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Can stress improve performance in negotiations?

Based on an interview with Jimena Ramirez-Marin and Adrian Barragan Diaz (IÉSEG School of Management, Lille, France) on their paper “Is stress good for negotiation outcomes? The moderating effect of social value orientation” (International Journal of Conflict Management, 2020), co-written with Sinem Acar-Burkay (USN School of Business, University of South-Eastern Norway, Ringerike, Norway).

The ability to succeed in negotiations is high on any company’s agenda, but the process can be highly stressful. An in-depth study reveals that a bit of stress may impact negotiations positively.

2020 was a big year for high-profile negotiations, a notoriously stressful aspect of the business world. From negotiations between Covid-19 vaccine makers and anxious governments to the Brexit negotiations, crucial negotiations have impacted many businesses, as of late.

In high-impact negotiations such as these, stress is typically omnipresent and commonly seen as a hindrance to performance. But could a little stress actually lead to greater levels of cooperation and better outcomes for all concerned? Furthermore, could prosocial beliefs aid with success in negotiations? Jimena Ramirez-Marin, Adrian Barragan Diaz, and Sinem Acar-Burkay set out to test this experimentally.


Creating stress experimentally

The researchers first artificially created stress in an experimental setting by using a challenge in which participants had to solve a mental arithmetic task. “We wanted to have this manipulation outside of the negotiation task itself, because otherwise you wouldn’t know whether the stress is coming from the situation itself, so we tried to isolate the variable and manipulate stress independently from the negotiation itself,” Ramirez-Marin explains.

In a pilot study this arithmetic task was given to individuals completing an online experiment. When a time limit was added, the task created higher levels of self-reported stress.

Having confirmed that their timed arithmetic task created stress, the researchers then went on to use the same task to investigate the impact of stress in a negotiation.

Observing a negotiation scenario

Participants recruited online were asked to take part in a negotiation task involving a “mental game” in which they had to negotiate a patent licence on behalf of their business. The participants were split into pairs with one participant acting as a buyer and one as a seller. They had to vie for better terms on three factors: patent license fee, duration of license and royalty percentage.

The participants were told they were not allowed to exchange their profit charts due to “the confidential information” involved, the participants therefore had to leverage negotiation to agree on a deal through communication and information exchange. Participants’ “social value orientation” was measured using a game in which they had to choose between three outcomes: equal outcomes for each player, maximum outcome for themselves and maximum outcome for the other. They were thus classified as prosocial, proself or mixed.

The study showed no significant difference between the high-stress and low-stress groups in terms of the types of offers made. However, there was a difference in the rationale given for the offers. The results showed that in the high-stress group, the proportion of “integrative offers” – offers that took into account the shared interests of the negotiating partner-, were more likely than for participants in the low-stress group. The study also found an interesting interaction effect, in which prosocial individuals reached higher joint outcomes under stress. This effect was not found for “proself” individuals.

Negotiating face to face

In another experiment, the researchers set out to replicate the finding in a face-to-face setting. The test was given with a new stress manipulation, to see if the same results appeared in a more real-world context. In this study, the researchers told the participants that an observer was present, an experienced negotiator who was going to evaluate their performance. In the low-stress condition no evaluator was present. The same negotiation task was used as in the previous study.

The researchers were surprised to discover that this time stress led to offers that were more in the interests of both parties in the negotiation and this resulted in higher joint outcomes. This finding was different to other studies in the literature, so the researchers are now attempting to reconcile their findings with the broader literature. Interestingly, yet again the effect was especially true for individuals who were more prosocial.

The findings are good news for people struggling with a more stressful world than they were used to before the Covid-19 pandemic. “People today are depressed, sad and anxious about getting sick and fearing for their lives. Stress signals to us that everything is bad around us, but we can instead learn to see a silver lining in stress and find something positive out of the negative” Ramirez-Marin explains.

The research supports a wealth of literature that has found that stress in negotiations can be valuable when it is interpreted as beneficial rather than interpreted as anxiety. How you interpret stress has a big impact on how stress influences your behaviour, so simply seeing stress as a good thing rather than merely a painful fact of life, could lead to better outcomes for all concerned.


Practical applications

The most important insight from this research is that stress can in fact be a healthy part of a successful negotiation, it can indeed have positive effects.

While we are naturally inclined to minimise our stress in a negotiation setting, allowing ourselves to be put under a little stress could in fact be a good thing. When picking team members to enter negotiations in a stressful deal, the researchers recommend choosing prosocial members.

This research may be particularly valuable to businesses where high-pressure negotiations are a fact of life.


Methodology

The authors first completed a pilot study involving a timed arithmetic task to create stress in participants completing an online survey using Amazon’s Mechanical Turk. They went on to examine the impact of the task on a negotiation between participants completing a “mental game” before evaluating a negotiation scenario. The researchers then repeated the study in the laboratory, using the same negotiation task face-to-face but with stress created through the presence of an evaluator.


Biography

Jimena Ramirez and Adrian Barragan Diaz are professors in international negotiation at IÉSEG School of Management. They both hold a Ph.D from the University of Seville and are members of ICON, IÉSEG’s center of excellence in negotiation research, teaching and knowledge transfer.