IDEAS home Printed from https://ideas.repec.org/a/eee/jobhdp/v168y2022ics0749597821001047.html
   My bibliography  Save this article

When we should care more about relationships than favorable deal terms in negotiation: The economic relevance of relational outcomes (ERRO)

Author

Listed:
  • Hart, Einav
  • Schweitzer, Maurice E.

Abstract

When should negotiators care relatively more about their relationships with their counterparts than about the deal terms? We introduce a new dimension to characterize negotiation contexts to answer this question: the Economic Relevance of Relational Outcomes (ERRO). ERRO reflects the extent to which the total economic value of a negotiation hinges on the strength of a negotiator’s post-negotiation relationship with their counterpart. For example, in hiring a tutor, a student may derive economic value from both the wage and the quality of the tutor’s post-agreement service; if the student’s post-negotiation relationship with the tutor influences the quality of the service, this negotiation context is high ERRO. Importantly, although ERRO is an objective feature of the negotiation context for each negotiator, individuals may perceive their negotiation context to have higher or lower ERRO than it actually does. Across four experiments (N = 1601), we identify ERRO as a fundamental dimension of negotiation contexts. We find that in high ERRO contexts (e.g., many services, such as hiring a tutor) compared to low ERRO contexts (e.g., buying a couch), individuals negotiate more collaboratively, are more likely to privilege relational concerns over favorable deal terms, or may even forgo negotiating altogether. Compared to negotiators who build poor relationships, negotiators who build positive relationships with their counterparts attain better economic outcomes in high ERRO contexts because their counterparts invest greater effort following the negotiation. By introducing ERRO, our work underscores the importance of post-negotiation behavior and identifies when, how, and why relational outcomes influence economic outcomes.

