Journal of Strategic Contracting and Negotiation

Article
The negotiation of
contractual agreements
Journal of Strategic
Contracting and Negotiation
2015, Vol. 1(1) 8598
The Author(s) 2015
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DOI: 10.1177/2055563615571479
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Edward C Tomlinson
College of Business and Economics, West Virginia University, USA
Roy J Lewicki
Department of Management and Human Resources, Fisher College of Business,
The Ohio State University, USA
Abstract
We provide a focused review of the extant negotiation literature to address four highly salient
objectives for contract negotiations: how to maximize the likelihood of reaching a [good]
agreement; how to reach an agreement that will fulfill its intended purpose; how to reach an
agreement that will last; and how to reach an agreement that will lead to subsequent negotiations.
Throughout the article, we rely on integrative negotiation as the key strategy to achieve these
objectives and review work that has highlighted the specific tactics involved.
Keywords
Contracts, conflict, negotiation, integrative negotiation, joint gain
Disciplinary areas
Organizational behavior, social psychology
Introduction
A contract is a voluntary agreement between parties whereby a promise (or set of promises) is
granted in exchange for consideration (i.e. something of legal value), and negotiation is the process
that leads to this voluntary agreement (Mallor et al., 2013). More precisely, negotiation refers to a
form of decision making in which two or more parties talk with one another in an effort to resolve
their opposing interests (Pruitt, 1981: xi). As the product of joint decision making, negotiated
contracts are peculiar insofar as both parties voluntarily surrender some measure of freedom to
each other and yet this sacrifice enables both to gain more than what would otherwise be possible
Corresponding author:
Edward C Tomlinson, College of Business and Economics, West Virginia University, Morgantown, WV 26506, USA.
Email: edward.tomlinson@mail.wvu.edu
Downloaded from jsc.sagepub.com at INDIAN INST MGMNT KOZHIKODE on October 8, 2016
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Journal of Strategic Contracting and Negotiation 1(1)
(Rousseau, 1995). Because contracts can only exist by voluntary agreement, we will review the
body of negotiation research to determine how this voluntary agreement is produced. We structure
our review to address four specific and highly practical objectives for the contracting process:
(1) how to maximize the likelihood of reaching an agreement; (2) how to reach an agreement that
will fulfill its purpose; (3) how to reach an agreement that will last; and (4) how to reach an
agreement that will pave the way for subsequent agreements. We draw on our over three decades of
research and consulting to make recommendations on negotiating contracts.
We will mention at the outset that we believe these four objectives are most fruitfully achieved
through the use of integrative negotiation. Integrative negotiation refers to an over-arching
negotiation strategy whereby both parties seek to maximize joint gain. This process stands in
marked contrast to distributive negotiation, where the aim of the process is to reach an agreement
to distribute resources such that the value achieved by one negotiator comes at the others expense.
In integrative negotiation, however, the goals of the parties are not judged to be mutually exclusive
(although they may sometimes appear that way initially). As we will explain in the sections that
follow, we believe that an integrative strategy is the best suited for not only reaching an agreement
(as opposed to impasse), but also for ensuring that the resulting agreement will fulfill its purpose,
continue in force, and facilitate subsequent agreements.1
How to maximize the likelihood of reaching an agreement

Because negotiations are by definition voluntary agreements, there is no guarantee at the outset
that an agreement will result. In other words, there is no contractual agreement without mutual
consent. If negotiators are to benefit from an interdependent relationship, they must avoid reaching
impasse. Integrative negotiation tactics are helpful in avoiding or resolving impasses (Lewicki and
Tomlinson, 2014a). Of course, it is also important to note that negotiators should never negotiate
merely to have an agreement; rather, negotiators should strive to achieve a good agreement. In
specifying a good agreement, we mean an agreement that optimizes the value both negotiators
derive. Integrative negotiation is well suited for this purpose as well.
