Research Identifies Power of Leveraging Rivalry in Negotiation

Research on negotiation has typically emphasized the importance of the terms of different offers–in other words, what benefits an offer can provide. But there’s another factor to consider: who makes the offer. Assistant Professor of Management and Business Julia Hur set out to explore this topic alongside Professor Sanghoon Kang of The Chinese University of Hong Kong and Professor Gavin Kilduff of NYU Stern. Their resulting research paper, Beating the rival but losing the game: How the source of alternative offers alters behavior and outcomes in negotiation, was recently published by the American Psychological Association’s Journal of Applied Psychology.

The study focuses on negotiations in which a rival relationship is involved. “The relationship context around the negotiation can significantly affect [its] outcome,” said Hur. “Rivalry in general is shown to generate a lot of emotions. It's a powerful relationship in terms of the effects it has on human psychology. And it's a very common type of relationship you'll find in business.” 

The research, which consisted of four studies conducted across three different countries, found that securing an alternative offer from a rival can allow significant advantage in negotiation, compared to a situation not involving a rival. Typically, negotiation is focused on maximizing the benefits of the offer that you choose to go with. But when negotiation involves rivals, the desire to beat a rival may drive a negotiator to forfeit benefits they otherwise would not be willing to let go of. 

“If I [as a hiring company] know that you’re getting another offer from my rival, how much I get out of this negotiation doesn't matter,” said Hur. “I’m just happy [if] I beat my rival by reaching an agreement with you. That kind of goes against everything we knew about the negotiation before.” The findings might also apply to other negotiation situations involving rivals, for example, two rivaling sports teams trying to recruit the same athlete. The existence of a rival counterpart gives power to the negotiator. 

Hur said the project was a great opportunity for collaboration with her co-authors. “It was a very, very positive experience for me,” she said “I loved working on it, and I can't wait to talk about this when I teach negotiation.”