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E-NEGOTIATION VERSUS FACE–TO-FACE NEGOTIATION: WHAT HAS CHANGED – IF ANYTHING?

by
Amira Galin, Miron Gross, Gavriel Gosalker,
Faculty of Management, Tel Aviv University, Israel

E-mail: ami30@bezeqint.net or: amira1@post.tau.ac.il or: mg8708@post.tau.ac.il,

Working Paper No 8/2002 May 2002

The authors wish to thank Mr. Ilan Roziner for efficient assistance in data analysis. IIBR working papers are intended for preliminary circulation of tentative research results. Comments are welcome and should be addressed directly to the authors. This paper was partially financed by the Israel Institute of Business Research.

Abstract

The focus of the present study is the relatively new and still controversial electronically mediated negotiation (hence denoted e- negotiation) as compared to the good old face-to-face negotiations. The main research question is the impact that the type of negotiation media (face-to-face versus e-negotiation) has on the features of the negotiation process (duration and tactics) and on its outcomes. It also examines the moderation effects of the sequence of the negotiation media i.e. face-to-face negotiation, when carried out prior to, or after e-negotiation. For this purpose, 80 young students were exposed to the two types of negotiations, whilst various intervening variables were controlled by randomization. It was found that the negotiation media, as well as the negotiation sequence, barely affects the negotiation outcomes. Face-to-face negotiation was not different than e-negotiation, in terms of the final price, the number of installments for the balance and the sum of the advanced payment. However, both the negotiation media and the negotiation sequence significantly affected the main features of the negotiation process, in terms of time duration and the use of hard or soft tactics. These results are discussed and interpreted in terms of existing theories.

Preface

With the growing interest in electronic business and the emerging of several price models (Hobson, 1999) of electronically mediated negotiation (e-negotiation), the impact of the electronic media on the negotiation process and its outcomes has become an important issue for both researchers and practitioners. Technology may change the negotiation process, but has it already done so? Has the electronic media changed the traditional process of face-to-face negotiation and if so in which ways? Is it more integrative or competitive? Does it lead to different features and outcomes? The present study examines the impact that the type of negotiation media (face-to-face versus e-negotiation) has on the negotiation process and its outcomes. It also examines the moderation effects of the sequence of the negotiation media (face-to-face negotiation, when carried out prior to or after e-negotiation) and the moderation effects of the negotiated Content. The literature and research findings concerning the impact of the negotiation media on the negotiation process and its outcomes are inconclusive. On one hand, it has been argued that face-to-face negotiation has a great advantage over e-negotiation, while on the other hand; it has been found that in many ways e-negotiation offers a new and better media for the parties involved in negotiation.

On the Good Old Face-to-Face Negotiation

It has been argued that face-to-face negotiation offers a better flow of information between the negotiating parties, thus enabling better decision-making. Studies, which examined the effects of computer-mediated interaction on group processes and decisions vs. face-to-face interaction, found that computer-mediated interaction suppressed information exchange and led to poor group decisions (Hollingshead, 1996). Furthermore, face-to-face communication versus computer-mediated communication has been found to affect negotiation performance by changing the accuracy of the negotiation judgment. Research results showed that computer-mediated groups lowered judgment accuracy, obtained poorer outcomes and distributed resources less equally than face-to-face groups (Arunachalam and Dilla, 1995). The rational was that during e-negotiation, the parties could make their decisions and judgments on the basis of text only. The absence of non-verbal or verbal signals, which could help the parties attribute the “true meaning” to the message, may result in misunderstanding, misjudgment and undesired outcomes.
It has also been found that face-to-face negotiations in mixed–motive conflicts (Drolet and Morris, 2000) facilitate better understanding of negotiators non-verbal cues and thus fostered the development of rapport, strengthened the basis of trust and helped negotiators coordinate a mutually beneficial settlement. In contrast, it has been alleged that e-negotiation may lead to conflict escalation, as a result of increased mistrust between the parties, as the parties are more likely to engage in conflict escalation in an anonymous exchange than in a face-to-face exchange. Also, there is evidence that e-negotiation takes longer than face-to-face negotiation and is less satisfactory to the parties involved (Carnevale and Probst, 1997). In studies where negotiators had the opportunity to assess the weaknesses and strengths of e-negotiations vs. face-to-face negotiations, the conclusion was that face-to-face negotiations lead to better outcomes in competitive or individualistic climates, but not in cooperative ones (Landry, 2000).