However, while the concept of integrative negotiation (often referred to as winwin or
mutual gains or creating value negotiating) has gained popularity in recent years, our
experience with teaching negotiation indicates that few people truly understand what constitutes an
integrative agreement or the process and tactics involved in creating one. Because we view
integrative negotiation as the best way to maximize the likelihood of reaching a good agreement,
we proceed to describe the major stages that are required. The five major stages are: preparation;
building the relationship with the other negotiator; exchanging information; inventing and
exploring options for mutual gain; and reaching an agreement (Lewicki and Tomlinson, 2014a;
Lewicki et al., 2015).
Preparation
We and others have argued that preparation is essential to negotiation success (Fisher and Ertel,
1995; Lewicki and Tomlinson, 2014a; Lewicki et al., 2015; Simons and Tripp, 1997). As we
mentioned above, the objective of any negotiation is not only to obtain an agreement, but to obtain
a good agreement. Preparation involves a set of conceptual tools that helps a negotiator define in
advance what a good agreement would look like, and to develop specific plans to achieve it.
Tomlinson and Lewicki
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Defining interests. The purpose of negotiation is to create agreements that satisfy the negotiators
interests their ultimate needs, desires, and concerns (Fisher et al., 1991). Yet many negotiators
fixate so heavily on arguing for a specific way of quantifying their interests (by stating specific
positions) that they lose focus on the larger interests themselves. This creates problems in several
ways. First, a focus on positions rather than interests risks negotiating a contract that fails to
address the interests that gave rise to the negotiation. It is imperative that negotiators clearly
articulate their interests before the negotiation. For example, a large company may approach an
individual who started a successful small business with an offer to purchase that business. The
founder, having made a tremendous investment of time, money and personal creativity in building
the business, may be reluctant to sell the business, fearing that the sale would effectively separate
him from something he created and sees as an integral part of his identity. So, he offers to sell the
business only for an exorbitant amount of money (implying that the only way to separate him from
his business is for the large company to pay a large premium to buy it). Ultimately, however, it is
not a large amount of money that the small business owner really wants. Rather, he wants to
continue his involvement in a business he created (and indeed, the large company may very well
have no objection to this at all). Therefore, even if he sells the company for the exorbitant price, he
will have failed to achieve his true interests retaining some personal involvement and control
over it because that is not how he reasoned through the agreement and what would happen if the
buyer actually paid the extreme price. What we see in this example is a fundamental mismatch
between the position (the amount of money the small business owner demanded) and the interest it
was supposed to represent (what the small business owner ultimately wanted).
Second, positions are rigid statements that negotiators make in order to narrow the range of
possibilities for settlement; however, this narrowing can inhibit the chances of reaching a good
agreement because it ignores the larger interests. Focusing on interests enhances the likelihood of
reaching a good agreement because of greater flexibility: in short, there are often multiple ways to
achieve a given interest in a negotiation, as opposed to very limited way of satisfying a position.
For example, a job applicant may state that a US$60,000 salary is necessary for her to accept an
offer, whereas the hiring manager may respond that the most they can pay for the position is
US$50,000. All that has been communicated so far are positions (what the negotiators say they
want); what has been omitted is their interests (why they want what they say they want). If the
candidate is ultimately concerned with having enough money to live off while pursuing a masters
degree, and the employer has a tuition reimbursement program that the candidate does not know
about, it becomes possible to see another way for the candidate to satisfy her fundamental interest.
Defining the BATNA. Another critically important step in preparing for a negotiation is for the
negotiator to consider what can be done to satisfy his/her interests if an agreement is not reached. If
the focal negotiation fails, there are usually several alternative courses of action that may serve the
negotiators interests. Among these alternatives, the negotiator should identify what is the best
alternative to a negotiated agreement (BATNA) (Fisher et al., 1991). A job candidate with two
offers still has one to fall back on if agreement cannot be reached on the other, and therefore has
more leverage to negotiate the first offer. Identifying and strengthening ones BATNA before a
negotiation, and communicating that BATNA during a negotiation, can help maximize the likelihood of reaching an agreement because it encourages the counterpart to cooperate and keep the
other from deferring to his BATNA (Pinkley, 1995; Ury, 1991). It also helps to ensure a good
agreement, because the final settlement should at a minimum exceed what is available from the
BATNA.
