions). Understand the individual negotiators. Who are on the negotiation teams. Participants not at the table, internal rules not relevant for the other party, the agenda. "I want to organize a meeting between our project finance expert and the customer...We have never done that." (from case study. No examples from the survey). 3.1.1. Logistical Concerns Defining where the meet, physical arrangement and timing considerations. Logistics: Practicalities. Where to negotiate: home, neutral, others turf/location/site/premises. Physical arrangements: Seating arrangement, meeting space, breakout rooms, refreshments, food, drinks, connectivity, privacy. Timing of the negotiations: Duration for the meeting, firm deadline, breaks, caucus, social arrangements. Support material, participants, communication. "Where do we meet, what about the logistics?" 3.1.4. Role-Play and Rehearsal Role-playing and rehearsing parts of the negotiation. Role-play, rehearse, pretending, dry-run, opening statement. Support material, understand the other party, joint history. "Rehearse approach to counterpart." 3.2. How to Organize the Team Who and how many participants to include on the negotiation team, their roles and responsibilities and alignment of the members. Participants, team members, observers, advisors, consultants. Roles, responsibility, who does what, timekeeper, note taker, leader. Alignment, share, same page, agreement. The negotiation team of the other party. "Make sure we [the team] have the same objectives, and we know the objective of our customer. Decide who will talk about what, who will lead the negotiation (define the roles within the negotiation team members is really key in the preparation)." 3.3. What to Negotiate - Agenda What to negotiate and how to create the agenda. Agenda, opening stance, issues to discuss, order of items, topic to cover, meeting points/structure. Sequence, framing, packaging, formula, opening. Issues when not included which/how to include in the meeting/agenda. "Structure of the negotiation: How do we open discussions? In what order are we going to tackle the various items to negotiate?" 4. Integrative Strategy and Tactics 4.1. Understand the Underlying Interests and Needs Planning for increasing the understanding of interests and needs at-the-table Questions to test assumptions/conclusions from formulation. Share own: Preference, priority, interests, need, motivations, expectations, desires, fears. Unbundle issues: separate, disaggregate, fractionation, unlinking, reprioritize. Initial assessment of interests and issues. "[Prepare] open questions for discovering the priorities and values for the Customer." 4.2. Generate Integrative Solutions Identify ways to create integrative agreements during the negotiation encounter. Shared brainstorming, idea generation, solution/option development. Compromise, logrolling, dovetailing, trade-off, modify/expand the resource pie, bridging interests, cut the cost, compensation, superordination. Initial option development. " Playing out as many alternative scenarios as possible to solve a particular negotiation topic in order to have the creativity and the lucidity during negotiation to enlarge the pie or at least approach your counterpart from multiple points to see where they are more amenable to compromise." 4.3. Legitimacy Prepare ways to evaluate and justify options. Objective criteria, fair standards, merits, legitimacy, independent, precedents, precedent, scientific judgment, professional standards, efficiency, costs, moral standards, equal treatment, tradition, parts projects or reciprocity. Options, arguments, counterarguments. "Try to establish a background for explaining our position to the client and pick examples based on real business practice or past projects." 