New Research DirectionsThe research described in this article by Volkema, Fleck and Hofmeister-Toth builds upon thetheme of a recent issue of International Negotiation, “Ethical Issues in Conflict Resolution” (Vol.7, no. 2, 2002). The authors test the implications of using deceptive tactics in negotiation. Theirresearch relates to the larger theme of this present issue by its use of an innovative means ofnegotiation, e-mail, as the channel for the experimental exercise.
Ethicality in Negotiation: An Analysis of Attitudes,Intentions, and Outcomes
ROGER J. VOLKEMA*Kogod School of Business, American University, 4400 Massachusetts Ave., NW, Washington,DC 20016 USA (E-mail: [email protected])
DENISE FLECK**COPPEAD Graduate School of Business, Federal University of Rio de Janeiro – UFRJ, Rio deJaneiro, Brazil (E-mail: [email protected])
AGNES HOFMEISTER-TOTH***Marketing Department, Budapest University of Economic Sciences, Budapest, Hungary (E-mail:[email protected])
Abstract. The study reported in this article examines the prediction and use of invalid infor-mation (e.g., exaggerated offers, false promises, misrepresented facts) in a two-party, propertyleasing negotiation in which participants from different countries negotiated seven issues via
315
* Roger Volkema is Associate Professor of Management at the Kogod School of Business,American University, Washington, DC. His research focuses on negotiation, conflict manage-ment, group/meeting processes, and problem formulation. He received his Ph.D. from theUniversity of Wisconsin, and was a Fulbright Fellow at Catholic University in Rio de Janeiro,Brazil in 1988.
** Denise L. Fleck is an Associate Professor of Strategy at Coppead Graduate School ofBusiness, UFRJ, Brazil. Her research interests include corporate growth, organizational self-perpetuation, change and institutionalization processes, and innovation roles in growthprocesses. She received a Ph.D. in Management from McGill University.
*** Agnes Hofmeister-Toth is Professor of Marketing at the Budapest University ofEconomic Sciences and Public Administration. She teaches Consumer Behavior andNegotiation and Conflict Management. Her research interests include cultural differences,international negotiation, transition of consumer behavior, changing consumer values andlifestyles, and symbolic consumption. She received her Ph.D. in Marketing from BUESPA.
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electronic mail. Prior to negotiating, attitudes and intentions towards questionable or unethicaltactics were measured, and perceived behavior was measured through a post-negotiation ques-tionnaire and compared with actual behavior and negotiated outcomes (differential and joint).The results suggest that the pre-negotiation questionnaire was a modest predictor of actualbehavior, with general attitudes effective in predicting general behavior. Ethical behavior of thenegotiator, ethical behavior of the other party, and perceived honesty of the other party were thebest predictors of performance (perceived and actual), while likely use of unethical tactics andperceived honesty of the other party predicted whether or not an agreement was reached.
Keywords: negotiation, ethics, information exchange, e-mail.
Information is often cited as one of the central elements in understanding andmanaging the negotiation process (McMillan 1992; Pruitt and Carnevale1993; Rubin and Brown 1975; Shell 1999; Thompson 1998). In theory, infor-mation exchange can help build trust between parties, which in turn can leadto a fuller, richer exchange of information and, ultimately, better joint/inte-grative outcomes. On the other hand, information is a source of power, so themore information one party has about a counterpart’s strengths and weak-nesses (preferences, priorities, alternatives), the stronger his/her bargainingposition (Brodt 1994; French and Raven 1959; Lewicki, Saunders and Minton1999; Schelling 1960; Walton and McKersie 1965). Consequently, negotiatorsare faced with the challenge of determining how much and what types of infor-mation to reveal while assessing their negotiating counterpart’s honesty andforthrightness.
The types of information that individuals might employ in a negotiation canrange from valid and relevant information (e.g., a statement of fact critical tothe outcome of the negotiation) to erroneous or invalid information (e.g., anintentional misstatement of fact). While the former has been the focus of anumber of studies, generally linking valid information exchange to negotia-tor performance (Pruitt and Lewis 1975; Olekalns, Smith and Walsh 1996;Roth and Murnighan 1982; Thompson 1991), there have been far fewer stud-ies focused on the exchange of invalid information, such as through misrep-resented facts, false promises, and bluffs.
Several studies have documented the frequent use of invalid information inreal and simulated negotiations (Boles, Croson and Murnighan 2000;Murnighan, Babcock, Thompson and Pillutla 1999; O’Connor and Carnevale1997), and at least one questionnaire (the “Incidents in NegotiationQuestionnaire” or SINS questionnaire, developed by Lewicki and his col-leagues) has been designed to measure individuals’ perceptions of the appro-priateness and their likely use of these tactics, although no empirical evidenceexists linking the questionnaire to actual behavior. Most importantly, it seems
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likely that invalid information such as misrepresented facts, false promises,and bluffs could affect both the process (pace, openness, responsiveness) andthe outcome of a negotiation (perceived and actual). These relationships,however, have received only modest attention by researchers and scholars.
In an international context, the cultural values of the principal negotiators,their familiarity with one another, and their physical proximity could moder-ate the use of invalid information. While there exist both anecdotal and empir-ical evidence regarding the differing values and behaviors to expect incross-cultural negotiations (cf. Puffer and McCarthy 1995; Schuster andCopeland 1996; Volkema 2004), the inherent uncertainty in these negotiationsoften leads the parties to engage one another with caution if not suspicion(Hopmann 1996; Iklé 1964). This is further exacerbated by the increasingreliance on media of lower information richness (e.g., electronic mail) ininternational negotiations (Shell 2001; Ulijn, Lincke and Kavakaya 2001),media that offer apparent efficiencies but which may be associated with greateruse of questionable or unethical tactics (Daft and Lengel 1986; Daniels 1967;Tinsley et al. 2002; Valley, Moag and Bazerman 1998).