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Defining issues. An issue is an agenda item on which the negotiators will strive to reach a settlement.
Sale price, amount of down payment, and financing terms would be examples of negotiable issues
for the private sale of a used car. On the other hand, mileage, the color of the car, and whether it has
air conditioning are not likely to be issues because they cannot be changed through a negotiation.
For example, no amount of negotiating will change the mileage of the vehicle; rather, this
information can be considered when negotiating over the appropriate sales price.
Because negotiators often have different preferences among their group of issues, it is helpful to
identify as many of these issues as possible in advance. For example, in a two-issue negotiation,
one negotiator may place high value on the first issue and little on the second. The second
negotiator may place little value on the first issue and high value on the second. Identifying
multiple issues and relative priorities among them allows the negotiators to reach an agreement
where they both achieve their most valued outcome and concede the other issue to the opponent.
This type of agreement is referred to as logrolling (Pruitt, 1981).
Defining targets and walkaways. A target is the goal a negotiator sets for the final agreement; targets
can be established for each issue and/or for the entire set of issues as a package (Simons and Tripp,
1997). Setting a target before the negotiation provides a benchmark by which the negotiator can
gauge his performance. Meeting or exceeding ones target indicates that a good agreement has
been reached. Similarly, a walkaway (or resistance point or reservation price) is defined as the least
acceptable settlement for an issue or the entire set of issues. Establishing this minimum threshold
prior to negotiation helps ensure that one does not achieve an agreement merely for the sake of
having one. In other words, it prevents negotiators from voluntarily agreeing to terms that amount
to a bad agreement. If the negotiator cannot reach an agreement that exceeds the walkaway point,
she should pursue her BATNA instead.
Understanding the other party. Once ones own interests, BATNA, issues, targets, and walkaways
are defined, similar care should be taken to understand what the other negotiators point of view is
likely to be. This might be done by referring to past negotiations with that party, conversing with
others who have negotiated with that party before, holding preliminary meetings, or even
exchanging an agenda prior to the negotiation. Regardless of how this insight is gained, considering the conflict from the others point of view can be very useful for crafting an integrative
agreement (Galinsky et al., 2008; Richardson et al., 1994). As we suggested earlier, the other party
might have different priorities among issues that allow for a logrolling solution. It is also possible
that both negotiators might have commonalities that can be exploited. For example, a father and
son might share a highly valued superordinate goal of spending more time together (even though
the father dislikes playing video games and the son dislikes watching football on television). The
pleasure of spending time together fuels their search for an activity they both enjoy.
Building the relationship with the other negotiator

Negotiators often view their counterparts as obstacles standing in the way of them getting what
they want, and regard them as opponents to be defeated (Hocker and Wilmot, 1995). This mindset
predisposes them to perceive the negotiation in fixed-pie terms, such that one persons gain
necessarily entails the other persons loss, and that the other party stands in the way of achieving
ones objectives (Thompson, 1990). This perception leads to lower trust among negotiators, and as
a result, information is carefully guarded to prevent exploitation by the other (Lewicki et al., 2015).
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However, the integrative negotiation process is based on a different mindset, where negotiators
mentally separate the other person (i.e. the other negotiator) from the problem at hand (the actual
issues to be resolved by mutual agreement) (Fisher et al., 1991). In this case, the other negotiator is
viewed as a partner who assists in solving a joint problem. When both parties to a negotiation view
each other this way, they are more likely to engage in efforts to build a relationship with each other.
This relationship building involves establishing the trust necessary to openly and accurately share
information about their respective preferences and priorities, and to believe what the other tells
them (Butler, 1999; Lewicki and Tomlinson, 2014b; Tenbrunsel, 1999). This information
exchange, in turn, enables collaborative processes that results in higher joint gain (Olekalns et al.,
1996). We wish to stress, however, that building a relationship with the other negotiator does not
require the negotiators to abandon their self-interests, simply to attend to the desires of the other.
