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ETHICALITY IN NEGOTIATION:
AN ANALYSIS OF ATTITUDES, INTENTIONS, AND OUTCOMES
Roger J. Volkema
Kogod School of Business American University
4400 Massachusetts Ave., NW Washington, D.C. 20016
202-885-6193 (T) 202-885-1992 (F)
Denise Fleck Instituto de Pos-Graduacao e Pesquisa em Administracao - COPPEAD
Universidade Federal do Rio de Janeiro – UFRJ Rio de Janeiro, Brazil
Agnes Hofmeister-Toth Marketing Department
Budapest University of Economic Sciences Budapest, Hungary
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ETHICALITY IN NEGOTIATION:
AN ANALYSIS OF ATTITUDES, INTENTIONS, AND OUTCOMES
Abstract
The study reported in this paper examines the role of invalid information (e.g.,
exaggerated offers, false promises, misrepresented facts) in a two-party, property leasing
negotiation in which participants negotiated seven issues via electronic mail. Prior to
negotiating, attitudes and intentions towards questionable or unethical tactics were measured,
and perceived behavior was measured through a post-negotiation questionnaire and compared
with actual behavior and negotiated outcomes (distributive and integrative). The results suggest
that the pre-negotiation questionnaire was a modest predictor of actual behavior, with general
attitudes effective in predicting overall behavior. Ethical behavior of the negotiator, ethical
behavior of the other party, and perceived honesty of the other party were the best predictors of
performance (perceived and actual), while likely use of unethical tactics and perceived honesty
of the other party predicted whether or not an agreement was reached.
ETHICALITY IN NEGOTIATION:
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AN ANALYSIS OF ATTITUDES, INTENTIONS, AND OUTCOMES
Negotiation is the decision-making process by which two or more people seek to reach an
agreement on the exchange or distribution of benefits, burdens, roles, or responsibilities
(Cramton & Dees, 1993; Thompson, 1998). As such, bargaining and negotiation are central to
the functioning of all human interaction, personal as well as professional (Lax & Sebenius, 1986;
Mintzberg, 1973; Volkema, 1999b).
Much of the early research on bargaining and negotiation took the form of game theory,
where the parties were asked to choose from a finite set of strategies that effected specific, pre-
determined outcomes. The focus of this research was on understanding and predicting rational
behavior (Luce & Raiffa, 1957; Nash, 1950; von Neumann & Morgenstern, 1947). Subsequent
research has focused more on how negotiators actually behave in situations where information is
incomplete or asymmetrically shared, the relationship between strategies and outcomes is
uncertain, and the value of an outcome is relative or unknown (Harsanyi, 1962; Putnam & Jones,
1982; Thompson, 1991).
Often cited as one of the essential elements in understanding and managing negotiation is
the flow of information (McMillan, 1992; Pruitt & Carnevale, 1993; Rubin & Brown, 1975;
Shell, 1999; Thompson, 1998). In theory, information exchange can help build trust between
parties, which in turn can lead to a fuller, richer exchange of information and, ultimately, better
joint/integrative outcomes. On the other hand, information is a source of power, so the more
information one party has about a counterpart=s strengths and weaknesses (preferences,
priorities, alternatives), the stronger his/her bargaining position (Brodt, 1994; French & Raven,
1959; Lewicki, Saunders & Minton, 1999; Schelling, 1960; Walton & McKersie, 1965).
Consequently, negotiators are faced with the challenge of determining how much and what types
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of information to reveal while assessing their negotiating counterpart=s honesty and
forthrightness.
While a number of studies have focused on the effects of valid (factual) information
exchange on negotiating performance (cf. Pruitt & Lewis, 1975; Olekalns, Smith & Walsh, 1996;
Roth & Murnighan, 1982; Thompson, 1991), few studies have focused on the exchange of
invalid information such as exaggerated offers, misrepresented facts, false promises, and bluffs,
despite their reported prominence in everyday bargaining and negotiation (Boles, Croson &
Murnighan, 2000; Murnighan, Babcock, Thompson & Pillutla, 1999; O’Connor & Carnevale,
1997). This paper reports on a study of the use of invalid information in a two-party, property
leasing negotiation, which was conducted via electronic mail. Invalid information was measured
in three ways: first, through a questionnaire (the “Incidents in Negotiation Questionnaire”) to
assess attitudes and intentions towards questionable or unethical tactics; second, through
participants’ self-reporting of their behavior in this commercial property leasing negotiation; and
third, through third-party measures of actual behavior. The purpose of the study was to assess
the questionnaire’s utility in predicting actual use of these tactics, and the impact of these tactics
on distributive and integrative outcomes (perceived and actual). A review of the literature
related to these issues is presented in the next section (along with the development of specific
hypotheses), followed by a description of the study’s design, analysis/results, and conclusions.