This article reports on a study of predicted and actual use of invalid infor-mation in a two-party, commercial-property leasing negotiation, which wasconducted via electronic mail. Invalid information was measured in threeways: first, through a questionnaire (the “Incidents in Negotiation Question-naire”) to assess attitudes and intentions towards questionable or unethical tac-tics; second, through participants’ self-reporting of their behavior in thisproperty leasing negotiation; and third, through third-party measures of actualbehavior. The purpose of the study was to determine the frequency of use ofquestionable or unethical tactics in an e-mail-based, international negotiation,to assess the questionnaire’s utility in predicting actual use of these tactics, andto assess the impact of the tactics on differential and joint outcomes (perceivedand actual). By understanding the impact of these tactics on negotiation out-comes, we can begin to understand the rationales of negotiators faced with dif-fering challenges (high stakes, time constraints, media limitations, competitiveor unethical opponents/counterparts) in an international context.
Background and Hypotheses
Information exchange is generally considered one of the keys to understand-ing and managing the negotiation process (Pruitt and Carnevale 1993; Pruitt and Rubin 1986; Shell 1999; Thompson 1998; Walton and McKersie1965). Information can take a number of forms, based on its relevancy andvalidity. Relevant information, for example, might include a negotiator’s
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needs, alternatives, resources, utilities, and style (Chatterjee and Ulvila 1982;Fisher, Ury and Patton 1991; Harsanyi 1962; Pinkley, Griffith and Northcraft1995). In addition, negotiators frequently share valid information that is notdirectly relevant to the issues of a negotiation (e.g., discussions of traffic,weather, current events, hobbies), which can assist the parties in getting com-fortable, building rapport, and reaching agreement (Lewicki et al. 1999;Thompson, Peterson and Kray 1995).
The exchange of valid, relevant information has been found to predict bothdifferential and joint outcomes. Roth and Murnighan (1982), Brodt (1994), andOlekalns, Smith and Walsh (1996) all found that parties with an informationaladvantage performed better than their peers or negotiating counterparts withrespect to substantive outcomes. Likewise, several researchers have found thatinformation exchange can be positively associated with higher joint out-comes, most notably when that information is about the parties’ interests or pri-orities (Olekalns et al. 1996; Pruitt and Lewis 1975; Thompson 1991).
Negotiators also communicate invalid or misleading information in theform of exaggerated offers, misrepresented facts, and false promises of futurebusiness opportunities (Anton 1990; Scouller 1972). These communications,in fact, have been found in several studies to occur with some degree of fre-quency. O’Connor and Carnevale (1997), for example, discovered that par-ticipants misrepresented information in 28% of their negotiations in alaboratory study. Murnighan et al. (1999) compared experienced and naivebargainers, and found that 34% of the former both lied (i.e., made an invalidstatement) and were deceptive (i.e., failed to correct a counterpart’s faultyassumptions). Boles et al. (2000) found that participants in a laboratory nego-tiation were deceptive about 13% of the time, with more deception occurringin the early rounds of negotiation. In addition, they noted that the individualsmaking propositions were far more likely to outright lie than were the indi-viduals responding to propositions.
There are a number of reasons why individuals may choose to use invalidinformation in a negotiation. These include the financial stakes (Boles et al.2000; Kelley, Beckman and Fischer 1967; Tenbrunsel 1998), perceived timepressure (Yukl, Malone, Hayslip and Pamin 1976), environmental competi-tiveness (Hegarty and Sims 1978), and their own personal characteristics/val-ues (Hegarty and Sims 1978; Trevino and Youngblood 1990). The last of thesefactors – personal characteristics/values – will likely be influenced by the indi-vidual’s cultural frame-of-reference (Banas and McLean Parks 2002; Faure2002, Volkema 2004).
Invalid information can take several different forms, from generallyaccepted behaviors like exaggerating an offer or demand to less acceptedbehaviors such as making false promises. Lewicki (1983), building on the
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work of Bok (1978) and others, developed a questionnaire (“Incidents inNegotiation Questionnaire”) and typology of lying and deception in negotia-tion 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 tobelieve that you are in control of consequences which you are not, such asthrough promises you may not be able to fulfill), inappropriate informationcollection (e.g., various forms of bribery, such as paying others for informa-tion), and influencing a counterpart’s professional network (e.g., encouragingothers to defect). Subsequently, Lewicki and Robinson (1998) and Volkema(1999a, 2004) have employed this questionnaire to examine differences in perceptions due to demographic factors.
While the “Incidents in Negotiation Questionnaire” appears to be a usefultool in assessing attitudinal differences, there have been few studies to confirmthe predictive validity of the instrument (Banas and McLean Parks 2002). Thequestionnaire measures individuals’ perceptions of the appropriateness ofquestionable negotiating tactics and their likelihood of using those tactics, notactual behavior. Robinson, Lewicki, and Donahue (2000) associate percep-tions of appropriateness with attitudes, while likelihood of use corresponds tobehavioral intentions.
There is, however, a long history of research that links attitudes, intentions,and behavior (for a review see Ajzen 1988). Attitudes have been found to pre-dict behavior, with behavioral intentions acting as a mediating variable.Further, specific attitudes appear better at predicting specific behaviors, whilegeneral attitudes are better at predicting general behaviors.
In a meta-analysis of over one hundred studies, Kim and Hunter (1993)found significant support for these linkages between attitudes, intentions, andbehavior, particularly where an individual’s actions fall within his/her control.Given that this is the case for most of the negotiating tactics identified byLewicki and his colleagues, we propose the following:
Hypothesis 1: Attitudes and intentions towards questionable or unethicalnegotiating tactics (high perceived appropriateness and likely use, as mea-sured by the “Incidents in Negotiation Questionnaire”) will be positivelyassociated with self-reported and actual use of those tactics.
