Influence of Negotiation Risk Attitude and Power on Behaviors and Outcomes When Negotiating Construction Claims
Publication: Journal of Construction Engineering and Management
Volume 141, Issue 2
Abstract
When confronted with construction claims, negotiation is always the preferred method for owners and contractors. The authors conducted a questionnaire survey to explore the correlation between negotiation risk attitude and power as well as the influence of these two parameters on behaviors and outcomes in construction claim negotiations. The results indicate that to some extent, negotiation risk-taking is correlated with high power. The risk taker usually performs collaborating behaviors (better than avoiding and obliging), while the risk averter always adopts obliging behaviors (which are proved to be less beneficial than collaborating and avoiding). The risk averter enjoys a remarkable increase in reaching better outcomes with an increasing degree of adopting dominating behaviors. The high-power party with frequently used dominating behaviors has access to better outcomes than the low-power party while the low-power party that commonly uses obliging behaviors is more likely to face deterioration. The findings can be used by construction practitioners as references to evaluate their negotiation risk attitude and power in negotiations. Consequently, they can adjust their negotiation strategies accordingly to achieve better outcomes.
Get full access to this article
View all available purchase options and get full access to this article.
Acknowledgments
The authors would like to express their appreciation for the constructive comments of the editor and the reviewers. The work described in this paper was fully supported by the National Natural Science Foundation of China (General Program, Project No. 71172147, and Key Program, Project No. 71231006).
References
Ajzen, I. (1991). “The theory of planned behavior.” Organ. Behav. Hum. Deci. Processes, 50(2), 179–211.
Ajzen, I., and Fishbein, M. (1977). “Attitude-behavior relations: A theoretical analysis and review of empirical research.” Psychol. Bull., 84(5), 888–918.
Anderson, C., and Galinsky, A. D. (2006). “Power, optimism, and risk-taking.” Eur. J. Soc. Psychol., 36(4), 511–536.
Anderson, C., John, O. P., and Keltner, D. (2012). “The personal sense of power.” J. Personality, 80(2), 313–344.
Anderson, C., and Thompson, L. L. (2004). “Affect from the top down: How powerful individuals’ positive affect shapes negotiations.” Organ. Behav. Hum. Deci. Processes, 95(2), 125–139.
Arrow, K. J. (1971). Essays in the theory of risk-bearing, Vol. 1, Markham, Chicago.
Blais, A. R., and Weber, E. U. (2006). “A domain-specific risk-taking (DOSPERT) scale for adult populations.” Judgment Decis. Making, 1(1), 33–47.
Carnevale, P. J., and Pruitt, D. G. (1992). “Negotiation and mediation.” Ann. Rev. Psychol., 43(1), 531–582.
Carney, D. R., Cuddy, A. J. C., and Yap, A. J. (2010). “Power posing brief nonverbal displays affect neuroendocrine levels and risk tolerance.” Psychol. Sci., 21(10), 1363–1368.
Cheung, S. O. (1999). “Critical factors affecting the use of alternative dispute resolution processes in construction.” Int. J. Proj. Manage., 17(3), 189–194.
Cheung, S. O., Chow, P. T., and Yiu, T. W. (2009). “Contingent use of negotiators’ tactics in construction dispute negotiation.” J. Constr. Eng. Manage., 466–476.
Cheung, S. O., and Yiu, T. W. (2006). “Are construction disputes inevitable?” IEEE Trans. Eng. Manage., 53(3), 456–470.
Cheung, S. O., Yiu, T. W., and Yeung, S. F. (2006). “A study of styles and outcomes in construction dispute negotiation.” J. Constr. Eng. Manage., 805–814.
Cohen, K., Cohen, P., West, S. G., and Aiken, L. S. (2003). Applied multiple regression/correlation analysis for the behavioral sciences, L. Erlbaum Associates, Mahwah, NJ.
De Dreu, C. K. W. (1995). “Coercive power and concession making in bilateral negotiation.” J. Conflict Resolut., 39(4), 646–670.
