Cooperative Negotiation

Essay 2008 14 Pages

Business economics - Business Ethics, Corporate Ethics


Table of Content

1. Introduction

2. The Nature of Negotiation
2.1 The Two Styles of Negotiating

3. Conflicts
3.1 Cultural Differences

4. Cooperation and Ethics
4.1 “Better Ways to Cut a Cake”
4.2 Mechanism Design
4.3 Enron Scandal

5. Conclusion


1. Introduction

Negotiating is essential. The world, nowadays, is more and more interactive and we find ourselves dealing with all different kinds of cultures and possibilites. It’s getting more complicated since the world opened up. We can multiply our profits by negotiating and trading world-wide.

One can find a lot of interesting information about negotiation and its diverse tactics to make money, but another topic is the ethical or social aspect behind negotiating. This is something one can also not so easily deny because it’s part of the game. It is known under the catchphrase “Social Dilemma”.

It’s about the conflict of the individual in ordinary life and the decision to cooperate or defect. The decision is based on the best outcome for the individual and should be for the collectivist while achieving a maximum individual result.

The purpose of this paper is based on the nature of negotiation and should give an insight especially to the cooperative style of negotiations and should also touch on the related ethical point of view.

2. The Nature of Negotiation

Negotiation is the process of bargaining between two or more parties or according to a free online dictionary “a discussion intended to produce an agreement.” Ph.D. Christopher Moore, Associate Professor of Neuroscience from the Massachusetts Institute of Technology, says negotiation is also a problem-solving process and establishes a new or redefines an old relationship that is not satisfactory. Spangler (2003) adds:

"The reason you negotiate is to produce something better than the results you can obtain without negotiating [...]”

Individuals search for their best possible outcome and they do it by trying to win the other party involved for their self-interest by being cooperative and trying to convince the other party while facing mutual interest.

2.1 The Two Styles of Negotiating

According to Professor Moore “there are two styles of negotiating: competitive and cooperative”.

The competitive style is also called adversarial, positional or hard bargaining. It is applied when resources are limited. It implies a win-lose situation because the involved parties have opposing interests, e. g. buyer-seller transaction.

The cooperative style or soft bargaining on the other hand is based on a win-win mentality, which is based on mutual interests to reach a common goal. It offers more flexibility and therefore allows also the selection of the “Best Alternative to a Negotiated Agreement” (BATNA)[1], e. g. in a hiring situation.

BATNA protects both parties “from accepting terms that are too unfavorable and from rejecting terms that would be in their interest to accept” (Spangler, 2003). BATNA can also lead to an end of the negotiation process, but BATNA is, in fact, also used to avoid a conflict, respectively as a prevention method to a further escalation by keeping an eye on a mutual interest leading to an agreement.

3. Conflicts

Conflicts are an indispensable attribute of every social unit. There is no social unit without any conflict.

Conflicts can be classified as functional and dysfunctional and normaly arise when there are conflicts of interets and/or of material aspects or when unfair methods put one party obviously and deliberately at a disadvantage.

Other conflicts might be caused by the relationship of the parties themselves, management divisions of resources, different horizons of rationality, values, norms and positions, own perception, communication barriers, dissatisfaction of social positions, personality of the negotiators and the influence by the management.

Different cultural backgrounds can also play a role, but are not necessarily a reason for a conflict. As it is a possible catalyst to a conflict, it should be shortly contemplated as well.

3.1 Cultural Differences

Even though a conflict can arise apart from different cultural backgrounds, there are factors that influence international negotiations and make them more challeging than domestic negotiations.

Factors that influence international negotiations are for example:

- Differences in international economics
- Foreign governments and bureaucracies (e. g. taxes)
- Instability
- Ideology
- General cultural differences (gender, age, hierarchy, cultural dimension)

Different countries have different economics and different governmental styles, as well as differences in their organization and administration. That can lead to tensions or obstacles in the negotiation process and should be considered in an environmental context. Other factors are, of course, diversity in bargaining power, desired outcomes, immediate stakeholders and the relationship between the negotiating parties.

The amount of influence certain factors have, like corruption in less-developed countries, can lead to a communication barrier and even “hard conflicts” depend on the knowledge, one party has about the other. Thus, it should not be forgotten and should be discussed separately before each negotiation process.


[1] BATNA is a term created by Fisher, Ury (1981)


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Institution / College
Jagiellonian University in Krakow – Cracow University of Economics
Cooperative Negotiation




Title: Cooperative Negotiation