Despite the apparent frequency with which invalid information appears tobe employed, there have been relatively few studies that have examined theinfluence of invalid information on negotiation outcome. Roth and Murnighan(1982) found that the party with the larger outcome (payoff) and an informa-tional advantage was inclined to misrepresent his or her outcome to his/herultimate advantage, while O’Connor and Carnevale (1997) found that subjects
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who misrepresented information achieved higher outcomes. These studies,however, focused only on individual outcomes (i.e., comparing a negotiator’soutcome with his or her peers’performance) or differential outcome (i.e., com-paring a negotiator’s outcome with his/her negotiating counterpart’s perfor-mance), not joint or integrative outcomes (which are based on the combinedperformance of parties in a dyadic negotiation), and only on misrepresentationof information. Other tactics in the typology identified by Lewicki and his col-leagues (e.g., bluffing) were not examined.
It would seem reasonable that individual outcomes as well as differentialoutcomes would increase with the use of unethical tactics, as one’s counter-part is making decisions based on erroneous information. The communicationof false or deceptive information might even create a sense of openness andtrust on the part of the other party, causing him/her to share additional validinformation. The use of such tactics would likely have the opposite effect onjoint outcomes, decreasing with the use of unethical tactics and vice versa. Forexample, by not exaggerating an initial offer or misrepresenting information,the parties may actually negotiate a settlement that comes closer to theirmutual benefit rather than benefiting one party (the party exaggerating an offeror 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 individualemploys, the higher will be his/her actual outcome, the higher his/her differ-ential outcome, and the lower the joint outcome.
In addition, it would be valuable to know what effect questionable or uneth-ical tactics have on perceived outcomes. Negotiators seldom know the actualpayoff (differential or joint outcome) in real-world negotiations, since they sel-dom know the utilities and winnings of the other party (Putnam and Jones1982). Instead, they make their decisions regarding whether or not to engagein future negotiations based on perceived outcomes. Brodt (1994) did one ofthe few studies that examined the effects of information on perceived outcome,and found that informed parties were significantly more positive about theirperformance than were their uninformed peers. However, the inside informa-tion that was shared with these parties came from a third party, so the validityof the information might not have been questioned.
We might assume that the individual using questionable tactics believeshe/she has an advantage over the other party, since this individual knows thatthe other party is making decisions based on erroneous information. Therefore,the negotiator would expect that his/her outcome would exceed the otherparty’s performance, and that as a consequence their joint outcome might suf-fer as well (assuming there is no opportunity to increase a fixed-pie outcomefor both parties). Thus,
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Hypothesis 3: The more questionable or unethical tactics an individualemploys, the higher will be his/her perceived outcome, the higher his/her per-ceived differential outcome, and the lower the perceived joint outcome.
Finally, many of the studies conducted to date assume that an agreement willbe reached by the negotiating parties. In reality, this is not always the case. Infact, many authors advise negotiators to develop alternatives to a negotiatedagreement as a way of protecting themselves against a bad deal; sometimes thebest alternative is to walk away (Fisher, Ury and Patton 1991; Thompson 1998;Volkema 1999b).
There are a number of factors that might lead one or both negotiators to backaway from an agreement, including the terms of the agreement (which may notallow a negotiator to reach his/her breakeven point) or the perceived ethical-ity 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 (for example, as a result of grossly exaggerated offers or demands, the introduction of questionable facts, or con-tradictory statements), the deal may seem too risky to consummate. The morea negotiator employs such tactics, the greater the likelihood of suspicionbeing raised.
Given this reasoning, the following is hypothesized:
Hypothesis 4: The more questionable or unethical tactics an individualemploys, the greater the likelihood of not reaching an agreement.
Method
Participants
The participants in this study were sixty-six graduate business students takingcourses in negotiation, thirty-three of whom were taking a course offered inRio de Janeiro, Brazil. This group included individuals from Brazil andFrance, ranging in age from 22 to 37 years old (mean = 26.3). Sixty-one percent of the subjects 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 ofdifferent countries, including Hungary, Germany, the Netherlands, Greece,Russia, Mexico, and the United States. All participants were fluent in English,which was the primary language of their courses.
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Procedure
The subjects participated in a two-party, property leasing negotiation, asdescribed in Volkema (1999b). The thirty-three graduate students in Brazil rep-resented a company called Logan Telecommunications, which was interestedin expanding its operations in a new geographic area. As such, they were inter-ested in leasing 300 square meters of commercial space. The other party(graduate students in Hungary) represented RJW Properties, Inc., a real estatefirm with properties in the desired area.
In addition to background information about their company, each repre-sentative 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. Dependingupon the outcome negotiated for an issue, the individual earned a certain num-ber of points (Table 1). Because some of the issues were worth more points tothe representative of Logan Telecommunications than to the representative ofRJW Properties, and vice versa, negotiators had an opportunity to maximizetheir joint score as well as their individual and differential scores. Multi-issuesimulations of this type have been used effectively in a number of prior stud-ies (cf. Olekalns et al. 1996; Thompson 1991).
The negotiation took place via electronic mail, which allowed for collectionof all dialogue. All communications were in English, and participants had four-teen days to complete the negotiation. This time frame was deemed more thansufficient, based on prior testing of the simulation, both in person and via theinternet. All negotiating dyads remained the same throughout the study.
Three weeks prior to commencing the negotiation, the thirty-three individ-uals representing Logan Telecommunications were asked to complete the“Incidents in Negotiation Questionnaire.” (Note: There have been several ver-sions of this questionnaire.) This questionnaire, developed by Lewicki and hiscolleagues (Lewicki and Robinson 1998; Robinson et al. 2000), asks respon-dents to rate the appropriateness and likelihood of using eighteen tactics orbehaviors, rating each behavior on a 7-point Likert scale (for appropriateness:1 = not at all appropriate, 7 = very appropriate; for likelihood of use: 1 = notat all likely, 7 = very likely). The tactics consist of a range of behaviors withrespect to ethicality, from generally accepted competitive tactics (e.g., exag-gerating 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 oppo-nent with his or her supervisor). The questionnaire indicates that there are no “right answers” regarding the right or wrong thing to do, so respondents areencouraged to be candid in their answers. All respondents were assuredconfidentiality.
