Read the attached journal article (Stoshkj 2014).

:4 Marina Stoshikj this type of situations is that not always the involved parties are able to recognize that they are after different things and should cooperate so that the both gain more. That is an addi- tional criteria that decides on what type of negotiation will take place, as sometimes, due to lack of communication, competitive instead of cooperative negotiation style is pursued and the total outcome potential is not used (Thompson 1990). Between the two extremes are the integrative negotiations, where the resources discussed should be considered to have variable sum. [t is assumed that most of the negotiations are of this type (Thompson 1990). Pruitt provides kind of a proof for this statement with a simple explanation that is more acceptable to assume that different parties have different prefe- rences, than to assume the preferences are fully opposite. That is why new alternatives may be sought for and greater joint benefit achieved (Pruitt 1981). More on the different types of possible behavior will be given in subsection 2.2 and section 3. ' Negotiation Process Third feature of the negotiation is the process itself. Negotiation process refers to the interaction actions between the parties that should result in certain outcome. Different stra- tegies can be applied within the process. Some of them will be discussed in the next sections. ' Negotiation outcome Regarding the fourth feature, the negotiation outcome, can be stated that there are two general outcomes of negotiations-no outcome at all, meaning reaching no agreement between the parties, or achieving a mutually acceptable agreement. In the latter case, the efficiency of the achieved outcome can be differentiated. It might be possible that in some cases, a certain outcome brings additional value to the parties, but there also might have been another one that would have brought even higher joint benefit. But maybe the discussion between the parties has not been led in that direction (Thompson 1990). That would mean that, in terms of the outcome of negotiations, not every dispute is settled in a way that brings the most value to all parties. Raiffa sees the problem for non-achieve- ment of the most efficient outcomes in the lack of training of the involved parties, even when a rhe Society of Service Science and Springer integrative and Distributive Negotiations and Negotiation Behavior 15 the ones are professional mediators and arbitrators (Raiffa 1982). The way the parties behave during the negotiation process has high inuence on the negotiation outcome itself. It is assumed that when the parties make low initial demands and the rate of concession making during the negotiation process is high, the outcome will be reached in shorter time. At this point, the concept of concession will be shortly presented as a bargaining step in which the negotiator accepts smaller value for certain issue/s, not gaining improvement of his position on other issues, meaning, when \"ur (xgrl) 2 uk (Kim) for all k and le (Xkrl) > '11: (xiu) for at least one k\" (Filmoser, Vetschera, 2008), where xk.K is the value of issue k in offer I and uk is the marginal utility of the negotiator for the issue k. Empirical evidence shows that too high extremes on the demand side (low requirements, many concessions) may lead to breach of the negotiations. The reason behind may be the expectation of the other party that the rst will continue to make high concessions. The second party becomes reluctant to concession and waits the first party with lower demands to proceed with the same tempo. From the other side, when a bargainer requires a lot, it might end up with nothing. In case it succeeds, it will have much better results than in the first case (when making low demands). But in the worst-case scenario he will also lose much more than in the first situation. Some kind of moderate border is seen to be most plausible. (Pruitt, 1990) The main determinants of the demand level and concession rate will be broader discussed in the section dealing with the negotiators' behavior. 2.1.2 Other Characteristics of the Negotiation Disputes Other important characteristic that helps distinguish between the different disputes is the frequency of appearance of the bargaining situation. Based on that, certain behavior of the parties can be explored. Discussion on one-time basis with short perspective opens different game options for the party than when the discussion topic has high frequency and repetitive relation with the counterparty. 1n the second case, the parties might be focused on a long term positioning and take care for the reputation that they build (Raiffa 1982). Decisive role on the outcome of negotiations plays the involvement level of the parties in Jounurl of Service Science Research (2014) r: 194': 9 :4 Marina Sloshlkj this type of situations is that not always the involved parties are able to recognize that they are after different things and should cooperate so that the both gain more. That is an addi- tional criteria that decides on what type of negotiation will take place, as sometimes, due to lack of communication, competitive instead of cooperative negotiation style is pursued and the total outcome potential is not used (Thompson 1990). Between the two extremes are the integrative negotiations, where the resources discussed should be considered to have variable sum. [t is assumed that most of the negotiations are of this type (Thompson 1990). Pruitt provides kind of a proof for this statement with a simple explanation that is more acceptable to assume that different parties have different prefe- rences, than to assume the preferences are illy opposite. That is why new alternatives may be sought for and greater joint benet achieved (Pruitt 1981). More on the different types of possible behavior will be given in subsection 2.2 and section 3. ' Negotiation Process Third feature of the negotiation is the process itself. Negotiation process refers to the interaction actions between the parties that should result in certain outcome. Different stra- tegies can be applied within the process. Some of them will be discussed in the next sections. ' Negotiation outcome Regarding the fourth feature, the negotiation outcome, can be stated that there are two general outcomes of negotiations-no outcome at all, meaning reaching no agreement between the parties, or achieving a mutually acceptable agreement. In the latter case, the efficiency of the achieved outcome can be differentiated. It might be possible that in some cases, a certain outcome brings additional value to the parties, but there also might have been another one that would have brought even higher joint benefit. But maybe the discussion between the parties has not been led in that direction (Thompson 1990). That would mean that, in terms of the