King’s College London School of Management & Business(Undergraduate)

SHARK TANKThe Design of Rejection in Negotiations

Module Title: Communication in Organization

Module Code:(e.g. 4SSMN134) 6SSMN350

Negotiations are a form of strategic social interaction in which parties of differing interests

seek to achieve a common goal (Arminen, 2005). Bargaining is a form of negotiation and

both terms are used interchangeably. Goffman (1955) defines institutional talk as

interactions that embody an institutional order in which institutional rights and obligations are

linked to face, identity and macro-social institutions (Heritage, 1998). In the context of

institutional talk, negotiation activities differ from ordinary conversations as they are formally

organized through sequences whereby a party formulates a position and a recipient aligns or

misaligns with it.

While negotiation has gained wide attention in the business and communication research,

most tend to focus on the strategies employed and message contents that influence

bargaining activity (see Pennington, 1986 and Schurr and Ozanne, 1985); omitting the

consideration of social interaction and the sequential organization of talk. Additionally, while

some studies have focused on this subject area, most are grounded in institutional contexts

of sales, telemarketing calls or meetings. This report takes a unique view of examining the

development of negotiation in a live investment-pitching environment. It aims to illustrate (1)

how investment offers are responded to, (2) how responses are designed to express

reservations toward offers and (3) its implications on negotiation outcomes. The paper will

first discuss the methodology followed by a detailed analysis and provide an overview on the

broader implications of findings.

Negotiation patterns in the Shark Tank reality television series were analyzed where

entrepreneur-contestants conduct business pitches to a panel of ‘shark’-investors seeking

investment capital for a portion of their business equity. Data of the 12 most successful

Shark Tank pitches across all five seasons were collected based on the recommendations of

various news sources (Business Insider and Inc) and was analyzed in the form of recordings

provided by ‘Watch Series’. The report adopts Sacks and Schelgoff’s Conversation Analysis

(CA) and is unpacked using Heritage and Atkinson’s sequential organization of talk that

focuses on adjacency pairs and the preference organization. Both literatures helped

scrutinize the systematic patterns that occurred within negotiation and revealed structural

preferences in conversation for some actions over others.

Sequential organization is the ordering and positioning of actions or utterances that produce

context for subsequent turns. Its principles are centered on the notion of adjacency pairs

(Schegloff, 2007) and are fundamental units of conversational organization (Schegloff and

Sacks, 1973). An adjacency pair typically consists of two parts that are ordered, adjacent

and produced by different speakers and can come in forms of Offer-Acceptance/Rejection,

Question-Answer and Compliment-Response where the first-pair part (FPP) orientates the

second-pair part’s (SPP) behavior. This two-part structure is present in bargaining

sequences where a speaker proposes a position (offer) and is responded by the recipient in

the next turn displaying alignment (acceptance) or nonalignment (rejection) (Maynard, 1984).

For example, a two-part sequential pattern of an investment offer nonalignment is observed

in (Extract-1); (1) Proposal (line 1) and (2) Silence (line 3) and Non-acceptance (line 5).

Sacks, Schegloff and Jefferson’s (1974) notion of preference further categorizes these SPP

responses as ‘preferred’ and ‘dispreferred’. ‘Dispreferreds’ are often characterized by delays

(silences), prefaces (“erm” and “uh”, token agreements, appreciations and apologies) and

mitigated disagreement (minimal utterance and/or acknowledgement) (Clark and Pinch,

2001; Pomerantz, 1984; Clayman, 2002). Dispreferred responses are done ‘weakly’ with

delay markers of a 0.8 ‘gap’ and “erms” and a minimal utterance of “okay” in (Extract-1 line

3). The utterance “okay” makes no available grounds of agreement but depicts ‘basic’

agreements (Pomerantz, 1984) or ‘working acceptance’ (Goffman, 1967) that implies weak

agreement or even disagreement. Additionally, disagreements can be implied through the

conscious or unconscious act of disregarding the offer and directing of turn to a third

negotiator. However, this defies the moral obligation of a SPP response and therefore

generates a redirecting of turn back to the recipient furnishing a warrant to do so (Line 4).

Contrastingly, Firth (1995) posits that preferred responses are performed differently,

commonly without delays or intervening talk. In (Extract-1 line 8), acceptance is contiguous

with the preceding turn and this occurs when a third party intervenes to snatch and close the

previous offer. Similarly in (Extract-2 line 7), utterance was framed in a ‘hypothetical reported

sequence’ (HRS) by a third party to nudge the other party toward agreement (Koester, 2014;

Myers, 1999). The use of conditional agreement skillfully shaped a preference for

accommodation (Firth, 1995) to ‘make-a-deal-here-and-now’ that provoked urgency,

prompting preferred response and conforming Firth’s statement.

