Entrepreneurs’ negotiation behavior

Abstract

This study provides first empirical results on entrepreneurs’ negotiation behavior. In a series of negotiation tasks, we compare persuasive behaviors and negotiation outcomes of entrepreneurs and non-entrepreneurs. Our results show that entrepreneurs make extensive use of emotions and arguments as means of persuasion. Due to their assertive behavior, they close fewer deals; however, when they close a deal, they make higher profits than non-entrepreneurs. These results demonstrate the relevance of studying entrepreneurs’ interpersonal interactions as determinants of entrepreneurial success and highlight the role expressed emotions and arguments play in this context.

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Notes

  1. 1.

    The authors explain this performance gap with experts’ greater process expertise and suggest that experts might not be immune to framing effects and cognitive biases. Their results do not allow for any conclusions on whether experts might be less susceptible to cognitive biases in their own domain where they are confronted with constraints specific to their profession (Neale and Northcraft 1986, p. 316).

  2. 2.

    Following Cardon et al. (2012), we use the terms “emotion” and “affect” interchangeably and as a broad label for subjective feelings (Barsade 2002) of pleasure or displeasure (Barrett et al. 2007).

  3. 3.

    Since we did not provide information on the total number of participants, beliefs about the chances of being chosen for the payment might have differed. The negotiation task would still be incentive compatible in this case, but the perceived strength of the incentive could have differed.

  4. 4.

    Further narrow traits that would be interesting to control for in future research include self-efficacy, stress tolerance and pro-activity. Due to time restrictions, we did not include items to measure these traits in the present study.

  5. 5.

    We first identified which role participants were assigned to and the values of their own and opponents’ reservation prices participants were assigned to in each scenario. For each entrepreneur with a specific parameter constellation, we randomly selected one non-entrepreneur who was confronted with the same parameters in this round.

  6. 6.

    Before running the regressions, we tested for differences in personality between the two groups. In line with previous research, we found that entrepreneurs have a more internal locus of control. We also found significant differences in neuroticism and openness (see Table 5 in the Appendix 1 for a summary of these results).

  7. 7.

    The macro “INDIRECT” by Preacher and Hayes (2008) has been improved since the 2008 paper was published. In particular, the latest version allows estimating models with a dichotomous outcome variable as given in our analysis (Hayes 2013).

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Acknowledgments

We appreciate helpful comments and suggestions from Anna Abratis, Katrin Burmeister-Lamp, Philipp Koellinger, Christine Lauritzen, Maria Minniti, Mirjam van Praag, Christian D. Schade, Joeri Sol, Noam Wassermann and the participants at the ERIM research seminar at Erasmus University, the ACE research seminar in Amsterdam, the Humboldt Research Seminar on Entrepreneurship and Innovation Management and the Oxford Summer Residence Week for Entrepreneurship Scholars. We also wish to thank Joern Block and two anonymous reviewers for their feedback and suggestions on an earlier version of the paper.

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Correspondence to Sabrina Artinger.

Appendices

Appendix 1

See Tables 3, 4, 5, 6.

Table 3 Coding categories and examples
Table 4 Overview mean profits in GBP
Table 5 Personality scores by group
Table 6 Robustness test: logistic regression with random effects for individuals

Appendix 2: Instructions

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Artinger, S., Vulkan, N. & Shem-Tov, Y. Entrepreneurs’ negotiation behavior. Small Bus Econ 44, 737–757 (2015). https://doi.org/10.1007/s11187-014-9619-8

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Keywords

  • Negotiation
  • Persuasion
  • Arguments
  • Emotions
  • Strategic uncertainty
  • Stakeholder interaction

JEL Classifications

  • L26
  • C70
  • C93