Exploring the Concept of Psychological Distance and Its Impact on Intention to Settle in Construction Dispute Negotiation
Publication: Journal of Construction Engineering and Management
Volume 148, Issue 12
Abstract
Negotiation is the most frequently used and economical way of resolving construction disputes. However, negotiators are not always rational decision makers. It is not uncommon to find that negotiations fail despite the tabling of notable settlement options. Having the intention to settle is paramount in achieving an amicable settlement. To improve the success rate of construction dispute negotiations, this study posits exploring negotiators’ intention to settle from the perspective of how they perceive failure. Applying construal-level theory (CLT) and the concept of psychological distance (PD), it is hypothesized that construction dispute negotiators having the proximal psychological distance of negotiation failure would raise the respective concern that mediates intention to settle. With data collected from experienced construction dispute negotiators, the results of the partial least squares structural equation modeling (PLS-SEM) supported the hypothesis. The findings of the study indicated that the negotiators’ distal perception of and low concern for failure can obscure their intention to settle. Furthermore, the results indicated that a reduced PD could enhance negotiators’ intention to settle. This finding explains why reality testing is effective in steering negotiators’ decisions along a rational course. In practice, a realistic assessment of the consequences of a negotiation failure by either the negotiation team or a neutral third party would raise attention to failure. The resulting proximal PD would lead to a stronger intention to settle. The study is novel in (1) offering a vital theoretical link between the perception of failure and the settlement intention; and (2) anchoring the functions of reality testing with the concept of PD.
Practical Applications
The resolution of construction disputes typically starts with negotiations. Negotiated settlements are the most economical outcome, as a high price can be paid if resource-laden resolution mechanisms are deployed. It is disappointing to see promising negotiations fail because the negotiators were not prepared for a settlement. This study addresses the practical issue of how to make the best use of construction dispute negotiations. Having the intention to settle is paramount should positive negotiation outcomes be envisaged. The concept of psychological distance explains that if one perceives failure not to be imminent, the concern for failure will be low, and thereby no pressing need to settle. This proposition was supported in this study. The practical application of the study could be the intervention strategy of reality testing, which has been proven instrumental in facilitating negotiations. Third-party neutrals, particularly mediators, have high regard for the effectiveness of reality testing. The function of realistic assessment in enhancing settlement is the result of reframing negotiators’ subjective cognition and raising the concern for failure. This study contributes to negotiation practice by offering a solid theoretical base to explain why and how reality testing is one of the most versatile tools to assist negotiations.
Get full access to this article
View all available purchase options and get full access to this article.
Data Availability Statement
Some or all data, models, or code that support the findings of this study are available from the corresponding author upon reasonable request.
References
Acharya, N. K., Y. Dai Lee, and H. M. Im. 2006. “Conflicting factors in construction projects: Korean perspective.” Eng. Constr. Archit. Manage. 13 (6): 543–566. https://doi.org/10.1108/09699980610712364.
Ajzen, I. 1991. “The theory of planned behavior.” Organizational Behav. Hum. Decis. Processes 50 (2): 179–211. https://doi.org/10.1016/0749-5978(91)90020-T.
Arcadis. 2021. 2021 global construction disputes report the road to early resolution. Netherlands: Arcadis consultant company.
Bagozzi, R. P. 1992. “The self-regulation of attitudes, intentions, and behavior.” Social Psychol. Q. 55 (2): 178–204. https://doi.org/10.2307/2786945.
Baldwin, D. A., and J. A. Baird. 2001. “Discerning intentions in dynamic human action.” Trends Cognit. Sci. 5 (4): 171–178. https://doi.org/10.1016/S1364-6613(00)01615-6.
Bandura, A. 1993. “Perceived self-efficacy in cognitive development and functioning.” Educ. Psychologist 28 (2): 117–148. https://doi.org/10.1207/s15326985ep2802_3.
Bar-Anan, Y., N. Liberman, and Y. Trope. 2006. “The association between psychological distance and construal level: Evidence from an implicit association test.” J. Exp. Psychol. 135 (4): 609–622. https://doi.org/10.1037/0096-3445.135.4.609.
Bazerman, M. H., and D. Chugh. 2005. “Bounded awareness: Focusing failures in negotiation.” Frontiers of social psychology: Negotiations, edited by L. Thompson. East Sussex, UK: Psychological Press.