However, delays preceding acceptance utterances can also occur and this is common in the

absence of a third party. In (Extract-3 lines 1, 3, 5, 7 and 8), tactical summaries were utilized

to ‘force’ the unwilling party to take its preferred position. By summarizing offers and

presenting the speaker’s position desirably, the speaker asserts own position rather than

provide a mere summary, and successfully converts a probable dispreferred response to a

hesitant (0.2 ‘gap’ – Line 9) but eventual agreement (Charles and Charles, 1999). This

suggests that delays can be found in both preferred and dispreferred responses, though

more prominent in the latter.

How an offer is rejected is informative and consequential for the following negotiating turn.

Clark and Pinch (2001) distinguishes between implicit rejections (thereafter IR) and explicit

rejections (thereafter ER) and expresses that IRs in the form of pre-ERs appear to have a

significant influence on the ensuing course of negotiations compared to counterarguments or

ERs. Firth (1993) identifies five components on how messages can be designed to imply

‘dispreferred’ status; (1) Retrospectively ‘tie’ the communication to a particular preceding

message, (2) Apologize for current actions, (3) Propose accounts for that action, (4) Propose

substantive resolutions and (5) Prospectively ‘tie’ the message to upcoming messages. As

negotiation is fluid and is shaped according to preceding turns, the sequence of components

differs accordingly.

In (Extract-4 line 3), the response is again injected with delays, foreshadowing an implied

disagreement. Contrastingly, it is expanded with the utterance “I love you” that act as both a

‘cushioned rejection’ and a form of an apology, and is ensued with an ‘account’ (lines 5-6)

(Firth, 1993). ‘Accounts’ are “statements made to explain unanticipated or untoward behavior

when rejections occur ” (Scott and Lyman, 1968). Notice that disagreements are not

explicitly made. The design and ordering of the ‘cushioned rejection’ and ‘account’ is not

random, it systematically reduces the rejection impact. By pushing the ‘account’ down within

the disagreeing turn, the entrepreneur first displays non-acceptance (cushioned rejection)

then identifies a problem (account) that is preventing acceptance and ties the message to an

upcoming action to elicit offers from other ‘sharks’. Effectively, the offer rejection does not

necessarily close the offer sequence, but implicitly yet transparently demands a higher offer

and elicits new proposals from other sharks while still allowing re-entry for counter-offers

from the first. Therefore, IRs are tricky, as it requires a competent interactant to recognize

the speaker’s misgivings, affirm the validity of the speaker’s position and address the

reservations without them expressing it explicitly (Clark & Pinch, 2001). In this case, the

message was well received by a second shark who revised subsequent offers favouring the

entrepreneur (line 7).

According to Clark and Pinch (2001), ERs are harder to overturn into acceptance compared

to IRs as they signal minimal possibilities of obtaining acceptance to the sale/offer initially

proposed. Therefore, “explicit objections are not as important as is currently assumed” and

occur infrequently as it can induce face-threatening confrontation. The ‘facework’ concept

can be defined into (1) negative face – desire to be free from imposition and have one’s

prerogatives and autonomy respected and (2) positive face – desire to posses favourable

self-image that is validated by others (Brown and Levinson, 1987). Fundamentally, preferred

responses affirm a speaker’s both face aspects while dispreferred responses

(rejections/disagreement) threaten both face aspects.

(Extract-5A) exemplifies this deviant case. Notice that an insert sequence of a polite-marker

“thank you” (line 3) is positioned before the explicit declaration of rejection and a following

account. This intends to create a positive face to counterbalance the impact of the following

rejection and to demonstrate reasons for rejection respectively. The entrepreneur initiates

the account that reveals a problem of both parties engendering differing goals; capital-for-

equity shark VS equity-for-expertise entrepreneur. However, the shark interrupts with a

‘formulation’ that provides a ‘gist’ of the entrepreneur’s account by employing an information-

gathering question which unpacks the account. He then swiftly decides to retract his offer.

The concept of ‘face’ has a direct consequence on persuasion in that the hearer must be

made to feel important (Brown and Levinson, 1987). Therefore, it can be argued that the ER

was an imposition of the entrepreneur’s own desires at the expense of the shark resulting in

face loss (negative face) and therefore prompted the offer cancellation as an act of face-

saving.