outcome of negotiations, not every dispute is settled in a way that brings the most value to all parties. Raiffa sees the problem for non-achieve- ment of the most efcient outcomes in the lack of training of the involved parties, even when n The Society of Service Science and Springer Integrative and madman Negotiations and Negotiation Behavior 35 the ones are professional mediators and arbitrators (Raiffa 1982). The way the parties behave during the negotiation process has high inuence on the negotiation outcome itself. It is assumed that when the parties make low initial demands and the rate of concession making during the negotiation process is high, the outcome will be reached in shorter time. At this point, the concept of concession will be shortly presented as a bargaining step in which the negotiator accepts smaller value for certain issue/s, not gaining improvement of his position on other issues, meaning, when \"ut (xkr1) 2 uk (x19) for all k and ur (Xk,r1) > \"k (you) for at least one k" (Filmoser, Vetschera, 2008), where xle is the value of issue k in offer I and Lu is the marginal utility of the negotiator for the issue k. Empirical evidence shows that too high extremes on the demand side (low requirements, many concessions) may lead to breach of the negotiations. The reason behind may be the expectation of the other party that the first will continue to make high concessions. The second party becomes reluctant to concession and waits the first party with lower demands to proceed with the same tempo. From the other side, when a bargainer requires a lot, it might end up with nothing. In case it succeeds, it will have much better results than in the first case (when making low demands). But in the worst-case scenario he will also lose much more than in the rst situation. Some kind of moderate border is seen to be most plausible. (Pruitt, 1990) The main determinants of' the demand level and concession rate will be broader discussed in the section dealing with the negotiators' behavior. 2.1.2 Other Characteristics of the Negotiation Disputes Other important characteristic that helps distinguish between the different disputes is the frequency of appearance of the bargaining situation. Based on that, certain behavior of the parties can be explored. Discussion on one-time basis with short perspective opens different game options for the party than when the discussion topic has high frequency and repetitive relation with the counterparty. In the second case, the parties might be focused on a long term positioning and take care for the reputation that they build (Raiffa 1982). Decisive role on the outcome of negotiations plays the involvement level of the parties in Jounuil of Service Science Research (2014) 629769 IA Marina 5.95ka the situation. When a certain resolution is highly requested and the possible gain more appreciated by one party than the other, their approaches in the negotiation process might be completely different. The number of issues negotiated has high influence on the approach and ow of the negotiation process also. In case of a simple buy-sell relation, where no complementary products are involved, the only issue to be resolved might be the price. What makes the negotiations more complicated is the involvement of more interrelated issues, mutually interactive, but from different nature. In that case there is a place for certain trade-offs in the potential value to be gained, so the issues are jointly determined. Filzmoser, Vetschera (2008) define the trade off bargaining step, typical for multi-issue negotiations, as a one where \"uk (xklrl) > uk (xkl) for at least one k and uk (xkrl) 'b', there is no space for agreement. The space between 's' and 'b,' when '5' Ui C R, Kersten (2001) expresses the utility function of each party, where U is the joint utility space, u = [uA, uB] E U. The set X is assumed to be convex, and the functions ti and gi are assumed to be concave (pseudo-convex) (Kersten 2001). Both parties must accept the agreement, and that is possible when the buyer and seller's reservation prices are overlapping and forming the zone of agreement. The existence of the zone of agreement does not necessarily mean positive result of the negotiation, as the parties might not be able to see its existence, due to the different negotiation strategies they imple- Journal ofScn-icc Science Research [2014) 6:29769 40 Marina Sloshikj ment. The Way in which the parties behave is also dependent on the amount of information they have on the other party's reservation price (Raiffa 1982). Assessment of the reservation price of the opposing party is a task that should be fullled before entering the negotiations, because having more information on it, would make the party able to decide for the most plausible negotiation strategy. It helps in the decision on the opening offer. During the negotiation, each party behaves in a way that would bring more value to her, trying to show to the opponent that his reservation price is higher (seller)/lower Gruyer), so that it could maximize its surplus. This type of behavior of the negotiators is also dependent on the culture they are coming from. Certain cultures do not have problems mis- leading the other party, whereas that is not the case in certain others. The negotiation ow is always in a way that the buyer's offers are increasing, and the seller's decreasing. Through this 'negotiation dance' by the concessions made from the party/ies, the demanded levels are coming closer to each other (Raiffa 1982). The basic characteristics of a distributive negotiation problem (minimize vs. maximize tactics) were mentioned above. Here specic distributive negotiation examples could be named so that the applicability of this type is recognized in the praxis. Most simple every-day business examples would be buy-sell type of negotiation for a house, a car, insurance premiums for certain damages, salary negotiations, etc. One of the examples of Raiffa (1982) describes negotiations for acquisition: the buying rm wants to buy another rm (seller) for a specic, as low as possible price. Still, this would be a very simplied case. In reality, it might be a one with more involved complex issues. Or, to be even more complex, the negotiation problem could be merger situation. It would be much harder to conclude the negotiation if everyone just tries to maximize the individual surplus. More plausible solution would be approaching, communicating and exchanging information and preferences, so that the one bargaining issue could be extended to multiple issues, differently relevant for the both parties, and the process itself and the negotiators' behaviors might be different. These types of situations are characteristic for integrative negotiations, which are discussed in the next subsubsection. The distributive situations are likely to pass into integrative ones when there is deadlock point reached and the time is putting additional pressure, and the parties are well aware that to The Society of Service Seteiice and Swings) lnlegmlive and Distributive Negotiations and Negotiation Behavior 41 they are better off with an agreement than without. There is no possibility for unilateral concession making anymore, but the parties' demands are already closer to the limits. (Pruitt, 1981) Other conditions for the transition to cooperation after competition are presented in the section dealing with negotiation behavior. As a conclusion to this subsubsection, the definition of Thomson, Wang, Gunia on distri- butive negotiations can be stated: \"Distributive: a negotiation is distributive when negotiators are mainly concerned about their own economic outcomes and not the joint outcomes of all negotiating parties.