Bazerman, M. H., J. R. Curhan, D. A. Moore, and K. L. Valley. 2000. “Negotiation.” Annu. Rev. Psychol. 51 (1): 279–314. https://doi.org/10.1146/annurev.psych.51.1.279.
Bazerman, M. H., and M. A. Neale. 1982. “Improving negotiation effectiveness under final offer arbitration: The role of selection and training.” J. Appl. Psychol. 67 (5): 543–548. https://doi.org/10.1037/0021-9010.67.5.543.
Becker, J.-M., C. M. Ringle, M. Sarstedt, and F. Völckner. 2015. “How collinearity affects mixture regression results.” Marketing Lett. 26 (4): 643–659. https://doi.org/10.1007/s11002-014-9299-9.
Beddo, V., and F. Kreuter. 2004. “A handbook of statistical analyses using SPSS.” J. Stat. Software 11 (2): 1–4. https://doi.org/10.18637/jss.v011.b02.
Ben-Yoav, O., and D. G. Pruitt. 1984. “Resistance to yielding and the expectation of cooperative future interaction in negotiation.” J. Exp. Social Psychol. 20 (4): 323–335. https://doi.org/10.1016/0022-1031(84)90029-5.
Borick, C. P., and B. G. Rabe. 2014. “Weather or not? Examining the impact of meteorological conditions on public opinion regarding global warming.” Weather Clim. Soc. 6 (3): 413–424. https://doi.org/10.1175/WCAS-D-13-00042.1.
Brooks, S. 2008. “Enforcing a turning point and imposing a deal: An analysis of the Darfur Abuja negotiations of 2006.” Int. Negotiation 13 (3): 413–440. https://doi.org/10.1163/157180608X365262.
Cannon, M. D., and A. C. Edmondson. 2005. “Failing to learn and learning to fail (intelligently): How great organizations put failure to work to innovate and improve.” Long Range Plann. 38 (3): 299–319. https://doi.org/10.1016/j.lrp.2005.04.005.
Caputo, A. 2013. “A literature review of cognitive biases in negotiation processes.” Int. J. Conflict Manage. 24 (4): 374–398. https://doi.org/10.1108/IJCMA-08-2012-0064.
Chan, E. H. W., and H. C. H. Suen. 2005. “Dispute resolution management for international construction projects in China.” Manage. Decis. 43 (4): 589–602. https://doi.org/10.1108/00251740510593576.
Chandran, S., and G. Menon. 2004. “When a day means more than a year: Effects of temporal framing on judgments of health risk.” J. Consum. Res. 31 (2): 375–389. https://doi.org/10.1086/422116.
Cheung, S. O., and P. T. Chow. 2011. “Withdrawal in construction project dispute negotiation.” J. Constr. Eng. Manage. 137 (12): 1071–1079. https://doi.org/10.1061/(ASCE)CO.1943-7862.0000388.
Cheung, S. O., and K. Li. 2019. “Biases in construction project dispute resolution.” Eng. Constr. Archit. Manage. 26 (2): 321–348. https://doi.org/10.1108/ECAM-03-2018-0109.
Cheung, S. O., W. K. Wong, T. W. Yiu, and T. W. Kwok. 2008. “Exploring the influence of contract governance on construction dispute negotiation.” J. Civ. Eng. Educ. 134 (4): 391–398. https://doi.org/10.1061/(ASCE)1052-3928(2008)134:4(391).
Chiu, Y.-B., C.-P. Lin, and L.-L. Tang. 2005. “Gender differs: Assessing a model of online purchase intentions in e-tail service.” Int. J. Serv. Ind. Manage. 16 (5): 416–435. https://doi.org/10.1108/09564230510625741.
Chow, P. T., S. O. Cheung, and T. W. Yiu. 2012. “A cusp catastrophe model of withdrawal in construction project dispute negotiation.” Autom. Constr. 22 (Mar): 597–604. https://doi.org/10.1016/j.autcon.2011.12.006.
Darke, P. R., M. K. Brady, R. L. Benedicktus, and A. E. Wilson. 2016. “Feeling close from afar: The role of psychological distance in offsetting distrust in unfamiliar online retailers.” J. Retailing 92 (3): 287–299. https://doi.org/10.1016/j.jretai.2016.02.001.