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ETHICALITY IN NEGOTIATION 323
On the final day of the negotiation (following collection of e-mail transcripts),participants completed a second questionnaire in which they were asked toindicate how well they thought they had performed in the negotiation and howwell they thought the other party had done (both on 7-point Likert scales,where 1 = not well and 7 = very well), which tactics they had used (i.e., mis-representation of factual information, making promises that could not be kept,exaggerating an opening demand or offer, pretending not to be in a hurry), and
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 250One room 400 200Two rooms 500 150Three rooms 600 100
Utilities included None 100 300Water/sewer 150 200Water/sewer/electricity 200 100
Length of lease One year 500 200Two years 450 500Three years 300 700Four years 200 900
Parking available No cars 100 300One car 300 250Two cars 500 200Three cars 600 150Four cars 650 100
Advanced payment One month 500 200Six months 350 600One year 150 900
Maximum 3700 3700
Minimum 1100 1100
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324 ROGER J. VOLKEMA, DENISE FLECK AND AGNES HOFMEISTER-TOTH
overall how honest they had been and how honest they thought the other partyhad been in the negotiation (on 7-point Likert scales, where 1 = not very hon-est/ethical and 7 = very honest/ethical). The method of asking participants toreport in a post-experiment questionnaire on tactics and informationexchanged has been employed successfully in other studies of bargaining andnegotiation (cf. Boles et al. 2000; Murnighan et al. 1999). All post-negotiationquestionnaires were confidential.
Independent and Dependent Measures
To gain insight into the predictive validity of the “Incidents in NegotiationQuestionnaire,” the 7-point Likert ratings of appropriateness and likely usewere taken for all eighteen tactics, including four focal tactics – pretending notto be in a hurry (when you were), exaggerating an offer or demand, misrepre-senting information, and making promises that could not or would not be kept. These four focal tactics each had the potential of being employed dur-ing the actual negotiation. Other tactics, such as talking directly to the peopleto whom an opponent reports in order to undermine the negotiation or inten-tionally misrepresenting the progress of negotiations to the press, are tech-niques could not be affected by participants in this negotiation. Still otherapproaches, such as hiding one’s bottom line, could not be easily measured bythird parties reviewing transcripts of the negotiation. Overall measures werecalculated as the sums of the ratings for the four focal tactics as well as for alleighteen tactics for appropriateness and likely use, respectively (Robinson et al. 2000). Self-reported use of the four focal tactics was taken from the post-negotiation questionnaire. In addition, participants also were asked toindicate on this questionnaire their overall honesty in the negotiation (as pre-viously detailed).
Actual behavior for each negotiator (Logan Telecommunications and RJWProperties) was determined by three individuals independently reviewingprinted transcripts of the e-mail negotiations. These individuals, who did notknow 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 comparedand any differences were resolved through discussion. An overall measure ofethicality for each participant was determined by adding the occurrences ofthese questionable or unethical behaviors across categories. For exaggeratingan offer or demand, only those offers/demands that were outside the specifiedrange shown in Table 1 were counted as exaggerated offers.
To determine the influence of ethics on performance, several measures ofoutcome were taken. Perceived outcomes were based on self-assessments
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ETHICALITY IN NEGOTIATION 325
recorded on the post-negotiation questionnaire, where subjects were asked toindicate how well they thought they had done in the negotiation and how wellthey thought the other party had done (as previously detailed). Perceived dif-ferential outcome was the difference in these point values (self minus other),while perceived joint outcome was calculated as the sum of these values.Actual outcome was measured by totaling the point values for each of theseven issues negotiated (Table 1). Given that the simulation allowed for bothdifferential and joint outcomes, the difference in scores between an individualand his/her counterpart (differential outcome) was calculated, as well as thesum of their scores ( joint outcome).
Analyses
Hypotheses 1–3 were tested using regression analyses, while Hypothesis 4 wastested using discriminant analysis. Since perceived and actual ethical behav-ior of the other party in the negotiation might influence the outcomes predictedby Hypotheses 2 and 3, these variables were included as independent variablesin these analyses. Due to dependency concerns with data from negotiatingdyads (e.g., highly correlated outcome measures within dyads), only out-come data from Logan Telecommunications representatives were analyzed intesting hypotheses (Kenny 1995).
Results
From the “Incidents in Negotiation Questionnaire,” respondents indicated thatpretending to be in no hurry was the most appropriate of the four focal tactics(mean = 5.94, SD = 1.39), followed closely by exaggerating an offer ordemand (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 indicatedthat 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 generally feltthat it was more appropriate to use each tactic than they indicated they werelikely to do (supported by t-tests at the .05 level for pretending to be in nohurry, and at the .10 level for exaggerating an offer or demand and for makingfalse promises.)
Consistent with findings reported elsewhere (cf. Volkema 1997), the corre-lations between attitudes (appropriateness) and intentions (likely use) were all
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326 ROGER J. VOLKEMA, DENISE FLECK AND AGNES HOFMEISTER-TOTH
Tabl
e 2.
Des
crip
tive
Stat
istic
s an
d C
orre
latio
n M
atri
x fo
r Atti
tude
s, In
tent
ions
, and
Beh
avio
rs a
Var
iabl
esM
ean
SD
1 2
3 4
5 6
7 8
9 10
11
12
13
14
15
16
17
18
19
20
Att
itud
e 1.
