Special Issue Article

When control does not pay off: The dilemma between trade-off opportunities and budget restrictions in B2B negotiations

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Abstract

Practitioners in business-to-business (B2B) organizations often report difficulties to reach mutually beneficial outcomes in their buyer-seller negotiations—a finding that contrasts with researchers’ expectations based on the favorable preconditions B2B negotiations provide. In this conceptual article, we argue that this researcher-practitioner gap is due to a structural dilemma: On the one hand, B2B negotiations offer specific trade-off opportunities across multiple dimensions (i.e., issues, time periods, markets, partners). On the other hand, rigid financial budgets resulting from management control systems constrain negotiators’ necessary flexibility to exploit these opportunities. We propose that negotiators translate budgets into negotiation limits. Depending on the structure of these budgets, negotiators set one superordinate or multiple subordinate limit(s), which either maximize or restrain their ability to realize tradeoffs. We outline future-research opportunities for extending the negotiation literature by investigating multidimensional tradeoffs and different types of limits. We conclude with recommendations how B2B negotiators can overcome their dilemma.

Keywords:

• integrative negotiation,
• business-to-business organization,
• outcome potential,
• tradeoffs,
• financial budgets