Negotiation and sourcing alternatives representation in buyer-seller relationships

The main aim of this paper is to build an integrated framework of analysis regarding the relation between negotiation activities and sourcing alternatives representation. From a methodological point of view the paper offers an integrated framework of analysis, to be further developed in the future, and empirical findings mainly based on previous researches in the field of clothing and textile. In a business to business setting the buyer-supplier relationship finds one of its greatest expression in negotiating activities, which contribute to giving content to the history of the interaction and endowing its fundamental characters with meaning. Negotiation is a naturally significant component of this interaction, as is known from case analyses of buyer-supplier relations that have long been available in business-to-business marketing. According to a network view, negotiations could be seen as an operational lever emerging from sourcing strategies. Sourcing activities have once more acquired a central role as a guiding function in business-to-business companies. Furthermore, the expansion of sourcing requires an ever increasing body of knowledge in order to effectively carry out the sourcing function itself, as the activities involved in this function can more and more be seen as relationship marketing applied to purchasing. The theme of negotiation can be examined from various different perspectives, among which two are of special importance, namely the question of management of information and that of the negotiation styles that the buyer and the supplier each adopt. In the literature stemming from the Harvard Negotiation Project, the “position” negotiator (whether “soft” or “hard”) has been contrasted with the “principles” negotiator (Fisher and Ury 1981). In a different but apparently converging literature, negotiating styles have been subdivided by other authors into, on the one hand, competitive or distributive negotiation, and, on the other, problem-solving or integrative negotiation. In this paper, it is worthwhile keeping the concept of integrative negotiation separate from that of principles-based or interest-based negotiation, just as distributive negotiation needs to be kept separate from positions negotiation. More specifically, we assume that the negotiating style, which is generally linked to the individual’s evaluation of the most appropriate manner of approaching the interlocutor and the attitude to be adopted during negotiation, should be distinguished from the strategy which is brought into action and emerges from the concrete negotiating process, inasmuch as this latter aspect specifically concerns the results achieved through the negotiating activity (Guercini and Runfola 2005). According to the market-as-network approach (Hakansson and Snehota 1995) one of the most interesting aspects is that negotiation comes to be seen as a way of acting that influences the buyer-supplier relationship but at the same time is an operational lever that sheds light on relational practices per se. To represent the alternatives of buyer, this paper propose a non-orthodox use of the concept of indifference curve. More specifically, we introduce the concepts of the no-purchase indifference function (indifference to the failure to make a purchase), which is to be compared and contrasted with the function of the best supply alternatives that can be put forward by the seller.