Monday, April 21, 2014

Researchers: Does Breaking Bread Help Make a Negotiation a Success?

Deals over lunch may be tasty, but here's why they're not always smart.

People negotiating a deal commonly have a meal or two together. Sharing a meal seems a gesture of goodwill — after all, who's going to fight in one sentence and then say, pass the sushi in the next? You might suppose, then, that negotiating while eating can only help bring good deals to fruition.

Not so fast. While such thinking propels the lunchtime scenes everywhere from the Four Seasons in New York City to Chateau Marmont in Los Angeles, new research from Stanford Graduate School of Business calls it into question.

Professor Margaret Neale and doctoral student Peter Belmi find that sharing food does help create more valuable deals in competitive negotiations. But in situations that are cooperative, such as when the two parties are friends, meal sharing reduces the overall value of the deal.

What are the two or three lessons a negotiator could draw from this research?

Neale: Food sharing would be one of my tools in my tool kit. Having a meal where you share food would be a good strategy in a competitive situation where there is an adversarial relationship. If you're going to a lawyer's office, and it's you negotiating with your soon-to-be ex-spouse, you might want to suggest a plate of cookies on the table. If you are negotiating to end a dispute with another company, plan a meal at a restaurant.

Belmi: On the other hand, if you have a cooperative negotiation, food sharing may facilitate a quick resolution but not necessarily a good resolution. So it might not be a good idea in a cooperative negotiation.

How do you tell the difference between the two?

Belmi: In more competitive negotiations, people want to have the best possible deal for themselves, and typically, they see their counterpart as having adversarial or opposing motives. In cooperative negotiations, typically people are more concerned about reaching an agreement for all parties involved.

Neale: In a competitive situation, you have that assessment that this is going to be really tough. We are really at odds. In the laboratory we can tell folks: this is a very contentious negotiation.

How did you do the research?

Belmi: We told participants they were negotiating in either a competitive or a cooperative situation, and then we asked them to negotiate while they ate food that was either shared or individually served during the interaction. At the end of the exercise, we measured their perception of the interaction and assessed value creation by examining the joint gain created by the two parties. We used apples and caramel sauce in one study, and then we used chips and salsa in another study. What we found is that when people were negotiating in a competitive situation, sharing the food — and by that we mean sharing, not just eating — they created significantly more value. On the other hand, people negotiating in a cooperative situation created less value.

What's your explanation for what's going on?

Neale: When you have a competitive negotiation, the added presence of food makes folks uncertain about how to behave. It's that juxtaposition of that social ritual, which is cooperative, and the negotiation, which is competitive. That disconnect gets people to pay more attention to each other. They realize opportunities to create value that they wouldn't otherwise.

What happens in the cooperative negotiation? Is everyone just more relaxed and not focused on the deal at hand?

Belmi: In a cooperative negotiation, sharing food creates a comfortable and familiar environment, and people can become more concerned about maintaining that atmosphere rather than finding the best deal. So, food sharing in that situation could restrict important information exchange and distract negotiators from finding the best outcomes. You're also probably concerned about maintaining the relationship. The deal may be less important.

Does it matter what people eat?

Neale: It is the shared-ness of the food that's important. In one of the studies, some participants were given their own plates of chips and salsa, and some were given a communal bowl. Those who ate from a communal bowl and were in a competitive negotiation created more value, and those who were in a cooperative situation created less value. It was the communal bowl that made the difference, not eating.

The suggestion might be: If you're in a competitive negotiation, take someone to an Ethiopian restaurant!

Or, order appetizers. Did this research address the effect of sharing food in cultures outside California?

Neale: We did not look at different cultures specifically; however, the ritual of sharing food among humans is typically a cooperative one — and not just in California or the United States. So, the specific answer to your question is no; however, we would not be surprised if sharing food has a similar effect on negotiators from other countries and other cultures.

Is there more research to be done?

Neale: One area to consider is what happens when people bring the food instead of being given it. Does that affect the status of the giver and the receiver?

Isn't it possible that sharing anything — not just food — would create the same effect?

Belmi: It's not the effect of sharing in general. We had study participants share a calculator and didn't see a similar difference in how our participants approached the negotiation.

What's different about food, then? The biology? The ritual surrounding it?

Neale: Food sharing is cooperative and communal in a way that sharing a calculator is not. Sharing a calculator is slightly cooperative, but it doesn't have the same kind of social overlay. With whom do we share food? Our families, people in our social circle. It's the inconsistency between the competitive negotiation and the cooperative nature of sharing food that makes the difference. The lesson here is that you're really trying to generate a sense of uncertainty. That helps you pay closer attention to your counterpart, and that, in turn, allows you to find ways to create more value.

Margaret Neale is Adams Distinguished Professor of Management, and Peter Belmi is a doctoral student in organizational behavior at Stanford Graduate School of Business.