Leverage (negotiation)

In negotiation, leverage is the power that one side of a negotiation has to influence the other side to move closer to their negotiating position. A party's leverage is based on its ability to award benefits or impose costs on the other side. Another conceptualization holds that the party that has the most to lose from a "no deal" outcome has less leverage than the party that has the least to lose. Leverage has been described as "negotiation's prime mover," indicating its important role in bargaining and negotiation situations. Individuals with strong leverage can sometimes overcome weak negotiating skills, whereas those with poor leverage have a reduced likelihood of being successful even if they have strong negotiating skills.

In negotiation, leverage is the power that one side of a negotiation has to influence the other side to move closer to their negotiating position. A party's leverage is based on its ability to award benefits or impose costs on the other side. Another conceptualization holds that the party that has the most to lose from a "no deal" outcome has less leverage than the party that has the least to lose. Leverage has been described as "negotiation's prime mover," indicating its important role in bargaining and negotiation situations. Individuals with strong leverage can sometimes overcome weak negotiating skills, whereas those with poor leverage have a reduced likelihood of being successful even if they have strong negotiating skills.

Positive leverage

Positive leverage is a negotiator's ability to provide things that his or her opponent wants. Positive leverage is based in the ability of one party to satisfy the needs of another party. The power from positive leverage comes from the opportunity to provide or withhold the needed item or action. The strength of this type of leverage is determined by the other alternatives available to the opposition (often referred to as the "BATNA" or the best alternative to a negotiated agreement). If there are others who can also fulfill the opposition's needs, then the leverage is weakened since the opposition can go elsewhere to receive what they need. In politics, an example of positive leverage is logrolling, or vote trading. Legislators will promise to vote the way that another legislator wants on one issue in order to gain their opponent's vote on another issue.

Negative leverage

Negative leverage is a threat-based form of leverage that represents one side's ability to make the other side worse off. The power of negative leverage relies on loss aversion. Because potential losses are seen as worse than equivalent gains, negative leverage can be very powerful. However, it can also bring out strong reactions from the opposing party, straining the relationship. Neither party's interests are advanced by negative leverage except for the gain that the party employing the leverage may get towards their ultimate desired outcome from the negotiation. Picketing in labor negotiations is an example of negative leverage. The goal of picketing is to attract negative attention to the employer, but the employees do not gain any material benefits from the act of picketing itself.

See also

Porter 5 forces analysis

References

External links

Harvard Law School Program on Negotiation

Text derived from https://en.wikipedia.org/w/index.php?oldid=1345514652 under CC BY-SA 4.0; modifications have been made.