The Impact of New Media:

While this Hanna-Barbera cartoon represents an early view of desktop videoconferencing, the actual use of such systems is just now taking off. While the depiction offers many advantages to existing communications media, does it offer enough to become a medium of choice by persons conducting business negotiations?

A thesis by Scott D. LiPera for The Impact of New Information Resources (BA 296.7) taught by Prof. Howard Besser at the Haas School of Business, University of California, Berkeley

December 5, 1996


Index


INTRODUCTION

The proliferation of computer networks and high speed communications is bringing the world to our doorsteps. Given the widespread growth of the Internet, a relatively simple and soon-to-be-obsolete computer network, the future impact that networked computers will have on all aspects of society are tremendous. However, as one’s ability to reach out to different cultures, countries and continents grows, one is still left with a gap. That is, one still has the computer and its input/output devices as a translation media that all communications must travel through—a sort of buffer that keeps one from truly “reaching” others. These two, seemingly contradictory, forces will change the way communications are conducted. In this paper, I wish to address the impact that a particular form of computer-mediated communications, desktop video-conferencing, will have on the art of negotiations, a specialized form of communications.

I will utilize media choice theories to examine the effects that desktop video-conferencing will have on the practitioners of negotiations. I will address how trust and power are important to the negotiating process and how they will be potentially affected by the more wide-spread use of desktop video-conferencing as a negotiations medium. I will also address negotiating gambits and their role in the computer-enabled negotiation. Finally, I will present some of the technology issues surrounding desktop video-conferencing vis-à-vis negotiations. However, the thesis of this paper is not technology-focused. Rather, it is toward the assumption that technology will evolve to support this process; and with that assumption, what will be the social effects. Thus, my paper will attempt to address the following questions: will desktop video-conferencing become an acceptable medium for negotiations; what impact will it have on the process from a practitioners perspective; and how will it be employed.

In order to limit the scope of this thesis, I will address only desktop video-conferencing as opposed to video-conferencing as a whole. Furthermore, I will not specifically address negotiations by more than two parties or more than one person per party. It is understood that this more limited view will have some ramifications to my findings and that they may not scale up to more sophisticated video-conferencing systems and settings. Also, this paper is not an argument of cost vs. efficacy, or use vs. non-use. Rather, it is about desktop video-conferencing as an acceptable medium for negotiations and what changes, if any, it will cause in the negotiations process.

MEDIA CHOICE

Many social scientists, primarily organizational behaviorists, have examined how organizations process information; i.e., the methods that employees use to communicate with one another within an organization. They have tried to explain the choice of media for which employees communicate. The two dominant schools of thought are the media richness theory of Daft and Lengel (1986), including situational determinants (Trevino, Daft and Lengel, 1987), and Fulk and colleagues’(1990) social influence model of technology use.

Media Richness Theory: The media richness theory favors a rational explanation for media choice. That is, media choice is driven by a message’s content. More specifically, the equivocality of the message must be matched to the medium so that uncertainty in interpretation of the content is reduced. Therefore, for highly equivocal messages--messages open to interpretation--a shared definition of the content of a message must be created through two-way interaction that uses language and other cues. It is expected then that communication is most effective when the medium matches the content of the message. Supporting this argument, Trevino, Daft and Lengel (1987) demonstrated that managers who matched medium to message content are rated as better performers.

There are several factors affecting or defining the richness of different media: capacity for immediate feedback, number of cues, channels utilized, personalization and language variety. These factors can be broadly characterized as issues of synchrony and bandwidth. (Short and Christie, 1976) Synchrony refers to communications being in real-time; bandwidth refers to the breadth of cues or channels of information available--e.g., non-verbal cues of touch, smell, sight, etc. Bandwidth may be important for the exchange of social information and social context cues (e.g. when establishing trust with a stranger). Social information and context cues increase involvement and comprehension through back channel uses, and social pressure. (Short and Christie, 1976) Using these determinants, the media available become a spectrum from higher richness to lower richness: face-to-face, telephone, e-mail, voice mail, and memos. E-mail and voice mail are further categorized as new media because of their relative newness in corporate settings. (This distinction will become important in the next section, and when defining desktop video-conferencing (DVC) as a medium.) Thus, as tasks become more non-routine or interdependent, or the message more equivocal, communications shift from the impersonal end of the spectrum (i.e., low richness) to more personal exchanges (i.e., the higher richness media). (Daft and Lengel, 1986) Additionally, people perform better in the aforementioned task environment when communication channels convey social presence. (Short and Christie, 1976) In fact, Trevino, Daft and Lengel (1987) showed that there is an increasing executive preference for face-to-face communications as topics become more non-routine. This would appear to indicate that DVC would not be a medium of choice for most negotiators given the high uncertainty and equivocal content of negotiations. And at the very least, it would indicate that DVC would not be the medium of choice for parties either having low mutual trust or unfamiliarity with each other. However, because DVC is more of a new medium, along the lines of e-mail rather than a traditional medium, users may not have the same set of determinants. Given that, some more recent research suggests that new media like e-mail are being used to send equivocal messages (Lee, 1994; Markus, 1994) despite e-mail’s relatively low standing on the media richness hierarchy. Perhaps media richness theory does not adequately explain new media choices.