Davison, A. C., and D. V. Hinkley. 1997. Bootstrap methods and their application. New York: Cambridge University Press.
Easterby-Smith, M., R. Thorpe, and A. Lowe. 2001. Management research: An introduction. Thousand Oaks, CA: SAGE.
Efron, B. 1987. “Better bootstrap confidence intervals.” J. Am. Stat. Assoc. 82 (397): 171–185. https://doi.org/10.1080/01621459.1987.10478410.
Falk, R. F., and N. B. Miller. 1992. A primer for soft modeling. Akron, OH: Univ. of Akron Press.
Fornell, C., and D. F. Larcker. 1981. “Evaluating structural equation models with unobservable variables and measurement error.” J. Marketing Res. 18 (1): 39–50. https://doi.org/10.1177/002224378101800104.
Geisser, S. 1974. “A predictive approach to the random effect model.” Biometrika 61 (1): 101–107. https://doi.org/10.1093/biomet/61.1.101.
Gollwitzer, P. M. 1999. “Implementation intentions: Strong effects of simple plans.” Am. Psychologist 54 (7): 493–503. https://doi.org/10.1037/0003-066X.54.7.493.
Hagger, M. S., N. L. D. Chatzisarantis, and S. J. H. Biddle. 2002. “A meta-analytic review of the theories of reasoned action and planned behavior in physical activity: Predictive validity and the contribution of additional variables.” J. Sport Exercise Psychol. 24 (1): 3–32. https://doi.org/10.1123/jsep.24.1.3.
Hair, J. F., L. M. Matthews, R. L. Matthews, and M. Sarstedt. 2017. “PLS-SEM or CB-SEM: Updated guidelines on which method to use.” Int. J. Multivar. Data Anal. 1 (2): 107–122. https://doi.org/10.1504/IJMDA.2017.087624.
Hair, J. F., C. M. Ringle, and M. Sarstedt. 2011. “PLS-SEM: Indeed a silver bullet.” J. Marketing Theory Pract. 19 (2): 139–152. https://doi.org/10.2753/MTP1069-6679190202.
Hair, J. F., J. J. Risher, M. Sarstedt, and C. M. Ringle. 2019. “When to use and how to report the results of PLS-SEM.” Eur. Bus. Rev. 31 (1): 2–24. https://doi.org/10.1108/EBR-11-2018-0203.
Hamdollah, R., and P. Baghaei. 2016. “Partial least squares structural equation modeling with R.” Pract. Assess. Res. Eval. 21 (1): 1–16. https://doi.org/10.1108/ebr-10-2013-0128.
Henseler, J., C. M. Ringle, and R. R. Sinkovics. 2009. “The use of partial least squares path modeling in international marketing.” Adv. Int. Marketing 20: 277–319. https://doi.org/10.1108/S1474-7979(2009)0000020014.
Holaday, L. C. 2002. “Stage development theory: A natural framework for understanding the mediation process.” Negot. J. 18 (3): 191–210.
Hulland, J. 1999. “Use of partial least squares (PLS) in strategic management research: A review of four recent studies.” Strategic Manage. J. 20 (2): 195–204. https://doi.org/10.1002/(SICI)1097-0266(199902)20:2%3C195::AID-SMJ13%3E3.0.CO;2-7.
Johari, S., and K. N. Jha. 2020. “Interrelationship among belief, intention, attitude, behavior, and performance of construction workers.” J. Manage. Eng. 36 (6): 04020081. https://doi.org/10.1061/(ASCE)ME.1943-5479.0000851.
Jones, C., D. W. Hine, and A. D. G. Marks. 2017. “The future is now: Reducing psychological distance to increase public engagement with climate change.” Risk Anal. 37 (2): 331–341. https://doi.org/10.1111/risa.12601.
Kim, P. H., and A. R. Fragale. 2005. “Choosing the path to bargaining power: An empirical comparison of BATNAs and contributions in negotiation.” J. Appl. Psychol. 90 (2): 373–381. https://doi.org/10.1037/0021-9010.90.2.373.
Leung, R. H. M. 2014. Hong Kong mediation handbook. Hong Kong: Sweet & Maxwell.
