Insight into the Process of Negotiating with Stakeholders: An Organizational Learning Context.

Author:Andrade, Leonel J.C.
 
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INTRODUCTION

As organizations shifted from internally focused and efficiency based closed-system modes of doing business to externally focused and effectiveness based open-system modes of doing business, their approach to managing internal and external conflict also evolved. The closed-system organization approach to conflict management with internal and external stakeholders was based on a 'we-win you-lose' orientation. As such the management of these organizations utilized a competitive negotiation behavior in order to maximize gains for their organizations. This was evident by the way closed-system organizations dealt with their customers. In this context, the attitude of these closed-system organizations when dealing with their customers was 'we made it, you buy it'. The relationship of these organizations with their suppliers was based on hard bargaining to obtain the lowest price possible. At times, this meant encouraging suppliers to compete against each other on a price only basis. Needless to say, closed-system organizations did not appreciate and foster a joint strategic partnership with their suppliers.

As the competitive environment became fiercer and the stakeholders became more sophisticated, most organizations shifted toward the open system mode of doing business. With this shift, organizations began to consider internal and external stakeholders as integral components of their organizational success and competitive performance. Therefore, these organizations found it necessary to change their conflict management orientation to a win-win approach rather than 'we-win you-lose' approach. This new approach to conflict resolution meant more flexible behaviors. In this context, the collaborative and cooperative styles of negotiation began to replace the competitive negotiation behavior by the management of these organizations. These new negotiation behaviors on the part of the open-system organizations' management tended to facilitate a learning organizational environment where organizations learned from their internal and external stakeholders. The results of this learning organizational environment were then shared with the stakeholders. This exchange of know-how tended to enhance the win-win approach to conflict management and promoted more flexible negotiation behaviors on the part of the management of the open-system organizations. This dynamic learning process facilitated better relations with stakeholders and in the process led to improved organizational performance.

The research at hand attempts to shed more light on the emerging organizational learning environment through investigating the relationships among the components of this dynamic process. Using a sample of 54 Portuguese organizations, this research examines the relationship between the organization and its stakeholders with regards to the different components of the learning organizational environment and their potential influence on negotiation. In the process, the relationships among the ability to acquire knowledge, organizational memory, innovativeness, and responsiveness are explored. Specifically, this research addresses the following research questions.

  1. What are the relationships between organizational learning environment components, including organizational memory, innovativeness, responsiveness, and acquiring of knowledge?

  2. What are the relationships among management characteristics and the different behaviors of negotiation?

  3. What is the potential influence of the organizational learning environment on effective negotiation behavior?

The implications of this research have practical managerial value, as organizations attempt to effectively manage conflicts with internal as well as external stakeholders through effective negotiation. The effectiveness of such negotiation might lead to a better organizational performance and improved relationships between an organization and its stakeholders through sharing of knowledge and lessons learned.

The conceptual framework incorporates the issues and concerns addressed in this research. As such, it is used to guide this empirical investigation. The framework integrates the negotiation styles, external stakeholders, as well as the components of the learning organizational environment, including innovativeness, responsiveness, acquiring of knowledge, and organizational memory. In this context, organizational memory is seen as the way which organizations store knowledge acquired from the stakeholders for future use. The framework formulated based on the literature pertaining to the different components under investigation in this study.

The contribution of this research stems from combining the different elements of the process. While previous research has dealt with the different components, it tended to focus on each component individually rather than as a part of a dynamic organizational process that governs the relationship among the organization and its stakeholders through effective negotiation behaviors, which are consistent with the components of the learning organizational environment.

Future research in this area is encouraged in order to examine and, in the process, validate findings in different organizational cultural settings. Such research is necessary toward resolving the practical concerns of management, as it deals with internal and external stakeholders. It is also fundamental to the establishment of theoretical frameworks conducive to the advancement of the art of conflict management through effective negotiation processes.

BACKGROUND AND RELEVANT LITERATURE

The Influence of Stakeholders on Learning Environment

Business organizations have been under increasing pressure to learn, change, and adapt, along with taking actions which are ethically acceptable, whilst simultaneously responding to the expectations of multiple stakeholders (Rowley & Gibbs, 2008).

In this context, a diversified knowledge acquisition strategy can be an important competitive weapon (Akerman, 2015). As such the capacity of business organizations to acquire external knowledge is imperative for their renovation and reconfiguration. This, in turn, lends itself to their performance (Martinez-Canas et al., 2012). Accordingly, one of the most important issues for business organizations is the way in which they generate environments that have a high capacity for organizational learning (Guinot et al., 2015).

In this regeneration process, external stakeholders are fundamental instruments to promote a dynamic and effective organizational learning environment. For this purpose, they should be implemented as the main competitive information channel.

Therefore, in order to maintain an effective learning environment, business organizations need to be responsive to their stakeholders and innovative in their relationship processes. As such business organizations need to effectively acquire, distribute, interpret, and store stakeholder-related knowledge (Mena & Chabowski, 2015).

Knowledge transfer is a process that not only increases the amount of organizational knowledge, but also influences performance (Argote & Ingram, 2000). In this process, organizational memory also takes a preponderant role to promote an effective organizational learning environment. However, the existence of a true organizational memory, which can make the difference on the business performance, demands more than simply channeling more knowledge to fill databases (Cross & Baird, 2000).

The effective organization memory truly resides in the minds of its employees and in the relationship that employees tap into an ongoing basis to accomplish work. It can also be embedded in work processes and in products or services offered that have evolved over time and reflect lessons learned from an organization's past experience (Cross & Baird, 2000). This means, for example, that there is a potential loss of organizational memory in companies when experienced employees depart. As such, attention should focus on finding ways to address this issue (Strack et al., 2008). Therefore, an effective relationship between all organization stakeholders should be promoted.

The current knowledge that remains in organizational memory along with the new knowledge acquired from external stakeholders tends to foster organizations to be more efficient in their current operations and competences. This can reinforce the introduction of incremental changes on their products, which means continual improvements of their operations and organizational results (Rabeh et al., 2013).

According to Cross and Baird (2000), two important features are useful for building organizational memory: time and proximity during interaction. This means internal stakeholders working closely together in order to share knowledge and create new competitive resources. Furthermore, close working with external stakeholders must be promoted in order to create stronger relationships. This way, a knowledge network can be created. Therefore, increasing the already existing knowledge base established in the relationship may increase innovation...

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