Background and Hypotheses
Information exchange is generally considered one of the keys to understanding and
managing the negotiation process (Pruitt & Carnevale, 1993; Pruitt & Rubin, 1986; Shell, 1999;
Thompson, 1998; Walton & McKersie, 1965). Information can take a number of forms, based
on its relevancy and validity. Relevant information, for example, might include a negotiator’s
needs, alternatives, resources, utilities, and style (Chatterjee & Ulvila, 1982; Fisher, Ury &
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Patton, 1991; Harsanyi, 1962; Pinkley, Griffith & Northcraft, 1995). In addition, negotiators
frequently share valid information that is not directly relevant to the issues of a negotiation (e.g.,
discussions of traffic, weather, current events, hobbies), which can assist the parties in getting
comfortable, building rapport, and reaching agreement (Lewicki, et al., 1999; Thompson,
Peterson & Kray, 1995).
The exchange of valid, relevant information has been found to predict both distributive
and integrative outcomes. Roth and Murnighan (1982), Brodt (1994), and Olekalns, Smith and
Walsh (1996) all found that parties with an informational advantage performed better with
respect to distributive outcomes. Likewise, several researchers have found that information
exchange is positively associated with higher integrative outcomes, most notably when that
information is about the parties’ interests or priorities (Olekalns, et al., 1996; Pruitt & Lewis,
1975; Thompson, 1991).
Negotiators also communicate invalid or misleading information in the form of
exaggerated offers, misrepresented facts, and false promises of future business opportunities
(Anton, 1990; Scouller, 1972). These communications, in fact, have been found in several
studies to occur with some degree of frequency. O=Connor and Carnevale (1997), for example,
discovered that participants misrepresented information in 28% of their negotiations in a
laboratory study. Murnighan, et al. (1999) compared experienced and naive bargainers, and
found that 34% of the former both lied and were deceptive. Boles, et al. (2000) found that
participants in a laboratory negotiation were deceptive about 13% of the time, with more
deception occurring in the early rounds of negotiation. In addition, they noted that the
individuals making propositions were far more likely to outright lie than were the individuals
responding to propositions.
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There are a number of reasons why individuals may choose to use invalid information in
a negotiation, including the financial stakes (Boles, et al., 2000; Kelley, Beckman & Fischer,
1967; Tenbrunsel, 1998), perceived time pressure (Yukl, Malone, Hayslip & Pamin, 1976),
environmental competitiveness (Hegarty & Sims, 1978), and their own personal
characteristics/values (Hegarty & Sims, 1978; Trevino & Youngblood, 1990).
Invalid information can take several different forms, from generally accepted behaviors
like exaggerating an offer or demand to less accepted behaviors such as making false promises.
Lewicki (1983), building on the work of Bok (1978) and others, developed a questionnaire and
typology of lying and deception in negotiation that consists of five categories: traditional
competitive bargaining (e.g., exaggerating an initial offer or demand), misrepresentation of
information (i.e., lying about an informational item), bluffing (i.e., leading your counterpart to
believe that you are in control of consequences which you are not, such as through promises you
may not be able to fulfill), inappropriate information collection (e.g., various forms of bribery,
such as paying others for information), and influencing a counterpart=s professional network
(e.g., encouraging others to defect). In subsequent studies, Lewicki and Robinson (1998) and
Volkema (1999a) employed factor analyses to confirm these five distinct categories of behavior
and examined differences in perceptions due to demographic factors.
Although the “Incidents in Negotiation Questionnaire” developed by Lewicki and his
colleagues has been employed in a number of settings, there have been no studies to confirm the
predictive validity of the instrument. The questionnaire measures individuals’ perceptions of the
appropriateness of questionable negotiating tactics and their likelihood of using those tactics, not
actual behavior. There is, however, a long history of research that links attitudes, intentions, and
behaviors (for a review, see Ajzen, 1988). In their meta-analysis of over one hundred studies,
Kim and Hunter (1993) found significant support for each of the three linkages, particularly
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where an individual’s actions fall within his/her control. Given that this is the case for most of
the negotiating tactics identified by Lewicki and his colleagues, we propose the following:
Hypothesis 1: Attitudes and intentions towards questionable or unethical negotiating
tactics (high perceived appropriateness and likely use, as measured by the “Incidents in
Negotiation Questionnaire”) will be positively associated with self-reported and actual use of
those tactics.
Despite the apparent frequency with which invalid information appears to be employed,
there have been relatively few studies that have examined the influence of invalid information on
negotiation outcome. Roth and Murnighan (1982) found that the party with the larger outcome
(payoff) and an informational advantage was inclined to misrepresent his or her outcome to
his/her ultimate advantage, while O=Connor and Carnevale (1997) found that subjects who
misrepresented information achieved higher outcomes. These studies, however, focused only on
distributive outcomes (i.e., outcomes based on a single party’s performance), not joint or
integrative outcomes (which are based on the performance of both parties in a dyadic
negotiation), and only on misrepresentation of information. Other tactics in the typology
identified by Lewicki and his colleagues (e.g., bluffing) were not examined.
It would seem likely that individual/distributive outcomes would generally increase with
the use of unethical tactics, as one’s counterpart is making decisions based on erroneous
information. The communication of false or deceptive information might even create a sense of
openness and trust on the part of the other party, causing him/her to share additional valid
information. The use of such tactics would likely have the opposite effect on joint or integrative
outcomes, decreasing with the use unethical tactics and vice versa. For example, by not
exaggerating an initial offer or misrepresenting information, the parties may actually negotiate a
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settlement that comes closer to their mutual benefit rather than benefiting one party (the party
exaggerating an offer or misrepresenting information) at the expense of the party.
