Bargaining Process Research Articles

Coordinating Project Outsourcing Through Bilateral Contract Negotiations

Problem definition: Project outsourcing has been a pronounced trend in many industries but is also recognized as a major cause for project delays. We study how companies can coordinate outsourced projects with uncertain completion times through bilateral contract negotiations. Academic/practical relevance: Misaligned subcontractor incentives may result in substantial losses to both project clients and subcontractors. Coordinating subcontractors’ efforts through proper contracts is imperative to the success of project outsourcing. Most previous studies on project contracting have not addressed subcontractors’ bargaining powers or the dynamic bargaining process in negotiations. We fill in this gap by studying bilateral bargaining between the client and subcontractors, which better reflects real-world negotiations. Methodology: We model project contract negotiations as a multiunit bilateral bargaining game. We derive the conditions such that bilateral negotiations can achieve system coordination and characterize the equilibrium negotiation outcomes. We then compare the conditions and equilibria under various model settings to study their impact on project contracting. Results: Our study uncovers how the coordination of project outsourcing is impacted by the contract form, bargaining power structure, precedence network topology, payment timing, external opportunities, and negotiation protocols. For single-task projects, the widely used fixed-price (cost-plus) contract can achieve system coordination only when the subcontractor (client) possesses full bargaining power. Cost-sharing and time-based incentive contracts, which perform well for single-task projects, may not be effective for projects with parallel tasks when any subcontractor’s bargaining power is sufficiently high. Projects with serial tasks can be coordinated only under certain extreme bargaining power structures. Delaying payments always exacerbates the incentive misalignment. Managerial implications: Our analysis provides insights and guidelines to companies regarding how to select proper contract forms and payment timing schemes, based on the characteristics of the projects and subcontractors, to ensure the effectiveness of project outsourcing. Our results also highlight the importance of bargaining modeling in project contracting.

Land Issues in Forest Areas of Yogyakarta Special Region and The Dynamic of Decision Making Process

There is a forest land identified as Ab Gronden, located in Gunung Kidul Regency, Yogyakarta Special Region. Ab Gronden occupation has led to prolonged conflict over land until today. Environment and Forestry Service (EFS) of Yogyakarta Special Region has made a decision of “do nothing” from the policy set by central government to solve the problem. This study intends to examine factors underlying the decision of “do nothing". This type of research is a case study, that is a study on a policy in the context of real life and uses historical approach holistic single case study through the procedures of data collection and analysis systematically. The sources of data in this study consisted of both primary and secondary sources of data and were analyzed qualitatively. The results of this study found the following conclusion factors underlying of why decision of “do nothing” choosed by EFS is because of there is no policy agenda of forest land statue yet. EFS has experience a dilemma and conflict to make a decision relate to: a) the differences in the ab gronden perception among actors, b) multy level hierarchy of decision making, c) there is no initiation of dialogue between related actors. The Organizational Politics Model has not been able to work in decision making of government organizations that are grounded in legal provisions. The do nothing decision was made because the bargaining process between the actors was not running.

Do buyers have bargaining power? Evidence from informal groundwater contracts.

In developing countries, the emergence of informal groundwater markets is accidental rather than planned due to the water scarcity and supply-side constraints. It is less often that water markets are assessed for agents bargaining power and equity impacts. In this paper, I examine the relative bargaining power of sellers and buyers in informal groundwater markets in India. To understand the process of bargaining, a framed-field experiment is conducted with actual buyers and sellers in groundwater contracts. In the experiment, sellers and buyers make a series of choices between output-shared and fixed-price contracts under varied risk conditions, first individually and then jointly. I define bargaining power as the relative ability of the agent to influence the joint decision for their individually preferred contract type. I find that there is a large preference disagreement between sellers and buyers. Buyers have preferences for output-shared contracts while sellers' choices are motivated by expected earnings. Using the random-parameter probit model, I show that sellers have relatively more power to drive the joint decision in their favour. Nevertheless, factors like interpersonal relationships between buyers and sellers, such as kinship ties, long contractual history, and higher education of buyers augment buyers' power relative bargaining power.

Two-level politics and the backlash against international courts: Evidence from the politicisation of the European court of human rights

Are international institutions more prone to face backlash politics than domestic ones? Are international institutions easy targets for satisfying domestic political interests? Using the case of the recent criticism of the European Court of Human Rights, the article explores whether international institutions are more susceptible to face backlash politics than domestic ones due to the dual nature of international politics. The empirical study, focusing on the reform of the European Court of Human Rights through the 2018 Copenhagen Declaration, suggests that pre-existing commitments to international institutions might be given up rapidly when significant domestic interests collide with international institutions and their practices. The analysis, however, also shows that backlash politics against international institutions is transformed when seeking institutional reform. Entering a collective bargaining process, backlash objectives are changed by the logic of diplomatic negotiation, academic scrutiny and the interests of the other member states and civil society. This suggests that the two-level logic of ordinary international politics has a mediating effect on domestically fuelled backlash campaigns.

