Relationality in business negotiations: Evidence from China

Abstract

INTRODUCTIONBusiness negotiation is a decision-making process through interactive communication to reach agreement between buyers and sellers (Weingart & Olekalns, 2004). Negotiations are a constructive approach to maintaining inter-firm relationship commitments, and enhancing partnerships (De Dreu, Weingart, & Kwon, 2000; Pruitt, 1981; Thomas, Thomas, Manrodt, & Rutner, 2013). The interactive and interdependent nature of negotiation indicates the impact of relationality on negotiation processes and outcomes (Turel, 2010). For example, negotiators' relationship propensity influences their decisions and strategies made in negotiations. Negotiation practices can "reconstitute and reshape relationships" with their counterparts (Thompson, Wang, & Gunia, 2010, p. 502). Despite the recognized importance of understanding relationality in negotiations, only a few negotiation studies have touched upon this topic (e.g., Arino, Reuer, Mayer, & Jane, 2014; Wieseke, Alavi, & Habel, 2014). This research follows the call for relational perspective in negotiation research (Ingerson, DeTienne, & Liljenquist, 2015). By using China as a typical high relational culture, this study examines how relational determinants of negotiators from a high relational culture, including relational (guanxi) orientation and relational commitment on negotiation, affect negotiation communication and outcomes (i.e., economic outcome and relational capital).RELATIONALITY IN NEGOTIATIONSNegotiation has an inherently interdependent structure because "any bilateral negotiation is an interpersonal interaction" (Turel, 2010, p. 111). As a social factor influencing negotiation strategies, relational constructs affect negotiators' decisionmaking and subsequent outcomes (Tsay & Bazerman, 2009). However, discussions of relationality in the literature have been rare. Many researchers have agreed that the role of relationality has been under-researched and even ignored in negotiation studies (Greenhalgh, 1987). For example, many experimenters adopted an arelational research design which overlooked the social elements embedded in negotiations (Barley, 1991; Gelfand, Major, Raver, Nishii, & O'Brien, 2006). Following this line of argument, this research explores the salience of relationality in negotiations. In so doing, we operationalize relationality as a conglomerate of relational constructs in negotiation phenomena, including relational orientation, relational commitment, and relational capital.Relational OrientationHuman relationship are a social phenomenon featuring successive interpersonal interactions over time (Varey, 1998). Among other relational constructs, relational orientation has been used as the converse of transactional orientation in the relationship marketing literature (Gopalakrishna Pillai & Sharma, 2003), and treated as individual differences in management research (Leung, Chen, Zhou, & Lim, 2014). In line with these studies, this research defines relational orientation in negotiation as the propensity of an individual to foster and maintain interpersonal long-term relationship with another.Chinese culture, like many East and Southeast Asian cultures, is characterized as high relational in contrast to individualistic Western cultures (Ho, 1991). The emphasis on harmony and interpersonal relationships is one of the hallmarks of Chinese society (Hwang, 1987). In Chinese society, the informal relationship network dominates business activities, including negotiations (Lovett, Simmons, & Kali, 1999). Chinese culture is typical of highly relational interaction for this research.In China, the term "guanxi" is used to describe everyday relationship dynamics. As a pervasive cultural phenomenon, guanxi shapes interpersonal interactions in business negotiations with Chinese (Brunner & Koh, 1988; Brunner & Taoka, 1977). Guanxi has been extensively studied by sociologists and management scholars with attention to its role in constituting behavioral systems (Hwang, 1987), substituting for legal protection (Xin & Pearce, 1996), promoting venture performance (Luo, 1997) and affecting coworker relationships (Chen & Peng, 2008). …