Pre
tend
no
hurr
y5.
941.
39
2. E
xagg
erat
e of
fer
5.52
1.44
.2
4
3. M
isre
p. in
fo.
3.85
2.
15
.53**
.20
4. M
ake
prom
ises
2.15
1.37
.0
5-.
07.3
0t
5. A
ll ta
ctic
s 66
.82
16.9
2 .5
6***
.20
.68**
*.5
2**
Inte
ntio
ns6.
Pre
tend
no
hurr
y5.
211.
75
.43*
.01
.34
t.1
3 .3
0t
7. E
xagg
erat
e of
fer
5.15
1.52
.2
3 .7
1***
.12
-.06
-.
05
.31
t
8. M
isre
p. in
fo.
3.88
1.
98
.53**
*.1
0 .8
5***
.31
t.6
3***
.44**
.1
1
9. M
ake
prom
ises
1.
79
1.02
.0
6 .0
6 .1
0 .6
5***
.23
.11
.20
.20
10. A
ll ta
ctic
s 59
.06
12.7
1.4
8**.1
4 .4
7**.3
4*.7
0***
.61**
*.2
8 .6
7***
.39*
Self
-rep
orte
d B
ehav
ior
11. P
rete
nd n
o hu
rry
.24
.44
-.08
-.11
.1
4 .0
4 .0
2 .1
0 .0
8 .0
4 .3
3t
.08
12. E
xagg
erat
e of
fer
.73
.45
-.03
.3
2t
.12
.02
-.07
-.
24
.15
-.18
.0
1 -.
42*
.19
13. M
isre
p. in
fo.
.73
.91
.23
.23
.54
***
-.02
.4
2*
.04
.14
.54**
*.1
7 .4
8**
.17
-.11
14. M
ake
prom
ises
.03
.17
.14
-.56
***
.26
.24
.18
.18
-.49
**.2
8 -.
14
-.03
-.
10
.11
-.14
15
. Hon
esty
– s
elf
6.12
1.
02
.16
-.11
-.
28
-.17
-.
30t
-.09
-.
05
-.24
-.
09
-.28
-.
07
.14
-.33
t.1
5 16
. Hon
esty
– o
ther
4.
81
1.94
-.
18
-.02
.1
3 .0
7 .2
4.0
0 -.
21.1
2 .1
2 .2
0 .0
1 -.
03
.32
t.1
1-.
01
Act
ual B
ehav
ior
17. P
rete
nd n
o hu
rry
.06
.24
.20
-.09
.38*
-.12
.2
7 .1
9 -.
03
.21
.05
.23
.45
**-.
13
.36
*-.
05
-.41
*.0
318
. Exa
gger
ate
offe
r .3
0 .4
7 .0
8 .3
2t
.23
.02
.28
.11
.29
.24
.01
.27
.09
.11
.13
-.12
-.
21
.21
.11
19. M
isre
p. in
fo.
2.67
2.
57
.18
.20
.31
t-.
02
.44
**.0
9 -.
06
.33
t-.
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ETHICALITY IN NEGOTIATION 327
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), thecorrelation for misrepresenting information was .85 (p < .001), and the corre-lation 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 tac-tics in the questionnaire was .70 (p < .001).
Eight of the thirty-three focal 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 hadexaggerated an offer or demand during the negotiation (mean = .73, SD = .45).Fifteen individuals (45.5%) indicated that they had misrepresented informa-tion, from one to three times (mean = .73, SD = .91). One person indicated thathe/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/eth-ical, 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 Telecommunicationsfelt that they had been more honest than their negotiating counterparts at RJWProperties (t = 3.29, p < .01).
In terms of actual behavior (as determined from transcripts), two individu-als (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 ordemand. Twenty-four (72.7%) misrepresented information, from one to tentimes (mean = 2.67, SD = 2.57). No one was found to have made a promisethat could not be kept. Overall, twenty-seven (81.8%) of the thirty-three participants representing Logan Telecommunications used at least one of thefour focal tactics. These overall numbers were comparable for those individ-uals representing RJW Properties – twenty-five (75.8%) used at least one ofthe tactics.
There were sizeable correlations between several of the self-reported behav-iors and actual behaviors. The correlation between participants’perception ofpretending to be in no hurry and their actual use of this tactic was .45 (p < .01),while the correlation between perceived misrepresentation of informationand actual misrepresentation was .53 (p < .001). The correlation between per-ceived exaggeration and actual exaggeration, while positive (.11), was notsignificant. (The fact that more individuals reported exaggerating offers thanwere actually counted is likely due to the fact that only offers or demands thatwere outside the specified ranges shown in Table 1 were counted as exagger-ated offers, while some individuals may have exaggerated within a specifiedrange for a given issue.) Overall, participants’ perceptions of their honestywere highly correlated with actual use of these tactics (r = –.52, p < .01). That
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is, the more honest a participant judged himself/herself to be in this negotia-tion, the less he or she actually used these questionable or unethical tactics inthe negotiation.
The correlations between participants’ specific attitudes and their actualbehavior and between intentions and actual behavior were all positive, but at best marginally significant (Hypothesis 1). The only significant findingswere for exaggerating an offer (attitude: r = .32, p < .10) and misrepresentinginformation (attitude: r = .31, p < .10; intentions: r = .33, p < .10). However, participant’s ratings for all attitudes and all intentions were significantly cor-related with actual behavior for all tactics (attitude: r = .48, p < .01; intentions:r = .35, p < .05).
In terms of performance, twenty-two of the thirty-three pairs of negotiatorscompleted their negotiations. For those reaching an agreement, the scores forthe negotiators representing Logan Telecommunications ranged from 2550 to3000, with a mean of 2777.27 (SD = 119.25), while the scores for their coun-terparts (representing RJW Properties) ranged from 2400 to 3050 (mean =2675.00, SD = 183.71). The differential outcome for the focal participantsranged from 400 to 600 (mean = 102.27, SD = 284.30). The joint outcomeranged from 5300 to 5700 (mean = 5452.27, SD = 122.94).