Social Influence Model of Technology Use: Fulk, Schmitz and Steinfield (1990) have developed this model to explain choices of new media, proposing variation with social forces such as work group norms and co-worker and supervisor attitudes and behaviors. While this model holds more for intra-organizational communication and media choice, it can be extrapolated to inter-organizational communications, such as most negotiations. Trevino, Daft and Lengel (1990) and Markus (1994) also suggest that there is some symbolic meaning conveyed by the choice of a particular medium. Again, since most communications studied by the cited research is one-way communications, with the recipient an involuntary receptor of the message, the applicability is low for DVC and negotiations. However, there will be some cues given to parties when DVC is proposed as the medium for a given negotiation. Early on the meaning will most likely mean that this is not an important negotiation, or that there are no uncertainties likely to arise. In other words, negotiations done via DVC will be relatively straigthtforward and most likely between parties that know each other from previous interactions. This will be addressed further in a later section.

Complementarity of Media Choice Theories: Webster and Trevino (1995) have attempted to take a more integrative view of the rational and social approaches to media choice. They have tried to resolve the dichotomy between “rational” and “social” influences that Rice et al. (1994) argued seemed artificial and perhaps unnecessary. Webster and Trevino showed that for traditional media choices, media richness was a better determinant. This is most likely because these media have been around for many years and thus there is better agreement as to their effective use. In that case, social influences would be less important. For newer media—of which DVC must be included—social explanations will be more important than rational explanations. These new media are not yet standard ways of communicating (or negotiating) and thus their use is not institutionalized or routinized by organizations. In this case, workplace attitudes will have a greater influence than rational explanations. The implications of this will be that DVC as a negotiations medium will be accepted in those organizations and industries that are most technology forward. I would surmise that industries such as software and high technology will be the first to adopt it as a common medium for negotiations. This does not look at the issue of cost savings, which will no doubt be a big (if not bigger) driver of where DVC will be used as a negotiations medium. But that question is beyond the scope of this paper.

Webster and Trevino (1995) also concluded that message equivocality will significantly influence all media choices (traditional and new). Also, that it was message equivocality, not job level as a whole, that was the driver. So merely being a negotiator will not imply one medium choice over another; rather, the equivocality of the specific message will be the driver. This is important since not all negotiations are equal in their complexity and need for interpretation. In other words, a negotiator need not have one choice of media for all of her negotiations.

This study also showed that physical distance between communication partners was significantly associated with media choice. This is important, because the primary driver for DVC vs. face-to-face negotiations is cost and time savings. No one would argue that DVC is superior or preferable to face-to-face given all other things being equal. Thus, given that a large percentage of companies are moving toward DVC as a medium of choice for communications because of cost and time considerations , this finding is significant.[1] This will lower a company’s barrier to adaption of the new technology.

NEGOTIATIONS

Generally speaking, negotiations is the process of two or more parties communicating, each for the purpose of influencing the other’s decision. (Fisher, 1983) This persuasive communication relies on several factors, most notably the projection of power and trust. Those will be the primary areas that I will examine vis-à-vis DVC. I will also address gambits as they are utilized in negotiations.

Trust: There are many interpretations of trust, but more commonly in negotiations the concept refers to predictability and cooperation. That is, being able to predict how the other party will act or react, and whether the other party will cooperate in the future. Rotter (1967, 1971, 1980) has proposed that interpersonal trust functions as a personality variable with important effects in social relationships. His research shows that individuals differ in their level of interpersonal trust and that it is determined by the experiences that individuals have in dealing with others. In other words, those who have had experiences where they have trusted others, and this trust has been rewarded with reciprocal trust and productive relationships, then generalized interpersonal trust should be high. In contrast, those who have experienced deception, exploitation and dishonesty when they trusted someone will generally have low interpersonal trust. Rotter makes several observations regarding the two orientations, but the most salient for my application is:

This would make it more likely, from a trust perspective, that DVC as a negotiations medium would be more viable for high-trust individuals rather than for both orientations. Given that the DVC medium is leaner in cues than that of the face-to-face medium--the latter being the most common of negotiating media--it would seem likely that low-trust individuals would find adaption of that medium as too risky. That is, there would be suspicions that could not be as easily overcome because of the leanness of the DVC medium. Low-trust individuals would have difficulty detecting these cues.