Rather, negotiators should actively strive to achieve their interests while being mindful of the
collaborative relationship they have established with the other party, and attentive to that partys
interests as well (Kelley and Schenitzki, 1972).
We also realize that some relationships may become strained by actual or perceived trust
violations by one or both negotiators. If this is the case, special attention needs to be directed to
repairing damaged trust (Lewicki and Tomlinson, 2014b). One method of doing so is to minimize
the likelihood of future violations by creating contractual agreements that codify expected behavior, and detect and sanction violations (Kramer and Lewicki, 2010).
Exchanging information
As we discussed above, negotiators should work to build a relationship with each other so they will
feel comfortable sharing information with each other. This freer flow of information should allow
each party to reveal their interests and relative priority among issues. In this way, negotiators may
find some issues where their preferences are common (i.e. both parties have the same superordinate
goal), compatible (i.e. both generally prefer the same settlement value), different (e.g. across two
issues, one party strongly prefers a high value on the first issue and places no value on the second,
whereas the second party prefers a high value on the second issue and places no value on the first),
and opposed (i.e. the parties have inverse priorities, such as when a job candidate prefers a higher
salary and the employer prefers to pay a lower salary). Integrative negotiation is ideally suited to
dealing with the first three categories.
To set the stage for this information exchange, the parties should establish that the first thing
they will negotiate is how they will conduct the remainder of the negotiation that is, to discuss the
process they will use before they begin to put specific issues on the table. In other words, both
parties should commit at the outset to work toward joint (rather than individual) gain, share
information on their respective interests, and explore all viable options in order to maximize a win
win agreement. They should also agree that as the negotiation proceeds through a discussion of the
various issues, any agreement on a particular issue should be considered tentative until all issues
have been discussed (to allow for any final tradeoffs that can maximize joint gain). Finally, we
advise negotiators to establish ground rules such as following a pre-determined agenda, being
polite and respectful during the negotiation, dealing with easier-to-resolve issues first, and taking
breaks when negotiations become difficult (Lewicki and Tomlinson, 2014a). These are only some
of the elements of what experts have called the shadow negotiation (how we negotiate, where
and when we negotiate, etc.) that may be as important as how we address the substantive issues
(Kolb and Williams, 2000).
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As the negotiation continues, both negotiators should take care to express their interests, as well
as their particular priorities among these interests. This exchange of information makes it much
more likely to achieve an integrative agreement (Thompson, 1991). As obvious as this advice may
seem, research has shown that very few negotiators actually do this (Thompson, 1991). Yet merely
asking why a negotiator has taken a certain position on an issue can provide the insight that allows
it to be resolved (Malhotra and Bazerman, 2007).
When the negotiators begin to discuss specific issues, they should state their opening offer
for each one, and this opening offer should be no more (or less) than they can plausibly justify.
(This step is in direct contrast to the distributive bargaining process, where parties are
encouraged to make extreme opening offers). The rationale for this offer should also be
explained when that opening offer is made, taking care to show how it relates to the interests
that have already been discussed. It might seem at first that asking for as much as one can
justify is incompatible with integrative negotiation. However, the interests tied to this issue may
be compatible (such that both negotiators reap high value for that settlement point) or differential (such that the other negotiator has no objection to that settlement point because that issue
has little value to him). Essentially, asking for the most that can be plausibly justified avoids the
myth of the fixed pie which assumes that the goals of the negotiators are opposed on every
issue. Some research also shows that making a concession to a more moderate offer on an issue
is more likely to be accepted compared to the same (moderate) offer without the more ambitious offer preceding it (Cialdini, 1993).