\" (2010) That clearly explains the claiming value approach of the negoti- ators, when they just want to divide the scarce resources in own benet. The authors state a bit of a different, but typical negotiation problem, the classic ultimatum game (Gth et al. 1982; Ochs & Roth 1989), where one party has to divide a x amount of money with the other person. It is task of the rst party to propose the division, and in case the second part does not accept it, the both parties will get 0. In which proportion the split is going to be done states the distributive aspect of the negotiation. But the pressure of the acceptance of the other party puts focus on expanding the thoughts on the benets of the others as well, as without their compliance, all is lost (Thomson et al. 2010). 2.2.2 Integrative Negotiations-Basic Characteristics, Model and Common Problems The case when there is no zone of agreement between the negotiating parties for the single issue does not have to mean that will end as a situation where no agreement is reached. The parties may be willing to conclude the deal and try to enlarge the whole picture by including additional relevant factors for them, and with it, moving from single to multiple factor problem. In this new type of problem, the parties would behave less competitive and more cooperative, trying to attain the preferences needed the most by expanding the pie itself, meaning, creating an additional value compared to the one deriving from the single factor problem. This type of negotiations is called integrative. It is interesting that no longer the gain of the one party represents a loss for the other party. Still, the enlarged pie at the end has to be divided between the parties in a certain way (Raiffa 1982). Raiffa gives very interesting example that presents the problematic in a simplied manner. In the specic negotiation problem, there are two parties involved, and there are negotiations Jauntal of Service Science Research (1014) 5:19-59 42 Marina 51:15th on two separate issues where no zone of possible agreement seems to exist. The one issue is money, the other settlement value. Both represent distributive problems. Value for the both parties could be created if they start negotiating the two issues connected. It might appear that one party is more interested in the money, the other in the settlement value, and certain trade- off could take place. One party might agree on less money if receiving more settlement value. At the end, both parties would gain more with this approach than when proceeding with the distributive negotiations. This example shows in simplied manner the potential of the integrative problems, when the parties are able to recognize it and act upon it. Still, the actual negotiator behavior has to be held in mind as highly inuential, since, for example, the parties may not be willing openly to reveal what exactly they are interested in, so that they don't become weaker in the process (Raiffa 1982). The typical orange example for integrative distributions was already mentioned previously. In that situation is the Pareto optimality principle clear and the meaning of integrative negotiations and outcomes can be understood-\"the extent to which the negotiated outcome satises the interests of both parties in a way that implies the outcome cannot be improved upon without hurting one or more of the parties involved (i.e., Pareto optimality)\" (Pareto 1935). In the orange example, cutting it at half would not have satised fully the interests of the sisters and the outcome could have been further improved, meaning, would not have been efficient enough. It is important that negotiations are considered integrative when all types of creative opportunities have been evaluated, and all resources are further divided between the parties (Thomson et a]. 2010). Specic integative negotiation problem is a one where two parties, husband and wife want to decide where to go for two-weeks vacation. At first glance, it would seem quite impro- bable for them to nd a solution, as the wife wants beach whereas the husband vacation in the mountains. As the parties have certain history and have been and will be conducting other negotiations as well, a cooperative and trustful climate may be recognized. They would be willing to share the preferences that derive their different interests. That opens space for deeper analysis of the conicting situation and search for a mutually agreeable solution. With an active search of alternatives, they can establish the real meaning that each preference has for the dened party (Pruitt 1981). (c the Society ofService Science and Springer Integrative and Distributive Negotiations and Negotiation Behavior 43 It is also important to make distinction between the possible outcomes and their nature. One option in the specic case would be C (refer the gure below)-no vacation. A and B would be the extremes (seashore, mountain) bringing satisfaction in the outcome only to one of the parties at a time. Additional, more obvious alternative would be E-one week on the seashore, one in the mountains. It has to be clearly understood that this represents only a compromise situation, but not an integrative option. Integrative outcome would be something that would bring more benet for the both parties, than half, with the compromise. That would be D, as a new alternative, satisfying the needs, the highest preferences of the both parties, by, for example, inland lake near the mountains (Pruitt 1981). Benet to wae Benet to Husband Figure 2. Benet Space for the Husband-Wife Vacation Example Source: Pruitt DG (1981) Negotiation Behavior. Organizational and Occupational Psychology Aca- demic Press: 138. Through the mentioned examples the basic characteristics of the integrative negotiations can be clearly understood: \"creation of value, focus on interests not positions, openness and exchange of relevant information, learning and problem resbuct'uring\" (Fischer & Ury 1983; Lax & Sebenius 1986; Sebenius 1992; Ury 