Chapter 2 Theoretical Foundation of International Business Negotiation

Learning Objectives By the end of this chapter, you will know • How to apply the needs theory in international business negotiation; • How to apply the social exchange theory in international business negotiation; • How to apply the game theory in international business negotiation.

Lead-in Fait Accompli --- “The Deed is Done” The cover story on the front page of a recent Wall Street Journal declared that “President Barack Obama installed four key regulatory appointees Wednesday without Senate approval using a disputed legal maneuver, setting off a clash with Republicans over presidential power that may end up in the courts” The President utilized a tactic known as “fait accompli. ” Regarding this tactic, Dr. Karrass writes the book In Business As In Life that the strength of this tactic “is the fact that once a deed is done or an action taken it is difficult to undo”. While people will debate over the ethics of a tactic like this, it nevertheless is a very powerful concept and tactic. The same concept is based on the old adage, “It’s generally easier to get forgiveness than it is to get permission. ” (http: //www. karrass. com/blog/fait-accompli-the-deed-is-done/)

Contents 2. 1 Needs Theory 2. 2 Social Exchange Theory 2. 3 Game Theory

2. 1 Needs Theory 2. 1. 1 Maslow's Hierarchy of Needs Theory 2. 1. 2. Application of Maslow's Hierarchy of Needs Theory in Business Negotiation

M a s l o w s u g g e s t s 2. 1. 1 Maslow's Hierarchy of Needs Theory Abraham Harold Maslow

r c h y o f N e e d s T h

2. 1. 2 Application of Maslow's Hierarchy of Needs Theory in Business Negotiation • • • Negotiation and Physical or Survival Needs Negotiation and Security Needs Negotiation and Social Needs Negotiation and Ego Needs Negotiation and Self-realization Needs

2. 2 Social Exchange Theory 2. 2. 1 Introduction to Social Exchange Theory 2. 2. 2. Applications of Social Exchange Theory in Business Negotiations

2. 2. 1 Introduction to Social Exchange Theory • Social exchange theory posits that human relationships are formed by the use of a subjective cost -benefit analysis and the comparison of alternatives. • social exchange theory may well help us understand most of our behavior in interpersonal relationships and communication, but it cannot explain all of it.

2. 2. 2. Applications of Social Exchange Theory in Business Negotiations • Following the Principle of Reciprocity • Emphasizing the Intrinsic Benefits of Negotiators

2. 3. 1 I n t r o d u c 2. 3 Game Theory

2. 3. 1 Introduction to Game Theory • The Simplest Game: Two Persons with a Fixed Pie • Prisoner's Dilemma • Bigger Games

2. 3. 2 Applications of Game Theory in Business Negotiations • • • Minimize Risk Make the first offer Beware of Precedence Trust Continuity Reciprocity

• W h a t a r e t h e 1 Negotiation Dynamics

• W h a t i s t h e I n Culture Kaleidoscope

Chapter Summary • First of all, five levels of needs are included in Maslow’s Hierarchy of Needs Theory, namely physiological needs, safety needs, social needs, esteem needs and self-actualization needs. • Next, the social exchange theory remains a key theory in sociology, social psychology and communication studies and the social exchange theory may well help us understand most of our behavior in interpersonal relationships and communication, but it cannot explain all of it. • Finally, negotiations are in essence games between or among negotiation parties. , therefore, how to use Game theory to guide business negotiations is of great significance in research and in practice.

Key Terms Maslow’s Hierarchy of Needs 马斯洛需求理论 survival needs 生存需求 security needs 安全需求 social needs 归属感的需求 self-realization needs 自我实现的需求 Social Exchange Theory 社会交换理论 Game Theory 博弈论 minimax theorem 极大极小值定理 homeostasis 体内稳定；内环境稳定（身体对变化作出自我调整） propagation 繁殖 stature 地位，声望 posit 假定，假设 structuralism 建构主义 crux (难题或辩论的)关键，最难点，症结 barter易货贸易

Exercises I. Review and Critical Thinking Questions. II. Case Study. III. Suggested Reading.