Finally, we note that the other negotiator is most likely to share information with you if you
share information with her first. When you state a willingness to share information, and then
proceed to do so, you make it more likely that the other negotiator will reciprocate in kind
(Malhotra, 2004; Malhotra and Bazerman, 2007). Even if the other party is not as forthcoming as
you would prefer, you can make offers across issues that are of equivalent value to you, and use the
other partys reaction to infer his relative priority among the issues (Bazerman and Neale, 1992;
Malhotra and Bazerman, 2007). Again, this process is in contrast to the more traditional negotiating strategy of beginning with extreme opening offers and minimally sharing information, both
of which inhibit trust development.
Inventing and exploring options

Once the opening offers (and their underlying interests) are stated by both negotiators, they will be
able to see if there are any compatible issues (i.e. both parties prefer the same settlement point), and
these can be quickly settled.
To address the differences that remain, negotiators should propose and discuss options
(i.e. different possible settlements on each issue). The more issues that are being negotiated
allows for more ways to package them in different ways; this makes it more likely to reach
a settlement that maximizes joint gain. Therefore, the parties should proceed to brainstorm
over options they think will satisfy both sets of interests. The objective is to generate as
many options as possible, taking care not to criticize or evaluate any of the options until a
complete list is generated. (Criticizing options is likely to make the other party defensive,
which usually leads the other party to dig in and defend their preferences rather than
generate more options.) It is critical to understand that this part of the process must not be
construed as making proposals or offers. Once a full list of options is generated, each one
will be examined to see which ones more fully satisfy both parties interests. This also
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means that each negotiator should demonstrate firm flexibility (i.e. insisting on achieving
ones interests, but being flexible on the manner in which this is accomplished) (Fisher
et al., 1991).
One way of generating options is to consider whether what initially appears to be a single
issue negotiation can actually be dealt with as two or more separate issues. As we discussed
earlier, this creates the potential for logrolling (Lax and Sebenius, 1986; Pruitt, 1983). Consider
the classic negotiation example of two sisters in a dispute over the last orange in the house. One
sister wants this orange for a cake recipe, while the other wants it to make a glass of orange juice.
Since there is only one orange, it appears that either: (1) one sister will get the orange while the
other will not (meaning there will be one winner and one loser); or (2) they will divide the
orange, perhaps by cutting it in half (in which case both sisters reach a compromise where neither
gets enough to be satisfied). Because a negotiated agreement is one that requires mutual
agreement, the first option is somewhat unlikely. In any event, these possibilities are depicted in
the zero-sum line in Figure 1 and shows that when one sister gets more of the orange, the other
gets less.
However, exchanging information on interests will reveal that one sister wants the rind for
her cake recipe and has no use for the pulp; she would just discard it anyway. The other sister
wants the pulp for the juice and would throw out the rind. What initially appears to be one
issue (how to distribute the orange) is really two separate issues: who gets the rind of the
orange and who gets the pulp of the orange. Now the task at hand is to determine how much
of the desirable part of the orange each sister will receive, and it becomes clear that both
sisters can get 100% of what they want (refer to the star in Figure 1, which is far from the
zero-sum line). Conversely, large problems with many issues can be fractionated or logrolled
into smaller, more easily solved parts.
Other strategies for generating options could include expanding the pie (finding a creative way
to add more resources to a fixed-pie issue which would allow both negotiators to be satisfied),
nonspecific compensation (paying the other negotiator in a completely different currency in
exchange for getting what one wants), cost cutting (reducing the burden the other negotiator
endures by agreement), and finding a bridge solution (creating new possibilities that neither side
had earlier envisioned) (Carnevale, 2014; Pruitt, 1983). The parties can also create contingent
contracts, which are useful when there are unresolved differences over how future events are
predicted to unfold. Specifically, the parties spell out different future scenarios (e.g. the future
improves vs. the future deteriorates), and then decide how different contract terms will apply based
on these different future scenarios (Bazerman and Gillespie, 1999; Lax and Sebenius, 2002;
Lewicki et al., 2015; Pruitt, 1981).