1993; Fisher et al. 1994; Raiffa 1996; Bazerman 1998), and that is what distinguishes them from the distributive type. For consistency, a proposed integrative negotiation model from Kersten (2001) will be Journal of Service Science Research (2014) new 44 Marina Stoshikj Integrative and Distributive Negotiations and Negotiation Behavior 45 shortly presented. own costs also, or a third party may involve some similar approach (Pruitt 1981). N = {A, B, Xt, YA, t, YB, t, Ut, t= 1, ".., T). . Compensation This is another way of reaching integrative outcomes of the negotiation problems. In order During integrative negotiations Xt may express modification in the goals and preferences that a party gets most of its desired demands, it might try to compensate the other party for of the parties within time. That could be achieved in case additional resources are made some of its costs. Specific, homologous and substitute are three types of compensation, men- available, or new offers are considered (so new set of offers is formed: Xt+1 > Xt), or it tioned by Pruitt (1981). In the first approach alternative ways that can lower the frustration of might be that some issue is not relevant any more, or that the parties did not know they were the other party have to be searched for. When speaking about homologous compensation, it is already agreed on certain interest, which can be expressed through the following condition: referred to a situation when the party would receive certain benefit with the same value as the Xt+1 C Rn, Xt C Rm and n * m. Common for each of these cases is introduction of one it has lost with the specific agreement. In this second case, the needs that were the source qualitative difference in the process and not a quantitative one, where the parties tend to come of frustration were not directly responded to. That is the case in the substitute compensation closer to each other with their offers by changing the values given to the utilities (Kersten also, where also different costs and needs are included. When implementing these approa- 2001). ches, one must be careful in finding the real equivalence between the frustrated needs and the Pruitt discusses classification on four types of integrative agreement (presented in blocks new alternatives, so that the both parties are happy. It should be held in mind that the below). These types can be seen as models with whose implementation new opportunities or compensation values might not be visible at first look (as for example, the benefit of nice alternatives could be found, so that the joint benefit could be reached (Pruitt 1981). reference letter for a former employee). Another issue that has to be dealt with is the trust component, as it is not always easy to decide which party would be first to go forward with . Cutting of One Party's Costs its cooperative approach so that both are sure the compensation will be fulfilled as agreed When there is an existence of different interests between the parties, it could be that the (Pruitt 1981). beneficial outcome of one party will bring costs to the other. One option for easing on the costs could be one party's attempts to cut the costs of the other (costs as for example, sense of . Logrolling rejection, weakening of the status or perception of reduced freedom by the other), in order to Different than the first two forms where the actor tries to fulfill his action by easement on ensure reaching an agreement by persuading the other to accept some other major demands the other party, in logrolling (and later in bridging as well), change in the positions of the the party has in return. Two specific forms of cost cutting could be mentioned both parties is required in order to make the matching of the interests possible. This is a way of reaching an integrative agreement by which the both parties make concessions on certain easing the other party's concern about the future implications of the agreement through issues. It is possible only when there are more issues involved, and the involved issues have specific action of decoupling in order to make the other party feel more secure and not different values for the actors. In this way, one could give up on an issue for which he does vulnerable in the future if making concessions now not have high preferences for receiving a one that is more relevant to him, but maybe not that or an attempt for protection of the other side's public image, in a way so that they feel as much to the opposing party that would make this concession. The characteristics of compen- included in the decision making. In terms of cost cutting, the party might try to cut its The Society of Service Science and Springer Journal of Service Science Research (2014) 6:29-6945 Marina Sloshikj sation above describe the logrolling process, but only from one side. In logrolling, the both sides try to compensate the other for a certain issue they care about so this form is though similar, a different one. One nice example would be the negotiation for a salary and overtime hours with the workers union or an employee (Pmitt 1981). ' Bridging With the bridging form a brand new option that is supposed to satisfy the needs of the both parties is found. That is the difference with logrolling, since, although in this case concessions are made as well, new option is additionally introduced. In order to come to a bridging agreement, mutual communication and understanding of the underlying values of the parties are needed. Typical example is a negotiation problem where two women sit in the same room, one willing to have opened window for ventilation, but the other closed against draft. Knowing the real interests for having the window opened or closed can help them find an alternative-opened window in another room-so that the both preferences were fullled. Depending on what the reaching on an agreement constrains, different bridging formulas could be used. In terms of time constraint, an alteration might be used-e. g. going to vacation place of preference of the wife one year and then the next year to the one the man prefers. Other option would be implementation of one idea until it is proved that is not working and the other one's is then enacted-so called contingent approach. In case when a resource shortage is the obstacle, increasing the pie by increasing the resources might be the right call. Another possible solution might be even the understanding that an agreement on certain issue cannot be met (Pruitt 1981). It is important to be understood that in order to reach integrative agreements, the parties might have to give up or concede on certain issues and goals they have had. In order that to happen, and the party to be still satised, unlinking of the issues and their effects must happen. That would be a process of going deeper into the issues and searching for alternatives with which