On the Advantages of Electronically-Mediated Negotiations

In contrast to the above findings and arguments, some research findings suggest the opposite i.e. that conventional face-to-face negotiations often lead to ineffective outcomes (Rangaswamy and Shell, 1997) and that e-negotiation has clear advantages over face-to-face negotiation. It has been argued that e-negotiation is quick, direct and to the point and due to the effect of anonymity, helps the parties separate the negotiated issues from the personalities involved (Carmel, Herniter and Nunamaker, 1993). Furthermore, when non-verbal cues are removed, concession making and problem solving, as well as reduced hostility have been frequently observed. Studies have indicated that the absence of non-verbal cues in hostile negotiations may reduce, not increase, the level of conflict (Carnevale, Pruitt and Seilheimer, 1981; Lewis and Fry, 1977). Also, the depersonalized nature of e-negotiation has been found to eliminate status differences between groups (Hewstone and Brown, 1986) as well as between people (Kiesler, Siegal and McGuire, 1984; Sproull and Kiesler, 1986). Several studies have indicated that computerized interaction increases the resources of low-network people (Weisband, Schneider and Connolly, 1995). Where status distance makes direct negotiations improbable, e-negotiations enables people to communicate on an equal status. Due to the absence of face-to-face contact, e-negotiation may prevent hostility, overpass suspicion, cut across group boundaries and thus form a basis for agreement (Carnevale and Probst, 1997). Some research results also suggest (Croson, 1999) that many of the negotiating “tricks”, which negotiators have learned in order to glean advantage in face-to-face negotiating, do not translate well in the electronic media.

A Possible Moderation Effect

According to face-to-face negotiation supporters, the greatest disadvantage of e-negotiation is the lack of rapport and trust in the absence of personal cues. According to the supporters of e-negotiations, the greatest advantage of e-negotiation is the absence of face-to-face contact. In order to resolve such an alleged contradiction, it is possible to assume that the sequence of the negotiation media (face-to-face, e-negotiation) may serve as a moderating variable, which affect the relations between the communication media and the processes and outcomes of negotiation.
Perhaps the advantage of anonymity in e-negotiation can be maintained without loosing rapport and trust, on the basis of a previous “positive” face-to-face experience. Such former personal experience may help negotiators to overcome the total anonymity of e-negotiation and thus promote the ability of the parties to reach an agreement. It has been found that even superficial encounters, in which people reveal relatively little about themselves, may create positive feelings, which in turn may lead to more cooperative negotiations (Moore, Kurtzberg, Thompson and Morris, 1999). Moreover, it was found that negotiators, who experience positive feelings towards each other, are more likely to make concessions (Barry and Oliver, 1996), whereas experience in distributive negotiation may hinder performance in subsequent integrative negotiations (Thompson, 1989).
Thus, the effects of e-negotiation may be moderated, not necessarily by previous acquaintance from face to face negotiations, but by the overall previous experience of the negotiators. It has already been found (Thompson, 1989) that negotiators were able to apply the integrative skills, learned in one task, to different negotiation situations. Accordingly, we anticipated that the mere experience with face-to-face negotiation, when carried out prior to e-negotiation, would affect both the e-negotiation process and the negotiation outcomes. Face-to-face negotiation prior to e-negotiation may create a positive atmosphere and lead to: a) greater use of soft tactics, including the use of active listening, revealing information and concession making, b) shortening the length of negotiation and c) increase the chances to reach an agreement between the negotiation parties. Also, it has been argued (Thompson, 2001) that e-negotiation prior to face-to-face negotiation may result in the negotiators’ nightmare, as the parties learn that they can use e-negotiation to reach consensus on easy issues and resolve their acute differences through face-to-face negotiation. In so doing, they may turn their face-to-face negotiation into “combat zones”.

