8. What are integrative, distributive, and compatible bargaining scenarios?
The interdependence of parties is often affected by the nature of the differing interests or objectives. The parties may find themselves in situations where the interest or objective of both parties is the same and is finite. Finite generally means that the interest is a fixed sum and cannot be expanded. We will use the phrases “fixed pie” and “expanding the pie” to refer to the finite or non-finite nature of interests.
A negotiation involving finite objectives or interests is known as a “distributive negotiation”. Alternatively, parties may find themselves in situations where the interests and outcomes of each party are not mutually exclusive (not the same and/or not finite); rather, both parties to the negotiation may be able to obtain a more favorable or desirable outcome than they could achieve without negotiating. That is, if the parties have competing interests (opposite interests) that can be improved through negotiation, this is known as an “integrative” negotiation. If the parties have interests that are not directly in conflict (i.e., the parties want exactly the same thing), this is known as a “compatible” negotiation. Distributive, integrative, and compatible negotiation scenarios are re-explained as follows:
• Distributive Negotiations: The interests or objectives of the parties are the same and are mutually exclusive. As such, it is a competitive (win-lose) situation. Any value claimed by one party in the negotiation is at the expense of the other party. This scenario generally is very competitive and does not foster cooperative behavior.
• Integrative Negotiations: The interests or objectives of the parties are related and are NOT mutually exclusive. Any value claimed by one party is not at the expense of the other party; rather, the parties negotiate to create or generate value in the situation and both parties may achieve mutual gains beyond what they could achieve independently. This is a potentially (win-win) scenario. Parties must generally much some degree of tradeoffs to improve both interests from their best alternative to a negotiated agreement (BATNA). These tradeoffs allow each party to gain in an interest that is important to her in exchange for the other party gaining in an interest that is important to him. The net result is both parties being better off because of the negotiation.
• Compatible Negotiation: The interests of objectives of the parties are the same and NOT mutually exclusive. In fact, the parties desire the exact same outcome. There is no need for tradeoff. The parties want the exact same outcome with regard to the interest or objective at stake in the negotiation.
While untrained negotiators tend to see negotiations as distributive in nature, negotiations generally combine aspects of claiming and creating value. Each requires unique strategies and tactics for a negotiator to effectively achieve her objectives while creating the greatest value possible for all parties.
• Note – IMPORTANT: A single negotiation may have multiple interests at stake – each of which is either distributive, integrative, or compatible.
• Discussion: Can you provide an example of a distributive negotiation scenario? Integrative negotiation scenario? Compatible negotiation scenario? How do you think the nature of the negotiation (distributive, integrative, or compatible) affects the strategy employed by the negotiator? If there is a mix of distributive, integrative, and compatible interests in a negotiation, how would it affect the strategy and tactics employed by the negotiator?