Given these arguments, the following hypothesis is offered:
Hypothesis 2: The more questionable or unethical tactics an individual employs, the
higher will be his/her actual outcome, the higher his/her distributive outcome, and the lower the
joint/integrative outcome.
In addition, it would be valuable to know what affect questionable or unethical tactics
have on perceived outcomes. Negotiators seldom know the actual payoff (distributive or
integrative outcome) in real-world negotiations, since they seldom know the utilities and
winnings of the other party (Putnam & Jones, 1982). Instead, they make their decisions
regarding whether or not to engage in future negotiations based on perceived outcomes. Brodt
(1994) did one of the few studies that examined the effects of information on perceived outcome,
and found that informed parties were significantly more positive about their performance than
were their uninformed peers. However, the inside information that was shared with these parties
came from a third party, so the validity of the information might not have been questioned.
We might assume that the individual using questionable tactics believes he/she has an
advantage over the other party, since the other party is making decisions based on erroneous
information. Therefore, the negotiator would expect that his/her outcome would exceed the
other party’s performance, and that their joint outcome might suffer. Thus,
Hypothesis 3: The more questionable or unethical tactics an individual employs, the
higher will be his/her perceived outcome, the higher his/her perceived distributive outcome, and
the lower the perceived joint/integrative outcome.
Finally, many of the studies conducted to date assume that an agreement will be reached
by the negotiating parties. In reality, this is not always the case. In fact, many authors advise
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negotiators to develop alternatives to a negotiated agreement as a way of protecting themselves
against a bad deal; sometimes the best alternative is to walk away (Fisher, Ury & Patton, 1991;
Thompson, 1998; Volkema, 1999b).
There are a number of factors that might lead one or both negotiators to back away from
an agreement, including the terms of the agreement (which may not allow a negotiator to reach
his/her breakeven point) or the perceived ethicality of either party. As Tenbrunsel (1998) noted,
the use of unethical tactics can actually create a cycle of distrust when individuals project their
own circumstances and unethical behavior onto others. If either party perceives the other party
as being untrustworthy, the deal may seem too risky to consummate.
Given this reasoning, the following is hypothesized:
Hypothesis 4: The more questionable or unethical tactics an individual employs, the
greater the likelihood of not reaching an agreement.
Method
Participants
The participants in this study were sixty-six graduate business students taking courses in
negotiation. One course was offered in Rio de Janeiro, Brazil, and included individuals from
Brazil and France. Sixty-one percent were male. Each of these students was paired with a
student taking a comparable course at another university in Budapest, Hungary. The students
taking the course in Budapest came from a number of different countries, including Hungary,
Germany, the Netherlands, Greece, Russia, Mexico, and the United States. All courses were
taught in English.
Procedure
The subjects participated in a two-party, property leasing negotiation, as described in
Volkema (1999b). The thirty-three graduate students in Brazil represented a company called
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Logan Telecommunications, which was interested in expanding its operations in a new
geographic area. As such, they were interested in leasing 300 square meters of commercial
space. The other party (graduate students in Hungary) represented RJW Properties, Inc., a real
estate firm with properties in the desired area.
In addition to background information about their company, each representative was
given a scoring table with seven critical issues to be negotiated. The seven issues included cost
per square meter, duration of lease, renovations, cost of utilities, parking space, furnishings, and
advanced payment. Depending upon the outcome negotiated for an issue, the individual earned a
certain number of points (Table 1). Because some of the issues were worth more points to the
representative of Logan Telecommunications than to the representative of RJW Properties, and
vice versa, negotiators had an opportunity to maximize their joint/integrative score as well as
their distributive score. Multi-issue simulations of this type, with both distributive and
integrative potential, have been used effectively in a number of prior studies (cf. Olekalns, et al.,
1996; Thompson, 1991).
____________________________
Insert Table 1 about here.
____________________________
The negotiation took place via electronic mail. All communications were in English, and
participants had fourteen days to complete the negotiation. This time frame was deemed more
than sufficient, based on prior testing of the simulation, both in person and via the internet. All
negotiating dyads remained the same throughout the study.
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Three weeks prior to commencing the negotiation, the thirty-three individuals
representing Logan Telecommunications were asked to complete the “Incidents in Negotiation
Questionnaire.” This questionnaire, developed by Lewicki and his colleagues (Lewicki &
Robinson, 1998; Robinson, et al., 2000), asks respondents to rate the appropriateness and
likelihood of using eighteen tactics or behaviors, rating each behavior on a 7-point Likert scale
(for appropriateness: 1=not at all appropriate, 7=very appropriate; for likelihood of use: 1=not
at all likely, 7=very likely). The tactics consist of a range of behaviors with respect to ethicality,
from generally accepted competitive tactics (e.g., exaggerating an offer or demand, hiding one’s
bottom line) to tactics involving the other party’s professional network (e.g., seeking to discredit
one’s opponent with his or her supervisor). The questionnaire indicates that there are no Aright
answers@ regarding the right or wrong thing to do, so respondents are encouraged to be candid in
their answers. All respondents were assured anonymity.