Li, K., and S. O. Cheung. 2018. “Bias measurement scale for repeated dispute evaluations.” J. Manage. Eng. 34 (4): 04018016. https://doi.org/10.1061/(ASCE)ME.1943-5479.0000617.
Li, K., and S. O. Cheung. 2020. “Embracing debiasing in mediator’s tactic of reality testing.” J. Leg. Aff. Dispute Resolut. Eng. Constr. 12 (1): 04519046. https://doi.org/10.1061/(ASCE)LA.1943-4170.0000359.
Liberman, N., and Y. Trope. 1998. “The role of feasibility and desirability considerations in near and distant future decisions: A test of temporal construal theory.” J. Personality Social Psychol. 75 (1): 5–18. https://doi.org/10.1037/0022-3514.75.1.5.
Liberman, N., Y. Trope, S. M. McCrea, and S. J. Sherman. 2007. “The effect of level of construal on the temporal distance of activity enactment.” J. Exp. Social Psychol. 43 (1): 143–149. https://doi.org/10.1016/j.jesp.2005.12.009.
Liberman, V., N. R. Anderson, and L. Ross. 2010. “Achieving difficult agreements: Effects of positive expectations on negotiation processes and outcomes.” J. Exp. Social Psychol. 46 (3): 494–504. https://doi.org/10.1016/j.jesp.2009.12.010.
Lim, B. T. H., F. Y. Y. Ling, C. W. Ibbs, B. Raphael, and G. Ofori. 2011. “Empirical analysis of the determinants of organizational flexibility in the construction business.” J. Constr. Eng. Manage. 137 (3): 225–237. https://doi.org/10.1061/(ASCE)CO.1943-7862.0000272.
Lim, L.-H., and I. Benbasat. 1992. “A theoretical perspective of negotiation support systems.” J. Manage. Inf. Syst. 9 (3): 27–44. https://doi.org/10.1080/07421222.1992.11517966.
Lin, S., and S. O. Cheung. 2021. “Analyzing intention to settle in construction dispute negotiation.” In Proc., Creat. Constr. Conf. 2021. Budapest, Hungary: Diamond Congress Ltd.
Linacre, J. M. 2002. “Optimizing rating scale category effectiveness.” J. Appl. Meas. 3 (1): 85–106.
Liu, J., L. Geng, B. Xia, and A. Bridge. 2017. “Never let a good crisis go to waste: Exploring the effects of psychological distance of project failure on learning intention.” J. Manage. Eng. 33 (4): 04017006. https://doi.org/10.1061/(ASCE)ME.1943-5479.0000513.
Liu, J., S. Lin, and Y. Feng. 2018. “Understanding why Chinese contractors are not willing to purchase construction insurance.” Eng. Constr. Archit. Manage. 25 (2): 257–272. https://doi.org/10.1108/ECAM-08-2016-0186.
Locke, E. A., and G. P. Latham. 2002. “Building a practically useful theory of goal setting and task motivation: A 35-year odyssey.” Am. Psychologist 57 (9): 705–717. https://doi.org/10.1037/0003-066X.57.9.705.
Lu, W., L. Zhang, and J. Pan. 2015. “Identification and analyses of hidden transaction costs in project dispute resolutions.” Int. J. Project Manage. 33 (3): 711–718. https://doi.org/10.1016/j.ijproman.2014.08.009.
Macfarlane, J. 2001. “Why do people settle?” McGill Law J. 46 (3): 663–711.
McCorkle, S., and M. J. Reese. 2018. Mediation theory and practice. Thousand Oaks, CA: SAGE.
Mitropoulos, P., and G. Howell. 2001. “Model for understanding, preventing and resolving project disputes.” J. Constr. Eng. Manage. 127 (3): 223–231. https://doi.org/10.1061/(ASCE)0733-9364(2001)127:3(223).
Moore, D. A., and D. M. Cain. 2007. “Overconfidence and underconfidence: When and why people underestimate (and overestimate) the competition.” Organizational Behav. Hum. Decis. Processes 103 (2): 197–213. https://doi.org/10.1016/j.obhdp.2006.09.002.
