Analysis of Features Affecting Contracted Rate of Return of Korean PPP Projects

Various risk factors influence the success of public–private partnership (PPP) projects. This study analyzes the risk attributes of PPP projects and develops a regression model based on a 20-year PPP project database to quantitatively analyze the factors affecting the contracted internal rate of return (CIRR) of PPP projects. Although the risk factors of PPP projects have been widely studied, the factors affecting CIRR have not been explored. Information from the intra-info DB system managed by Korea Development Institute was used to calculate the impact of the variables on CIRR. It was observed that the CIRR of Korea’s PPP projects did not reflect the risks associated with the facility types, service area, amount of private investment, and operation period accurately. Financing costs did not demonstrate a statistically significant relationship with the CIRR either. Furthermore, the CIRR of projects with a minimum revenue guarantee option was found to be higher than that of projects without. The CIRR of the current project was found to be closely related to the number of bidding competitors and the CIRR values of previous projects that are similar to the current one. This is attributed to a failure in the bureaucratic negotiation behavior of the parties due to their avoidance of responsibilities.

The Unintended Consequences of Headquarters’ Involvement in Decentralized Transfer Price Negotiations: Experimental Evidence

This study investigates how headquarters’ involvement affects the efficiency of transfer price negotiations. Although prior research explores autonomous transfer price negotiations, evidence suggests that headquarters can become involved in these negotiations, particularly after they fail. Although the likely intention of headquarters’ involvement is to overcome inefficiencies arising from decentralized managers’ inability to agree on a transfer price, we suggest that such involvement can reduce agreement frequency and the efficiency of transfer pricing in coordinating transfers between divisions. Reduced agreement may occur because involvement can reduce managers’ perceived responsibility for the negotiation outcome and because they may expect headquarters’ decision to be more favorable for them than a negotiated price. Headquarters’ involvement can also reduce the coordination efficiency of transfer pricing because of information asymmetries and headquarters’ decision biases in interpreting negotiation failure and using available information. In an experiment, we manipulate whether headquarters’ involvement is absent or present. We also manipulate whether headquarters suggests a nonbinding price (weak involvement) or whether it imposes a price on divisions (strong involvement). Consistent with our predictions, we find that headquarters’ involvement reduces the frequency of negotiation agreement and the coordination efficiency of transfer pricing. Efficiency is reduced more when involvement is strong rather than weak. We contribute to research by studying managers’ negotiation behavior in the realistic setting of potential headquarters’ involvement and by providing evidence on headquarters’ biased perceptions of negotiation impasse and the unintended consequences of its involvement. This paper was accepted by Brian Bushee, accounting.

Resilient negotiators: the effects of trait negotiation resilience on behavior, perception and outcomes

Purpose This study aims to test the contributions of a new type of resilience, Trait Negotiation Resilience (TNR; Nelson et al., 2016), to negotiators’ effective behavior, perception of opponent and negotiation outcomes. Design/methodology/approach A laboratory study (N = 98; 49 dyads) featuring a mixed-motive negotiation task. Participants self-reported TNR (emotional skills, social sensitivity, intrinsic motivation for self-improvement and a sense of purpose to life events) up to a week before negotiating. After the negotiations, they rated their opponents on resilient, effective personal attributes and reported their own subjective value (SV). Trained judges watched the negotiations, coded objective outcomes and rated negotiators on dimensions of effective negotiation behavior. Statistical analyses accounted for dyadic interdependence. Findings TNR predicted higher levels of effective negotiation behavior, which, in turn, fully mediated TNR’s favorable contribution to negotiated value. TNR also predicted higher levels of SV, and this contribution was partially mediated by perceiving effective personal attributes in the opponent. Research limitations/implications The sample size was moderate and it consisted of undergraduate students, most of them female. Originality/value Evidence on the contribution of a personality construct to both outcome and process negotiator variables; contribution to the research of specific types of resilience.

Impeding fatal violence through third-party diplomacy: The effect of mediation on conflict intensity

Existing research provides no systematic insights into if and how mediation impedes battle-related deaths. Therefore, this article presents a temporally disaggregated analysis and assesses the effect of mediation on monthly fatal violence. The article predicts that adversaries evaluate opponents’ trustworthiness from both fighting and negotiation behavior. It argues that reducing fighting intensity during negotiations is a sign of cooperation, which can be negotiated by mediators to build trust. Over the course of mediation, the content of negotiations provides information about how genuinely a conflict party is interested in conflict resolution. Only if mediation achieves negotiation of core incompatibilities will conflict parties be willing to reduce fighting intensity. Under these conditions, information revealed in a mediation process can build trust and substantively reduce violence. An empirical analysis of all African conflicts between 1993 and 2007 supports this prediction and shows that on average mediation is followed by substantive and lasting reductions in fatal violence, if mediation discusses the conflict’s main incompatibility. In contrast, mediation on other topics is associated with a small, fleeting reduction in violence. Data of battle-related fatalities in Syria during negotiations as well as qualitative evidence further support the theoretical mechanism and the model prediction. The study concludes that mediation can reduce conflict intensity substantively, if it achieves exchange between conflict parties on the main conflict issues.

Negotiation and Bargaining

Bargaining and negotiation are the most constructive ways to handle conflict. Economic prosperity, order, harmony, and enduring social relationships are more likely to be reached by parties who decide to work together toward agreements that satisfy everyone’s interests than by parties who fight openly, dominate one another, break off contact, or take their dispute to an authority to resolve. There are two major research paradigms: distributive and integrative negotiation. Distributive negotiation (“bargaining”) focuses on dividing scarce resources and is studied in social dilemma research. Integrative negotiation focuses on finding mutually beneficial agreements and is studied in decision-making negotiation tasks with multiple issues. Negotiation behavior can be categorized by five different styles: distributive negotiation is characterized by forcing, compromising, or yielding behavior in which each party gives and takes; integrative negotiation is characterized by problem-solving behavior in which parties search for mutually beneficial agreements. Avoiding is the fifth negotiation style, in which parties do not negotiate. Cognitions (what people think about the negotiation) and emotions (how they feel about the negotiation and the other party) affect negotiation behavior and outcomes. Most cognitive biases hinder the attainment of integrative agreements. Emotions have intrapersonal and interpersonal effects, and can help or hinder the negotiation. Aspects of the social context, such as gender, power, cultural differences, and group constellations, affect negotiation behaviors and outcomes as well. Although gender differences in negotiation exist, they are generally small and are usually caused by stereotypical ideas about gender and negotiation. Power differences affect negotiation in such a way that the more powerful party usually has an advantage. Different cultural norms dictate how people will behave in a negotiation. Aspects of the situational context of a negotiation are, for example, time, communication media, and conflict issues. Communication media differ in whether they contain visual and acoustic channels, and whether they permit synchronous communication. The richness of the communication channel can help unacquainted negotiators to reach a good agreement, yet it can lead negotiators with a negative relationship into a conflict spiral. Conflict issues can be roughly categorized in scarce resources (money, time, land) on the one hand, and norms and values on the other. Negotiation is more feasible when dividing scarce resources, and when norms and values are at play in the negotiation, people generally have a harder time to find agreements, since the usual give and take is no longer feasible. Areas of future research include communication, ethics, physiological or hormonal correlates, or personality factors in negotiations.