De Dreu, C. K. W., and Van Lange, P. A. M. (1995). “The impact of social value orientations on negotiator cognition and behavior.” Personality Soc. Psychol. Bull., 21(11), 1178–1188.
Deutsch, M. (1973). The resolution of conflict: Constructive and destructive processes, Yale University Press, New Haven, CT.
Dickinson, D. L. (2009). “The effects of beliefs versus risk attitude on bargaining outcomes.” Theory Decis., 66(1), 69–101.
Ert, E., and Yechiam, E. (2010). “Consistent constructs in individuals’ risk taking in decisions from experience.” Acta Psychologica, 134(2), 225–232.
Fast, N. J., Sivanathan, N., Mayer, N. D., and Galinsky, A. D. (2012). “Power and overconfident decision-making.” Organ. Behav. Hum. Deci. Processes, 117(2), 249–260.
Fenn, P., Lowe, D., and Speck, C. (1997). “Conflict and dispute in construction.” Constr. Manage. Econ., 15(6), 513–518.
Friedman, R., Chi, S. C., and Liu, L. A. (2005). “An expectancy model of Chinese–American differences in conflict-avoiding.” J. Int. Bus. Stud., 37(1), 76–91.
Friedman, R. A., Tidd, S. T., Currall, S. C., and Tsai, J. C. (2000). “What goes around comes around: The impact of personal conflict style on work conflict and stress.” Int. J. Conflict Manage., 11(1), 32–55.
Galinsky, A. D., Gruenfeld, D. H., and Magee, J. C. (2003). “From power to action.” J. Personality Soc. Psychol., 85(3), 453–466.
Gross, M. A., and Guerrero, L. K. (2000). “Managing conflict appropriately and effectively: An application of the competence model to Rahim’s organizational conflict styles.” Int. J. Conflict Manage., 11(3), 200–226.
Hair, J. F., Anderson, R. E., Tatham, R. L., and Black, W. C. (2006). Multivariate data analysis, 6th Ed., Prentice Hall, Upper Saddle River, NJ.
Han, S. H., Diekmann, J. E., and Ock, J. H. (2005). “Contractor’s risk attitudes in the selection of international construction projects.” J. Constr. Eng. Manage., 283–292.
Hanoch, Y., Johnson, J. G., and Wilke, A. (2006). “Domain specificity in experimental measures and participant recruitment an application to risk-taking behavior.” Psychol. Sci., 17(4), 300–304.
Hiemer, J., and Abele, A. E. (2012). “High power=motivation? low power=situation? The impact of power, power stability and power motivation on risk-taking.” Personality Individual Differences, 53(4), 486–490.
Hillson, D., and Murray-Webster, R. (2007). Understanding and managing risk attitude, Gower Technical Press, Aldershot, England.
Hwang, K. K. (1998). “Guanxi and mientze: Conflict resolution in Chinese society.” Intercultural Commun. Stud., 7, 17–38.
Jaccard, J., Turrisi, R., and Wan, C. K. (1990). Interaction effects in multiple regression, Sage, Beverly Hills, CA.
Johnson, J., Wilke, A., and Weber, E. U. (2004). “Beyond a trait view of risk taking: A domain-specific scale measuring risk perceptions, expected benefits, and perceived-risk attitudes in German-speaking populations.” Polish Psychol. Bull., 35(3), 153–163.
Kannai, Y. (1977). “Concavifiability and constructions of concave utility functions.” J. Math. Econ., 4(1), 1–56.
Keltner, D., Gruenfeld, D. H., and Anderson, C. (2003). “Power, approach, and inhibition.” Psychol. Rev., 110(2), 265–284.
Kim, P. H., Pinkley, R. L., and Fragale, A. R. (2005). “Power dynamics in negotiation.” Acad. Manage. Rev., 30(4), 799–822.
Kirkbride, P. S., Tang, S. F. Y., and Westwood, R. I. (1991). “Chinese conflict preferences and negotiating behaviour: Cultural and psychological influences.” Organ. Stud., 12(3), 365–386.