Regression analyses revealed that the “Incidents in Negotiation Question-naire” did predict both self-reported and actual behavior (Table 3). Withappropriateness and likelihood of use of the four focal tactics as the indepen-dent variables, participants’appropriateness ratings for the sum of the four tac-tics were positively associated with actual unethical behavior (b = .32, p < .10)as well as with perceived unethical behavior (b = .42, p < .05). Participants’ratings for general appropriateness of tactics (all eighteen tactics) were posi-tively associated with actual unethical behavior (b = .48, p < .01) and posi-tively associated with perceived unethical behavior (b = .34, p < .05).Therefore, the higher the perceived appropriateness of questionable or uneth-ical tactics, the more questionable or unethical tactics the individual thoughthe or she employed in the negotiation and the more tactics he or she actuallydid employ, consistent with Hypothesis 1. In addition, participants’ ratings ofgeneral appropriateness were negatively associated with perceived honesty inthe negotiation (b = –.30, p < .10). That is, the higher the perceived appropri-ateness of the tactics from the questionnaire, the less honest the participant per-ceived himself/herself to be in the negotiation.
These results also suggest a relationship between participants’ perceivedhonesty and their actual unethical behavior, with the latter also potentiallyaffected by the other party’s perceived or actual behavior. When actual uneth-ical behavior was regressed on perceived honesty of self and other as well asactual unethical behavior of other (Table 4), the perceived honesty of self was
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found to be negatively associated with actual unethical behavior of self (b = –.48, p < .01) while actual unethical behavior of the other party was found tobe positively associated with actual unethical behavior of self (b = .38, p < .05).Thus, the more honest the negotiator perceived himself/herself to be in thenegotiation, the fewer questionable or unethical tactics the individualemployed during the negotiation. The lack of a significant correlation betweenperceived honesty of self and the other party (r = –.01) suggests that partici-pants did not necessarily project their own ethicality onto their negotiatingcounterpart. However, the positive relationship between actual unethicalbehavior of the two parties suggests that unethical behavior might breed sim-ilar behavior from the other party.
Table 3. Results of regression analyses of actual and perceived behavior on the Incidents inNegotiation Questionnairea
Predictor variable Actual unethical Perceived unethical Perceived honestybehavior behavior of self
Four focal tacticsAppropriateness .32⊥ .42* –.09 Likely use –.05 .00 –.19
All eighteen tacticsAppropriateness .48** .34* –.30⊥
Likely use .03 .01 –.13
Adjusted R2 .08 .21 .15 .09 .01 .06
F 3.59⊥ 9.49** 6.67* 4.14* 1.17 3.11⊥
a n = 33⊥ p < .10, * p < .05, ** p < .01, *** p < .001
Table 4. Results of regression analysis of actual behavior on the perceived honesty of self andhonesty of othera
Predictor variable Actual unethical behavior
Perceived honesty of self –.48**
Perceived honesty of other .08Actual unethical behavior of other .38*
Adjusted R2 .36
F 9.74***
a n = 33⊥ p < .10, * p < .05, ** p < .01, *** p < .001
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As a follow-up analysis, the first use of a questionable or unethical behav-ior was examined for each representative, Logan Telecommunications andRJW Properties (i.e., location in the sequence of e-mail messages sent by aparty where the first use of a focal tactic occurred). In twenty-two (66.7%) ofthe negotiations, both parties used one or more tactics, in eight cases (24.2%)only one party used a focal tactic, and in three cases (9.1%) neither party usedone of these tactics. In those cases where both parties employed one or morefocal tactics there was a high correlation between stages of first use (r = .64,p < .001), suggesting that the first incidence of a questionable or unethicalbehavior on the part of one negotiator was followed quickly by reciprocalbehavior on the part of the other negotiator. Furthermore, the earlier a LoganTelecommunications representative used a questionable or unethical behaviorin the sequence of e-mail messages exchanged, the more unethical the RJWrepresentative was overall (r = –.40, p < .05), and the earlier the RJW repre-sentative used a questionable or unethical behavior, the more unethical theLogan Telecommunications representative was overall (r = –.36, p < .10).
Outcomes (actual and perceived) were regressed on attitudes, intentions,perceived honesty, and actual behavior (Table 5). The more questionable orunethical tactics a party used (b = .37, p < .10) and the less honest he/shethought the other party was in the negotiation (b = –.51, p < .05), the higherthe negotiator’s score (the former consistent with Hypothesis 2). The moreunethical the other party, the greater the differential outcome (b = .40, p < .10)and the smaller the joint outcome (b = –.62, p < .01). These results suggest thatthe perceived or actual ethicality of the other party was a better predictor ofactual outcomes than the ethics of the principal party (although, as previouslynoted, unethical behavior by one party appears to promote similar behavior bythe other party).
The participant’s perception of the honesty of the other party and the actualunethical behavior of the other party were the only variables significantly asso-ciated with perceived outcomes. The more honest the other party was per-ceived to be, the better the negotiator perceived he/she did in the negotiation(b = .30, p < .10) and the better the negotiator perceived the other party did inthe negotiation (b = .64, p < .001). In addition, the more honest the other partywas perceived to be (b = –.58, p < .001) and the more unethical the other partyactually was (b = –.29, p < .10), the smaller the perceived differential outcome(i.e., the difference between his/her perceived performance and the perceivedperformance of the other party). Finally, the more honest the other party wasperceived to be, the larger the perceived joint outcome (b = .55, p < .001).However, there was no support for a relationship between actual unethicalbehavior of the Logan Telecommunications negotiators and perceived out-comes (Hypothesis 3).
