Your Gain My Pain? The Effects of Accounting Information in Uncertain Negotiations
53 Pages Posted: 14 Apr 2016
Date Written: April 12, 2016
Prior studies on buyer-supplier negotiations show that refined accounting information can enhance negotiation processes and outcomes. We extend these studies by considering the influence of uncertainty, which is commonly present during negotiations. Uncertainty increases friction between negotiators as they take different reference points, exacerbating the level of conflict. We theorize that refined accounting information, even when unrelated to the source of uncertainty, helps to limit its adversarial effects on behavior and outcomes by enabling negotiators to identify mutually beneficial tradeoffs. We develop an experiment in which 89 dyads of buyers and suppliers participate to test our expectations about how uncertainty interacts with accounting information in affecting negotiation behavior and outcomes. Results show that uncertainty reduces negotiators’ use of integrative tactics relative to distributive tactics, which in turn negatively influences joint profit. Refined accounting information, however, weakens the negative impact of uncertainty on behavior, mitigating the negative impact on joint profit.
Keywords: Buyer-supplier negotiations, uncertainty, accounting information, negotiation tactics, negotiation outcomes.
JEL Classification: M41
Suggested Citation: Suggested Citation