Following conclusion of the negotiation, participants completed a second questionnaire in
which they were asked to indicate how well they thought they had performed in the negotiation
and how well they thought the other party had done (both on 7-point Likert scales), which tactics
they had used (i.e., misrepresentation of factual information, making promises that could not be
kept, exaggerating an opening demand or offer, pretending not to be in a hurry), and overall how
honest they had been and how honest they thought the other party had been in the negotiation (on
7-point Likert scales). The method of asking participants to report in a post-experiment
questionnaire on tactics and information exchanged has been employed successfully in other
studies of bargaining and negotiation (cf. Boles, et al., 2000; Murnighan, et al., 1999). All post-
negotiation questionnaires were anonymous.
Independent and Dependent Measures
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To determine the predictive validity of the “Incidents in Negotiation Questionnaire,” the
7-point Likert ratings of appropriateness and likely use were taken for eighteen tactics, including
the four focal tactics - pretending not to be in a hurry (when you were), exaggerating an offer or
demand, misrepresenting information, and making promises that could not or would not be kept.
These four focal tactics were deemed representative of the original eighteen, and each had the
potential of being employed during the actual negotiation. Other tactics, such as talking to the
people to whom an opponent reports in order to undermine the negotiation or intentionally
misrepresenting the progress of negotiations to the press, are tactics that could not be effected by
participants in this negotiation. Still other tactics, such as hiding one’s bottom line, could not be
easily measured by third parties reviewing transcripts of the negotiation. Overall measures were
calculated as the sums of the ratings for the four focal tactics as well as for all eighteen tactics for
appropriateness and likely use, respectively. Self-reported use of the four focal tactics was taken
from the post-negotiation questionnaire. In addition, participants also were asked to indicate on
this questionnaire their overall honesty in the negotiation on a 7-point Likert scale (1=not very
honest/ethical, 7=very honest/ethical), as well as the perceived honesty of the other party.
Actual behavior for each negotiator (Logan Telecommunications and RJW Properties)
was determined by three individuals independently reviewing printed transcripts of the email
negotiations. These individuals, who did not know the value of the negotiated outcomes at the
time of their review, identified incidents of the four focal tactics. Using the Estimate-Discuss-
Estimate approach (Nutt, 1992), their independent assessments were compared and any
differences were resolved through discussion. An overall measure of ethicality for each
participant was determined by adding the occurrences of these questionable or unethical
behaviors across categories.
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To determine the influence of ethics on performance, several measures of outcome were
taken. Perceived outcomes were based on self-assessments recorded on the post-negotiation
questionnaire, where subjects were asked to indicate how well they thought they had done in the
negotiation (7-point Likert scale) and how well they thought the other party had done, again on a
7-point Likert scale (from 1 to 7, where 1=not well and 7=very well). Perceived distributive
outcome was the difference in these point values (self minus other), while perceived
joint/integrative outcome was calculated as the sum of these values. Actual outcome was
measured by totaling the point values for each of the seven issues negotiated (Table 1). Given
that the simulation allowed for both distributive and integrative outcomes, the difference in
scores between an individual and his/her counterpart (distributive outcome) was calculated, as
well as the sum of their scores (joint/integrative outcome).
Analyses
Hypotheses 1-3 were tested using regression analyses, while Hypothesis 4 was tested
using discriminant analysis. Due to dependency concerns with data from negotiating dyads (e.g.,
highly correlated outcome measures within dyads), only data from Logan Telecommunications
representatives were analyzed in testing hypotheses (Kenny, 1995).
Results
From the “Incidents in Negotiation Questionnaire,” respondents indicated that pretending
to be in no hurry was the most appropriate of the four focal tactics examined (mean=5.94,
SD=1.39), followed closely by exaggerating an offer or demand (mean=5.52, SD=1.44),
misrepresenting information (mean=3.85, SD=2.15), and making promises that could not or
would not be kept (mean=2.15, SD=1.37) (Table 2). Of these four tactics, participants indicated
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that they would be most likely to pretend to be in no hurry (mean=5.21, SD=1.75), followed by
exaggerate an offer or demand (mean=5.15, SD=1.52), misrepresent information (mean=3.88,
SD=1.98), and make false promises (mean=1.79, SD=1.02). As these numbers suggest,
participants felt that it was more appropriate to use each tactic than they indicated they were
likely to do.
____________________________
Insert Table 2 about here.
____________________________
Consistent with findings reported elsewhere (cf. Volkema, 1997), the correlations
between attitudes (appropriateness) and intentions (likely use) were all significant. Specifically,
the correlation for pretending to be in no hurry was .43 (p<.05), the correlation for exaggerating
an offer was .71 (p<.001), the correlation for misrepresenting information was .85 (p<.001), and
the correlation for making a promise that could not or would not be kept was .65 (p<.001). The
correlation between attitudes and intentions for all eighteen tactics in the questionnaire was .70
(p<.001).
