Business Ethics in Negotiations

What do ethics have to do with negotiation?

Questions surrounding ethical behavior in negotiation have been explored and researched for many years.

• Questions like, “What are ethics, and why do they apply to negotiation?”,
• “What questions of ethical conduct are likely to arise in negotiation?”,
• “What motivates unethical behavior, and what are the consequences?”, and
• “How can negotiators deal with the other party’s use of deception?”

The subject of Ethics in Negotiation was discussed in Chapter 5 in the textbook, “Essentials of Negotiation”.

This paper will discuss various principles and issues related to ethics 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. Ethics are different from morals. Morals involve an individual’s personal principles about right and wrong (Lewicki, Barry and Saunders 2016). While ethics evolve from ideas about the society in which people live and standards that govern how individuals live in that society. The goal of this paper is to examine various standards and criteria that affect ethical behavior in negotiation.

Much of the research on business ethics utilizes competing ethical standards related to long standing classical theories of ethical philosophy. There are four standards for evaluating strategies and tactics in business and negotiation: end-result ethics, duty ethics, social contract ethics and personalistic ethics. It is believed that ethical decisions that are made reflect how one approaches these standards. A more recent thought on the utilization of long standing ethical philosophy theories to evaluate ethical behavior in business is cited in the article by Gerald F. Cavanagh, Dennis J. Moberg, and Manuel Velasquez, “Making Business Ethics Practical”. A recurring criticism of business ethics is that business ethics is not practical enough; that it is too abstract to allow straightforward application to the real moral conundrums that managers face in their daily lives (Pamental, 1991; Stark, 1993) (as sited in Cavanagh and Moberg 1995). This criticism often cites the abstract nature of the theories that moral philosophers have proposed, and points out how difficult it is to relate these abstract theories to the messy details of everyday business life (Cavanagh and Moberg 1995). In spite of the foregoing reference, it is the proven practice to evaluate ethical behavior as it relates to these long standing ethical theories and philosophies.

The first step in solving an ethical dilemma is to develop a complete understanding of the problem. One of the four approaches cited earlier could be utilized to assist in the ethical reasoning concerning the problem. The analytical process for the resolution of moral problems involve:

1.  a determination of economic outcomes of potential courses of action,
2.  a consideration of the legal requirements that bear on the situation, and
3. an assessment of the ethical obligations to other involved parties regarding what is “‘right’ and ‘just’ and ‘fair’” (Lewicki, Barry and Saunders 2016).

Kevin Gibson cites the importance of decision-making in negotiation. “Decision-making is at the heart of negotiation, and some of the decisions we make will be value-laden. Negotiators may differ over whether to take advantage of an apparent deficiency in party x, for example or if they should disclose private information to get concessions from party y, say something that may not be true, or perhaps craft an agreement that externalizes the costs on to some unwitting third party who is not at the negotiating table, and may other issues. Value-based decisions may be the result of reflective thinking, but sometimes they arise quickly and demand urgent resolution. Therefore it is incumbent upon negotiators to have an ethical stance from the outset of settlement discussions” (Gibson 2004). Understanding the ethical dilemma involves decisions regarding the subjective moral standards of involved parties, individual value and beliefs, social norms and recognizing the potential harms, benefits, and rights that are involved in the problem.

The suggestions as to why individuals are untruthful or unethical in negotiation are plentiful. The main suggestion is the belief that people are just not truthful and would do or say whatever is necessary to get what they want. The various negotiation tactics bring ethics into consideration. Truth telling is the standard of most concern in ethical negotiation. The interdependence of information in negotiation makes the truth of pivotal importance.

In the article by Alan Strudler, “On The Ethics of Deception in Negotiation” it indicates that some deception in negotiation may be good or ethical. “The truth can get in the way of a good deal. So, many people lie, dissimulate, and otherwise fail to tell the truth in negotiation. In this paper I will focus on the case of deception about “reservation price,” that is, a person’s bottom-line price, the price such that she would walk away from a negotiation rather than accept a worse price. I will maintain that despite the commonsense moral presumption against deception more generally, some deception in negotiation, including lies about one’s reservation price, may be morally acceptable. When things go well, such deception is a signaling and symbolic device that even strangers, people who neither know nor trust one another, can use to work their way to a reasonable and mutually advantageous agreement in an otherwise risky environment. In some circumstances, I will maintain, one may lie in negotiation without incurring a reason to feel moral regret or embarrassment. I will also maintain that these circumstances are quite limited in scope. By explaining why deception about one’s reservation price may be acceptable in negotiation, I hope to improve the prospects for undertaking why deception about material facts is wrong” (Strudler 1995). Over the years, individuals have offered various reasons why and when not telling the truth is acceptable behavior in negotiation. Research suggests that there are tacitly agreed-on rules of the game in negotiation. Some minor forms of untruths- misrepresentation of one’s true position to the other party, bluffs, and emotional manipulations- may be seen by some negotiators as ethically acceptable and within the rules (but not by others) (Lewicki, Barry and Saunders 2016).