Reaching agreement
Once the process of inventing options has been completed, the negotiators can proceed to
evaluate each one and select the one that maximizes joint gain. Evaluating options should be
done using objective criteria that is, established indicators such as market rates, industry
practice, or past precedent (Fisher et al., 1991). This helps to justify the solution as fair, and
avoid the perception that the emerging agreement is unfairly biased toward one negotiator or
the other. Embracing these objective criteria also serves as a meaningful benchmark for
evaluating the extent to which the settlement satisfies the parties interests. The ultimate
objective is to reach the Pareto efficient frontier, where there is no agreement that would
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Figure 1. An example of a logrolling solution. The star indicates the ideal posion, in which both parties gain
what they want.
make any party better off without decreasing the outcomes to any other party (Neale and
Bazerman, 1991: 23).
Once the parties agree on the objective criteria to be used, they may proceed to apply the
criteria to each option. The option scoring the highest along the chosen criteria is selected
as the optimal solution. The negotiators can also leave the door open for the possibility
of a post-settlement settlement (Bazerman et al., 1987). In this case, the current agreement
becomes the parties new BATNA, while they continue to explore additional ways to further
enhance joint gain. This process can be initiated soon after the initial agreement is reached,
or even weeks or months later, to account for a change in the context or circumstances.
How to reach an agreement that fulfills its purpose

Unfortunately, as many negotiators have learned from prior experience, it is possible to reach a
contractual agreement that seems ideal when it is reached, but clearly falls short not long after the
ink is dry. This may happen when the negotiators have fixated over the economic terms of the
agreement such as price, and ignored the other contractual elements. When so much attention is
devoted to solely economic issues, the spirit or scope of the agreement tends to get neglected.
The parties simply assume that they are on the same wavelength when it comes to the actual
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purpose of the agreement because they have reached a narrow agreement on price. As a result, the
contract that both parties signed fails to adequately capture what each may expect to occur in
practice. When these discrepancies inevitably surface, it becomes apparent that such a contract will
fail to fulfill its purpose.
For example, Fortgang et al. (2003) describe a joint venture between a national hospital
organization and a regional health care provider. These organizations realized that they each had a
hospital in the same area, and they did not want to cannibalize each other. They carefully created
an agreement that would (theoretically) maximize the joint ventures profits through a new governance system and management incentives. In hindsight, the agreement did not fulfill the ultimate
(yet unstated) objectives of either party. The national chain wanted to retain full service capability
at their hospital (even though this was redundant with the regional providers hospital) in case the
joint venture eventually failed, so they resisted the elimination of redundant departments. In
contrast, the regional provider wanted to make their own operation more efficient, so they were not
concentrating on maximizing the joint ventures profits either. In sum, both sides engaged in
behaviors that were both contrary to the actual agreement they signed, and to the organizations
other underlying purpose in signing the agreement. Ultimately, the culprit was the opposing yet
unspoken (hence unreconciled) assumptions of each side.
The sharing of interests in an integrative negotiation enhances the likelihood of creating an
agreement that will fulfill its purpose. After all, the ultimate purpose of a negotiation is not to
achieve a position (i.e. certain economic terms) per se, but to satisfy a set of underlying interests.
Once an agreement is reached, it creates an expectation that those interests will be fulfilled.
However, if the parties never explicitly articulate what those expectations are (e.g. what is the true
objective of this negotiation, how will the agreement be implemented once it goes into effect?), the
agreement is unlikely to capture those expectations. On the other hand, sharing interests requires
the negotiators to delve into their expectations regarding the purpose and implementation and longterm benefits of the agreement. The contract simply cannot fulfill its purpose until the parties have
reached a shared understanding of what that purpose is even if negotiators on both sides have
signed the same document.
We close this section by observing that the end of the negotiation process (after the verbal
agreement has been reached but before the final contractual language is finalized and signed) calls for
special vigilance. Because no contract can specify all contingencies in advance (Arrow, 1973) and
because the actual language of the contract will govern how a court or arbitrator will settle a subsequent
dispute should one arise (e.g. Snow, 2005), whichever party takes responsibility for reducing the verbal
agreement into its final written form has considerable power to shape the documents language in ways
that prefer his side of the agreement (Karrass, 1985). If both parties are needed to come to mutual
agreement, then both are needed to participate in crafting the document that records that agreement.
