This chapter discusses influence, persuasion, and negotiation. It covers six primary approaches to influence: social proof, authority, liking, consistency, reciprocation, and scarcity. Regarding negotiations, it discusses types of negotiations, common biases, BATNA, the importance of information, framing, fairness and trust, positive emotion, and culture. The key learning objectives are what persuasion is and its role in influence, the six approaches to influence, negotiations, and international applications and concerns.

1. Chapter 10
Influence
and
Negotiation

2. Learning Objectives
• After studying this chapter, you should be
able to explain:
– What persuasion is and its role in the
influence process
– Six primary approaches to influence
– Negotiations
– International applications and concerns

3. Persuasion
• Persuasion and influence are not identical.
• Persuasion is a change in a private
attitude or belief resulting from the receipt
of a message.
• Influence is an action that leads to a
change in behavior.
• Persuasion is a deeper form of change
than influence.

4. Persuasion
• Cognitive response model of
persuasion: A model that views the most
direct cause of persuasion as the self-talk
of the target audience, not the persuasion
method itself or its deliverer.

5. Persuasion
• Reasons why people may respond to a
persuasive message:
– Many people would like to build a more
accurate view of the world and how it works.
– People would like to be consistent with their
own values (the consistency principle) in
order to avoid cognitive dissonance.
– People also care about what others think.

6. Influence
• Social influence: Encouraging a change
in behavior that was caused by real or
imagined external pressure.
• Three behavior outcomes deriving from a
successful influence attempt:
– Conformity
– Compliance
– Obedience

7. Influence
• Conformity: Changing one’s behavior to
match the perceived requirements of
others.
• Compliance: The act of changing one’s
behavior in response to a direct request.
• Obedience: Changing one’s behavior in
response to a directive from an authority
figure.

8. Influence
• Six universal principles of influence
– Social proof: A principle of influence that
states people are more likely to want to do
something if they believe that many others are
doing the same thing or buying the same
product.
– Authority: A principle of influence that states
people are more likely to say yes to a request
or purchase a product if an authority says it is
good to do so.

9. Influence
• Six universal principles of influence (cont.)
– Liking: A principle of influence that holds that
people are more likely to be influenced by
those whom they like or with whom they have
similarities.
– Consistency: A principle of influence that
indicates how people are influenced by
showing how their previous statements or
stated values fit with a recommendation or
request.

10. Influence
• Six universal principles of influence (cont.)
– Reciprocation: A principle of influence that
states people are more likely to say yes to a
request when the requester has done
something for that person in the past.
– Scarcity: A principle of influence that argues
that people are more likely to buy a product or
want to do something that they perceive as
scarce, unique, or dwindling in availability.

11. Influence
• Social proof
– People like to follow the crowd.
– It is helpful to appeal to what the larger group
is doing.
– Using an opinion leader (or two) is quite
important.
– People faced with strong group consensus
sometimes go along even though they think
the others may be incorrect.

12. Influence
• Social proof (cont.)
– Social validation is important in cultures with
high group cohesiveness (East Asia).
– To encourage a behavior, show that many
others are doing that same thing, particularly
people who are similar to those you are trying
to influence.
– To discourage a behavior, do not say that
many others are doing the action you want to
discourage.

13. Influence
• Authority
– The authority principle is helpful to some
extent because we do not have time to
evaluate every decision we make.
– Studies by Stanley Milgram.
– People are more influenced by those who
display their credentials and awards as a
signal of their authority.

14. Influence
• Liking
– People seek opinions from and are thus
influenced by those who they like, are similar
to, or feel connected with in some way.
– Similarity increases liking.
– Differences decrease liking and thus
influence.
– Managers can use similarities to build
relations with external and internal customers.

15. Influence
• Liking (cont.)
– Praise can establish liking while criticism can
have the opposite effect.
– Able managers can use praise to repair an
already damaged relationship.
– There are cultures where negative comments
may be even more damaging than in others.
– Focusing on others’ needs instead of talking
about what you want can establish liking.

16. Influence
• Consistency
– Once individuals go on record in favor of an
idea or product, they typically prefer to stick to
that position.
– Thus, seemingly insignificant commitments
can lead to large behavior changes.
– Decision makers have a tendency to escalate
their commitments to decisions that are not
working out and should be terminated.

17. Influence
• Reciprocation
– People are more willing to comply with
requests from those who have provided
something to them first.
– Gifts can increase the number of donations.
– Balanced reciprocity: Securing a promise of
a near-immediate return for a favor done or a
gift given; thought to be particularly important
in China and in ethnic Chinese communities
around the world.

18. Influence
• Scarcity
– People find objects and opportunities more
attractive to the degree that they are scarce.
– Reactance: When we are told that we cannot
have or do something, then we want it more.
– Scarcity does not just influence consumers
but also can be influential inside firms as well.

19. Negotiations
• Negotiating: A process in which at least
two partners with different needs and
viewpoints try to reach agreement on
matters of mutual interest.

20. Negotiations
• Cognitive shortcuts and negotiation
– Even in the careful, studied process of a long
negotiation, decisions can be affected by:
• Availability
• Loss aversion
• Consistency
• Other heuristics

21. Negotiations
• Balance of power
– In any negotiation, one side may have more
leverage.
– It is not always clear which firm has the power
in a relationship.
– Negotiating skill is especially critical because
it can help maximize what you receive from
the negotiations.

22. Negotiations
• Types of negotiations
– Distributive (or fixed-pie) negotiations: This
type assumes a fixed set of resources to
bargain over, although this assumption may
not be accurate and should be challenged by
the other side.
– Integrative (or expanding-pie) negotiations:
This type looks aggressively for win-win
solutions that also enlarge the resources that
both sides might capture in negotiations.

23. The Negotiation Process
• Common biases that appear at the start of
a negotiation:
– Unrealistic expectations
– Anchors
– Escalation of commitment

24. The Negotiation Process
• The Best Alternative to a Negotiated
Agreement (BATNA)
– Decisions should not be evaluated in
isolation, but must be assessed in the context
of other reasonable alternatives at hand.
– Negotiators must be fully aware of their
alternatives.
– It is better to quit a lengthy negotiation than to
accept a deal at a loss.

25. The Negotiation Process
• The importance of information
– Having well-organized and relevant
information is crucial to effective negotiations.
– It is important to collect as much information
as possible because most negotiators will not
offer the information up front.

26. The Negotiation Process
• The importance of information - Common
biases:
– Most people make decisions based on vivid
experiences and events – Unfortunately,
memory is often selective and subject to the
availability heuristic.
– Individuals are often as impressed by the
theatricality of a presentation as its
substance.

27. The Negotiation Process
• A reservation price is the firm’s absolute
bottom price that is acceptable.
• Target price is the value that you would like to
have.
• Impasse: When a manager and his or her
negotiating partner cannot reach an agreement.
• Ultimatum: Requiring someone or a group to do
specific thing in a specific way in order for
negotiations to continue.

28. The Negotiation Process
• Framing
– Negotiators can react differently to identical
proposals when the framing changes.
– Loss framing and the scarcity principle.
• Fairness and trust
– Most people are very sensitive to fairness
issues.
– The ultimatum game.

29. The Negotiation Process
• Positive emotion
– Anger, pride, overconfidence, and over-
competitiveness can work against you.
– Negotiators who are in positive moods are
more likely to achieve integrative
agreements.

30. The Negotiation Process
• Culture in negotiations
– A negotiation becomes cross-cultural when
the parties involved belong to different
cultures and therefore do not share the same
values and behaviors.
– Effective cross-cultural negotiations contain all
the complexity of domestic negotiations with
the added dimension of cultural diversity.