Suggested Citation

  • Hart, Einav & Schweitzer, Maurice E., 2022. "When we should care more about relationships than favorable deal terms in negotiation: The economic relevance of relational outcomes (ERRO)," Organizational Behavior and Human Decision Processes, Elsevier, vol. 168(C).
    • Handle: RePEc:eee:jobhdp:v:168:y:2022:i:c:s0749597821001047
    DOI: 10.1016/j.obhdp.2021.104108
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0749597821001047
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.obhdp.2021.104108?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Anderson, Cameron & Thompson, Leigh L., 2004. "Affect from the top down: How powerful individuals' positive affect shapes negotiations," Organizational Behavior and Human Decision Processes, Elsevier, vol. 95(2), pages 125-139, November.
    2. Pinkley, Robin L. & Conlon, Donald E. & Sawyer, John E. & Sleesman, Dustin J. & Vandewalle, Don & Kuenzi, Maribeth, 2019. "The power of phantom alternatives in negotiation: How what could be haunts what is," Organizational Behavior and Human Decision Processes, Elsevier, vol. 151(C), pages 34-48.
    3. Overbeck, Jennifer R. & Neale, Margaret A. & Govan, Cassandra L., 2010. "I feel, therefore you act: Intrapersonal and interpersonal effects of emotion on negotiation as a function of social power," Organizational Behavior and Human Decision Processes, Elsevier, vol. 112(2), pages 126-139, July.
    4. Pinkley, Robin L. & Neale, Margaret A. & Bennett, Rebecca J., 1994. "The Impact of Alternatives to Settlement in Dyadic Negotiation," Organizational Behavior and Human Decision Processes, Elsevier, vol. 57(1), pages 97-116, January.
    5. Curhan, Jared R. & Neale, Margaret A. & Ross, Lee & Rosencranz-Engelmann, Jesse, 2008. "Relational accommodation in negotiation: Effects of egalitarianism and gender on economic efficiency and relational capital," Organizational Behavior and Human Decision Processes, Elsevier, vol. 107(2), pages 192-205, November.
    6. Holmstrom, Bengt & Milgrom, Paul, 1991. "Multitask Principal-Agent Analyses: Incentive Contracts, Asset Ownership, and Job Design," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 7(0), pages 24-52, Special I.
    7. Novemsky, Nathan & Schweitzer, Maurice E., 2004. "What makes negotiators happy? The differential effects of internal and external social comparisons on negotiator satisfaction," Organizational Behavior and Human Decision Processes, Elsevier, vol. 95(2), pages 186-197, November.
    8. Kory Kroft & Devin G. Pope, 2014. "Does Online Search Crowd Out Traditional Search and Improve Matching Efficiency? Evidence from Craigslist," Journal of Labor Economics, University of Chicago Press, vol. 32(2), pages 259-303.
    9. Amanatullah, Emily T. & Tinsley, Catherine H., 2013. "Punishing female negotiators for asserting too much…or not enough: Exploring why advocacy moderates backlash against assertive female negotiators," Organizational Behavior and Human Decision Processes, Elsevier, vol. 120(1), pages 110-122.
    10. Tinsley, Catherine H. & O'Connor, Kathleen M. & Sullivan, Brandon A., 2002. "Tough guys finish last: the perils of a distributive reputation," Organizational Behavior and Human Decision Processes, Elsevier, vol. 88(2), pages 621-642, July.
    11. Bowles, Hannah Riley & Babcock, Linda & Lai, Lei, 2007. "Social incentives for gender differences in the propensity to initiate negotiations: Sometimes it does hurt to ask," Organizational Behavior and Human Decision Processes, Elsevier, vol. 103(1), pages 84-103, May.
    12. Mislin, Alexandra A. & Campagna, Rachel L. & Bottom, William P., 2011. "After the deal: Talk, trust building and the implementation of negotiated agreements," Organizational Behavior and Human Decision Processes, Elsevier, vol. 115(1), pages 55-68, May.
    13. O'Connor, Kathleen M. & Arnold, Josh A., 2001. "Distributive Spirals: Negotiation Impasses and the Moderating Role of Disputant Self-Efficacy," Organizational Behavior and Human Decision Processes, Elsevier, vol. 84(1), pages 148-176, January.
    14. Mannix, Elizabeth A. & Tinsley, Catherine H. & Bazerman, Max, 1995. "Negotiating over Time: Impediments to Integrative Solutions," Organizational Behavior and Human Decision Processes, Elsevier, vol. 62(3), pages 241-251, June.
    15. Hart, Einav & Schweitzer, Maurice E., 2020. "Getting to less: When negotiating harms post-agreement performance," Organizational Behavior and Human Decision Processes, Elsevier, vol. 156(C), pages 155-175.
    16. Wiltermuth, Scott S. & Raj, Medha & Wood, Adam, 2018. "How perceived power influences the consequences of dominance expressions in negotiations," Organizational Behavior and Human Decision Processes, Elsevier, vol. 146(C), pages 14-30.
    17. White, Judith B. & Tynan, Renee & Galinsky, Adam D. & Thompson, Leigh, 2004. "Face threat sensitivity in negotiation: Roadblock to agreement and joint gain," Organizational Behavior and Human Decision Processes, Elsevier, vol. 94(2), pages 102-124, July.
    18. Tatyana P. Soubbotina, 2004. "Beyond Economic Growth : An Introduction to Sustainable Development, Second Edition," World Bank Publications - Books, The World Bank Group, number 14865.