Moss, S., H. Prosser, H. Costello, N. Simpson, P. Patel, S. Rowe, S. Turner, and C. Hatton. 1998. “Reliability and validity of the PAS-ADD checklist for detecting psychiatric disorders in adults with intellectual disability.” J. Intellectual Disability Res. 42 (2): 173–183. https://doi.org/10.1046/j.1365-2788.1998.00116.x.
Murtoaro, J., and J. Kujala. 2007. “Project negotiation analysis.” Int. J. Project Manage. 25 (7): 722–733. https://doi.org/10.1016/j.ijproman.2007.03.002.
Nunnally, J. C. 1994. Psychometric theory 3E. New York: Tata McGraw-Hill Education.
O’Connor, K. M., and J. A. Arnold. 2001. “Distributive spirals: Negotiation impasses and the moderating role of disputant self-efficacy.” Organizational Behav. Hum. Decis. Processes 84 (1): 148–176. https://doi.org/10.1006/obhd.2000.2923.
Oettingen, G., K. Schnetter, and H. J. Pak. 2001. “Self-regulation of goal setting: Turning free fantasies about the future into binding goals.” J. Personality Social Psychol. 80 (5): 736–753. https://doi.org/10.1037/0022-3514.80.5.736.
Okuniewski, J. E. 2014. “Age and gender effects on motivation and attitudes in German learning: The polish context.” Psychol. Lang. Commun. 18 (3): 251–262. https://doi.org/10.2478/plc-2014-0017.
Patton, C., and P. V. S. Balakrishnan. 2010. “The impact of expectation of future negotiation interaction on bargaining processes and outcomes.” J. Bus. Res. 63 (8): 809–816. https://doi.org/10.1016/j.jbusres.2009.07.002.
Paulhus, D. L., and S. Vazire. 2007. “The self-report method.” In Handbook of research methods in personality psychology, 224–239. New York: Guilford.
Politis, D., and J. Gabrielsson. 2009. “Entrepreneurs’ attitudes towards failure: An experiential learning approach.” Int. J. Entrepreneurial Behav. Res. 15 (4): 364–383. https://doi.org/10.1108/13552550910967921.
Priest, G. L., and B. Klein. 1984. “The selection of disputes for litigation.” J. Legal Stud. 13 (1): 1–55. https://doi.org/10.1086/467732.
Qu, Y., and S. O. Cheung. 2012. “Logrolling ‘win-win’ settlement in construction dispute mediation.” Autom. Constr. 24 (Jul): 61–71. https://doi.org/10.1016/j.autcon.2012.02.010.
Rabinovich, A., T. A. Morton, T. Postmes, and B. Verplanken. 2009. “Think global, act local: The effect of goal and mindset specificity on willingness to donate to an environmental organization.” J. Environ. Psychol. 29 (4): 391–399. https://doi.org/10.1016/j.jenvp.2009.09.004.
Richbell, D. 2009. Mediation of construction disputes. Chichester, UK: Wiley.
Rigdon, E. E. 2012. “Rethinking partial least squares path modeling: In praise of simple methods.” Long Range Plann. 45 (5–6): 341–358. https://doi.org/10.1016/j.lrp.2012.09.010.
Sagristano, M. D., Y. Trope, and N. Liberman. 2002. “Time-dependent gambling: Odds now, money later.” J. Exp. Psychol. 131 (3): 364–376. https://doi.org/10.1037/0096-3445.131.3.364.
Shmueli, G., and O. R. Koppius. 2011. “Predictive analytics in information systems research.” MIS Q. 35 (3): 553–572. https://doi.org/10.2307/23042796.
Shmueli, G., S. Ray, J. M. Velasquez Estrada, and S. B. Chatla. 2016. “The elephant in the room: Predictive performance of PLS models.” J. Bus. Res. 69 (10): 4552–4564. https://doi.org/10.1016/j.jbusres.2016.03.049.
Shmueli, G., M. Sarstedt, J. F. Hair, J. H. Cheah, H. Ting, S. Vaithilingam, and C. M. Ringle. 2019. “Predictive model assessment in PLS-SEM: Guidelines for using PLSpredict.” Eur. J. Marketing 53 (11): 2322–2347. https://doi.org/10.1108/EJM-02-2019-0189.
Smallman, R. E. 2010. The role of relevant information in functional counterfactual thinking. Urbana, IL: Univ. of Illinois at Urbana-Champaign.