5. Distributive Strategy 5.1. Reservation Points and Goals Assessment and manipulation of the other party´s reservation point and targets together with management of the other party´s impression of own reservation point and goals. Test assumptions/conclusions from formulation: Ask questions, listen for relevant information. Control own sharing of information: Silence, agree on information to disclose/share and not to disclose/confidential, use of spokesperson, information overload (snow job), selective presentation, emotional display, the flinch, time allocation. Unfavourable information about competitive alternatives, unforeseen consequences, concealment of positive information. Initial development and search for goals and RPs. "Prepare a role out meeting with the people involved and define what they [the team members] can really say." 5.2. Positions and Concessions Development of opening offer and concession plan. Opening offer: Opening position, stand, bid. Concession plan: counter offers, give-away, discount, rebate, reduction, mark down, magnitude, contingent, timing. Reservation point (RP), target, aim. "What is our opening position, what are the compromises we can accept and what are we prepared to give away in order to get something back?" 5.2.3. Closing Tactics Planning how to overcome the final objections and how to respond to closing tactics. Closing: objections, compromise, sweetener, final concession, assumed close, exploding/expiring/time bound offers. Arguments and counter arguments, concession planning. "Prepare time limited offer to close the deal." (fiction, no contextual examples available." 5.3. Develop Arguments and Counterarguments Development of arguments and counterarguments. Arguments and counterarguments: answer, script, reply, response, course of action, persuasion, influence, induce, encourage, sway, impact, effect. Questions abount I & P. "Be prepared for changes from customer sight. Try to list possible changes customer may ask for, and be prepared for them." 5.4. Hard-Bargaining Tactics How to understand, use, detect, defend against hardball tactics. gg,y , , aggressive behaviour, misrepresentation, bluffing. Understand and detect: Plan of the other party, impose. Good cop - bad cop, take-it or leave-it, snow job, commitment. Use: ethics, consequences, Arguments and counter arguments, concessions. "Who will be the good guy ? Who will be the bad guy?" NePPA Codebook (MacQueen, McLellan-Lemal, Bartholow, & Milstein, 2008:121; Saldaña, 2009:21) 293 Appendix E – Overview of Transcribed Observations Date Temporal dimension Atlas.ti doc. no. Observation type Transcription duration [min] Language No. of participants (excl. researcher) Lead negotiator Sales management Legal Service Other No. quotations Quotation per min 20120119 Initial negotiations P75 Pre 0:31:00 English 4 √ √ √ √ 13 0:02:23 20120119 Initial negotiations P76 Post 0:17:00 French 2 √ √ 4 0:04:15 20120213 Initial negotiations P77 Pre 0:09:30 French 2 √ √ 3 0:03:10 20120213 Initial negotiations P78 Post 0:17:00 French 2 √ √ 5 0:03:24 20120228 Initial negotiations P79 Pre 0:08:30 Spanish 1 √ 2 0:04:15 20120330 Initial negotiations P80 Pre 0:29:00 French 1 √ 7 0:04:09 20120330 Initial negotiations P81 Post 0:17:00 French 2 √ √ 5 0:03:24 20120411 Initial negotiations P82 Pre 0:31:30 English 5 √ √ √ √ 6 0:05:15 20120411 Initial negotiations P83 Pre 0:12:30 French 2 √ √ 1 0:12:30 20120521 Open issues negotiations P84 Post 0:21:30 French 4 √ √ √ 1 0:21:30 20120522 Open issues negotiations P85 Post 0:16:30 French 1 √ 3 0:05:30 20120529 Open issues negotiations P86 Post 0:18:30 French 3 √ √ √ 3 0:06:10 20120604 Open issues negotiations P87 Post 0:17:00 French 3 √ √ √ 6 0:02:50 20120611 Open issues negotiations P88 Post 0:24:00 French 4 √ √ √ √ 8 0:03:00 20120620 Open issues negotiations P89 Pre 0:13:00 French 3 √ √ √ 5 0:02:36 20120620 Open issues negotiations P90 Post 0:10:30 French 2 √ √ 1 0:10:30 20120625 Open issues negotiations P91 Post 0:19:30 French 1 √ 2 0:09:45 20120625 Open issues negotiations P92 Pre 0:30:00 French 6 √ √ √ √ 13 0:02:18 20120702 Open issues negotiations P93 Pre 0:14:00 French 2 √ √ 0 20120702 Open issues