Negotiation Process

Topics: Negotiation, Foreign direct investment, China Pages: 44 (14675 words) Published: September 15, 2011
International Journal of Conflict Management Vol. 15, No. 3, pp. 304-334

The Aarhus School of Business, Denmark

Verner Worm
Copenhagen Business School, Denmark This paper develops the argument for analyzing negotiations from an institutional perspective. A major theme of the argument being advanced in this paper is that the institutional perspective provides a more comprehensive understanding of the negotiation process in its entirety. The negotiation process can be broken down into three distinct components, namely (a) the pre-negotiation phase; (b) the negotiating phase; and (c) the post negotiation evaluation. Each of these phases is critically influenced by a specific component or components of the institutional environment. Scott's distinction between the regulative, the normative, and the cognitive dimension of the institutional environment is drawn upon to illustrate the usefulness of this perspective. The framework is applied to assess the similarities and differences between Indian and Chinese institutional environments and their implications for negotiating processes in the countries discussed. Choosing India and China to illustrate the utility of this framework is justified by the fact that India and China are both in the process of transforming their economies, and although confronted with similar challenges, they have dealt with them in very different ways. This comparison is thus useful, not only for illustrating the value of the institutional perspective, but also for understanding the dynamics of the negotiation process in these countries. Keywords: Negotiation, Institutional designs. Cross-cultural Note: We would like to express our deep appreciation to the editor Judi McLean Parks for her insightful suggestions and to three anonymous reviewers for helpful comments on an earlier version of the manuscript. Correspondence concerning to this article should be address to Rajesh Kumar, Aarhus School of Business, Fuglesangs Alle 4, DK-8210 Aarhus V, Denmark, (



The objective of this paper is to highlight the contribution of institutional theory in studying negotiation processes and outcomes. We show the relevance of institutional theory through an illustrative example that compares Indian and Chinese negotiating behavior. The goal of this paper is to map the different dimensions of the institutional environment and to outline how each of these dimensions has a bearing on negotiating dynamics. A set of illustrative propositions was developed regarding Indian and Chinese negotiations and negotiation behavior in order to draw out the theoretical and practical implications that derive from the institutional perspective. The paper begins by outlining the strategic significance of the institutional perspective in studying negotiation processes and outcomes. The different components of the institutional environment are then outlined and, as a prelude to a discussion of negotiation processes in these countries, the significance of comparing India and China is addressed. The paper concludes by explaining the significance of the institutional perspective in studying negotiations and by positing implications for managers seeking to do business in these countries. Relevance of Institutional Analysis Focusing on the use of the institutional perspective in studying negotiating processes is theoretically important for a number of different reasons. First, such a perspective highlights the fact that negotiations are not, in essence, non -contextual or ahistorical. In other words, while negotiations are always rooted in the present they are influenced by what looms in the past and are constrained by the shadow of the future. Institutional logic pervades all negotiations, whether or not negotiators are conscious of its impact. Second, the use of an institutional perspective provides a...
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