Eight of the thirty-three participants (24.2%) indicated on the post-negotiation
questionnaire that they had pretended not to be in a hurry (mean=.24, SD=.44), while twenty-
four participants (72.7%) felt that they had exaggerated an offer or demand during the
negotiation (mean=.73, SD=.45). Fifteen individuals (45.5%) indicated that they had
misrepresented information, from one to three times (mean=.73, SD=.91). One person indicated
that he/she had made a promise that could not or would not be kept (mean=.03, SD=.17). On a
scale from one to seven, where seven means very honest/ethical, participants indicated a mean
honesty in their negotiations of 6.12 (SD=1.02). Their mean perceived honesty of the other party
was 4.81 (SD=1.94). Thus, overall the thirty-three representatives of Logan
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Telecommunications felt that they had been more honest than their negotiating counterparts at
RJW Properties.
In terms of actual behavior (as determined from transcripts), two individuals (6.1%)
pretended to be in no hurry (when they actually were in a hurry), while ten individuals (30.3%)
were found to have exaggerated an offer or demand. Twenty-four (72.7%) misrepresented
information, from one to ten times (mean=2.67, SD=2.57). No one was found to have made a
promise that could not be kept. Overall, twenty-seven (81.8%) of the thirty-three participants
representing Logan Telecommunications used at least one of the four focal tactics. The numbers
were comparable for those individuals representing RJW Properties: twenty-five (75.8%) used
at least one of the tactics.
There were strong correlations between several of the self-reported behaviors and actual
behaviors. The correlation between participants’ perception of pretending to be in no hurry and
their actual use of this tactic was .45 (p<.01), while the correlation between perceived
misrepresentation of information and actual misrepresentation was .53 (p<.001). The correlation
between perceived exaggeration and actual exaggeration, while positive (.11), was not
significant. (The fact that more individuals reported exaggerating offers than were actually
counted is likely due to the fact that only offers or demands that were outside the specified
ranges shown in Table 1 were counted as exaggerated offers, while some individuals may have
exaggerated within a specified range for a given issue.) Overall, participants’ perceptions of
their honesty were highly correlated with actual use of these tactics (r=-.52, p<.01). That is, the
more honest a participant judged himself/herself to be in this negotiation, the less he or she
actually used these questionable or unethical tactics in the negotiation.
The correlations between participants’ specific attitudes and their actual behavior and
between intentions and actual behavior were all positive, but at best marginally significant
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(Hypothesis 1). The only significant findings were for exaggerating an offer (attitude: r=.32,
p<.10) and misrepresenting information (attitude: r=.31, p<.10; intention: r=.33, p<.10).
However, overall both attitudes and intentions were significantly correlated with overall behavior
(attitude: r=.48, p<.01; intentions: r=.35, p<.05).
In terms of performance, twenty-two of the thirty-three pairs of negotiators completed
their negotiations. For those reaching an agreement, the scores for the negotiators representing
Logan Telecommunications ranged from 2550 to 3000, with a mean of 2777.27 (SD=119.25),
while the scores for their counterparts (representing RJW Properties) ranged from 2400 to 3050
(mean=2675.00, SD=183.71). The distributive outcome for the focal participants ranged for –
400 to 600 (mean=102.27, SD=284.30). The integrative outcome ranged from 5300 to 5700
(mean=5452.27, SD=122.94).
Regression analyses revealed that the “Incidents in Negotiation Questionnaire” did
predict both self-reported and actual behavior. With appropriateness and likelihood of use of the
four focal tactics as the independent variables, participants’ appropriateness ratings for the sum
of the four tactics was positively associated with actual unethical behavior (β=.32, t=1.90, p<.10;
F1,32=3.59, p<.10, R2=.10). In addition, participants’ ratings for overall appropriateness of tactics
(all eighteen tactics) was negatively associated with perceived honesty in the negotiation (β=-.30,
t=-1.76, p<.10; F1,32=3.11, p<.10, R2=.09) and positively associated with actual unethical
behavior (β=.48, t=3.08, p<.01; F1,32=9.49, p<.01, R2=.23). There were no significant results for
perceived honesty of the other party. These significant findings suggest that the higher the
perceived appropriateness of the eighteen questionable or unethical tactics from the
questionnaire, the less honest the participant perceived himself/herself to be in the negotiation
and the more questionable or unethical tactics the individual actually employed in the
negotiation.
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When the perceived honesty of self and other as well as actual unethical behavior of other
were regressed on actual unethical behavior, the perceived honesty of self was found to be
negatively associated with actual unethical behavior of self (β=-.48, t=-3.37, p<.01) while actual
unethical behavior of the other party was found to be positively associated with actual unethical
behavior of self (β=.38, t=2.62, p<.05) (F2,31=9.74, p<.001, R2=.40). Thus, the more honest the
negotiator perceived himself/herself to be in the negotiation, the fewer questionable or unethical
tactics the individual employed during the negotiation. The lack of a significant correlation
between perceived honesty of self and the other party (r=-.01) suggests that participants did not
necessarily project their own ethicality onto their negotiating counterpart. However, the positive
relationship between actual unethical behavior of the two parties suggests that unethical behavior
might breed similar behavior from the other party.