the linked unacceptable issue would be removed and the basic preferences still obtained (Pruitt 1981). As a conclusion on this discussion on integrative negotiation, it can be said that they are present when the agreement considers the both parties' interests and a maximum joint benet c The Society ofSei'vice Science and Springer Integrative mi Distributive Negotiations and Negotialion Behavior 47 could be created. So, an alternative is considered more integrative, if the joint benet is higher. Short explanation of the concept of joint benefit, the pillar of this type of agreement, may be interesting at this point. One denition would be an outcome that delivers higher benet for one party but still equal or higher for the other. This approach does not allow observation on which alternative brings highest value. In the vacation case, (Figure 2) every- thing would be better for the parties than no vacation, but that does not suggest the point D. Other definition would be the sum of the individual outcomes of the both parties, which is again not fully appropriate, as it might select a situation when one party is highly satisfied and the other not satisfied at all. Quite acceptable denition might be one where the joint benefit is seen in correlation with the outcome that the less benecial party would get. Under this criterion, the inland lake would be chosen, as an integrative approach. Still, the interests of the better party are here not fully considered and may lead to less favorable solution (Pruitt 1981). The complexity of dening the joint outcome might be an additional explanation of why the parties do not manage to find the best solution in every situation. They might not have same view on what is the best. 2.2.3 Benets of Integrative Negotiations After understanding the distinctive characteristics of the both types of negotiations, here is a summarization on why it is better to perform integrative negotiations: (Pruitt 1981) - Nevertheless how measured, higher joint benet brings more good for more people a As both parties usually tend to set high limits, an agreement would be impossible if a certain joint benet is not found and accepted by the both a Better outcome for the both parties lowers the possibility of withdrawal afterwards and helps building stable relation between the parties a As a result of a better joint outcome, the parties will be attracted to each other, will tend to develop trust in the future and enter in other integrative ageements, producing further higher benets In terms of an organization, leading integrative processes allows for higher efciency Journal of Service Science Research (20! 4) 52971.9 48 Malina Stoshikj within the organization and geater capability for goals achievements. Still, not every negotiation problem has the potential to be solved with an integrative approach. The situation's characteristics have to show certain integrative potential. As men- tioned above, simple one-issue negotiations (buy-sell one-time relation) may not have more alternative options where the joint benet would be different (bigger). The brighter side is that these zero-sum situations tend to be not that oen. In most of the cases, even when starting with an obvious one issue, additional issues of mutual interests can be later intro- duced. When the parties have different priorities on them, the integrative potential is highest (Pruitt 1981). Highest potential does not mean guaranteed success. As already mentioned, the outcome depends not on the hidden intentions of the parties, but on their exercised behavior, as one or both of them may not be able to see the integrative option and tend to act inappropriately to the given situation. The different ow of the negotiation process in a specific situation also might bring different results. In case when the issues are considered simultaneously, the parties are more open for giving in on issues that are less relevant for them, expecting the same response from the other party. When dealing one by one, each party may act a bit competitive, trying to lead the other party to concede as much as possible, which would lead to lower total benefit at the end. Much energy and concession making could be spent on issues of less relevance in the latter case (Pruitt 1981). When some of the basic characteristics and preconditions described for the different types are not fulfilled, the outcome might not be the most efficient one. After understanding the great meaning and inuence of the negotiation behavior on the whole negotiation process and outcome, the two general types, common for the two described negotiation types, will be discussed in the following section. Some common approaches and tactics were already men- tioned during the description of the integrative/disn'ibutive negotiations, as the both issues are quite connected and dependent on each other. 3. NEGOTIATION BEHAVIOR The introductory part of this work dealt with the denition of negotiation. Nevertheless to me Society of Service Science and Springei Integrative nnti Distributive Negotiations and Negotiation Behavior 49 which approach or theoretical definition is used, it is clear that there is an interaction between two or more parties that need to resolve certain conict by working together and discussing it through, as the outcome of each is dependent on the other party's acceptance/rejection/ interests. Based on that, it can be concluded that the way those parties interact and behave to each other is decisive for the negotiation outcome. Even in case when the negotiation problem has the potential to be integrative, if incompatible behavior is exercised, the outcome may be different. It should not be concluded from the latter that the behavior is fully decisive because if there is no integrative potential in the negotiation problem, although the parties act cooperatively, the outcome will not be integrative. But it could maybe open other perspec- tives for further cooperation. In case the negotiation problem has an integrative character and the parties act extremely competitive, the joint benefit could end up lower than possible. The complication comes from the fact that the outcomes are dependent on the negotiation behavior of not only one, but of the both parties. The combination of the parties' behavior: claiming (typical for distributive) and creating (typical for inteyative) and with that the different outcomes it results in, can be clearly recognized in the concept of the negotiator's dilemma, presented by Lax 3L Seb enius (1986): Party 1: Create Claim GOOD GREAT Create GOOD TERRIBLE TERRIBLE MEDIOCRE Claim GREAT MEDIOCRE Party 2: Figure 3. The Negotiator's Dilemma Source: Lax & Sebenius (1986), The Manager as Negotiator: Bargaining for Cooperation and Camper titive Gain, 9. In the following subsection, the negotiator's behavior will be analyzed to a certain depth. Janina] ofSerVice Science Research (2014) 615769 so Malina Stoshikj After some general characteristics of an effective negotiator, the necessary preparations for entering in a negotiation process and the main concepts that need to be considered and be known before and during the negotiation are discussed. The general characterization and typology of competitive and cooperative behavior as well as applicable situations that follows is based on the work of Pruitt (1981). Both parties do not equally know the parameters in a negotiation. The perception of the situation and of the opponent side might be the main source of information for drawing conclusions, rationalizing and adjusting the individual behavior. That is why the measures of negotiation behavior, with focus on the social-psychological ones, are shortly discussed. How a one can negotiate along the process is analyzed through the general types of bargaining styles. 