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ETHICS IN

NEGOTIATION

Presented By :
YATIN GUPTA
MBA-IB
33

What Do We Mean by Ethics


and
Why Do They Matter in
Negotiation?
Ethics:

Are broadly applied social standards for


what is right or wrong in a particular
situation, or a process for setting those
standards
Grow out of particular philosophies which

Define the nature of the world in which we live


Prescribe rules for living together

ETHICS

It

thus seems very appropriate to define


the ethical issues likely to arise in
negotiation, and boundaries (if they exist)
that commonly delineate ethical from
unethical conduct.

Resolving Moral Problems

ETHICS IN
NEGOTIATION

In this presentation, we explore the


question of whether there are, or should be,
accepted ethical standards for behavior in
negotiations.
It is our view that the fundamental
questions of ethical conduct arise in every
negotiation.
The effective negotiator must recognize
when the questions are relevant and what
factors must be considered to answer them.

WHY DO NEGOTIATORS
NEED TO KNOW ABOUT
ETHICS?

What are ethics and how do they apply to


negotiation?
What are the major ethical concerns that
apply to negotiation?
What major types of ethical and unethical
conduct are likely to occur in negotiation?
What factors shape a negotiators
predisposition to use unethical tactics?
How can negotiators deal with the other
partys use of deception?

WHAT ARE ETHICS AND WHY


DO THEY APPLY TO
NEGOTIATION?

Make the decision on the basis of


expected results, or what would give us
the greatest return on investment.
What the law says, on the legality of the
matter.
The strategy and values of my
organization.
My own personal convictions and what
my conscience told me to do

Four Philosophies

Four Approaches
to Ethical Reasoning

End-result ethics

The rightness of an action is determined


by evaluating its consequences

Duty ethics

The rightness of an action is determined


by ones obligation to adhere to
consistent principles, laws and social
standards that define what is right and
wrong

Four Approaches
to Ethical Reasoning

Social contract ethics

The rightness of an action is based on


the customs and norms of a particular
society or community

Personalistic ethics

The rightness of the action is based on


ones own conscience and moral
standards

WHAT ARE THE MAJOR ETHICAL


CONCERNS THAT APPLY TO
NEGOTIATION?
Ethical System

Definition

End-Result Ethics

Rightness of an action is determined by


considering consequences

John Stuart Mill (1806-1873)

Rule Ethicas

Rightness of an action is determined by laws


and standards

Immanuel Kant (1724-1804)

Social Contract
Ethics

Rightness of an action is determined by the


customs and norms of a community

Jean Jacques Rousseau (17121778)

Personalistic
Ethics

Rightness of an action is determined by one's


conscience

Major Proponent

Martin Buber (1878-1965)

HOW DO WE CLASSIFY
THE MAJOR ETHICAL
QUESTIONS?

Three major dimensions of ethical


conduct arise in negotiations
Means/Ends
Relativism/Absolutism
Truth-Telling

HOW DO WE CLASSIFY
THE MAJOR ETHICAL
QUESTIONS?

Means/Ends

Utilitarianism

Seek the greatest


good for the greatest
number
Quantitate and
optimize happiness
in society while
minimizing pain
Examples: Interstate
highways through
farms benefit the larger

HOW DO WE CLASSIFY
THE MAJOR ETHICAL
QUESTIONS?

Relativism/Absol
utism / Nihilism

Absolutism
What is right is
universal, timeless,
and absolute

Relativism

What is right may


be different for
different people or
cultures

Nihilism

There is no right

HOW DO WE CLASSIFY
THE MAJOR ETHICAL
QUESTIONS?

Truth-Telling

How does
one define
truth?
How does
one classify
various
deviations
from truth?
All they all
lies?

HOW DO WE CLASSIFY
THE MAJOR ETHICAL
QUESTIONS?

Deception and disguise may take


several forms in negotiation
Misrepresentation of ones position
Bluffing
Falsification
Deception
Selective disclosure or
mispresentation to constituencies

WHAT MAJOR TYPES OF ETHICAL AND


UNETHICAL CONDUCT ARE LIKELY TO
OCCUR IN NEGOTIATION?

ETHICS IN NEGOTIATION IS
MOSTLY ABOUT TRUTH TELLING

Carr (1968): Businesspeople ought to play the


game as poker players do

TYPOLOGIES OF DECEPTIVE TACTICS


AND ATTITUDES TOWARD THEIR USE
Category

Example

Traditional competitive bargaining

Not disclosing your walkaway; making an inflated opening offer

Emotional manipulation

Faking anger, fear, disappointment; faking elation,satisfaction

Misrepresentation

Distorting information or negotiation events in describing them to others

Misrepresentation to opponent's networks

Corrupting your opponent's reputation with his peers

Inappropriate information gathering

Bribery, infiltration, spying, etc..