Price Rigidity and Vacancy Rates: The Framing Effect on Rental Housing Markets

This paper proposes a new explanation for housing rent price rigidity. When high inflation or low inflation occurs, the bargaining process for new rent price represents negotiations representing increasing or diminishing utility for landlords. Based on framing effect theory, this study hypothesized that utility increasing-bargaining causes landlords to choose to give greater concessions and prefer short-term contracts. Although the income obtained from single contracts is comparatively lower, the high transaction volume (number of lease contracts) causes a reduction in the number of vacant properties and a higher frequency of price adjustments. Conversely, when low inflation occurs, landlords face utility decreasing-bargaining, reduce their concessions, and exhibit a preference for long-term contracts, thereby leading to an increase in the number of vacant houses and a lower frequency of price adjustments. Using US rental market data, this study explains asymmetric rent volatility and changes in the vacancy rate, and provides related evidence supporting the hypothesis that this rental market phenomenon is caused by an inflation illusion.

Renegotiating Belt and Road cooperation: social resistance in a Sino–Myanmar copper mine

In what way can societal actors in transitional polities play a role in influencing bilateral economic agreements? Societal actors are often ignored in the state-centric international relations literature. We, however, contend that social resistance to a foreign development project can reshape the international outcome, even under an asymmetric bargaining structure, if two conditions are met: the host country’s policy options are conditioned by citizens’ resistance; and the home country is eager to continue cooperation. To make this argument, this paper examines the social resistance to the China-backed Letpadaung copper mine in Myanmar amid the host country’s democratisation. Employing a process-tracing technique and drawing upon extensive interviews from 2015–2019, official documents and secondary data, we argue that a popular anti-mining movement transformed a previous state-to-state bargaining process into a two-level game negotiation. As a result, the rise of societal actors was able to disrupt project implementation and extract concessions from China in exchange for project resumption.

Please Help Us (or Don’t): External Interventions and Negotiated Settlements in Civil Conflicts

How do different types of external intervention affect the likelihood of a negotiated settlement in civil conflicts? Drawing on the negotiation literature, which shows that the nature of the parties’ “best alternative to a negotiated agreement (BATNA)” influences the bargaining process between them, we argue different types of intervention affect governments’ and rebel groups’ BATNAs in different ways. This, in turn, affects the likelihood of a negotiated settlement. To test this argument, we address the fact that interventions are nonrandom, and that characteristics of civil conflicts that lead to different types of intervention also influence the likelihood of a negotiated settlement. We therefore use a two-stage statistical model. The first stage predicts the likelihood of different types of intervention, and drawing on those results, the second stage analyzes the likelihood of a negotiated settlement. The results provide insights into how different types of intervention affect civil conflict outcomes.

Review: Unusually Cruel: Prisons, Punishment, and the Real American Exceptionalism, by Marc Morjé Howard

Review: Unusually Cruel: Prisons, Punishment, and the Real American Exceptionalism, by Marc Morjé Howard

Gender Gap in Housework: Couples’ Data Analysis in Kyrgyzstan

We analyze couples’ time-use diaries from the 2012–2013 Life in Kyrgyzstan data. Using the pooled Blinder-Oaxaca decomposition method, we test the relative resources, time availability, absolute resources, and gender-centered frameworks in their ability to explain gender differences in housework participation among Kyrgyzstani women and men. The results show that among the three resource-based approaches, the time availability models are the most potent in accounting for the gender gap in housework, followed by the relative resources framework. Both frameworks emphasize household bargaining processes and power differentials between spouses. The findings suggest that among Kyrgyzstani couples, partners’ time availability and, with it, bargaining power play an important role in the division of housework tasks. In contrast, absolute resources can account only for a small portion of the gender differences in housework participation.

He, She, "They" at the Bargaining Table… Woman, Man or Just Negotiators? A Critical Review on Gender Ideologies in Mixed-Gender Negotiations.