3.1 Characteristics of an E'eetive Negotiator As mentioned when discussing the negotiations from both a science and skills View point, the personal skills and characteristics of the negotiator can help him in ensuring better out- comes of the negotiation process for himself and in total. He has to possess certain abilities and pursue appropriate behavior in other to reach the best results (Raiffa 1982). Discovering the characteristics that promise efcient negotiation is not a straightforward task. That is why there are different opinions. Raiffa (1982) starts from the empirical ndings of Karrass (1958) that were derived from answers on the importance of thirty-four traits which could be considered an effective negotiator' characteristic, rated as unimportant, mildly important, important, very important and extremely important by thirty-two bank ofcers in the US. It has to be bear in mind that some traits are more important in certain business spheres and some in others, so the participants rank them by considering the applicability in their working position. The following ones ranked in the rst five: \"1. Preparation and planning skills 2. Knowledge of subject matter being negotiated 3. Ability to think clearly and rapidly under pressure und uncertainty 4. Ability to express thoughts verbally 5. Listening skills\" (Adopted by Karrass, 1968) (Q The Society ofService Science and Springer Integrative and Distributive Negotiations and Negotiation Behavior 51 Raiffa does not exclude the different variables that have inuence on the negotiation behavior, as age, sex, nationality, social status, religion and similar, but also adds that those generalizations on the characteristics of all negotiators as due to being part of a certain group might not be easily proven right (Raiffa 1982). 3.1.1 Things to be Considered by the Negotiator Before and During Negotiation According to the list above, the planning and preparation skills of a negotiation are seen as most important for gaining maximum outcome. The negotiator will be able to perform better if he has considered and thought through some issues in advance. Before the negotiation starts, there are certain issues he has to think on so that he can plan his behavior and approach during the process. Of course, one has to start from himself, has to be sure what does he want from the negotiations, what is the goal he is trying to reach, does he have a fall back option etc. A negotiation is interaction, so beside his motives, the nego- tiator should attempt to discover the preferences of the opposing party so that, for example, he could know at which point they might be willing to get out of the process. Connected with that and the specific situation, one has to be able to judge to which point he can be trustful and open to the other party, so that no advantage is taken of him. The possibility for inclusion of additional parties has to be also thought through, as well as the connected issues with the execution of the process itself-time, place, etc. After having shaped assumptions on the party and the surrounding situation, the negotiator has to once again reconsider his aspiration level, check for plausibility of his BATNA (Best Alternative to a Negotiated Agreement) and reservation price (Raiffa 1982). The limit and his aspiration level would dene the level of demand he would have in the negotiation. The limit is the ultimate fall back option or the level beyond which there is no concession, and the aspiration level is on the other border - what is sought for or how high is the value of the goal of the bargainer. The aspiration level is higher or equal to the limit of the negotiator (Pruitt 1981). The BATNA stays constant within the negotiations and the aspiration level changes based on the negotiation ow. Still, they are strongly correlated (Pruitt 1981). The rst step, the opening offer, is also something to be planned good in advance. It is very important for the rrther negotiations to have the rst offer within the acceptance zone of the Journal otSewice Science Researchuum) 519759 52 Marina Sloshikj other. It should not be extremely high so that the other party won't break the negotiations. The anchoring moment is also something whose misleading effect should be avoided. In case the counterparty makes extreme high offer, it has to be held in mind that the middle point might be the final goal, so the counteroffer and the concessions rate should be appropriately set opposite (Raiffa 1982). Regarding the mentioned concession making during the negotiation process, through the 'negotiation dance' the concessions are generally decreasing in a constant manner and become smaller as one comes closer to the self-defined limit (reservation or aspiration level). Intere- sting bargaining behavior that should be held in mind is that the \"opponent\" (the buyer) would try to convince the seller that his reservation price is lower than it actually is, and the other side (the seller)-that the limit is higher than it actually is. High influence on how the parties behave in these terms is the planned future relationship, fairness feeling, risk attitude etc. This approach has to be held in mind when reassessing the defined levels along the negotiation dance (Raiffa 1982). Chaise anr, Hee Cooperate Defect ' 5 cents \\ 10 cents to Hee \\ , m Hee Cooperate \\ \\ ~10 cents \\\\ Choice 0/ x to Shee \\\\ Mr. Hee \\ \\ \\\\ 5 cents \\\\ to Hee Defect \\ 10 cents 's,\\ .5 cents '\\ to Shee \\\\ to Shee '\\ Figure 4. A variation of the Prisoner's Dilemma Case Source: Rama H (1982) The An and Science ofNegotiation. Hamrd Univ. Press, Cambridge, MA, 125. During the negotiation process the parties have to decide whether they will act cooperative or competitive, and would perform their concession making in the appropriate way and pace. c The Society ofService Science and Springer Integrative and Distributive Negotiations and Negotiation Behavior 53 As