As previously noted, eleven pairs of negotiators were unable to reach an
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agreement in the allotted time (a period of two weeks, which appeared sub-stantial for completing the negotiation). To determine if the ethics of the sub-jects might have played a role in predicting whether or not an agreement wasreached, a discriminant analysis was performed, with agreement/no agreementas the dependent variable, and the mean score for appropriateness of tactics(attitude), mean score for likely use of tactics (intentions), perceived honestyduring the negotiation, perceived honesty of the other party during the nego-tiation, and actual ethical behavior of each party during the negotiation as thepredictor variables. The analysis yielded a significant function (canonicalcorrelation = .54; Wilks’ lambda = .71; p < .01) involving two variables –likely use of tactics and perceived honesty of the other party. The more likelythe use of competitive or unethical tactics, the greater the likelihood that noagreement would be reached. In addition, the less honest the other party wasperceived 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 thefunction. Strictly speaking, however, this result did not support Hypothesis 4,which predicted that the more questionable or unethical tactics an individualemployed, the greater the likelihood of not reaching an agreement.
Table 5. Results of regression analyses of outcomes on attitudes, intentions, perceived honesty,and actual behaviora
F 3.66* 3.80⊥ 12.64** 2.89⊥ 21.23*** 7.11** 13.25***
a For actual outcomes, n = 22; for perceived outcomes, n = 33.⊥ p < .10, * p < .05, ** p < .01, *** p < .001
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Discussion
As reported elsewhere (Boles et al. 2000; Murnighan et al. 1999; O’Connorand Carnevale 1997; Scouller 1972), the use of questionable or unethical tac-tics in negotiating is a common phenomenon. In this study, approximately 80%of the participants were found to use one or more of the four focal tactics. Thetactic that was used most frequently was misrepresenting information, whichwas used by over 70% of the participants. In general, these percentages aresomewhat higher than the numbers reported in previous studies, which maybe due to the medium employed in this study – electronic mail – and the factthat most of the dyads represented cross-cultural negotiations. At least onestudy has suggested that the use of unethical tactics increases when negotia-tions occur via electronic mail, due in part to the inability of the other party toread nonverbal cues which can give away intentions to deceive (Valley et al.1998). In addition, Volkema and Fleury (2002) report that the likelihood ofunethical behavior increases when an individual is negotiating with someonefrom another country, particularly a country known for its skilled negotiators.
The “Incidents in Negotiation Questionnaire” was found to be modestly pre-dictive of perceived (self-reported) and actual behavior. While there weresome marginally significant relationships between perceived appropriatenessor likely use of specific tactics and the actual use of those tactics, the measureof general appropriateness (all eighteen behaviors) was the best predictor ofactual ethical behavior. Prior research on the linkages between attitudes,intentions, and behavior has reported significant correlations between spe-cific attitudes or intentions and specific behaviors, and between general attitudes or intentions and general behaviors (Ajzen 1988). The somewhatweak finding for the former (specific-to-specific linkages) might be an artifactof only four tactics from the questionnaire having applicability to this partic-ular simulation. The positive link between the measure of general appropri-ateness and actual ethical behavior is encouraging as regards the predictiveutility of the questionnaire.
The likely use of questionable or unethical tactics, the actual use of thosetactics, and the perceived honesty of the other party were the critical variablesin predicting outcomes. The use of questionable or unethical tactics by aparty was positively associated with a party’s performance, while the per-ceived honesty of the other party was negatively or inversely associated withthe negotiator’s score. Thus, a negotiator did better relative to others repre-senting Logan Telecommunications when he/she used these questionable tac-tics and when he/she presumed the other party was using these tactics. Inaddition, the use of questionable or unethical tactics by the other party wasassociated with lower joint outcomes.
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There appears to be a reciprocating effect involving the use of questionableor unethical tactics, as early use by one party was associated with early use bythe other party. In addition, timing appeared to influence frequency of use, asthe earlier one party used one of these four tactics, the more the other partyused questionable or unethical tactics. As already noted, exaggerating an offeror demand was only coded as such if the offer or demand was outside thespecific ranges shown in Table 1. Since exaggeration is often one of the first tactics employed by negotiators, going beyond specified ranges mayhave sent a signal to the other party that future unethical behavior was likely(prompting not only reciprocation but escalating use of questionable or un-ethical tactics).
The perceived honesty of the other party was the primary variablesignificantly related to perceived outcomes. The more honest the other partywas perceived to be, the better a negotiator perceived he/she did compared toothers representing Logan Telecommunications, the poorer the individualperceived he/she did in competition with the other party (differential outcome),but the better the individual perceived he/she did in cooperation with the otherparty ( joint outcome). Interestingly, the more honest the other party was per-ceived to be, the better the negotiator perceived the other party did in the nego-tiation. Conceivably, the other party’s perceived honesty led to an increase inexchange of valid information, or accommodation on certain issues.
There were two variables that were most effective in differentiating betweennegotiations that reached agreement and negotiations that did not reach agree-ment – likely use of questionable or unethical tactics (as measured by the“Incidents in Negotiation Questionnaire”) and the perceived honesty of theother party. The more likely the use of these tactics and the less honest one’scounterpart was perceived to be, the greater the likelihood that the partieswould not reach an agreement. It is important to note, however, that the ratingof the other party’s honesty occurred at the conclusion of the negotiatingperiod (when it was clear no agreement would be reached). Therefore, it is con-ceivable that the respondent was seeking to explain or justify the failed nego-tiation by placing blame elsewhere. In future research, this perception mightbe measured at several points throughout the negotiation, to determine if per-ceptions change when it first appears that no agreement will be reached.