In recent years, an important number of studies aimed at levelling the playing field for women and men at the bargaining table. In spite of this, women continue to find themselves largely at a disadvantage when negotiating with a male counterpart. In this review, we focus on a neglected yet potentially important factor contributing to the gender gap in negotiations, namely people’s gender ideology. We argue that gender ideology shapes day-to-day negotiations and we offer insights regarding its consequences on the bargaining process. We first present the available contributions regarding gender in negotiations and underline the most significant variables that lead to gender effects in negotiations. We then introduce gender ideology as a potentially important variable in the process and lean upon previous studies to support our claim.

The revival and refashioning of gender pay equity in New Zealand

While the foundations for redressing gender pay inequality in New Zealand were established half a century ago, significant numbers of women still endure the sharp end of gender-based pay differentials. Following a landmark test case in the aged care sector which focused on the (re)interpretation of the Equal Pay Act 1972, gender pay equality is once again under intense scrutiny. On the 125th anniversary of women’s suffrage, the New Zealand government signalled the introduction of legislative amendments to address this enduring challenge. Although widely contested, the intent of the Equal Pay Amendment Bill is to lower the threshold for raising pay equity claims, while establishing a bargaining process for resolving them. Alongside this, the government has introduced an ambitious workplace action plan to eliminate public service gender pay gaps. Informed by gender equity policy approaches, this article examines New Zealand’s (gendered) regulatory history relating to equal pay, yielding insights into how labour law and policy have both addressed and evaded the objective of equal remuneration for work of equal value, concluding with a discussion of recent initiatives. This qualitative analysis illustrates how institutional contexts for wage-setting and value-laden equality strategies impact women’s experience of work in New Zealand.

Collective Bargaining during Times of Crisis: Recommendations from the COVID-19 Pandemic.

The COVID‐19 pandemic dramatically changed employment across sectors in 2020. This Viewpoint essay examines public sector labor relations during the pandemic and describes the impact bargaining process that is used to protect public employees. The authors draw on their own experience with impact bargaining negotiations and the public labor relations, conflict management, and civil service reform literatures to develop recommendations for public union labor leaders during times of crisis. They suggest that public unions have an important role in crisis management but must act strategically to develop good working relationships with leadership and successfully negotiate employee protections in uncertain times.

Bicameralism and government formation: does bicameral incongruence affect bargaining delays?

AbstractThe effects of bicameral legislatures on government formation have attracted scholarly attention since Lijphart’s (1984) seminal contribution. Previous research found support for the ‘veto control hypothesis,’ showing that bicameralism affects coalition governments’ composition and duration. However, the effects of bicameralism on the duration of the bargaining process over government formation have yet to be explored. Our work contributes to this area of research by focusing on the impact of bicameralism on bargaining delays. We show that the duration of the bargaining process over government formation decreases at increasing levels of partisan incongruence of the two chambers, especially in those legislative assemblies in which the upper chamber plays a relevant role in the policy-making process. Such empirical evidence is in contrast with the conventional expectation according to which bicameralism should delay the government formation process, as it introduces an additional element of complexity in the bargaining environment. We test our hypothesis by using a novel data set about the partisan composition of upper and lower chambers in 12 Western and Eastern European democracies over the postwar period.

Bargaining Process and Channel Efficiency

The behavioral literature has demonstrated that the format of supply chain contracts matters even when theoretically it should not and that contracts that in theory coordinate channels fail to do so in laboratory experiments. The existing body of experimental evidence uses an ultimatum bargaining protocol to test analytical models, but there is no reason to think that bargaining in supply chains is in the form of ultimatum offers. We investigate the effect of bargaining on contract performance by extending the bargaining protocol to allow the manufacturer to make concessions. We test coordinating contract with bargaining in the laboratory by comparing wholesale price and the two-part tariff contracts using two different bargaining protocols. We then develop and estimate a statistical model of behavior with bargaining and find that this model organizes our data well. Our main finding is that the contracts that we study are more efficient when participants are allowed to make concessions. The additional channel efficiency is owing to more efficient offers made by manufacturers. The higher channel efficiency primarily benefits the retailer—the weaker party. Our main contribution is the observation that, when testing analytical models of contracts in the laboratory, the way that the bargaining process is implemented, such as the ability to make concessions, has a critical effect on conclusions. This paper was accepted by Vishal Gaur, operations management.

The Role of Organizational Factors in Mobilizing Professionals: Evidence from Nurse Unions in the United States and Germany

AbstractScholars have intensely debated the conditions under which trade unions can successfully mobilize professionals. We explore an internationally comparative perspective on mobilizing professionals by asking how two nurse unions in the United States and Germany successfully limited management's prerogative over staffing levels. We found that German national institutions had little influence over the bargaining process; instead, factors at the level of organizations and their environment (leadership support, organizational restructuring, coalition‐building with supportive stakeholders and framing) enabled mobilization. Based on a power resources perspective, we conclude that unions can mobilize professionals using militancy, even without much support from national institutions.