As a follow-up analysis, the first use of a questionable or unethical behavior was
examined for each representative (Logan Telecommunications and RJW Properties). There was
a high correlation (r=.64, p<.001), suggesting that the first incidence of a questionable or
unethical behavior on the part of one negotiator corresponded to reciprocal behavior on the part
of the other negotiator. Furthermore, the earlier a Logan Telecommunications representative
used a questionable or unethical behavior in the sequence of email messages exchanged, the
more unethical the RJW representative was overall (r=-.40, p<.05), and the earlier the RJW
representative used a questionable or unethical behavior, the more unethical the Logan
Telecommunications representative was overall (r=-.36, p<.10).
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Attitudes, intentions, perceived honesty, and actual behavior also were regressed on
outcome (actual and perceived). The more questionable or unethical tactics a party used (β=.37,
t=1.77, p<.10) and the less honest he/she thought the other party was in the negotiation (β=-.51,
t<-2.50, p<.05), the higher the negotiator’s score (consistent with Hypothesis 2) (F2,21=3.66,
p<.05, R2=.28). These variables, however, did not predict actual distributive or integrative
outcomes.
The participant’s perception of the honesty of the other party and the actual unethical
behavior of the other party were the only variables significantly associated with perceived
outcomes. The more honest the other party was perceived to be, the better the negotiator
perceived he/she did in the negotiation (β=.30, t=1.70, p<.10; F1,31=2.89, p<.10, R2=.09) and the
better the negotiator perceived the other party did in the negotiation (β=.64, t=4.61, p<.001;
F1,31=21.23, p<.001, R2=.41). In addition, the more honest the other party was perceived to be
(β=-.58, t=-3.66, p<.001) and the more unethical the other party actually was (β=-.29, t=-1.83,
p<.10), the smaller the perceived distributive outcome (i.e., the difference between his/her
perceived performance and the perceived performance of the other party) (F2,31=7.11, p<.01,
R2=.33). Finally, the more honest the other party was perceived to be, the larger the perceived
joint outcome (β=.55, t=3.64, p<.001; F1,31=13.25, p<.001, R2=.31).
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As previously noted, eleven pairs of negotiators were unable to reach an agreement in the
allotted time (a period of two weeks, which appeared substantial for completing the negotiation).
To determine if the ethics of the subjects might have played a role in predicting whether or not
an agreement was reached, a discriminant analysis was performed, with agreement/no agreement
as the dependent variable, and the mean score for appropriateness of tactics (attitude), mean
score for likely use of tactics (intentions), perceived honesty during the negotiation, perceived
honesty of the other party during the negotiation, and actual ethical behavior of each party during
the negotiation as the predictor variables. The analysis yielded a significant function (canonical
correlation=.54; Wilks’ lambda=.71; p<.01) involving two variables – likely use of tactics and
perceived honesty of the other party. Thus, the more likely the use of competitive or unethical
tactics, the greater the likelihood that no agreement would be reached (supporting Hypothesis 4).
In addition, the less honest the other party was perceived to be, the greater the likelihood that no
agreement would be reached. The function correctly classified 78.1% of all cases into their
original groups, which exceeds the threshold suggested by Hair et al. (1998). In addition, Press’s
Q was significant (Q=10.1, p<.01), supporting the efficacy of the function.
Discussion
As reported elsewhere (Boles, et al., 2000; Murnighan, et al., 1999; O=Connor &
Carnevale, 1997; Scouller, 1972), the use of questionable or unethical tactics in negotiating is a
common phenomenon. In this study, nearly 82% of the participants were found to use one or
more of the four focal tactics. The tactic that was used most frequently was misrepresenting
information, which was used by 73.2% of the participants. In general, these percentages are
somewhat higher than the numbers reported in previous studies, which may be due to the
medium employed in this study – electronic mail – and the fact that most of the dyads
represented cross-cultural negotiations. At least one study has suggested that the use of unethical
tactics increases when negotiations occur via electronic mail, due in part to the inability of the
other party to read nonverbal cues (which can give away intentions to deceive) (Valley, Moag &
Bazerman, 1998). In addition, Volkema and Fleury (2002) report that the likelihood of unethical
behavior increases when an individual is negotiating with someone from another country,
particularly a country known for its skilled negotiators.
The “Incidents in Negotiation Questionnaire” was found to be modestly predictive of
perceived (self-reported) and actual behavior. While there were some marginally significant
relationships between perceived appropriateness or likely use of specific tactics and actual use of
those tactics, the overall measure of appropriateness for the eighteen behaviors was the best
predictor of actual ethical behavior (overall). Prior research on the linkages between attitudes,
intentions, and behavior has generally reported significant correlations between specific attitudes
19
or intentions and specific behaviors, and between general attitudes or intentions and general
behaviors (Ajzen, 1988). The somewhat weak finding for the former (specific-to-specific
linkages) might suggest that the “Incidents in Negotiation Questionnaire” would benefit from
multiple measures of a single tactic, which could improve the validity of those measures. Each
of the eighteen tactics, including the four focal tactics, is measured with a single question (item).
