Good Karma: How Individuals Construct Schemas of Reputation in Negotiation Contexts

Electronic copy of this paper is available at: http://ssrn.com/abstract=400960

223 CONSTRUCTING REPUTATION 1

Good Karma: How individuals construct schemas of reputation in negotiation contexts

Nathan Goates Owen Graduate School of Management

Vanderbilt University [email protected]

and

Bruce Barry

Owen Graduate School of Management Vanderbilt University

[email protected]

and

Ray Friedman Owen Graduate School of Management

Vanderbilt University [email protected]

Electronic copy of this paper is available at: http://ssrn.com/abstract=400960


Abstract

Reputation is defined as “socially constructed labels that extend the consequences

of a party’s actions across time, situations, and other actions” (Tinsley, O’Conner, &

Sullivan, 2002). Drawing on schema theory (Fiske & Taylor, 1991), Tinsley and

colleagues argue that “reputations evoke schemas that organize a negotiator’s images of

the counterpart.” Previous work on reputation has explored the effects of negotiator

reputation on outcome (Friedman, Anderson, Brett, Olekalns, Goates, & Lisco, 2003;

Tinsley, et al., 2002). The purpose of the paper abstracted here is to explore how

negotiators develop reputation schemas relevant to the context of a negotiation and how

reputations change as a result of having negotiated. We present the findings of two

studies that address negotiator reputation. In the first study we report qualitative data

regarding the kind of information that individual negotiators view as relevant in forming

a reputation schema. In the second study we examine how the act of negotiating

influence’s an individual’s construction of his or her opponent’s reputation. Preliminary

findings indicate that negotiator gender, satisfaction with process and outcome, and

whether an agreement was reached effect post-negotiation ratings of skill and ethical

reputation.

KEY WORDS: reputation, schema, gender


Good Karma: How individuals construct schemas of reputation in negotiation contexts

Tinsley, O’Conner, & Sullivan (2002) define reputations as “socially constructed

labels that extend the consequences of a party’s actions across time, situations, and other

actions.” Drawing on schema theory (Fiske & Taylor, 1991), Tinsley and colleagues

argue that “reputations evoke schemas that organize a negotiator’s images of the

counterpart.” Previous work on reputation has explored the effects of negotiator

reputation on outcome (Friedman, Anderson, Brett, Olekalns, Goates, & Lisco, 2003;

Tinsley, et al., 2002). The purpose of the paper abstracted here is to explore how

negotiators develop reputation schemas relevant to the context of a negotiation and how

reputations change as a result of having negotiated. We present the findings of two

studies that address negotiator reputation. In the first study we report qualitative data

regarding the kind of information that individual negotiators view as relevant in forming

a reputation schema. In the second study we examine how the act of negotiating

influence’s an individual’s construction of his or her opponent’s reputation.

Study 1

The first study was an attempt to explore inductively how individuals think about

the reputation of negotiation opponents. Our goal is to develop broad categories of the

schema of negotiation reputation. We invited study participants in a hypothetical

impending negotiation to tell us about the kinds of information they wish they had on the

individual with whom they would negotiate. Some of this information we judged as

relevant to negotiators’ construction of reputation schema.

Method


Fifty-eight MBA students in two sections of a course on negotiations were

presented a situation in which they were to negotiate a contract with a supplier with

which they had no prior experience. They were told they had one contact at the supplier

firm, a personal friend, who is acquainted with the person with whom they would

negotiate. Participants were asked list questions they would ask their contact regarding

the reputation of the person with whom they would be negotiating. Forty-nine students (a

response rate of 84 percent) completed the task.

Each simple sentence was content analyzed and categorized into one of several

categories, including (but not limited to demographic information, personality,

negotiating/work experience, general reputation, ethics, skill as a negotiator, and

authority to reach a deal. All content categories, as well as the percentage of participants

who asked at least one question within that category and the total number of questions of

each category are reported in Table 1.

Results

The content analysis revealed five categories of questions that were judged to be

related to the construction of reputation schema: general, vague reputation questions (e.g.

“What is reputation of this negotiator.”); personality questions; questions of negotiating

strategy and/or tactics (e.g. “Is the negotiator competitive? Aggressive?”); questions

regarding the negotiator’s ethics (e.g. “Does the negotiator have a reputation for

honesty?”); and questions of negotiating skill. All together, 92 percent of respondents

asked at least one question that fit within these categories (49 percent of all questions

asked).

Discussion


Content analysis leads to our making three observations about participant’s

construction of reputation schema. First, participants have diverse notions of what

information about the other party is useful in planning a negotiation. Second, participants

are concerned with things generally considered to be “reputation” (nearly 50 percent of

all questions) and there is some variance about which aspects of reputation are of interest.

That is to say, negotiators think of reputation as a tendency to engage in certain tactics, as

personality traits, as negotiating skill, and as integrity, ethicality, and/or honesty.