The Research Assumptions

1. Face-to-face negotiation is different than e-negotiation in terms of the outcomes of the negotiation. Face-to-face negotiation yields more integrative outcomes, due to the richness of non-verbal cues, the development of rapport and the promotion of better judgment accuracy.
2. Face-to-face negotiation is preferable to e-negotiation in terms of time duration. This is due to the fact that the actual writing down (and checking before transmission) of the messages demands more time than the oral presentation demands in face-to-face negotiation. Also the communication in face-to-face negotiation is less ambiguous, due to the richness of non-verbal cues, and therefore demands less time.
3. During face-to-face negotiation soft tactics are more frequently used than in e-negotiation, whereas hard tactics are more frequently used in e-negotiation than in face-to-face negotiation. Face-to-face negotiation enables a better flow of information between the negotiating parties, enables better understanding between the parties, strengthens the basis of trust and thus both reduces the need to utilize hard tactics and promotes the use of soft tactics.
4. The sequence of the negotiation media affects both the negotiation process and its outcomes. The mere experience with face-to-face negotiation prior to e-negotiation leads to more integrative outcomes, just as e-negotiation benefits from the positive effects, such as rapport and trust, previously experienced in the face-to-face phase. In the same way, experiencing e-negotiation, when prior to face-to-face negotiation, will influence the face-to-face phase in a distributive way and will lead to distributive outcomes. The features of the negotiation process, i.e. the duration and tactics, are also influenced by the sequence. On one hand, the contribution of the prior face-to-face negotiation to the later e-negotiation is in the promotion of soft tactics, the demoting of hard tactics and the curbing of the duration. Whilst, on the other hand, the endowment of the prior e-negotiation to the later face-to-face negotiation is the increased use of hard tactics and an extension of the duration.


The Experiment

Eighty (80) students, with an equal number of men and women, constituted the sample of negotiators. All of them were young (average age 25.3) and born in Israel.
At each stage of the experiment, the negotiators were introduced to one of two possible negotiation contents:

“Instrumental Content A”- buying / selling a piece of equipment

In this scenario, the negotiator plays the role of either a seller or a buyer of a Personal Computer. The negotiation process is defined by its length and the tactics employed, the outcome of the negotiation is defined by the following variables: 1) Agreed down payment. 2) Final (agreed) price, 3) Number of (equal) installments for the balance.
As a result of a pilot test, negotiators were restricted to similar monetary ranges, in order to avoid the impact of additional intervening variables. The specific model of the personal computer was also omitted, in order to avoid biases from the negotiators’ prior experience.

“Leisure Content B”- buying / selling intangible goods

In this scenario the negotiator either offers or seeks to buy a package deal for an organized tour abroad, with similar variables measuring the process and its outcomes. As a result of a pilot test, negotiators were restricted to similar monetary ranges and the specific destination of the holiday package was omitted, in order to avoid biases from prior experience of the negotiators.

The experimenting participants were also randomly allocated into four (4) groups, to fully take into consideration the two various forms of negotiations (face-to-face vs. e-negotiations). In this way, each group was exposed to both types of negotiation media – face-to-face and e-negotiation in the two possible sequences.

In each group the experiment was conducted in two (2) stages: In Groups Nos. 1 and 2, the sequence of the negotiation media was: Face-to-face negotiation and then e-negotiation. In Groups Nos. 3 and 4, the sequence of the negotiation media was: e-negotiation and then face-to-face negotiation.
Group No. 1 held face-to-face negotiations in the “Instrumental Content A” scenario and consequently negotiated the “Leisure Content B”-type issues using e-negotiation. Group No. 2 first held face-to–face negotiations in a “Leisure Content B” scenario and later on used e-negotiation for the “Instrumental Content A”. Group No. 3 first held e-negotiations for the “Instrumental Content A” and later on conducted face-to-face negotiations on “Leisure Content B”-issues. Group No. 4 first held e-negotiations on “Leisure Content B”-issues and later on conducted face-to-face negotiations on “Instrumental Content A”.
Twenty (20) students were randomly assigned to each of the groups and were then randomly “coupled” to form ten (10) negotiating couples in each of the groups. The groups were re-mixed and the couples re-assigned (randomly) after each stage. (For example: the couples in group No.1 were reallocated after the face-to-face negotiations in “Instrumental Content A to e-negotiation in the “Leisure Content B”-).
Negotiations were fully recorded (on a tape recorder, or computer hard disk). A content analysis of the full recordings was conducted later on . The analysis also referred to the tactics employed by both sides. The tactics were grouped into 5 categories according to Galin’s classifications (Galin, 1996): Soft Tactics, Hard Tactics, Time-Related Tactics, Authority-Related Tactics, Persuasive Tactics. Soft Tactics included concessions, active listening, promises and information revealing. Hard Tactics included threats, intimidation, take-it-or-leave-it and walking away from the negotiations. Time-Related Tactics included deadlines on the one hand and postponements on the other. Authority-Related Tactics included emphasizing the existence or absence of authority (full or partial). Persuasion Tactics included tactics based on facts, tactics based on worthwhileness, ridiculing the other’s demands. At the end of each stage, the parties were asked to report the outcomes of the process in writing. These reports were crosschecked and verified with the recordings from the tape recorder and the computer hard disk .Due to the fact that it was not possible to crosscheck the use of tactics, the analysis of the tactics was based on the content analysis only.

