The role of leadership in salespeople’s price negotiation behavior

Abstract

Salespeople assume a key role in defending firms’ price levels in price negotiations with customers. The degree to which salespeople defend prices should critically depend upon their leaders’ influence. However, the influence of leadership on salespeople’s price defense behavior is barely understood, conceptually or empirically. Therefore, building on social learning theory, the authors propose that salespeople might adopt their leaders’ price defense behavior given a transformational leadership style. Furthermore, drawing on the contingency leadership perspective, the authors argue that this adoption fundamentally depends on three variables deduced from the motivation–ability–opportunity (MAO) framework, that is, salespeople’s learning motivation, negotiation efficacy, and perceived customer lenience. Results of a multi-level model using data from 92 salespeople and 264 salesperson–customer interactions confirm these predictions. The first to explore contingencies of salespeople’s adoption of their transformational leaders’ price negotiation behaviors, this study extends marketing theory and provides actionable guidance to practitioners.

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Notes

  1. 1.

    Following prior works in this literature stream, we do not take a normative stance on the question whether salespeople should or should not grant discounts to customers. Instead, our work is of explicative nature and aims to improve our understanding of the factors that factually drive salespeople’s price defense.

  2. 2.

    An alternative hypothesis may be that a salesperson whose negotiation efficacy is low may imitate a leader’s price defense in search for orientation and improvement. However, if negotiation efficacy is low, the salesperson may try to learn with lower self-regulation and higher stress, which decreases learning success (Zimmerman 2000). Thus, we expect the net moderating effect of negotiation efficacy to be positive.

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Michael Ahearne served as Area Editor for this article.

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Alavi, S., Habel, J., Guenzi, P. et al. The role of leadership in salespeople’s price negotiation behavior. J. of the Acad. Mark. Sci. 46, 703–724 (2018). https://doi.org/10.1007/s11747-017-0566-1

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Keywords

  • Sales
  • Leadership
  • Price negotiations
  • Salesperson–customer interaction
  • Transformational leadership
  • Social learning