Distributive Negotiation

Cite this article as:"Distributive Negotiation," in The Business Professor, updated October 2, 2017, last accessed August 8, 2020, https://thebusinessprofessor.com/lesson/distributive-negotiation/.

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What is a distributive negotiation?

A “distributive negotiation” is a situation in which interests or objectives of the parties are the same and are mutually exclusive. These situations are characterized by a finite or fixed amount of resources. The interest(s) or objective(s) of the other party are in direct conflict with yours. In plain language, the parties seek to claim the same value; thus, any value that one party receives means the other party receives less value in the negotiation. For example, if the parties are competing for a share of the same pie, one party acquiring a greater percentage of the pie means the other party gets less pie. This is often the case in single negotiations (single deals or transactions) at the stage of negotiation where the negotiator can effectively improve her position or gain value. The distributive negotiation is generally very competitive (a win-lose situation) and does not foster cooperative behavior. A distributive negotiation strategy seeks to grab as much possible in that negotiation.

• Note, that a distributive negotiation strategy may still be ineffective in a distributive negotiation when there will be an on-going business relationship. Such a strategy can create animosity between the parties, negative emotions, and cause damage to the party’s reputation. These harsh effects may be mitigated in negotiations when parties wish to cooperate or avoid competitive behavior in the distributive negotiation.

• Discussion: Prior to studying negotiations, did you have a tendency to see all negotiations as distributive? Can you give an example of a time you pursued a distributive negotiation? Can you think of a time you attempted a distributive negotiation but learned that it was not really distributive in nature (i.e., the parties have integrative or compatible interests)?

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