Our third observation is that there exists a dichotomy in how meaning for the

word “reputation” is constructed. In the case of personality and strategy/tactic questions,

participants seem to be interested in categorical responses. For instance, negotiators want

to know if their opponent has a reputation for being competitive or collaborative, or if

their opponent is aggressive and “hard” or kind and understanding. Other questions seem

to be suggesting a response continuum. For instance, in asking about a person’s skill as a

negotiator, participants clearly want to know how skilled their opponent is, as in very

skilled, or not very skilled.

Study 2

In the second study we investigated how negotiator reputation is affected by the

act of negotiating. Specifically, we explored hypotheses related to:

- how reputations are influenced by negotiator gender.

- how reputations are affected by negotiation outcomes, such as whether or not

participants reached an agreement, the present value of the deal, and participants’

satisfaction with process and outcome.


- how having reached an agreement in the negotiation (versus an impasse) might

moderate the effects of gender and outcome variables on reputation.

Method

Sample. For this extended abstract we present preliminary results from 56 MBA

student participants who participated in the negotiating simulation as part of a course on

negotiations. (We are currently collecting additional data, with results from a sample of

approximately 170 expected to be available by the time of the conference in June.

Procedure and task. Before negotiating the focal task for this study, participants

completed a measure (see below) of the reputations of other participants. For the

negotiation task, we randomly paired participants to negotiate a buyer-seller agreement in

a commercial real estate transaction (the “Bullard Houses” negotiation from the Harvard

Project on Negotiation). At issue in the negotiation is the sale of historic but dilapidated

brownstones. If participants follow role instructions strictly, they should come to realize

that there is no zone of potential agreement, the reservation price of the seller exceeding

that of the buyer. Additionally, for an agreement to be made, the seller must know how

the buyer plans to develop the property, information the buyer’s agent is under instruction

not to divulge. Participants reported the outcome of the negotiation -- impasse or

agreement -- as well as the terms of any agreement reached. Participants completed a

post-negotiation questionnaire that contained measures of post-negotiation reputation,

process and outcome satisfaction, emotional intensity of the negotiation, and forethought

given to reputation in developing a negotiating strategy.

Reputation measure. A common pedagogical practice in negotiation courses is

the evaluation of students’ reputations by their peers; one form of this evaluation is to


inform students that their classmates’ evaluation of their reputations will factor into their

final course grade (Lewicki, Saunders, Minton, and Barry, 2003). Treating reputation as

a multi-faceted construct, we asked participants to make reputation evaluations on two

separate dimensions: negotiator integrity and negotiating skill. Just before the final

simulation in the course, each student rated every student on two 7-point scales (1=very

low; 7=very high), one for integrity and one for skill.

Other measures. Negotiators’ roles we coded as buyer = 1; gender coded as

women = 1. Negotiating pairs who reported that they were unable to reach an agreement

we coded as having reached impasse (impasse = 1). If participants reached an agreement

they reported the present value of their deal. If participants did not reach a deal, we

coded the present value of their deal according to each negotiator’s best alternative as

shown in the case (present value for no-deal buyers = $25.3 million; present value for no-

deal sellers = $29.4). The present value of deals ranged from $24.5 million to $30

million. Satisfaction with process and outcome we measured by questionnaire.

Participants self-reported their satisfaction with process and outcome on separate 7-point

scales (1 = very unsatisfied; 7 = very satisfied). We felt that the satisfaction measures

were similar enough (r = .77) to justify combining the two into one satisfaction variable,

which was done by summing responses. Two-tailed correlations between all variables

used in our analysis are reported in Table 2.

Results

Preliminary results provide show that both men and women construct reputations

of integrity for women differently than they do for men. Controlling for effects of role,

both men and women ranked women opponent’s higher as to integrity as a result of


having negotiated with them (beta = .290, p < .05; see Table 2, model 2). Furthermore,

dividing the sample by those whose negotiation ended in impasse against those who

reached an agreement suggests that impasse moderates the relationship between

opponent’s sex and the participant’s evaluation of their integrity. The relationship

between sex and integrity holds in the impasse condition (beta = .560, p < .1; see Table 2,

model 3) while it disappears for those who reached an agreement.

We also found a sex effect for representations of skill reputation. Generally,

women are more likely to rate their opponents as being more skilled negotiators after

having negotiated with them (beta = .247, p < .1; see Table 3, model 5). Again, this

effect appears to be moderated by impasse. Women are more likely to rate their

opponents high on skill reputation when agreements are reached (beta = .350; p < .01; see

Table 3, model 6), than in conditions of impasse.

We found evidence that satisfaction with the process and outcome of the

negotiation is related to the representations negotiators have of their opponents’ integrity.

When negotiators are satisfied with the negotiation, they are more likely to evaluate their

opponent’s as having more integrity (beta = .382, p < .01; see Table 3, model 2), but not

more skill (see Table 3, model 5). This effect holds true only when participants reached

an agreement (beta = .550, p < .01; see Table 3, model 3) and not under conditions of

impasse, though this may be an artifact of insufficient statistical power in this preliminary

analysis.