The use of ER in this scenario should not be concluded as absolutely disadvantageous or

avoided. Through the supplementing of account, negotiating parties are given ‘negotiable’

materials in facilitating problem resolution. For example, in (Extract-5B, lines 9-10), a joint

problem-solving activity is initiated when other sharks pursued the account, strategically

allowing for systematic account unpacking that re-engages the relevance of the projected

action. Such account questioning serves to seek a concession to the account’s hitherto

undisclosed contents and to challenge the legitimacy of the account-giver’s demand (Firth,

1995). The entrepreneur provides the ‘pursued’ account (line 13), inserts a compliment

(positive face) while shifting the negotiation power to the sharks (line 14-16). It can be

argued that this stance was taken to compensate for the previous face-threatening act. This

compliment does not warrant responses as a Question-Answer adjacency pair is presented

after. The question constrains the respondent to answer with a counter-offer that is

responded favourably in (lines 17-29) and the unpacked account evidently succeeds in

shaping more offers (lines 26-31). Therefore, contrary to Clark and Pinch’s (2001) argument,

here, ERs are important as it evokes the unambiguous position and account of one party,

providing negotiable materials that facilitate effortless problem-solving.

Overall, this report examined five types of negotiation outcomes depending on how

bargaining sequences are shaped: (1) straightforward preferred response, (2) delayed

preferred response, (3) simple dispreferred response, (4) complex implicit dispreferred

response and (5) explicit dispreferred response. There are further points worth investigating

but this exercise has been useful in revealing the design features of the speaker’s SPP

response to an offer in adjacency pairs. It contributes to Firth’s (1995) statement that

dispreferred responses are often delayed and more complex while preferred responses are

straightforward and promptly produced without delays. However, it also illustrates evidences

that delays do manifest in preferred responses, especially when pressured upon.

Additionally, the use of HRS aids as a persuasive device in negotiating towards

individualistic goals (Koester, 2014).

It is important to note that as the analysis is based on edited data materials, this limitation

may therefore affect findings on delayed responses. This study further illustrates that

dispreferred responses can be designed in implicit and explicit manners and contributes to

Clark et al (1994) statement that IRs act as hints that supply evidences of sales resistance.

While ERs are unambiguous, they are however vulnerable to face-threatening situations that

can undermine the relationship between parties during current and future encounters (Clark

et al, 2003). While Clark and Pinch (2001) suggest that ERs are not as important as

currently assumed, this report reveals otherwise as it drives negotiations forward by

providing direct opportunities for unpacking of accounts which render important problem-

solving resources. This discrepancy may arise from the contextual differences and the timing

of ER, whereby ERs arose only at the end of the bargaining sequence in Clark and Pinch’s

sales encounter while in this study it occurred in the early stages of negotiation.

The design of sequences is hence critical for informing and constraining the next preceding

action. IRs are common and influential for negotiations and negotiators need to learn to

recognize and understand objections and match proper communication techniques to

advance the negotiation process forward. They however should not neglect the significance

of ERs.

(1994 words)

References

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Charles, M. and Charles, D., 1999. Sales negotiations: Bargaining through tactical

summaries. Business English: research into practice, pp.71-82.

Clark, C. and Pinch, T., 2001. Recontextualising Sales Resistance: A Response to Hunt and

Bashaw. Industrial Marketing Management, 30(8), pp.637-643.

Clark, C., Drew, P. and Pinch, T., 2003. Managing prospect affiliation and rapport in real-life

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pp.229-253.

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reported speech in business negotiations. English for Specific Purposes, 36, pp.35-46.

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Appendix

S = SharkE = Entrepreneur

Extract 1: Ten Thirty One Productions

1 S1: Okay well then. I’ll give you two million dollars for forty percent=2 S2: =T:skk3 E: (0.8) Oka:y. (0.3) Mark? (.) Come on Mark.4 S3: Hhhh. Is that a yes^ or no to him^?5 E: Ermm hhhhh. Can I counter?6 S1: Of course^ you can counter7 E: (0.2) Erm. Two million for twenty percent8 S3: I’ll take that offer. Done.9 E: Really?10 S3: Yup.

Extract 2: Bantam Bagels

1 S2: In all that time that we just sat here, and I’ve had my offer [out there,2 S1: [Would you mind^ I’m doing an off=3 S2: =[I’m thinking to myself ] you could have just sold a hundred dollars in QVC!=4 E1: [Lori, I wanna, hhh I wanna]5 E1: =Would you? Would you. (0.1) Would you be interested in tha:t 25%?=6 S1: =I’ll give you a [thir:d7 S2: [I WOULD (0.1) if you decide right now with me8 E2: [Yup9 E1: [You have a deal

