A comparative assessment of win-win and win-lose negotiation strategy use on supply chain relational outcomes

Author:Stephanie Thomas, Jacqueline Eastman, C. David Shepherd, Luther Trey Denton
DOI:https://doi.org/10.1108/IJLM-10-2016-0238
Pages:191-215
Publication Date:12 Feb 2018
A comparative assessment of
win-win and win-lose negotiation
strategy use on supply chain
relational outcomes
Stephanie Thomas
Department of Supply Chain Management, Sam M. Walton College of Business,
University of Arkansas, Fayetteville, Arkansas, USA, and
Jacqueline Eastman, C. David Shepherd and Luther Trey Denton
Department of Marketing, College of Business Administration,
Georgia Southern University, Statesboro, Georgia, USA
Abstract
Purpose The purpose of this paper is to study the relational impact of using win-win or win-lose
negotiation strategies within different types of buyer-supplier relationships.
Design/methodology/approach A multi-method approach is used. Qualitative interviews with supply
chain managers reveal that relationship-specific assets and cooperation are important relational factors in
buyer-supplier negotiations. Framing interview insights within the social exchange theory (SET), hypotheses
are tested using a scenario-based behavioral experiment.
Findings Experimental results suggest that win-lose negotiators decrease their negotiating partners
commitment of relationship-specific assets and levels of cooperation. In addition, the use of a win-lose
negotiation strategy reduces levels of relationship-specific assets and cooperation more in highly
interdependent buyer-supplier relationships than relationships that are not as close.
Research limitations/implications Buyer-supplier relationships are complex interactions. Negotiation
strategy choice decisions can have long-term effects on the overall relationship. As demonstrated in this
study, previous research focusing on one side winninga negotiation as a measure of success has
oversimplified this complex phenomenon.
Practical implications The use of a win-lose negotiation strategy can have a negative impact on
relational outcomes like cooperation and relationship-specific assets. For companies interested in developing
strong supply chain relationships, buyer and suppliers should choose their negotiation strategy carefully as
the relational impact extends beyond the single negotiation encounter.
Originality/value Previous research predominantly advocates for the use of a win-win negotiation
strategy within interdependent relationships. This research offers evidence that the use of a win-lose strategy
does have a long-term relational impact.
Keywords Negotiation, Buyer-supplier relationships, Negotiation strategies,
Behavioural laboratory experiment, Multi-method, Relational outcomes
Paper type Research paper
Introduction
Buyer-seller relationships are at the heart of the supply chain (Mentzer et al., 2001). These
relationships can be based on either discrete, one-time interactions, or ongoing, long-term,
relational, interactions (Dwyer et al., 1987). In recent years, researchers have noted that
strong ongoing relationships should be considered a source of sustainable competitive
advantage, and that these ongoing relationships may be essential for the long-term success
of an organizations supply chain (Miguel et al., 2014; Thornton et al., 2013).
Given the recognized importance of the ongoing relational interaction, it is surprising to
note that supply chain research has tended to empirically treat negotiations and
buyer-supplier relationship research as discrete transactions (Atkins and Rinehart, 2006;
Daugherty, 2011; Patton and Balakrishnan, 2010). However, more recently, researchers have
The International Journal of
Logistics Management
Vol. 29 No. 1, 2018
pp. 191-215
© Emerald PublishingLimited
0957-4093
DOI 10.1108/IJLM-10-2016-0238
Received 24 October 2016
Revised 9 March 2017
1 May 2017
Accepted 2 May 2017
The current issue and full text archive of this journal is available on Emerald Insight at:
www.emeraldinsight.com/0957-4093.htm
191
Win-win and
win-lose
begun to note the need for a more relational research focus (Gelfand et al., 2006; Herbst et al.,
2011; Thomas et al., 2013, 2015) in supply chain research. In this study, we will begin the
process of addressing this research gap by examining relational negotiation outcomes in the
context of ongoing buyer-supplier relationships.
Negotiation research has been popular for over 50 years and has been influenced by a
variety of different fields such as economics (Nash, 1950, 1953), social psychology (Barry
and Oliver, 1996; Rubin and Brown, 1975), organizational behavior (Thompson et al., 2010),
marketing (Herbst et al., 2011), operations management (Ribbink and Grimm, 2014), and
supply chain management (Zachariassen, 2008). This research will focus on the important
relationship between negotiation strategy use and negotiation outcomes. The study includes
two negotiation strategies, win-win and win-lose, that are common in todays supply chain
(Ramsay, 2004; Thomas et al., 2015).
Win-win negotiators are characterized as desiring to learn information about their
partners goals,focusing on realizing joint benefits, and strengtheninglong-term relationships
(Mintu-Wimsatt and Graham, 2004; Zachariassen, 2008). Win-lose negotiators typically
exhibit a moreself-serving focus and oftenrefrain from exchanging information (Calhoun and
Smith, 1999). Given the supply chain managements focus onrelationship building, the use of
a win-win negotiation strategy has been strongly encouraged for buyers and suppliers
(Zachariassen, 2008). However, the frequency of win-win negotiation strategy use has been
challenged. Some research indicates that a win-lose negotiation strategy is actually more
common in supply chain negotiations than research has suggested (Ramsay, 2004).
While the relative success of various negotiation strategies have long been studied in a
variety of disciplines, notable gaps remain in understanding when it comes to incorporating
the real-life complexity inherent in supply chain negotiations (Zachariassen, 2008;
Herbst et al., 2011). Based on the gaps identified from studying previous research, the
following research question was developed:
RQ1. How are supply chain relationships effected by the use of different types of
negotiation strategies?
This research seeks to make three contributions: the use of a relational context instead of a
discrete transaction approach, theidentification of supply chain specificrelational negotiation
outcomes, and the relational impact of win-win vs win-lose negotiation strategies.
Building on an emerging research stream focused on the impact of different types of
negotiation strategies on the ongoing, relational aspect of supply chain negotiations
(Thomas et al., 2013; Thomas et al., 2015), this study utilizes an initiation multi-method
research approach as suggested by Davis et al. (2011). An initiation research design uses
multiple studies and methods, but they are weighted differently (Davis et al., 2011). The first
study initiates the research and informs the second study. While results from both studies
are reported, the majority of the discussion is on the second study. For this research, the first
study involves exploratory in-depth interviews with experienced supply chain professionals
from diverse industry backgrounds. The findings from this study are used to identify and
infuse relevant and important relational variables into the main study. The second
main study is a scenario-based experiment with dependent variables (relational
negotiation outcomes) drawn from the first study combined with the literature on supply
chain relationships, negotiation strategies, and the social exchange theory (SET).
Research hypotheses are presented and discussed. The study concludes with a statement
regarding research limitations and directions for further study.
Research background
Buyers and suppliers negotiate essential activities like product selection, pricing, payment
terms, shelf space, volume discounts, carrier selection, and markdown allowances.
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