But it is advised that parties build in contract language to allow for post-settlement settlements,
contract modification, and methods of resolution for contract disputes such as arbitration or mediation.
How to reach an agreement that will last

Ultimately, for the contract to be a success, both parties must commit to its implementation, and
this commitment must endure for the full term of the contract. As Mislin and her colleagues note,
. . . it is when those promises [in a contract] are actually kept that the parties anticipate that truly
meaningful consequences will follow (Mislin et al., 2011: 66). Another reason we have adopted a
focus on integrative negotiation is that high pressure tactics that tend to arise in distributive
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negotiation are likely to dampen the commitment of the party that got less out of the agreement. If
there is a clear loser in the negotiation, that party will actively search for a way out of the
contract, push the boundaries of acceptable behavior within the contract, or look for other ways to
recoup the loss (Lewicki et al., 2015; Wagner and Druckman, 2012). This is especially true if the
losing party comes to see the outcome as one that was produced by unethical or illegal (i.e.
fraudulent) means. In this kind of situation, that party may turn to the legal system to have the
contract annulled, or to initiate some other kind of action against the other. So, it is important that
both parties conclude the negotiation with a sense that the agreement that was reached was the best
they could attain.
Negotiation research suggests that when the parties perceive a high level of procedural justice
(i.e. both parties are actively involved in the bargaining process that generates the outcomes
specified in the contract and see the process as fair), they are more committed to enacting that
agreement (Jones and Worschel, 1992). Procedural justice is associated with better problemsolving techniques and integrative agreements (Wagner and Druckman, 2012). While many
negotiations involve parties with asymmetric (unequal) power, the more powerful party can
facilitate the less powerful partys commitment to the agreement by sharing power when it comes
to creating and shaping the agreement (De Rue et al., 2009).
How to maximize the likelihood of future agreements

A final reason we have focused on integrative negotiation is that it is a more appropriate strategy
when there is a shadow of the future (Axelrod, 1984). That is, when an ongoing relationship is
anticipated or desired, maximizing joint gain is a more suitable strategic objective than striving for
personal victory at the others expense. Negotiators do not want to work with other parties again in
subsequent negotiations when they hold those parties responsible for their own negative bargaining
outcomes (Reb, 2010). On the other hand, when a future relationship is envisioned, it affects
current negotiating behavior such that the parties are less likely to pursue a distributive strategy
(Patton and Balakrishnan, 2010). Furthermore, a negotiators subjective value derived from the
negotiation (i.e. their perceptions regarding their instrumental outcome, their personal performance, procedural justice, and the relationship they have established with their counterpart) more
strongly predicts the desire to negotiate with that counterpart again in the future than economic
value (Curhan et al., 2010). We speculate that perceptions of subjective value are likely to be
higher when using an integrative approach instead of a distributive approach.
Conclusion
In this article, we have reviewed research on integrative negotiation to highlight its role in
negotiating contractual agreements. We have observed that this research indicates a set of prescriptive stages to optimize the process and final outcomes. We described the five key steps that are
critical to maximizing the likelihood of reaching a good agreement. We also discussed how
integrative negotiation is well suited for ensuring that the ensuing agreement will fulfill its purpose, continue in force, and lead to subsequent negotiations.
In closing, we want to highlight three special circumstances that call for extending the
basic negotiation model we employed above. First, we acknowledge that we have drawn a
sharp distinction between distributive and integrative negotiation strategies. We did this
because we view integrative negotiation as superior for the criteria for contractual agreements
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we discuss, and because our experience has shown us that many often misunderstand what a
winwin approach involves. However, we also acknowledge that many negotiations
involve inherently distributive issues, and that even once value is created via integrative
negotiation, it will need to be distributed among the parties (Lewicki et al., 2015). We believe
that subsequent research can further illuminate the tension between distributive and integrative
approaches, as well as how that tension can be managed to produce improved outcomes. In short,
while negotiation research and practice has often relied on an eitheror approach that contrasts
distributive and integrative approaches, more work needs to be done to determine the viability of a
bothand hybrid model (e.g. Saunders, 1999).