Bluffing

Insincere threats or promises

INTENTIONS AND
MOTIVES TO USE
DECEPTIVE TACTICS
OConnor and Carnevale (1997)
Two forms of deception in
misrepresenting the common-value
issue:
Misrepresentation by omission
Misrepresentation by commission

THE MOTIVATION TO
BEHAVE UNETHICALLY

OConnor and Carnevale (1997)


individualistic orientation
cooperative orientation

THE CONSEQUENCES OF
UNETHICAL CONDUCT
Consequences:
Will occur depending on whether the
tactic worked or not
May result depending on how the
negotiator evaluates his/her use of
tactic
May come from the judgements and the
evaluations of that negotiator

EXPLANATIONS AND
JUSTIFICATIONS

The tactic was unavoidable


The tactic was harmless
The tactic will help to avoid negative
consequences
The tactic will produce good consequences
They had it coming or they deserve it or
Im just getting my due
They were going to do it anyway, so I will do it
first
The tactic is fair or appropriate to the situation

WHAT FACTORS SHAPE A


NEGOTIATORS PREDISPOSITION
TO USE UNETHICAL TACTICS?

Demographic Factors
Personality Differences and Moral
Development
Moral Development and Personal
Values

WHAT FACTORS SHAPE A


NEGOTIATORS PREDISPOSITION
TO USE UNETHICAL TACTICS?
Demographic Factors
Sex
Age and experience
Ethnicity
Nationality and cultural background
Professional orientation
Academic background

WHAT FACTORS SHAPE A


NEGOTIATORS PREDISPOSITION
TO USE UNETHICAL TACTICS?
Personality Differences and Moral
Development
Competitiveness versus
cooperativeness
Machiavellianism
Locus of control

WHAT FACTORS SHAPE A


NEGOTIATORS PREDISPOSITION
TO USE UNETHICAL TACTICS?
Moral Development and Personal
Values
A preconventional level (Stage 1 and
2)
A conventional level (Stage 3 and 4)
A principled level (Stage 5 and 6)

CONTEXTUAL INFLUENCES
ON UNETHICAL CONDUCT

Past experience
Role of incentives
Relationship between the negotiator and the
other party
Relative power between the negotiators
Mode of communication
Acting as an agent versus representing your
own views
Group and organisational norms and pressures
National culture norms

HOW CAN NEGOTIATORS DEAL


WITH THE OTHER PARTYS USE
OF DECEPTION?
Intimidation
Fulility portroyal
Discomfort and relief
Bluffing
Gentle prods
Minimization
Contradiction
Altered information

HOW CAN NEGOTIATORS DEAL


WITH THE OTHER PARTYS USE
OF DECEPTION?
A chink in the defense
Self-disclosure
Point of deception cues
Concern
Keeping the status guo
Direct approach
Silence

HOW CAN NEGOTIATORS DEAL


WITH THE OTHER PARTYS USE
OF DECEPTION?

Ask Probing Questions


Recognize the Tactic
gnore the tactic
Ask questions
Call the tactic
Respond in kind
Discuss what you see and offer to help
the other party change to more honest
behaviors

Conclusion
Being an ethical negotiator is not easy. It
requires you to be honest and trusting while
still trying to get the best result for yourself
and your company. You will not always know
when someone is trying to cheat you. You
can only control your own actions. If
everyone were to act ethically in their
business dealings, the world would be a
better place. The place it can start is with
you.

Bibliography

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Exercise in Practical Ethics, Business Ethics Quarterly Volume 3 Issue 4 (1993): 917.
Dasgupta, Partha Trust as a Commodity. In Diego Gambetta (ed.), Trust: Making
and Breaking Cooperative Relations (Oxford: Basil Blackwell Ltd., 1988), 62.
Lewicki, R. J., & Spencer, G. (1991). Ethical relativism and negotiating tactics:
Factors affecting their perceived ethicality . Paper presented at the Academy of
Management, Miami, Florida.
Rivers, Cheryl Lying, Cheating Foreigners!! Negotiation Ethics Across Cultures. A
Paper submitted to the 18th Annual Conference of the International Association for
Conflict Management, Seville, Spain; June 12-15, 2005 downloaded from
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=736184.
Tenbrunsel, A. E. (1998). Misrepresentation and expectations of misrepresentation
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Management Journal, 41(3), 330-339.
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http://www.culture-at-work.com/ethics.html
http://www.google.com/corporate/tenthings.html
http://www.levistrauss.com/Company/ValuesAndVision.aspx
http://www.negotiatormagazine.com/article301_1.html . Cited in an article by
Charles B. Craver entitled Negotiation Ethics.