The likely use of questionable or unethical tactics, the actual use of those tactics, and the
perceived honesty of the other party were the critical variables in predicting outcomes. The use
of questionable or unethical tactics by a party was positively associated with a party’s
performance, while the perceived honesty of the other party was negatively or inversely
associated with the negotiator’s score. Thus, a negotiator did better relative to others
representing Logan Telecommunications when he/she used these questionable tactics and when
he/she presumed the other party was using these tactics.
The perceived honesty of the other party was the primary variable significantly related to
perceived outcomes. The more honest the other party was perceived to be, the better a negotiator
perceived he/she did compared to others representing Logan Telecommunications, the poorer
he/she perceived he/she did in competition with the other party (distributive outcome), but the
better he/she perceived he/she did in cooperation with the other party (joint/integrative outcome).
Interestingly, the more honest the other party was perceived to be, the better the negotiator
perceived the other party did in the negotiation. Conceivably, the other party’s perceived
honesty led to an increase in exchange of valid information, or accommodation on certain issues.
There were two variables that were most effective in differentiating between negotiations
that reached agreement and negotiations that did not reach agreement – likely use of questionable
or unethical tactics (as measured by the “Incidents in Negotiation Questionnaire”) and the
perceived honesty of the other party. The more likely the use of these tactics and the less honest
20
one’s counterpart was perceived to be, the greater the likelihood that the parties would not reach
an agreement. It is important to note, however, that the rating of the other party’s honesty
occurred at the conclusion of the negotiating period (when it was clear no agreement would be
reached). Therefore, it is conceivable that the respondent was seeking to explain or justify the
failed negotiation by placing blame elsewhere. In future research, this perception might be
measured at several points throughout the negotiation, to determine if perceptions change when it
first appears that no agreement will be reached.
The significant positive relationship found between subjects’ self-reported behavior and
actual behavior is also worth noting, as such findings have not always been reported by
researchers. In general, restricting the recall of an event to a short and recent reference period
and providing specific recall cues can help improve recall (Gilbert, Fiske & Lindzey, 1998).
However, individuals still may choose to misreport events when social capital is at stake. The
high correlation between self-reported behavior and actual behavior found in this study may be
due to the fact that participants knew transcripts of their exchanges would be available to others
(e.g., the researchers) for verification. While this finding requires further study, it suggests one
way of increasing the validity of self-report data of this type, where the issue is more one of
honesty in reporting than accuracy in reporting behaviors.
These findings have some direct implications for practitioners. First, as reported in prior
research, the use of questionable or unethical tactics is commonplace among negotiators
(approximately 80% in this study indicated use of at least one such tactic), although some tactics
may be considered more acceptable than other tactics. Thus, it is not unreasonable to assume
that the other party in a negotiation will use a questionable or unethical tactic, especially
misrepresentation of information (which was the tactic used most frequently). Second, an
individual’s general attitude/intentions towards the appropriateness and use of questionable or
21
unethical tactics will likely translate into actual use of such tactics. Therefore, the extent to
which another party’s general attitude or intentions towards tactics can be ascertained prior to the
negotiation (e.g., through demographic information, reputation, etc.) or early in the negotiation
(e.g., through background and anecdotal exchanges) could be valuable in predicting the degree of
unethical behavior. Third, the first use of questionable or unethical tactics will likely result in
reciprocal behavior on the part of the other party, and the earlier such tactics are employed, the
more unethical the other party is likely to be overall. Fourth, the more likely one is to use
questionable or unethical tactics and the less honest the other party is perceived to be, the greater
the likelihood that no agreement will be reached. This could be costly if a viable agreement is
lost due to inaccurate perceptions of the other party. Whether or not someone can easily project
honesty while in fact acting unethically is important to this finding. An ad hoc correlation
analysis of participants’ perceptions of the other parties’ honesty and the other parties’ actual
unethical behavior was in the expected direction (r=-.26) but not statistically significant (p=.15).
Fifth, perceived outcomes matter, since many times negotiators do not know how they actually
performed relative to their counterpart; a decision to engage in future negotiations with the same
party must therefore be based on perceptions. Furthermore, based on the findings of this study,
one’s perceived performance (distributive and integrative) is likely to be tied to the perceived
honesty of the other party. The more honest the other party is perceived to be, the less the
negotiator’s distributive advantage is perceived to be and the larger the joint outcome is
perceived to be. Finally, the use of questionable or unethical tactics by a negotiator and the
perceived dishonesty of the other party can positively influence the negotiator’s actual
performance. Exaggerating an initial offer, for example, is both a generally accepted tactic and a
tactic that can directly affect outcome by serving as an anchor around which a final settlement is
reached. Cramton and Dees (Cramton & Dees, 1993; Dees & Cramton, 1991), in fact, argue that
22
a negotiator has a moral right to exaggerate an initial offer, since the other party will assume this
was the case in any event and demand the negotiator compromise on a sincere initial offer.