Another aspect of truth telling is when it is illegal to tell a lie during negotiation. Richard Shell in his article “When Is It Legal to Lie in Negotiation” provided a basis “common law” definition of fraud: “a knowing misrepresentation of a material fact on which the victim reasonably relies and which causes damage” (Lewicki, Barry and Saunders 2016). In other words, knowing that a statement is false when it is made and that the statement is about a material or objective fact that the victim relies on and causes them damage in the negotiation. Even with this, attempts are made to skirt responsibility for lies by indicating that one did not know that the statement or fact was not true. However, this attempt is unsuccessful if there was a reckless regard for the truth. Thoughts regarding ethics in negotiation continue to be expanded and developed. Kevin Gibson concludes in his paper on “The New Canon of Negotiation Ethics” that, “What we find, then, is that negotiation ethics has developed from merely knowing the minimal legal threshold of acceptable behavior, to more of awareness that our best interests may be understood in a wide perspective over the long term. This implies that the canon of negotiation should include concrete, practical issues, questions, and ethics that are more broadly and subtly understood as the backdrop of universal moral principles” (Gibson 2004). Therefore, it appears that a generally accepted broadened definition of what ethics is may be needed going forward.

There are five categories of marginally ethical negotiating tactics: traditional competitive bargaining, emotional manipulation, misrepresentation, misrepresentation to opponent’s network, inappropriate information gathering and bluffing. One might ask why is there so many untruths involved in negotiation? Is this generally accepted behavior on the part of negotiators? Different views regarding what ethical behavior is depend upon the culture or society in which the behavior exists. What is deemed unethical by one society may be considered ethical by another. Many times there is disagreement within the same society as to what is ethical behavior.

Consequently, various marginally ethical negotiating tactics exist. Various motives drive the urge to use these tactics. They are the power motive, cooperative motivational orientation, competitive motivational orientation and individualistic motivational orientation. The key component of the power motive is information. Information is power. How to get that information and how to use the information is often where the use of marginally ethical negotiation tactics enters into play. Many believe that it is fair game to use whatever information true or false and whether gained legally or not to win in negotiation. Cooperative, competitive and individualistic motivational orientation involves the individual negotiators biases, feeling and expectation of others. How the negotiator responds regarding an ethical dilemma in negotiation is influenced by these factors. In conclusion, there are marginally ethical negotiating tactics that match the negotiators personality and disposition. It is often difficult not to be influenced by them as it relates to ethical behavior in negotiation.

Now that we have determined that unethical behavior is often utilized in negotiation, let’s explore the consequences of unethical behavior.

Consequences may be positive or negative based upon three aspects of the situation:

1.  whether the tactic is effective;
2.  how the other person, his or her constituencies, and audiences evaluate the tactic; and
3.  how the negotiator evaluates the tactic (Lewicki, Barry and Saunders 2016).

It would be appropriate to judge the success of the use of a particular tactic by whether it helped to obtain the desired outcome. However, the success of its use does not indicate that its use was ethical. The consequences are that the negotiator may be likely to use unethical behavior in the future and if the other party becomes aware of the deception they will be very cautious or unlikely negotiate toward a mutual outcome in the future. Also, if it becomes common knowledge that the negotiator and/or their company regularly employ marginally ethical negotiating tactics it will future negotiation with another companies. Finally, a negotiator may feel remorse regarding the unethical behavior and the negative impact on the other party. Again, once the tactic is used successfully other negotiators may rationalize that the use of the tactic is justified. There are consequences both positive and negative to the negotiator that uses unethical tactics and to the other party.

In conclusion, the study of the topic Ethics in Negotiation as outlined in Chapter 5 in the textbook, Essentials of Negotiation and in the research and journal articles discussed in this paper outline the various aspects of ethics in negotiation. The topic is complex and has undergone extensive research for decades. It continues to be examined and researched today and possibly well into the future. One reason for its complexity is that it involves human beings, the most complex organism. Our hopes, dreams, beliefs, our experiences and even our prejudices influence our behavior in negotiation as in life. Our use of ethical behavior is driven by the elements listed above and sometimes it is difficult to track or plot their particular

Influence on our actions.

However, the prospect of acting ethically in negotiation is worthy of our efforts. Through continued research and agreement to a standard of behavior a measure of truth and honesty can be expected in our dealings with one another. The impediments to ethical behavior have been well identified. Let the research focus be increased regarding how to act ethically and honorably with one another in negotiation and in life in general.

Bibliography

1. Cavanagh, Gerald F, and Dennis J and Velasquez, Manuel Moberg. 1995. ‘Making Business Ethics Practical.’ Business Ethics Quarterly (Cambridge University Press) 5 (3): 399-418. Accessed April 30, 2020. https://www.jstor.org/stable/3857391.
2. Gibson, Kevin. 2004. ‘The New Canon of Negotiation Ethics.’ Marquette Law Review 87 (4): 747-752. http://ezproxy.uhd.edu//login?url=https://search.ebscohost.com/login.aspx?direct=true&db=a9h&AN=12761524&site=ehost-live.
3. Lewicki, Roy J, Bruce Barry, and David M Saunders. 2016. Essentials of Negotiation. 6th. New York: McGraw-Hill Education.
4. Strudler, Alan. 1995. ‘On the Ethics of Deception in Negotiation.’ Business Ethics Quarterly (Cambridge University Press) 5 (4): 805-822. Accessed April 27, 2020. https://www.jstor.org/stable/3857416.

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