The significant positive relationship found between subjects’ self-reportedbehavior and actual behavior is also worth noting, as such findings have notalways been reported by researchers. In general, restricting the recall of anevent to a short and recent reference period and providing specific recall cuescan help improve recall (Gilbert, Fiske and Lindzey 1998). However, indi-viduals still may choose to misreport events when social capital is at stake. Thehigh correlation between self-reported behavior and actual behavior found in
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this study may be due to the fact that participants knew transcripts of theirexchanges would be available to others (e.g., the researchers) for verification.While this finding requires further study, it suggests one way of increasing thevalidity of self-report data of this type, where the issue is more one of honestyin reporting than accuracy in reporting behaviors.
These findings have some direct implications for practitioners. First, asreported in prior research, the use of questionable or unethical tactics is com-monplace among negotiators (approximately 80% in this study used at leastone such tactic), although some tactics may be considered more acceptablethan other tactics. Thus, it is not unreasonable to assume that the other partyin a negotiation will use a questionable or unethical tactic, especially misrep-resentation of information (which was the tactic used most frequently). Theuse may actually increase when a medium such as electronic mail is employed(rather than face-to-face negotiations, where nonverbal cues can be read).Second, an individual’s general attitude/intentions towards the appropriatenessand use of questionable or unethical tactics will likely translate into actual useof such tactics. Therefore, the extent to which another party’s general attitudeor 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 inpredicting the degree of unethical behavior. Third, the use of questionable orunethical tactics will likely result in reciprocal behavior on the part of the otherparty, and the earlier such tactics are employed, the more unethical the otherparty is likely to be. Fourth, the more likely one is to use questionable or uneth-ical tactics and the less honest the other party is perceived to be, the greater thelikelihood that no agreement will be reached. This could be costly if a viableagreement is lost due to inaccurate perceptions of the other party. Whether ornot someone can easily project honesty while in fact acting unethically isimportant to this finding. An ad hoc correlation analysis of participants’ per-ceptions of the other parties’ honesty and the other parties’ actual unethicalbehavior was in the expected direction (r = –.26) but not statistically significant(p = .15). Fifth, perceived outcomes matter, since many times negotiators donot know how they actually performed relative to their counterpart; a decisionto engage in future negotiations with the same party must therefore be basedon perceptions. Furthermore, based on the findings of this study, one’s per-ceived performance (differential and joint) is likely to be tied to the perceivedhonesty of the other party. The more honest the other party is perceived to be,the less the negotiator’s differential advantage is perceived to be and thelarger the joint outcome is perceived to be. Finally, the use of questionable orunethical tactics by a negotiator and the perceived dishonesty of the other partycan positively influence the negotiator’s actual performance. Exaggerating an
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initial offer, for example, is both a generally accepted tactic and a tactic thatcan directly affect outcome by serving as an anchor around which a final set-tlement is reached. Cramton and Dees (Cramton and Dees 1993; Dees andCramton 1991), in fact, argue that a negotiator has a moral right to exagger-ate an initial offer, since the other party will assume this was the case in anyevent and demand the negotiator compromise on a sincere initial offer.
As with all research, there are several caveats that must be offered regard-ing this study and our findings. First, it should be pointed out that this negoti-ation took place entirely via electronic mail. While this medium has its benefitsin terms of data analysis and has been employed effectively elsewhere (Tinsleyet al. 2002), as already noted the use of questionable or unethical tactics mayvary depending on the medium and its richness (Daft and Lengel 1986;Daniels 1967; Tinsley et al. 2002). Remote media, such as telephone and elec-tronic mail, can induce greater competition between negotiators where trustand honesty appear lacking (Paese, Schreiber and Taylor 2003). In addition,as an asynchronous form of communication that is not always reliable, elec-tronic mail introduces other issues that can complicate the development of rap-port and trust between parties. Before generalizing beyond this medium,further study is clearly warranted. Although electronic mail may be usedincreasingly in negotiations over the coming years, the parties frequentlyhave some face-to-face contact as well, and other media such as video con-ferencing have begun to emerge. In one study, preliminary face-to-face con-tact was found to mitigate the likelihood of deadlocks in e-mail negotiations(Shell 2001). Researchers need to recognize that other media (or combinationmedia) might influence ethical behavior and outcome.
It should also be pointed out that the parties in this negotiation were frommany different cultures (as is the case in most multinational organizationsthese 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 questionabletactics (Volkema and Fleury 2002), and how individuals perceive the actions(or inactions) of the other party. It is easy for a cycle of mistrust and hostilityto emerge under such conditions, which in turn can reinforce the tendency toview oneself as good and the other party as bad or evil (Hopmann 1996).Innocuous behaviors, such as gift-giving, extended socialization, and flexibletime orientation, which are often more common in the business practices ofnon-Western cultures, suddenly become suspect (Donohue and Hoobler 2002;Schuster and Copeland 1996). With the continued globalization of markets andthe reliance on technologies such as electronic mail to negotiate agreements(particularly when challenging economic times limit travel), these factorswill become increasingly important.
A growing number of studies have reported the use of questionable and
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unethical tactics in both actual and simulated negotiations. These tactics areemployed in the public sector as well as the private sector, between nations aswell as multinationals. To fully understand the negotiation process, the use andimpact of these tactics needs to be better understood. This study represents oneof the first to examine some of these issues. Beyond replication, future researchneeds to examine the intentions with which invalid information is employed.Invalid information may provide a means of checking another party’s knowl-edge base, uncovering the other party’s settlement range, determining a coun-terpart’s negotiating style (e.g., cooperative, assertive), building rapport andperceived trust, or countering another party’s dishonesty, among other pur-poses. At the same time, we must recognize that many tactics that are per-ceived as unethical in one culture might be seen as acceptable practice inanother culture (Puffer and McCarthy 1995; Schuster and Copeland 1996).Indeed, being polite may be more important than telling the truth in some cul-tures (Faure 2002). Future research, therefore, might seek to isolate intentionsin order to better understand their influence on behavior and performance.
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