Klos, A., Weber, E. U., and Weber, M. (2005). “Investment decisions and time horizon: Risk perception and risk behavior in repeated gambles.” Manage. Sci., 51(12), 1777–1790.
Kumaraswamy, M. M. (1997). “Conflicts, claims and disputes in construction.” Eng. Constr. Archit. Manage., 4(2), 95–111.
Lejuez, C. W., et al. (2002). “Evaluation of a behavioral measure of risk taking: The balloon analogue risk task (BART).” J. Exp. Psychol. Appl., 8(2), 75–84.
Levin, P. (1998). Construction contract claims, changes & dispute resolution, ASCE, Reston, VA.
Lippman, S. A., and McCardle, K. F. (2012). “Embedded Nash bargaining: Risk aversion and impatience.” Decis. Anal., 9(1), 31–40.
Lu, S. K., and Hao, G. (2013). “The influence of owner power in fostering contractor cooperation: Evidence from China.” Int. J. Proj. Manage., 31(4), 522–531.
Lu, W. X., and Nie, J. M. (2008). “Study of the dynamic game in change pricing between owner and contractor.” Proc., 4th Int. Conf. on Wireless Communications, Networking and Mobile Computing (WiCOM), IEEE, Dalian, China, 1–6.
Magee, J. C., Galinsky, A. D., and Gruenfeld, D. H. (2007). “Power, propensity to negotiate, and moving first in competitive interactions.” Personality Soc. Psychol. Bull., 33(2), 200–212.
Maner, J. K., Gailliot, M. T., Butz, D. A., and Peruche, B. M. (2007). “Power, risk, and the status quo does power promote riskier or more conservative decision making?” Personality Soc. Psychol. Bull., 33(4), 451–462.
McAlister, L., Bazerman, M. H., and Fader, P. (1986). “Power and goal setting in channel negotiations.” J. Marketing Res., 23(3), 228–236.
Mishra, S., and Lalumière, M. L. (2011). “Individual differences in risk-propensity: Associations between personality and behavioral measures of risk.” Personality Individual Differences, 50(6), 869–873.
Nash, J. (1950). “The bargaining problem.” Econometrica, 18(2), 155–162.
Nunnally, J. (1978). Psychometric theory, McGraw-Hill, New York.
Pinkley, R. L., Neale, M. A., and Bennett, R. J. (1994). “The impact of alternatives to settlement in dyadic negotiation.” Organ. Behav. Hum. Deci. Processes, 57(1), 97–116.
Pratt, J. W. (1964). “Risk aversion in the small and in the large.” Econometrica J. Econometric Soc., 32(1–2), 122–136.
Pruitt, D. G., and Carnevale, P. J. (1993). Negotiation and social conflict, Open University Press, Buckingham, England.
Rahim, M. A. (2001). Managing conflict in organizations, 3rd Ed., Quorum Books, Westport, CT.
Rahim, M. A. (2002). “Toward a theory of managing organizational conflict.” Int. J. Conflict Manage., 13(3), 206–235.
Rahim, M. A., Magner, N. R., and Shapiro, D. L. (2000). “Do justice perceptions influence styles of handling conflict with supervisors?: What justice perceptions, precisely?” Int. J. Conflict Manage., 11(1), 9–31.
Ren, Z., Anumba, C. J., and Ugwu, O. O. (2003). “Multiagent system for construction claims negotiation.” J. Comput. Civ. Eng., 180–188.
Rubinstein, A. (1982). “Perfect equilibrium in a bargaining model.” Econometrica J. Econometric Soc., 50(1), 97–109.
Sambasivan, M., and Soon, Y. W. (2007). “Causes and effects of delays in Malaysian construction industry.” Int. J. Proj. Manage., 25(5), 517–526.
Schoemaker, P. J. H. (1990). “Are risk-attitudes related across domains and response modes?” Manage. Sci., 36(12), 1451–1463.
Schweinsberg, M., Ku, G., Wang, C. S., and Pillutla, M. M. (2012). “Starting high and ending with nothing: The role of anchors and power in negotiations.” J. Exp. Soc. Psychol., 48(1), 226–231.