Spence, A., W. Poortinga, and N. Pidgeon. 2012. “The psychological distance of climate change.” Risk Anal. 32 (6): 957–972. https://doi.org/10.1111/j.1539-6924.2011.01695.x.
Thompson, L. 1990. “Negotiation behavior and outcomes: Empirical evidence and theoretical issues.” Psychol. Bull. 108 (3): 515–532. https://doi.org/10.1037/0033-2909.108.3.515.
Trope, Y., and N. Liberman. 2010. “Construal-level theory of psychological distance.” Psychol. Rev. 117 (2): 440–463. https://doi.org/10.1037/a0018963.
Trope, Y., N. Liberman, and C. Wakslak. 2007. “Construal levels and psychological distance: Effects on representation, prediction, evaluation, and behavior.” J. Consum. Psychol. 17 (2): 83–95. https://doi.org/10.1016/S1057-7408(07)70013-X.
Trötschel, R., and P. M. Gollwitzer. 2007. “Implementation intentions and the willful pursuit of prosocial goals in negotiations.” J. Exp. Social Psychol. 43 (4): 579–598. https://doi.org/10.1016/j.jesp.2006.06.002.
Tversky, A., and D. Kahneman. 1985. “The framing of decisions and the psychology of choice.” In Behavioral decision making, 25–41. Boston: Spring.
Tversky, A., and D. Kahneman. 1986. “Rational choice and the framing of decisions.” J. Bus. 59 (4): S251–S278. https://doi.org/10.1086/296365.
Weber, E. U., and P. C. Stern. 2011. “Public understanding of climate change in the United States.” Am. Psychologist 66 (4): 315–328. https://doi.org/10.1037/a0023253.
Yiu, T. W., S. O. Cheung, and C. H. Cheung. 2007. “Toward a typology of construction mediator tactics.” Build. Environ. 42 (6): 2344–2359. https://doi.org/10.1016/j.buildenv.2006.05.005.
Yiu, T. W., S. O. Cheung, and C. L. Lok. 2015. “A fuzzy fault tree framework of construction dispute negotiation failure.” IEEE Trans. Eng. Manage. 62 (2): 171–183. https://doi.org/10.1109/TEM.2015.2407369.
Yiu, T. W., T. Liu, and L. C. Kwok. 2018. “Explicating the role of relationship in construction claim negotiations.” J. Constr. Eng. Manage. 144 (2): 04017114. https://doi.org/10.1061/(ASCE)CO.1943-7862.0001431.
Zartman, I. W., and G. O. Faure. 2005. Escalation and negotiation in international conflicts. Cambridge, UK: Cambridge University Press.
Zhang, S. B., Y. F. Fu, Y. Gao, and X. D. Zheng. 2016. “Influence of trust and contract on dispute negotiation behavioral strategy in construction subcontracting.” J. Manage. Eng. 32 (4): 04016001. https://doi.org/10.1061/(ASCE)ME.1943-5479.0000427.
Zigarmi, D., K. Nimon, D. Houson, D. Witt, and J. Diehl. 2012. “The work intention inventory: Initial evidence of construct validity.” J. Bus. Administration Res. 1 (1): 24–42. https://doi.org/10.5430/jbar.v1n1p24.
Zwick, R., and C. C. Lee. 1999. “Bargaining and search: An experimental study.” Group Decis. Negotiation 8 (6): 463–487. https://doi.org/10.1023/A:1008616514620.
Information & Authors
Information
Published In
Journal of Construction Engineering and Management
Volume 148 • Issue 12 • December 2022
Copyright
© 2022 American Society of Civil Engineers.
History
Received: Jul 31, 2021
Accepted: Aug 5, 2022
Published online: Oct 3, 2022
Published in print: Dec 1, 2022
Discussion open until: Mar 3, 2023
ASCE Technical Topics:
- Analysis (by type)
- Business management
- Construction engineering
- Construction management
- Contracts and subcontracts
- Data collection
- Decision making
- Dispute resolution
- Economic factors
- Engineering fundamentals
- Failure analysis
- Human and behavioral factors
- Legal affairs
- Methodology (by type)
- Negotiation
- Practice and Profession
- Research methods (by type)
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.