mentioned, that depends on the duration of the planned relationship. The gure below is a modied version of the negotiator's dilemma and shows what two parties get in case they decide to cooperate or defect. The two players (Ms. Shee and Mr. Hee) are involved in couple of rounds of monetary payoffs, making decisions independently and at the same time. The picture describes how much they get or lose. It is clear that they would get most if they defect, but the other party should be lead in to cooperate. One would lose the most if it cooperates, when the other party is claiming value, which makes the approach of cooperation risky, but at the same time, with highest joint benet, if the both parties behave in this way (Raiffa 1982). This is an extreme case where the monetary pay-offs are strictly defined and the two types of reactions produce well-dened outcome in a simplified situation of independent decision- making. In terms of reactions to the behavior of the other party within the whole negotiation pro- cess, since the interactions have high impact on how a one would behave when decisions are made (based on the previous actions of the other party), two kinds have been distinguished: matching and mismatching behavior. The negotiator exercises the first one when his demands are as high as the ones from his opponent, and the concession making is similar in terms of size and frequency. The second case is when a party sets higher demands even when the ones from the opponent are smaller, or does not respond with the same pace of concession making, keeping himself to his part. The matching behavior, which is also called strategy imitation, is common in bargaining situations, as one behaves cooperatively in response to the cooperation of the other party, or competitively, if it gets that kind of approach from the opposite nego- tiator (Pruitt 1981). The party has to be prepared for the commitment making part, has to have a clear way of signaling the other party that it cannot go further than the last offer, etc. In case of breaking a connnitment, it has to be done gracefully. The face saving moment is something to be pre- sserved here, as it would make the other party more cooperative when a certain proposal or exchange that does not seem as he is directly giving in. That can be done with introducing new issues and expanding the domain of negotiations. That works especially positive when there is no zone of agreement with the current discussed issues. Additionally, in case of break Journal of Service Science Research (2014) 5:295? 54 Marina Stoshtkj off, one might think of introducing a third party in the negotiation, an intervener. That should be also carerlly thought through and analyzed. It is also very important for the image and possibility for further success that the parties keep their integrity during the process, by acting rationally and fair. The ethical and moral issues are something to be paid attention too, as the personal beliefs have high inuence on how a negotiator behaves (Raiffa 1982). 3.2 Competitive and Cooperative Behavior These two general types of behavior were mentioned few times during the description of different negotiation problems and within the previous discussion on negotiator behavior. This subsection deals with some general denition of the competitive and cooperative beha- vior, the main types and applicability, and, quite importantly, the reactions of the other party on the specic behavior. 3.2.1 Competitive Behavior Pruitt (1981) denes the competitive behavior as \"efforts to elicit unilateral concessions from the other party.\" When the competitive behavior leads the other to make concessions, it is considered to be successful. It is assumed that the competitive behavior is more applicable when a distributive negotiation problem exists (Pruitt 1981). The competitive tactics exercised during competitive behavior are classied by Pruitt (1981) in ve types: - Putting time pressure on the other party - convincing the other to concede as otherwise a break in the negotiation could happen. The time prolongation of the decision is an additional risk. This tactic is most likely pursued by setting a deadline for reaching an agreement before negotiation stop, or by introducing an alternative option one has (e.g. other partner with an attracting offer at disposal). The success of the tactics depends on the perceptions of the other actor of the credibility of these threats from the opposing negotiator. In case the other party does not consider the threats seriously, the acting competitor may end up breaking negotiations (c The Society erSet-viee Science and Spnllget lntegralive mm Distributive Negotiations and Negotiation Belumol 55 that he would actually like to be positively resolved. Acting rm the competitive negotiator sets high demands, makes low and slow concessions but keeps the commitment to the negotiations. Too high demands at the beginning are risky move, but the negotiator is then able to present the concessions he will make as quite important ones, showing positive attitude and at the same time involving the other into making counter concessions. Though slow, the concessions may seem as a sign of weakness, which is why the negotiator might couple them with certain threats, pointing out that it is Very hard for him to make those concessions, as they have quite negative impact on his position. Reducing the opponent's resistance tactics belonging to this type are pursued in a way to make the other party lower their aspiration level or change his limit in a favorable direction. The competitive behavior employs persuasive ageements, threats, or gives certain promises, but in more implicit form than the threats. In order these tactics to work, the party should be seen as credible and that depends on the perceived rmness, historical reputation, inuence on neutral third parties and the actor's control in hands that it could/could not execute the threat. Principles of prominence tactics which are commonly used, but not deeply explored. It is assumed that the competitor builds a case on behalf of an agreement that he strives for. For that purpose, he could try to contribute a lot to the pie that will be further distributed, or push for moral principles. Positive relationship with the other party with these tactics, the competitor tries to establish positive relationship with the oppos- ing party, or inuence positive on his mood. He will try to show the other party liking and identication with, so that the one becomes less reluctant to concession making. Jauntal of Servtce Science Research (1014) 5:19-69 5i Manna Stoshikj Choosing a pleasant place for the negotiation, offering favors to the other, following his values in the own behavior are some of the possible forms for application of these tactics (Fruit 1981). ' Reactions to the Use of Competitive Behavior The effects