Discussion

From these preliminary results based on a pilot sample, it may imprudent to draw

strong conclusions. However, it does seem clear that the gender of both negotiators plays


a role in the construction of reputation schema. Additionally, satisfaction with the

process and outcome of negotiation seem to affect negotiators’ construction of their

opponents’ reputation positively. Both of these findings are likely moderated by whether

an agreement was reached versus impasse.


REFERENCES

Fiske, S. T. & Taylor, S. E. (1991). Social cognition (2nd ed.). New York: McGraw-Hill.

Friedman, R., Anderson, C., Brett, J., Olekalns, M, Goates, N, & Lisco, C. (2003).

Emotions and rationality in mediation: Evidence from electronically-mediated

disputes. Working paper.

Lewicki, R. J., Saunders, D. M., Minton, J. H., & Barry, B. (2003). Instructor’s Manual

CD-ROM to accompany “Negotiation: Readings, Cases, and Exercises, 4th

edition.” Boston: McGraw-Hill/Irwin.

Tinsley, C. H., O’Connor, K. M., & Sullivan, B. A. (2002). Tough guys finish last: The

perils of a distributive reputation. Organizational Behavior and Human Decision

Processes, 88: 621-645.


Table 1. Summary of content questions

percent of participants who asked

about

percent of total number of questions

general demographic 79.6

33.6

age, gender, education, looks 32.7

9.4

work/negotiating experience 73.5

20.2

compensation 16.3

2.1

hobbies 12.2

1.8

reputation 91.8 48.6

general reputation 22.4

4.5

personality 61.2

13.1

strategy/tactics 71.4

19.6

integrity 24.5

5.0

skill 20.4

3.4

deal specifics 51.0 11.3

authority to make decision 22.4

2.9

BATNA 10.2

1.3

reservation price 8.2

1.3

interests/priorities 24.5

4.2

other 10.2

1.6

general information about company 32.7 8.7

financial information 12.2

2.4

company reputation 6.1

0.8

other 30.6

5.5

advice-seeking behavior 34.7 10.2

strategy/tactics 26.5

4.2

other 14.3

1.8

verification of contact 26.5

5.2

average number of questions per participant: 8.1(3.55)


Table 2. Correlations mean sd 1 2 3 4 5 6 7 8 9

1 role (buyer = 1) 0.50 0.506 - 2 sex (female = 1) 0.35 0.482 -0.09 - 3 opponent's sex (female = 1) 0.39 0.493 0.09 -0.02 - 4 pre-neg. measure of integrity 5.83 1.060 0.00 0.03 0.18 - 5 pre-neg. measure of skill 5.48 1.394 -0.09 0.01 0.30* 0.60*** - 6 impasse (impasse = 1) 0.35 0.482 0.09 -0.15 -0.12 -0.14 -0.22 - 7 present value of deal 26.98 1.665 -0.37* 0.12 0.02 0.25† 0.21 0.05 - 8 opponent's satisfaction w/ neg. 4.79 1.511 -0.18 -0.01 0.10 0.13 0.10 -0.04 -0.01 - 9 post-neg. measure of integrity 6.04 0.988 -0.04 0.29* 0.06 0.37* 0.26† -0.17 0.10 0.41** -

10 post-neg. measure of skill 5.54 0.836 -0.13 0.18 0.39** 0.51*** 0.52*** -0.31* -0.01 0.28† 0.53*** † p < .1; * p < .05; ** p < .01; *** p < .001


Table 3. Regression models

Integrity reputation score as DV (post-negotiation measure) model 1 2 3

no

impasse impasse R2 0.14 0.35 0.40 0.46 adj. R2 0.12 0.27 0.28 0.19 change in R2 over model 1 0.15 0.16 0.07 F 6.892 * 4.362 ** 3.221 * 1.716 control variables PRE integrity rep measure 0.368 * 0.315 * 0.124 0.414 role (buyer = 1) 0.055 0.159 0.282 independent variables sex (female = 1) 0.290 * 0.166 0.560 †

opponent's sex -

0.034 0.056 -

0.318 opponent's satisfaction 0.382 ** 0.550 ** 0.372

Skill reputation score as DV (post-negotiation measure) model 4 5 6

no

impasse impasse R2 0.27 0.40 0.41 0.47 adj. R2 0.25 0.32 0.29 0.21 change in R2 over model 4 0.07 0.04 -0.04 F 16.491 *** 4.857 ** 3.441 * 1.78 control variables PRE skill rep measure 0.518 *** 0.454 ** 0.255 0.631 *

role (buyer = 1) -

0.105 -

0.051 0.210 independent variables sex (female = 1) 0.193 0.116 0.408

opponent's sex 0.247 † 0.360 * -

0.072 opponent's satisfaction 0.116 0.282 0.264

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Good Karma: How Individuals Construct Schemas of Reputation in Negotiation Contexts