In negotiations with suppliers, lying is contagious

Being deceptive – or not entirely honest – in negotiations is quite common. But two experiments have shown that it can have a harmful effect: It can spread through an organization. This article discusses the research findings and suggests measures that can curb the practice of potentially contagious excessive deception.

Imagine you are trying to make a deal with a supplier or you are a supplier trying to make a deal with a potential customer and the other company’s negotiator is lying to you. A) do you answer honestly or B) lie right away?

Choice A is for the white knights among us who strictly follow Kant’s categorical imperative to act as you would have others act. However, many people opt for “tick-for-tick” behavior and choose option B: they lie down.

But since our research – published in the Operations management journal — found, there is a dark side to doing it. Lying once can be contagious. This can pave the way for new lies in other interactions or negotiations with people from other companies. Therefore, companies need to take certain steps to curb this behavior and prevent it from spreading.

Our discoveries

We set up two experiments with 350 and 424 salespeople with experience in B2B commercial negotiation. In both experiments, participants acted as sales managers for a supplier of beauty and home care products and engaged in product price negotiations with purchasing managers from different corporate clients.

Our results revealed clear contagion effects. Our first experiment showed that only 16% of participants who were on the honest side lied during the final negotiation, but 55% of participants who witnessed deceptive behavior lied.

In our second experiment, we made adjustments to make dishonesty a bit less appealing and to check the robustness of the results. The contagion effect remained: more than twice as many participants chose the deception when previously witnessed it as those who were previously subjected to the honesty. Conversely, both experiments also confirmed the contagion of honesty. Surprisingly, the frequency with which participants were exposed to a behavior did not change the contagion effects overall. A single incidence was enough to trigger the contagion.

Preventive measures

Our experiences suggest that a company needs to be careful who it does business with, because ultimately their behavior is likely to be influenced by theirs. But how do you prevent your business from being infected? The following measures can help:

Make sure your negotiating team has at least two people.

The mere existence of a second pair of eyes can make the lead negotiator more aware of their own behavior and therefore resist the kind of impulsive actions that lead to lying.

Strongly reinforce your code of conduct.

For example, you could require employees in negotiation positions to take semi-annual ethics training rather than the one-time entry-level ethics course that other workers often receive. You can also ask team leaders to remind employees of fundamental company ethical principles during monthly team meetings. Finally, negotiating teams could jointly review their behaviors after a negotiation to determine whether the code of conduct has been violated. Knowing that their dishonest negotiating behaviors will be scrutinized by co-workers can create peer pressure, which makes them more likely to adhere to the code of conduct.

Screen negotiators from the other company carefully.

Certainly, some degree of dishonesty can be considered part of the negotiation game, but since such behavior can infect your team and have lasting effects, you should not tolerate extremes. To this end, you can keep track of other parties’ behaviors or ask negotiators on your team to compare notes on previous interactions with the person in question.

If the person turns out to be a bad actor, you can ask the other company to replace them and explain why you are making the request. Or you can choose not to do business with this company.

During negotiations, you can also use software to identify bad actors. Using an automated linguistic analysis program called Linguistic Inquiry and Word Count, we analyzed the wording of negotiation statements and found that, on average, honest statements had a higher degree of words reflecting analytical thinking. (e.g., “know”, “cause”) and authenticity (e.g., “I”, present tense verbs) and a lower degree of emotional words (e.g., “fear”, “happiness”) than statements deceitful.

Although there is no vaccine, these measures can help your business better resist contagious dishonesty.

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