Results

A general description of the dependent variables: the features of negotiation process and outcomes, is presented in Table 1.

Table 1 – Means and S.D. of the Dependent Variables

 
 

Variable

Mean

S.D.

Min

Max

Features of

Face-To-Face Negotiation Process

Duration

6.47

1.99

3

12

Soft Tactics

0.25

0.18

0

0.75

Hard Tactics

0.20

0.12

0

0.50

Time-Related Tactics

0.04

0.07

0

0.20

Authority-Related Tactics

0.08

0.12

0

0.33

Persuasive Tactics

0.42

0.20

0

1.00

Face-To-Face Negotiation Outcomes

Final Price

951

246.6

500

1400

No. of Installments for the Balance

12.6

3.24

7

20

Advanced Payments

158

66.45

0

350

Features of

E-Negotiation Process

Duration

15.0

2.56

10

21

Soft Tactics

0.16

0.14

0

0.67

Hard Tactics

0.41

0.11

0.17

0.67

Time-Related Tactics

0.04

0.07

0

0.25

Authority-Related Tactics

0.02

0.05

0

0.17

Persuasive Tactics

0.36

0.12

0.15

0.60

E-Negotiation Outcomes

Final Price

927.75

252.59

600

1300

No. of Installments for the balance

12.2

3.29

7

20

Advanced Payments

163.12

55.22

60

250



• N = 40 dyads in all cases


Analysis of Variance of the Negotiation Outcomes

The Analysis of Variance of the negotiation outcomes yielded no significant differences between the two negotiating media, with F values of .762, .306 and .376 for the final price, number of installments and down payment respectively. Neither have we found a significant influence of the sequence of the negotiation media (with F values of .007,230 and .341 for the final price, number of installments and down payment respectively) nor any significant effect of the order of the stories (which differed in content) with F values of .053, .491 and .008 for the three previously mentioned outcomes respectively.

The Impact of the Negotiating Media and Sequence of the Negotiation Media on the Features of the Process

The features of the negotiation process included the duration of the negotiation and the use of various tactics during the process. The duration of E-negotiation was found to be substantially longer than that of face-to-face negotiation (F = 259.66, p< .001). Also the amount of tactics employed was found to be significantly higher in E-negotiation vs. face-to-face negotiation (F = 9.53, p< .005). The interaction between the sequence of negotiation media and the duration of time yields no significant difference between the time duration of face-to-face negotiation and that of E-negotiation. However, the interaction between the sequence of negotiation media and the amount of tactics employed yields a significant difference between E-negotiation versus face-to-face negotiation (F=10.116, p< .005).
Next, we analyzed the impact of the negotiating media and sequence on the relative intensity of each type of tactics. The relative intensity was defined as the ratio between the number of times a certain type of tactics was used and the total number of times tactics (of all types) were used. The differentiation between the types of tactics employed yields the following analysis of variance of the relative intensity (Table 2).

Table 2: Analysis of Variance of the Tactics

 

MS

F

Hard Tactics

.919

81.264 *

Soft Tactics

.172

11.507**

Time-Related Tactics

3.887

0.001

Authority-Related Tactics

8.060

10.772 **

Persuasive Tactics

6.858

2.24



* p< .001 ** p< .005


The findings in Table 2 indicate significant differences regarding the relative intensity of use of the various types of tactics employed between face-to-face negotiation and E-negotiation. The use of hard tactics is significantly more frequent in E-negotiations, while the use of both soft and authority-related tactics is more frequent in face-to-face egotiation.
A detailed analysis of the type of tactics employed indicated that the sequence of the negotiation media yielded a significant impact only on the authority-related tactics (F=6.96 P<.05). When face-to-face negotiation took place prior to E-negotiation, the amount of authority-related tactics employed was significantly higher than when E-negotiation took place prior to face-to-face.