negotiations P94 Post 0:11:00 French 2 √ √ 5 0:02:12 20120709 Open issues negotiations P95 Pre 0:27:00 French 2 √ √ 1 0:27:00 20120712 Partial agreement negotiation P97 Pre 0:44:30 French 3 √ √ √ 1 0:44:30 20120713 Partial agreement negotiation P98 Post 0:05:00 French 1 √ 0 20120717 P99 Update 0:08:00 French 1 √ 1 0:08:00 20120718 P100 Update 0:13:00 French 1 √ 1 0:13:00 20120723 Open issues negotiations P101 Pre 0:24:00 French 3 √ √ √ 9 0:02:40 20120723 Open issues negotiations P102 Post 0:07:00 French 3 √ √ √ 1 0:07:00 20120723 Open issues negotiations P103 Post 0:07:00 French 1 √ 0 20120911 Partial agreement negotiation P104 Pre 0:45:00 French 3 √ √ √ 6 0:07:30 20120911 Partial agreement negotiation P105 Post 0:58:00 French 3 √ √ √ 2 0:29:00 20120912 Partial agreement negotiation P106 Post 0:18:30 French 1 √ 1 0:18:30 20120914 P107 Update 0:07:00 French 1 √ 0 20120920 Partial agreement negotiation P108 Pre 0:10:00 French 3 √ √ √ 5 0:02:00 20120920 Partial agreement negotiation P109 Post 0:12:30 French 1 √ 1 0:12:30 20121003 P110 Update 0:05:00 French 1 √ 2 0:02:30 20121004 Three party negotiations - not P111 Post 0:19:00 French 3 √ √ √ 1 0:19:00 20121004 Three party negotiations - not P112 Post 0:15:00 French 2 √ √ 0 20121024 Three party negotiations - not P113 Pre 0:04:00 French 1 √ 2 0:02:00 20121025 Three party negotiations - not P114 Pre 0:44:00 English 4 √ √ √ 6 0:07:20 20121025 Three party negotiations - not P115 Pre 0:11:30 Spanish 1 √ 2 0:05:45 20121031 P116 Update 0:10:30 French 1 √ 0 20121108 Three party negotiations - not P117 Pre 0:04:00 French 1 √ 1 0:04:00 20121108 Three party negotiations - not P118 Post 0:07:00 French 1 √ 0 20130122 Three party negotiations - not P119 Post 0:11:30 French 3 √ √ √ 0 20130219 P120 Update 0:08:30 French 1 √ 1 0:08:30 294 Appendix F - Formulation Theme Activities – Support from Literature, Activity Propositions and Open-Ended Survey Results Note: Supported propositions are highlighted in green. Activity Category: Support from literature Which category activities are commonly conducted Activity Propositions Commonly cited in Survey No. of respondents citing the activity (Q1', Q2', Q3') 2. Formulation 100% Yes 56 2.1. Issues, Interests, Positions and Priorities 100% Yes Yes 41 2.1.1. Issues and interests 100% Yes 34 2.1.1.1 . Customer Issues 100% 19 2.1.1.2. Seller Issues 100% 21 2.1.2. Positions 88% Yes 16 2.1.2.1. Customer Position 88% 14 2.1.2.2. Seller Position 88% 8 2.1.3. Priorities 100% Yes 8 2.1.3.1. Customer Priorities 100% 1 2.1.3.2. Seller Priorities 100% 7 2.2. Options 100% Yes Yes 20 2.2.1. Options - Issues 88% Yes 11 2.2.1.1. Customer Options Issues 88% 2 2.2.1.2. Seller Options Issues 88% 10 2.2.2. Options - Deal 88% Yes 13 2.2.2.1. Customer Options Deal 88% 5 2.2.2.2. Seller Options Deal 88% 8 2.3. Reservation Points 100% Yes Yes 35 2.3.1. RP - Issues 100% Yes 28 2.3.1.1. Customer RP Issues 100% 10 2.3.1.2. Seller RP Issues 100% 23 2.3.2. RP - Deal 100% Yes 22 2.3.2.1. Customer RP Deal 100% 16 2.3.2.2. Seller RP Deal 100% 10 2.4. Goals 100% Yes Yes 25 2.4.1. Goals - Issues 100% Yes 19 2.4.1.1. Customer Goals Issues 100% 8 2.4.1.2. Seller Goals Issues 100% 15 2.4.2. Goals - Deal 100% Yes 22 2.4.2.1. Customer Goals Deal 100% 8 2.4.2.2. Seller Goals Deal 100% 21 295 References Adair, W. L., & Brett, J. M. (2005). The negotiation dance: Time, culture, and behavioral sequences in negotiation. Organization Science, 16(1), 33-51. Adair, W., Brett, J., Lempereur, A., Okumura, T., Shikhirev, P., Tinsley, C., & Lytle, A. (2004). Culture and negotiation strategy. Negotiation Journal, 20(1), 87-111. Adler, P. A., & Adler, P. (1994). Observational techniques. Handbook of Qualitative Research, 1, 377-392. Armstrong, D., Gosling, A., Weinman, J., & Marteau, T. (1997). The place of inter-rater reliability in qualitative research: An empirical study. Sociology, 31(3), 597-606. Backhaus, K., van Doorn, J., & Wilken, R. (2008). 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