Negotiators’ Attitudes toward Signing Business Contracts: Evidence from Greece and Israel

• Published date: 01 September 2015
• DOI: http://doi.org/10.1002/tie.21697
• Author: Moshe Banai,Abraham Stefanidis,Ana Shetach
• Date: 01 September 2015

391

FEATURE ARTICLE

Published online in Wiley Online Library (wileyonlinelibrary.com)

© 2015 Wiley Periodicals, Inc. • DOI: 10.1002/tie.21697

Correspondence to: Abraham Stefanidis, Department of Management, Peter J. Tobin College of Business, St. John’s University, 8000 Utopia Pkway, Bent Hall

326, Queens, NY 11439, +1 (718) 990-6713 (phone), stefania@stjohns.edu

Negotiators’ Attitudes

toward Signing Business

Contracts: Evidence

from Greece and Israel

This study extends beyond negotiation process and styles, and focuses on negotiators’ tendency to

sign formal contracts. Drawing on a risk mitigation perspective, it examines the in uence of business-

people’s levels of horizontal and vertical individualism-collectivism, ethical idealism, and trust propen-

sity on their attitudes toward signing formal negotiated business contracts in Greece and in Israel. A

survey questionnaire was translated from English to Greek and to Hebrew, and 649 responses were

collected from employees who worked in industries such as banking, insurance, construction, manu-

facturing, retailing, and tourism in the Greek and Israeli private and public sectors. Our  ndings sug-

gest that higher levels of horizontal individualism, horizontal collectivism, and ethical idealism increase

employees’ tendency to sign formal contracts, whereas lower levels of general trust are associated

with a higher propensity to sign formal contracts. Interestingly, employees’ propensity to sign formal

contracts was signi cantly lower in Israel than in Greece. We argue that the propensity to sign formal

contracts, and thus to mitigate potential agreement risks, is dependent on the individuals’ cultural

and personal attributes. The study provides practitioners with a set of cultural and individual attri-

butes that can serve as predictors of negotiators’ predisposition toward signing business contracts.

©2015Wiley Periodicals, Inc.

By

Abraham Stefanidis

Moshe Banai

Ana Shetach

392

FEATURE ARTICLE

Thunderbird International Business Review Vol. 57, No. 5 September/October 2015 DOI: 10.1002/tie

their decision making regarding negotiation and, hence,

business contracts. However, to our knowledge, there

has been no previous empirical study to particularly look

into employees’ propensity to sign formal contracts and the

antecedents of such propensity. In an effort to address

this gap, this research aims to investigate whether cul-

tural and personal attributes could predict the tenden-

cies of businesspeople to sign formal business contracts.

Therefore, in line with existing theoretical evidence, this

research seeks to explicitly answer the following research

question: “Do businesspeople’s levels of horizontal and

vertical individualism-collectivism, ethical idealism, and

trust propensity have an effect on their attitudes toward

signing formal negotiated contracts?”

Our motivation to investigate this research question

was framed by a number of reasons. In particular, in

spite of their importance for the negotiation process and

results, negotiators’ attitudes toward signing formal con-

tracts have not been methodically studied. Furthermore,

the results of this research could significantly contribute

to the refinement of existing theories of contract negotia-

tion, emphasizing the significance of an underresearched

variable: the negotiators’ individual propensity to sign

formal contracts. Also, the findings of this research could

potentially serve as a useful toolkit for negotiators, allow-

ing them to a priori assess their counterparts’ propensity

to sign formal contracts by examining their peers’ cul-

tural and personal characteristics.

Introduction

T

he ancient Greeks were perhaps the first to philo-

sophically discuss the idea of contracts, for politi-

cal or moral conclusions of agreements between

the people and the ruler, or among the people them-

selves, or both (Hampton, 2007). In business contexts,

contracts, of a variety of forms, essentially constitute the

parties’ agreement toward the finalization of the negotia-

tion process. These contracts often take the form of for-

mal and detailed documents. However, the negotiating

parties do not always favor the signing of formal business

contracts; in diverse business and cultural contexts, rela-

tional contracts could serve the purposes of contractual

agreements (M. Chen & Nudelman, 2008; Gammelgaard,

Kumar, & Worm, 2013; Zhou & Xu, 2012).

Prior studies of negotiated business contracts have

been anecdotal (Hahn, 1982; Saxon, 2006) or histori-

cal (Hansen, 1995), or have focused on legal aspects of

the contracts (Daskalopulu & Sergot, 1997; Schwab &

Thomas, 2006), on compensation and rewards in labora-

tory conditions (McLean-Parks & Conlon, 1995; Neal &

Bazerman, 1985), on psychological attitudes in employ-

ment (Conway & Briner, 2005; Katou & Budhwar, 2012;

Montes & Irving, 2008; Rousseau & Schalk, 2000), on pro-

gramming language (Alberti et al., 2008), on decision-

making perspectives (Klein, Faratin, Sayama, & Bar-Yam,

2003), on interorganizational learning (J. Li, Poppo, &

Zhou, 2010; Lui, 2009), and on other aspects. Although

a large stream of research studies business contracts from

an exchange relationships perspective (Zhou & Poppo,

2010), much of the research in the field has been at

the organizational level, or alternatively at the meso level

( Heugens, Kaptein, & van Oosterhout, 2006), focusing

on the arrangements between collaborating firms (Abdi

& Aulhak, 2014). A thorough literature search renders

limited research about individuals’ attitudes toward nego-

tiated formal business contracts.

Contracts detail terms and function as safeguards

for the implementation of the terms of agreements

(Gammelgaard et al., 2013; Lui & Ngo, 2004). Nego-

tiators utilize contracts in order to minimize costs, curb

opportunism, and mitigate risks or uncertainties associ-

ated with their business transactions (Das & Teng, 2001;

Smolarski, Verick, Foxen, & Kut, 2005). The review of

the literature provides theoretical indications that, at the

individual level of analysis, negotiators’ cultural predisposi-

tion (Tiessen, 1997; Triandis et al., 2001), their ethical

tendencies (Koehn, 2001), and their interpersonal trust

propensity (Klein Woolthuis, Hillebrand, & Nooteboom,

2005; Mellewigt, Madhok, & Weibel, 2007) may influence

The results of this research

could significantly contribute

to the refinement of existing

theories of contract negotia-

tion, emphasizing the signif-

icance of an underresearched

variable: the negotiators’

individual propensity to sign

formal contracts.