Discussion

Has e-negotiation changed anything in the essence of traditional negotiation? Our first assumption was that face-to-face negotiation yields more integrative outcomes than e-negotiation does. However, perhaps the most interesting finding in this research is that the negotiation media does not yield any significant difference in the outcomes of negotiation. Face-to-face negotiation was not found to be preferable to e-negotiation regarding the following outcomes: final price, number of installments for the balance and the volume of the advanced (down) payment. Face-to-face negotiation and e-negotiation yielded similar outcomes even though face-to-face negotiation has non-verbal cues, and allegedly promotes rapport and better judgment accuracy (Drolet and Morris, 2000). The research performed on computer-mediated groups (Arunachalam and Dila, 1995), which indicated that e-communication obtained poorer outcomes was also not proven in this research. However, whilst the electronic media has not changed the outcomes of negotiation, it has a profound effect on the time duration and significant influences the tactics employed, i.e. a significant effect on features of the negotiation process
Our second assumption, that face-to-face negotiation is preferable to e-negotiation in terms of time duration, was confirmed in this study. Findings from past research regarding time duration of the process in negotiation are not conclusive. On the one hand, previous findings (Carmel, Herniter and Hunamaker, 1993) indicate that e-communication is a more concise form of correspondence and an easier and quicker way to interact, as much less demands are made on the traditional formalities. On the other hand, it was also argued that face-to-face negotiation may be more time consuming, due to the inducement of ‘combat zones’ (Thompson, 2001), which deflect the parties focus from the actual issues at hand and diverts their attention to the ongoing personal interactions. We found that the time duration in e-negotiation vs. face-to-face negotiation was substantially longer, more than doubled. Prima facie, this could be explained by the fact that e-negotiations necessitate the parties to actually write down their material to be put forward. Writing down the material can be a laborious task, where the writer rereads and double-checks his/her composition before actually electronically releasing it. Whereas, face-to-face negotiation enjoys the benefit of non-verbal cues, which are likely to convey the message at hand in a more rapid way, E-negotiation is totally reliant on text alone, therefore requiring more words and a longer text would necessarily lengthen the process.
Our third assumption, maintaining that soft tactics are more frequently employed in face-to-face negotiation and that hard tactics are more frequently utilized in e-negotiation, was also supported in this study. These findings are not in line with previous findings, that e-negotiations, in the absence of face-to-face contact, can prevent hostility, overpass suspicion and eliminate ‘tricks’, which negotiators use during face-to-face negotiations (Carnevale and Probst, 1997; Croson, 1999). The frequent employment of soft tactics in face-to-face negotiation may be explained by the prevalence of higher rapport and trust. It was interesting to note that the use of authority-related tactics was also found to be more frequent in face-to-face negotiations. This could be explained by the fact that face-to-face negotiations create and maintain status differences, whereas e-negotiations eliminate status-related advantages during the negotiation process (Hewstone and Brown, 1986; Kiesler, Siegalo and McGuire, 1984; Sproull and Kiesler, 1986; Weisband, Schneider and Conolly, 1995).
Very little support was found in this study for our fourth assumption. Neither the outcomes nor the features of the process were influenced by the sequence of the negotiation media. However, there was one exception - the use of authority-related tactics. When face-to-face negotiations were held prior to e-negotiations, authority-related tactics were more abundant in the latter e-negotiation phase. It seems that the lack of authority-related tactics, typical to the anonymity of e-negotiations, disappears once face-to-face negotiations are experienced prior to e-negotiations.
In our opinion, it is rather interesting that the negotiation media, as well as the negotiation sequence, barely affect the negotiation outcomes but significantly affect the main features of the process, such as duration and tactics. This may imply that technology may have changed the features of the negotiation process but the negotiation outcomes are not determined only according to the process. It is possible to divide the variables, which affect the negotiation outcomes, into intrinsic and extrinsic variables. The intrinsic variables are the features of the negotiation process, such as the time duration and the tactics employed. The extrinsic variable, which influences the outcomes, may be external time pressure, negotiators' gender or culture and the substance of negotiation (Harnick, Dreu and Van Vianen, 2000). These and other extrinsic
variables may have a greater impact on the negotiation outcomes than the intrinsic variables, studied in this research. One extrinsic variable studied in this research, i.e. the technology of the negotiation media, had no effect on the negotiation outcomes. However, there are other technology-related outcomes , which were not studied in this research, such as post-negotiation stress (e-negotiation may leave stressful feelings as a negotiation outcome), or a lesser or greater desire to re-negotiate again using the same technology. These variables may serve as interesting objectives for future research.
It should also be noted that the negotiators in the present research were relatively young, which perhaps restricts the validity of the results. The same research performed on an older population may yield different findings, as today’s older population is less attuned to the e-media than their younger contemporaries. Nevertheless, the justification for focusing on young negotiators in the present research is that in years to come, when e-negotiating may reasonably be expected to be a commonly used form of communication, the e-negotiating patterns of the present younger generation will be the prevailing ones.

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