From “obligated embeddedness” to “obligated Chineseness”? Bargaining processes and evolution of international automotive firms in China's New Energy Vehicle sector

AbstractOver the past decades, the automotive sector in China has been characterized by the obligation of foreign manufacturers to enter joint ventures, transfer technologies, and localize production. Still, the Chinese automotive industry has remained dependent on foreign brands, capital, and technology. The advent of markets and supply chains for electric vehicles, however, changes the framework conditions for established foreign automotive firms in terms of competitive landscape and access to core technology components. This is mainly the result of political initiatives: Established automotive manufacturers are exposed to direct and indirect restrictions that influence their production of electric vehicles, their choice of suppliers, and their potential market shares in the future. This paper outlines multilevel bargaining processes of Chinese and foreign actors as they aim to maximize value capture in a fundamentally transitioning automotive sector. In contrast to the lead firm‐centric focus of recent global production networks (GPN)‐discussions, this paper argues that the determinants of how production networks evolve is first and foremost a question of the institutional environment. Focusing on power balances between state and firm actors in multilevel bargaining processes offers a way of explaining GPN‐evolution in institutional contexts in which power concentrates in executive bodies and decision‐making processes are often informal.

Reconfiguration of state–society relations: The making of uncompromising nail households in urban housing demolition and relocation in Dalian, China

Based on an ongoing housing demolition and relocation project in Dalian, this article describes uncompromising nail households, who have resisted resettlement through intractable conflict and prolonged bargaining. Building upon a state–society approach, this article reveals a new relationship between state, society and governance in the institutional background of neoliberal urbanism in China. Uncompromising nail households within this transforming governance system are able to individually equip and maintain their resistance. The article identifies heterogeneous uncompromising nail households: ‘hard’, who maintain a firm stance throughout the bargaining process; and ‘hardened’, who increase resistance during the process of bargaining. These findings contribute to understanding of the reconfiguration of state–society relations, and demonstrate significant contradictions between the central and local states in the dynamics of change in neoliberal urbanism in China.

Making the most of game theory in the supplier selection process for complex items

There has been a growing interest in the application of game-theory to enhance the impact of supplier selection processes, but existing applications have been focused on commodity products. Therefore, scholars have recently called for further research into the use of game-theory to develop supplier selection processes for more complex products. The aim of this paper is to contribute by discussing the design and implementation of a novel supplier selection process based on game-theory through an empirical study of a construction project for an automotive company. The novelty of this research stems from the application of game-theory to design and implement a two-phase supplier selection process, combining a modified Japanese-auction with a structured bargaining process, and evaluating its impact in the context of complex items. Findings suggest that two-phase processes can enhance the effectiveness of the supplier selection by increasing competition and generating better predictions of the outcomes from the negotiation.

Financing and coordinating the supply chain with a capital-constrained supplier under yield uncertainty

We consider financing and coordinating issues in a supply chain with one supplier (she) and one manufacturer (he), where the supplier is capital-constrained and her production yield is random. Facing shortage of capital, the supplier may use two financing sources to facilitate her production: bank loan from a commercial bank, or advance payment from the manufacturer. Taking the supply chain with centralized control as a benchmark, we analyze the optimal decisions of the two members in the supply chain. We find that in the optimal decisions, the supplier chooses only one, instead of a combination, of the two financing sources, and the manufacturer is always willing to pay in advance to finance the supplier’s production. Furthermore, we propose to use the pay back contract (as well as cost-sharing contract as an extension) for the manufacturer to share the production risk and stimulate the supplier to improve the production yield. Finally, assuming the bargaining process of the supplier and the manufacturer being a Nash bargaining game, we show that the pay back contract under the two sources of financing (bank loan and advance payment) can coordinate the supply chain and flexibly allocate the total profit in the supply chain.

The Union Threat

AbstractThis article develops a search theory of labour unions in which the possibility of unionization distorts the behaviour of non-union firms. In the model, unions arise endogenously through a majority election within firms. As union wages are set through a collective bargaining process, unionization compresses wages and lowers profits. To prevent unionization, non-union firms over-hire high-skill workers— who vote against the union— and under-hire low-skill workers— who vote in its favour. As a consequence of this distortion in hiring, firms that are threatened by unionization hire fewer workers, produce less and pay a more concentrated distribution of wages. In the calibrated economy, the threat of unionization has a significant negative impact on aggregate output, but it also reduces wage inequality.