    19. Patton, Charles & Balakrishnan, P.V. (Sundar), 2010. "The impact of expectation of future negotiation interaction on bargaining processes and outcomes," Journal of Business Research, Elsevier, vol. 63(8), pages 809-816, August.
    20. Herbert A. Simon, 1991. "Organizations and Markets," Journal of Economic Perspectives, American Economic Association, vol. 5(2), pages 25-44, Spring.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Hart, Einav & Bear, Julia B. & Ren, Zhiying (Bella), 2024. "But what if I lose the offer? Negotiators’ inflated perception of their likelihood of jeopardizing a deal," Organizational Behavior and Human Decision Processes, Elsevier, vol. 181(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Hart, Einav & Schweitzer, Maurice E., 2020. "Getting to less: When negotiating harms post-agreement performance," Organizational Behavior and Human Decision Processes, Elsevier, vol. 156(C), pages 155-175.
    2. Brady, Garrett L. & Inesi, M. Ena & Mussweiler, Thomas, 2021. "The power of lost alternatives in negotiations," Organizational Behavior and Human Decision Processes, Elsevier, vol. 162(C), pages 59-80.
    3. Jaime Ramirez-Fernandez & Jimena Y. Ramirez-Marin & Lourdes Munduate, 2018. "I Expected More from You: The Influence of Close Relationships and Perspective Taking on Negotiation Offers," Group Decision and Negotiation, Springer, vol. 27(1), pages 85-105, February.
    4. Jingjing Yao & Martin Storme, 2021. "Trust Building via Negotiation: Immediate versus Lingering Effects of General Trust and Negotiator Satisfaction," Group Decision and Negotiation, Springer, vol. 30(3), pages 507-528, June.
    5. Brett, Jeanne & Thompson, Leigh, 2016. "Negotiation," Organizational Behavior and Human Decision Processes, Elsevier, vol. 136(C), pages 68-79.
    6. Hart, Einav & Bear, Julia B. & Ren, Zhiying (Bella), 2024. "But what if I lose the offer? Negotiators’ inflated perception of their likelihood of jeopardizing a deal," Organizational Behavior and Human Decision Processes, Elsevier, vol. 181(C).
    7. Curhan, Jared R. & Elfenbein, Hillary Anger & Xu, Heng, 2005. "What do People Value when they Negotiate? Mapping the Domain of Subjective Value in Negotiation," Working papers 18234, Massachusetts Institute of Technology (MIT), Sloan School of Management.
    8. Backhaus, & Pesch,, 2018. "Verhandlungen – Spiegeln die Lehrbücher den Stand der Forschung wider?," Die Unternehmung - Swiss Journal of Business Research and Practice, Nomos Verlagsgesellschaft mbH & Co. KG, vol. 72(1), pages 3-26.
    9. Tuncel, Ece & Kong, Dejun Tony & McLean Parks, Judi & van Kleef, Gerben A., 2020. "Face threat sensitivity in distributive negotiations: Effects on negotiator self-esteem and demands," Organizational Behavior and Human Decision Processes, Elsevier, vol. 161(C), pages 255-273.
    10. Junjun Cheng, 2020. "Bidirectional Relationship Progression in Buyer–Seller Negotiations: Evidence from South Korea," Group Decision and Negotiation, Springer, vol. 29(2), pages 293-320, April.
    11. Bowles, Hannah Riley & Babcock, Linda, 2008. "Relational Accounts: An Answer for Women to the Compensation Negotiation Dilemma," Working Paper Series rwp08-066, Harvard University, John F. Kennedy School of Government.
    12. Mara Olekalns & Philip L. Smith, 2018. "A Satisfied Mind: Motivational Orientation, Feedback and the Subjective Value of Negotiation Outcomes," Group Decision and Negotiation, Springer, vol. 27(2), pages 179-196, April.
    13. Buser, Thomas & Ranehill, Eva & van Veldhuizen, Roel, 2021. "Gender differences in willingness to compete: The role of public observability," Journal of Economic Psychology, Elsevier, vol. 83(C).
    14. Bowles, Hannah Riley & Babcock, Linda & Lai, Lei, 2004. "Do You a Favor? Social Implications of High Aspirations in Negotiation," Working Paper Series rwp04-033, Harvard University, John F. Kennedy School of Government.
    15. Paul Walker, 2010. "The (Non)Theory Of The Knowledge Firm," Scottish Journal of Political Economy, Scottish Economic Society, vol. 57(1), pages 1-32, February.
    16. Sprinkle, Geoffrey B., 2003. "Perspectives on experimental research in managerial accounting," Accounting, Organizations and Society, Elsevier, vol. 28(2-3), pages 287-318.
    17. Brad Greenwood & Idris Adjerid & Corey M. Angst & Nathan L. Meikle, 2022. "How Unbecoming of You: Online Experiments Uncovering Gender Biases in Perceptions of Ridesharing Performance," Journal of Business Ethics, Springer, vol. 175(3), pages 499-518, January.
    18. Volker Mahnke, 2001. "The Process of Vertical Dis-Integration: An Evolutionary Perspective on Outsourcing," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 5(3), pages 353-379, September.
    19. Steffen Andersen & Julie Marx & Kasper Meisner Nielsen & Lise Vesterlund, 2021. "Gender Differences in Negotiation: Evidence from Real Estate Transactions," The Economic Journal, Royal Economic Society, vol. 131(638), pages 2304-2332.
    20. Michele Griessmair & Sabine T. Koeszegi, 2009. "Exploring the Cognitive-Emotional Fugue in Electronic Negotiations," Group Decision and Negotiation, Springer, vol. 18(3), pages 213-234, May.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:jobhdp:v:168:y:2022:i:c:s0749597821001047. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/obhdp .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.