Communications of the ACM
Location, Location, Location: Home Field Provides Advantage in Negotiations
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Planning to negotiate a raise? Try not to discuss it with the boss in his or her office, suggests a new study by an organizational behavior expert at Washington University in St. Louis.
"Parties who negotiate on their home field can be expected to claim between 60 percent and 160 percent more value than the visiting party," says Markus Baer, assistant professor of organizational behavior at Olin Business School.
Baer's latest study, "Location in Negotiation: Is There a Home Field Advantage?" is among the first to empirically demonstrate that there is indeed a home-field advantage in negotiation. It appears in the March edition of the journal Organizational Behavior and Human Decision Processes.
Baer and his research partner, Graham Brown, of the University of British Columbia, set out to test the generally accepted theory that a home-field advantage exists, not only in sports but also in business negotiations.
They found that it does, but that the confidence of the person entering the negotiation as visitor can go a long way in evening the playing field.
"There was surprisingly little systemic research examining whether location matters in negotiation," Baer says. "And no study explains why it would matter. Does a person in their own environment perform better, or does a visitor to their office perform worse? As a result, home field advantage remains one of the least understood phenomena in negotiation."
Baer and Graham set up a series of three experiments.
In the first, students assumed the status of "resident" and were taken to a private office. They were given 20 minutes to make the office their own by choosing a chair, putting their name outside the office, choosing posters to put up, writing their schedule on a board and logging into a computer to check their email. They were also given a key to the office.
They were then told they would be negotiating with a fellow student over the price of a pound of coffee.
Participants assuming the role of a "visitor" were told that they would be negotiating with a fellow student who had an office because he or she was entering data for a professor in the department thus leading them to believe that the "resident" party had a permanent claim to the office.
The experiment showed that residents clearly outperformed visitors. By creating a third condition — a "neutral party" who was led to believe that the resident party did not have a permanent claim to the office but just happened to have arrived a little earlier — the authors were able to also show that the home-field advantage may be due both to a resident advantage and a visitor disadvantage. That is, residents did better than a neutral party, who, in turn, outperformed visitors.
The second experiment examined the role of confidence in explaining exactly why the home turf advantage arises. It was designed exactly as the first, however before the negotiation, participants took a questionnaire designed to measure confidence.
This experiment showed that the advantage of residents over visitors in distributive negotiations can at least partly be explained by the different levels of confidence residents and visitors are likely to have from knowing that they will be negotiating on their home field or on someone else's territory.
In the final experiment, visitors' confidence levels were manipulated by having students provide answers to a fake assessment. They were told that based on the assessment, their negotiating skills were quite high and they should do well in the negotiation.
The results of the experiment showed that boosting visitor's confidence levels before the negotiation can help to eliminate the home field advantage.
"Our findings suggest that location is an important factor to consider when examining the forces shaping outcomes of distributive negotiations and, therefore, should be incorporated into existing approaches to negotiation," Baer writes in the paper.
However, Baer's research suggests one way of overcoming home-field advantage if the location of a negotiation cannot be changed.
"Confidence plays a critical role in any negotiation, regardless of where it takes place," Baer says. "Anything a person entering a negotiation can do to boost his or her confidence is a good thing. Something as simple as participating in negotiation training may work to minimize the disadvantage of negotiating on someone else's home turf."
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