certain behavior has are seen through the reactions of the other party. The nal negotiation outcome is dependent not only on the behavior of the one party but on the reac- tions of the other party on that behavior, as well. When the competitor employs heavier tactics, such as the time pressure and threats, nega- tive attitude is more likely to be developed by the opposing party. Lighter tactics, such as promises, or building positive relationships, provoke positive or at least neutral reaction. Furthermore, laboratory studies have shown that in case of employment of heavier tactics, the other party tends to imitate the strategy and respond in the same way, in order to keep their face, which has contra productive effect for the negotiation in total. The effect of the way the tactics are formulated has high inuence on the perception and actions of the other party. Promises, positive formulations work much better than threats and negative connotations. (Pruitt 1981). ' Applicability Competitive behavior is usually present when there is low trust between the parties and the limits are high, so that the bargainer tends to make small concessions in order to stay closer to the high limits. The competitor has win-lose orientation. When one party is in better position and has greater capacity, it will tend to act competitive, resulting in distributive negotiations, as it would be able to take more in the pie division. The perception of the power a party has from the opponent's side has high impact on these types of situations. Still, the competitive behavior is seen to have inverse relation to concession making. The usage of competitive behavior in situations with integrative potential results in lower joint benets because through the mentioned tactics, the interests of both parties are somehow negatively inuenced and the problem-solving behavior is blocked (Pruitt 1981). (c The Society ofService SEIEIICE ziiiii Spiiiigei integrative inn Distributive Negotiations and Negotiation nemiei 57 3.2.2 Coordinative Behavior When behaving coordinative, the parties work together and make efforts to nd a solution that is acceptable and brings higher value for both of them. This type of behavior is also common for latter stages of situations that started out highly competitive, because otherwise a breach in the negotiation and bad parties' relation would be the only negotiation outcome left. There are two types of coordination observed in negotiations: - concession exchange, when the parties make concessions on an issue moving towards each other, in a justied manner, or making exchanging concessions on different issues with different relevance for them - and problem-solving discussion, when the parties are open to each other, tell their prefe- rences and goals and try to nd integrative agreement for satisfaction of the both sides (Pruitt 1981). Pruitt has dened the coordinative behavior as \"any action that seeks to establish coordina- tion or constitutes a part of coordination" (1981). Which coordinative actions will be used is dependent on the level of free communication and tnrst established between the parties. Based on it, Pruitt (1981) divides them in three types: high, moderate, and low risk coordinative behavior. ' High-Risk Coordinative Behavior When a party makes large concessions or reveals very sensitive information to the other party, in order to develop an integrative agreement, it can be said that the party pursues high- risk coordinative behavior. It is considered as such, as in this case the party may lose much. Image loss is one type of loss, as the counterparty may think the party is willing to concede even more than needed. If a big concession is already made, the party cannot go back to its previous benecial position. Once it has discovered a lot of information to the other party, the latter one may use it for implementation of some distributive actions, such as threats. Using these approaches in a negotiation, the party clearly states from the beginning that is in for coordinative behavior so the opponent might do nothing further, benecial for the party, to Jaunial of Service Science Resmrcli (2014) (1119759 su Malina stoshikj bring it to this position. Still, the loss of all of these actions is lower when there is trust between the parties. These actions are pursued in situations when the party is more of less clear that the other will behave in the same way (Pruitt 1981). - Moderate-Risk Coordinative Behavior This behavior is more applicable in negotiation problems where lower level of trust exists, so the parties might start competitive but they are actually interested in coordination. A party might use indirect communication, such as signals, sign language for example, to show indirectly to the other party that is ready to coordinate, within exposing itself to high risk. Those signals might be certain small concession or some kind of promise. If the other party understands it and is also willing to cooperate, the following steps will be coordinative. Signals and messages may be transferred through a third party as well. It is very important that the signals are noticed from the other party, but are revocable, meaning, if the other does not approach in an integrative manner, the party is not obliged to follow on those signals (Pruitt 1981). Additional approach in which a coordinative behavior is exercised is organizing an informal discussion where the problem-solving apprth is applied and is not part of the official negotiation. It can be a private chat in a bar or similar. The potential losses mentioned above are here reduced, as for example, there is no position loss. No promises are made, and for lowering the formality of the meetings, negotiation team members with lower status, not fully credible for the team, but able to pursue problem-solving behavior are sent. The acceptance for participation in this type of meetings is also a signal for cooperative mood (Pruitt 1981). Another option that the negotiator has in hands, in case the trust is not high at the begin- ning, is pursuing fractional concessions. He would start with smaller concessions, and as the other party accepts them and replies back, the trust is growing and bigger mutual concessions could be further made (Pruitt 1981). ' Low-risk Coordinative Behavior In situations when the risk of suffering om image loss is too high, the negotiator cannot (c The Society of Service Science and Springer integrative and Distributive Negotiations and Negotiation Belm'm 59 pursue much revealing tactics. He would try to approach the issue cautiously from the side, sending sigtals, but in more hidden way. For example, he can send signals that he would want an informal discussion, a back-channel meeting, and see how it is accepted from the other party. Additionally, he might stay in discussion on very minor issues, so that a go