Second, we also focused on dyadic, interpersonal negotiation that is, one-on-one negotiations. Many negotiations are far more complex, and we have elaborated on these dynamics
elsewhere (Lewicki et al., 2015). Constituents often hire negotiators to act as their agents.
Fassina (2004) has described the types of contracts constituents should formulate with their
agent (behavior-contingent, outcome-contingent, or combined) based on a set of contingencies.
Negotiators also often have a series of negotiations to conduct before an agreement can be reached,
both within their own group, and between their negotiating team and the other partys. Research
suggests that an integrative approach is especially well suited for intra-team negotiations (Lewicki
et al., 2015). In any event, it would be useful for future research to conduct more empirical investigation into these issues.
Finally, the parties may be working across cultural boundaries where there are very different standards for how a contract negotiation is conducted. Cross-cultural contract negotiation must confront issues surrounding different legal and political systems, different
cultural values that give rise to different styles of negotiating, and other influential considerations (Brett, 2014; Phatak and Habib, 1996). This raises a number of complications in
seeking to produce an agreement where both parties are truly on the same wavelength: differences in protocol, the meaning of verbal and nonverbal messages, time sensitivity, the
ethicality of certain negotiating tactics and so on are factors that tend to be taken for granted
within a culture. When we get acclimated to these sorts of factors within our own culture, we
overlook how they can become barriers to reaching and implementing a cross-cultural
agreement.
Note
1. We acknowledge that both distributive and integrative negotiation strategies originated out of the
same historical and conceptual roots (cf. Raiffa, 1982; Rubin and Brown, 1975; Walton and McKersie, 1965), and many reviews of the negotiation literature provide an extensive review of both
approaches (e.g. Lewicki et al., 2014; Thompson, 2011). We believe that there is a time and a place
for distributive negotiation, and explain the strategy and tactics of this approach more fully elsewhere
(Lewicki et al., 2014).
Funding
This research received no specific grant from any funding agency in the public, commercial, or
not-for-profit sectors.
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Author biographies
Edward C Tomlinson is an Associate Professor of Management at West Virginia University. He
earned a bachelors degree in economics and business at Virginia Military Institute, and an MBA
from Lynchburg College. He also received master and PhD degrees in labor and human resources
from the Fisher College of Business at The Ohio State University. His primary research interests
include negotiation and conflict resolution, interpersonal trust, behavioral integrity, and deviant
workplace behavior. He has published in several top-tier management journals, including Academy
of Management Review, Journal of Applied Psychology, Journal of Management, Journal of Management Education, Journal of Occupational and Organizational Psychology, and Group & Organization Management. He also co-edited (with Ron Burke and Cary Cooper) Crime and Corruption
in Organizations: Why it Occurs and What to Do about it (published by Gower, 2011).
Roy J Lewicki is the Irving Abramowitz Professor of Business Ethics and Professor of Management and Human Resources Emeritus at the Max M Fisher College of Business, The Ohio State
University. He has a BA degree from Dartmouth College and a PhD in social psychology from
Columbia University. Professor Lewicki maintains research and teaching interests in the fields
of negotiation, conflict management and dispute resolution, trust development, managerial leadership, organizational justice and ethical decision making, and has published many research articles
and book chapters on these topics. He is a Fellow of the Academy of Management and the Organizational Behavior Teaching Society. He is the author/editor of 36 books, including Negotiation
(Lewicki, Saunders and Barry, 2015) and Essentials of Negotiation (Lewicki, Barry and Saunders,
2015) the leading academic textbooks on negotiation and Mastering Business Negotiations
(Lewicki and Hiam, 2007), a book for managers. He has extensive management consulting and
training experience worldwide.

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