As with all research, there are several caveats that must be offered regarding this study
and our findings. First, it should be pointed out that this negotiation took place entirely via
electronic mail. While this medium has its benefits in terms of data analysis and has been
employed effectively elsewhere (Tinsley, O’Connor & Sullivan, 2002), as already noted the use
of questionable or unethical tactics may vary depending on the medium and its richness (Daft &
Lengel, 1986; Daniels, 1967; Tinsley, et al., 2002). Electronic mail, as an asynchronous form of
communication that is not always reliable, introduces other issues that can complicate the
development of rapport and trust between parties. Before generalizing beyond this medium,
further study is clearly warranted. Although electronic mail may be used increasingly in
negotiations over the coming years, the parties frequently have some face-to-face contact as well.
Researchers need to recognize that other media (or combination media) might influence ethical
behavior.
It should also be pointed out that the parties in this negotiation were from many different
cultures (as is the case in most multinational organizations these days) and had had no prior
contact (or the guarantee of future contact). These factors also can affect the extent to which a
party employs questionable tactics (Volkema & Fleury, 2002), and how individuals perceive the
actions (or inactions) of the other party. With the continued globalization of markets and the
reliance on technologies such as electronic mail to negotiate agreements, these factors will
become increasingly important.
Finally, future research needs to examine the intentions with which invalid information is
employed. Invalid information may provide a means of checking another party’s knowledge
base, uncovering the other party’s settlement range, determining a counterpart’s negotiating style
23
(e.g., cooperative, assertive), building rapport and perceived trust, or countering another party’s
dishonesty, among other purposes. Future research might seek to isolate these intentions in order
to better understand their influence on behavior and performance.
24
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TABLE 1 Issues, Negotiated Outcomes, and Point Values ________________________________________________________________________________ Issue Negotiated outcome Point value ________________________________ Logan Telecom. RJW Properties ________________________________________________________________________________ Cost per square meter $500. 900 300 $600. 750 450 $700. 600 600 $800. 450 750 $900. 300 900 Renovation of space No rooms renovated 150 250 One room 400 200 Two rooms 500 150 Three rooms 600 100 Utilities included None 100 300 Water/sewer 150 200 Water/sewer/electricity 200 100 Length of lease One year 500 200 Two years 450 500 Three years 300 700 Four years 200 900 Parking available No cars 100 300 One car 300 250 Two cars 500 200 Three cars 600 150 Four cars 650 100 Furnishings None 100 100 Refrigerator/stove 350 150
Advanced payment One month 500 200 Six months 350 600 One year 150 900 Maximum 3700 3700 Minimum 1100 1100 ________________________________________________________________________________
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TABLE 2 Descriptive Statistics and Correlation Matrix for Attitudes, Intentions, and Behaviors a Variables Mean SD 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Attitude 1. Pretend no hurry 5.94 1.39 2. Exaggerate offer 5.52 1.44 .24 3. Misrep. info. 3.85 2.15 .53** .20
4. Make promises 2.15 1.37 .05 -.07 .30 t 5. All tactics 66.82 16.92 .56*** .20 .68*** .52** Intention 6. Pretend no hurry 5.21 1.75 .43* .01 .34 t .13 .30 t 7. Exaggerate offer 5.15 1.52 .23 .71*** .12 -.06 -.05 .31 t 8. Misrep. info. 3.88 1.98 .53*** .10 .85*** .31 t .63*** .44** .11 9. Make promises 1.79 1.02 .06 .06 .10 .65*** .23 .11 .20 .20 10. All tactics 59.06 12.71 .48** .14 .47** .34* .70*** .61*** .28 .67*** .39* Self-reported Behavior 11. Pretend no hurry .24 .44 -.08 -.11 .14 .04 .02 .10 .08 .04 .33 t .08 12. Exaggerate offer .73 .45 -.03 .32 t .12 .02 -.07 -.24 .15 -.18 .01 -.42 * .19 13. Misrep. info. .73 .91 .23 .23 .54 *** -.02 .42 * .04 .14 .54*** .17 .48 ** .17 -.11 14. Make promises .03 .17 .14 -.56 *** .26 .24 .18 .18 -.49 ** .28 -.14 -.03 -.10 .11 -.14 15. Overall honesty - self 6.12 1.02 .16 -.11 -.28 -.17 -.30 t -.09 -.05 -.24 -.09 -.28 -.07 .14 -.33 t .15 16. Overall honesty – other 4.81 1.94 -.18 -.02 .13 .07 .24 .00 -.21 .12 .12 .20 .01 -.03 .32 t .11 -.01 Actual Behavior 17. Pretend no hurry .06 .24 .20 -.09 .38* -.12 .27 .19 -.03 .21 .05 .23 .45 ** -.13 .36 * -.05 -.41 * .03 18. Exaggerate offer .30 .47 .08 .32 t .23 .02 .28 .11 .29 .24 .01 .27 .09 .11 .13 -.12 -.21 .21 .11 19. Misrep. info. 2.67 2.57 .18 .20 .31 t -.02 .44 ** .09 -.06 .33 t -.08 .31 t -.04 -.27 .53 *** -.19 -.48** -.06 .39 * .11 20. Make promises .00 .00 -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- 21. All Tactics 3.03 2.77 .20 .23 .36 * -.03 .48** .12 -.01 .37 * -.06 .35* .02 -.24 .55 *** -.20 -.52** -.02 .46** .28 .98*** --
a N=33. t p<.10, * p<.05, **p<.01, ***p<.001
30