Shalev, J. (2002). “Loss aversion and bargaining.” Theory Decis., 52(3), 201–232.
Skeel, R. L., Neudecker, J., Pilarski, C., and Pytlak, K. (2007). “The utility of personality variables and behaviorally-based measures in the prediction of risk-taking behavior.” Personality Individual Differences, 43(1), 203–214.
Svejnar, J. (1986). “Bargaining power, fear of disagreement, and wage settlements: Theory and evidence from US industry.” Econometrica J. Econometric Soc., 54(5), 1055–1078.
Tran, H., and Carmichael, D. G. (2013). “A contractor’s classification of owner payment practices.” Eng. Constr. Archit. Manage., 20(1), 29–45.
Tsai, J. S., and Chi, C. S. F. (2009). “Influences of Chinese cultural orientations and conflict management styles on construction dispute resolving strategies.” J. Constr. Eng. Manage., 955–964.
Van de Vliert, E., and Kabanoff, B. (1990). “Toward theory-based measures of conflict management.” Acad. Manage. J., 33(1), 199–209.
Van Kleef, G. A., De Dreu, C. K. W., Pietroni, D., and Manstead, A. S. R. (2006). “Power and emotion in negotiation: Power moderates the interpersonal effects of anger and happiness on concession making.” Eur. J. Soc. Psychol., 36(4), 557–581.
Volij, O., and Winter, E. (2002). “On risk aversion and bargaining outcomes.” Games Econ,. Behav., 41(1), 120–140.
Weber, E. U., Blais, A. R., and Betz, N. E. (2002). “A domain-specific risk-attitude scale: Measuring risk perceptions and risk behaviors.” J. Behav. Decis. Making, 15(4), 263–290.
Wei, Q. W., and Luo, X. L. (2012). “The impact of power differential and social motivation on negotiation behavior and outcome.” Public Personnel Manage., 41(5), 47–58.
White, L. (2008). “Prudence in bargaining: The effect of uncertainty on bargaining outcomes.” Games Econ. Behav., 62(1), 211–231.
White, S. B., and Neale, M. A. (1994). “The role of negotiator aspirations and settlement expectancies in bargaining outcomes.” Organ. Behav. Hum. Deci. Processes, 57(2), 303–317.
Wolfe, R. J., and McGinn, K. L. (2005). “Perceived relative power and its influence on negotiations.” Group Decision Negotiation, 14(1), 3–20.
Yiu, T. W., Cheung, S. O., and Chow, P. T. (2008). “Logistic regression modeling of construction negotiation outcomes.” IEEE Trans. Eng. Manage., 55(3), 468–478.
Yiu, T. W., Cheung, S. O., and Siu, L. Y. (2012). “Application of Bandura’s self-efficacy theory to examining the choice of tactics in construction dispute negotiation.” J. Constr. Eng. Manage., 331–340.
Yiu, T. W., and Law, Y. M. (2011). “Moderating effect of equity sensitivity on behavior-outcome relationships in construction dispute negotiation.” J. Constr. Eng. Manage., 322–332.
Yiu, T. W., and Lee, H. K. (2011). “How do personality traits affect construction dispute negotiation? study of big five personality model.” J. Constr. Eng. Manage., 169–178.
Zhao, Z. Y., Shen, L. Y., and Zuo, J. (2009). “Performance and strategy of Chinese contractors in the international market.” J. Constr. Eng. Manage., 108–118.
Information & Authors
Information
Published In
Journal of Construction Engineering and Management
Volume 141 • Issue 2 • February 2015
Copyright
© 2014 American Society of Civil Engineers.
History
Received: Sep 24, 2013
Accepted: Jul 25, 2014
Published online: Sep 3, 2014
Published in print: Feb 1, 2015
Discussion open until: Feb 3, 2015
Authors
Metrics & Citations
Metrics
Citations
Download citation
If you have the appropriate software installed, you can download article citation data to the citation manager of your choice. Simply select your manager software from the list below and click Download.