Extract 3: Breathometer

1 S: You have an opportunity to get a:ll five sharks and the power of all 5 sharks behind you.2 E: Right3 S: Here’s the deal. One million dollars. Five hundred thousand from Ma:rk Cubin for fifteen percent.4 E: [Hhhehhh hehhh5 S: An[d five hundred thousand from the rest of the sharks, we are going to split it6 E: Right=7 S: =For a total of thirty percent (0.1) for one million dollars. In the power of Shark Tank, what are8 you going to do?9 E: (0.3) Hhhh I accept

Extract 4: Lumio

1 S: I share your vision (0.1) I.. I.. I think you are on the right path. I think your valuation is2 pretty fair^ (0.1) Two hundred and fifty thousand (0.1) for ten percent.3 E: (0.2) So (0.1) Robert, (0.1) I love you?=4 S: =Thank^ you hhahh ahh. I don’t know what to say^ hehh=5 E: =uhmm (0.1) would you mi:nd if I asked the other sharks to see if: they are interested6 (0.1) just to see what their offers are?7 S2: (0.2) I’m^ interested. And uhmm (0.1) I’m going to structure it a little differently: oka:y?

Extract 5A: Emazing Lights

1 S1: (…) I’m going to lo:an you six hundred fifty thousand dollars. I’m going to ask2 three percent equity. That will (0.1) give you the funds you ne:ed to gro:w=3 E: =Kevin (0.1) tha:nk you so much for the offer. But I would have to decline (0.2) That is4 absolutely not wh:y I’m here today. I am looking to get one of you5 sha:rks (0.1) on my team (0.1) to help us with the day to day=6 S1: =So you don’t want to do with any debts (0.1) that’s what you’re saying?=7 E: =I have never (.) gone out to look for a loan for this company^8 S1: (0.1) OKAY (0.2) I’m out.

Extract 5B: Emazing Lights

9 S2: So: (0.1) why is the offer s:o hhh SSSMA:LL? Because if you wa:nt hhh one of us to: get10

out of bed in the morning to come: work with^ you=

11

E: =Mmm hmm..

12

S2: why would we: (0.1) do that for five percent?

13

E: The five percent was because: I’m not really looking for the money^. I think you

14

guys are: the: hhh smartest business:s people on the planet^, you know.

15

Why don’t you guys tell m:e what percentage: make sense for yo:u to jump into bed with

16

us and grow this business into a billion dollar industry?

17

S2: I’:m gonna give you an offer (0.2). I wanna help you with all of the licensing:^ and give

18

you the marbles of the wo:rld and get you into the ( ) of the cities (0.1) if th:at’s what your

19

objective^ and all the brand extensions^ .hhh I’ll give you six hundred and fifty thou;sand

20

dollars: fo:r (0.3) twenty percent of the licensing that I: bring to you.

21

S1: (0.1) So that’s not the company=

22

S3: =That’s not [the company

2 S2: [That’s not of your company^ (0.1) I will go out and get you the licenses (0.1)

324

S3: [( )

25

S2: [I take the twenty percent (0.1) I don’t want any equity.

26

S4: (0.3) Alright. Brian: loo:k you are the re:al deal man. Like you ar:e probably one of the: IF

27

not the best entrepreneur we’ve ever had here (0.1) a:nd I think you need some help:

28

with: with growth. Here’s the offer Lori and I want to make you (0.1) We wanna help

29

yo:u^ (0.1) its good to have two [people]

30

S3: [in the trenches, together]=

31

=Ai:te?

Transcription symbols(.7) Length of a pause.

(.) Micro-pause.

[ ] Between adjacent lines of concurrent speech indicates overlap.

- Sharp cut-off.

: Stretching of a word.

( ) Unclear fragment.

^ Rising intonation.

Word underline indicates speaker emphasis.

Data of 12 Best Shark Tank videos:

Business: Episode: URL:1. Emazing Lights Season 6: Episode 22 http://goo.gl/Z52KGD2. Lumio Season 6: Episode 15 http://goo.gl/Kjpzx63. Bantam Bagels Season 6: Episode 13 http://goo.gl/VJTaWf4. Zipz Wine Season 6: Episode 11 http://goo.gl/UgnhqD5. Beatbox Beverage Season 6: Episode 6 http://goo.gl/3vUil06. Cycloramic Season 5: Episode 16 http://goo.gl/WHneZT7. Bubba’s Boneless Ribs Season 5: Episode 11 http://goo.gl/UgnhqD8. Tree T-PEE Season 5: Episode 7 http://goo.gl/Al9fv49. Ten Thirty One Productions Season 5: Episode 6 http://goo.gl/h1RfXv10.

Breathometer Season 5: Episode 2 http://goo.gl/qZSvu1

11.

Simple Sugars Season 4: Episode 19 http://goo.gl/A85ca8

12 Cousin Maine Lobster Season 4: Episode 6 http://goo.gl/mxbPtn

.