Shapiro, Sheppard, and Cheraskin (1992) propose moving beyond the simple definitions of trust, suggesting that there exists three bases for trust. They are, in ascending order: deterrence, knowledge, and identification. Trust based on deterrence is the level that one acts on when one knows the other least well, hence is the lowest. Beliefs and desires associated with this lower-level trust will tend to drive distributive negotiating strategies. As a relationship develops and matures, the levels of trust move up the hierarchy to knowledge-based and ultimately to identification-based. The higher-level trust will be associated with strategies more integrative in nature. This implies that as one gains knowledge and rapport with the other negotiator, then one will tend toward integrative strategies. What is important then is the development of a relationship, and its subsequent higher level of trust. For example, DVC is being used in the investment banking industry as a way of building trust early in negotiations for mergers and acquisitions.[2]

This example presents one of the early adaptations of DVC that will make it a viable medium for negotiations. Many negotiations are preceded by informal communications out of the negotiations context. Negotiators will dine together, go for drinks, etc., in order to develop rapport and to facilitate an easy exchange of objectives. This approach would imply a relationship-orientation, one that tends toward integrative strategies. DVC provides a medium that allows for frequent and easy communications prior to and during the negotiation process for the purpose of informal communications. Given a ubiquitous and easy-to-use set up, DVC could be as easy to use as the telephone, but would be a much richer medium, offering a greater number of cues. This could facilitate more robust relationship-building, thus leading to higher-level trust, and hence, more integrative strategies in negotiations.

In analogous studies of computer-supported meetings, it has been shown that the lack of socio-emotional cues associated with media other than face-to-face are transitory or time-dependent. (Chidambaram, 1996) Although computer-supported meetings are not entirely similar to using DVC, they do provide an apt analogy to the adaption of technology given a repeated-play scenario. That is, for negotiating parties that face each other on an ongoing basis, there is the appearance of socio-emotional cues over time that will make DVC a richer medium, approximating face-to-face interactions. The appearance of these cues take longer to develop in computer-supported groups versus face-to-face groups, so by analogy, these cues would take time to develop in DVC-enabled negotiations. Therefore, DVC would appear as an acceptable medium for repeated-play parties.

Trust in negotiations is paramount, but is not necessarily sacrificed when using DVC as a negotiations medium. Instead, DVC can be used to build trust early in negotiations as a pre-negotiations tool. Or, as the negotiations medium for parties exhibiting high-trust or a long-term relationship in negotiations.

Power: Power in negotiations is defined as the ability to affect favorably someone else’s decision. This depends upon someone else’s perception of the other party’s strength; what they think one has rather than what is actually had. (Fisher, 1983) DVC will clearly affect both the projection of power and the perception of the other party’s strength. Because DVC is a less rich medium, it will make both projection and perception harder. For example, location of the negotiation will no longer have a strong impact as a projection of power (or lack of). There will not be a home court advantage, nor the trappings of status and power that can come from one’s own office. As negotiators move to the small screen, there will be a leveling of the playing field. Although referring to non-video computer-mediated communication, the following quote from Sara Kiesler and colleagues is appropriate to this argument:

The facts or context of the negotiation aside, the process will now be more equal for all parties involved. DVC can take environmental issues out of the power equation, although other variables will now be introduced. According to Fisher, there are several (other) sources of power, including the power of skill and knowledge and the power of good relationships. As was discussed above, relationships are key to trust and will be key to the choice of DVC as a negotiations medium. Fisher claims that one gains power in negotiating when a strong relationship exists with the other party. DVC can thus enhance power by allowing for the rapport-building discussed above. DVC can create the opportunity for many small negotiating sessions rather than one marathon-like session. A series of mini-negotiations can then approximate the repeated-play model that tends toward identification-based trust, hence, integrative strategies. DVC’s coming ubiquity and ease of use can facilitate strong relationships. This could become an end in and of itself. As Fisher (1983) states, “A good working relationship is so helpful to the negotiation of satisfactory outcomes that it is often more important than any particular outcome itself.”

The power of skill and knowledge refer to the skill to communicate persuasively and the knowledge of the other’s skills. This does not change, except given the above argument. Rather, a new set of skills is added: The skill of using the new technology. A party’s comfort with technology will affect the outcome of the negotiation. This is implicit in findings of Fulk (1993), and Fulk and colleagues (1990). Thus, parties more comfortable or familiar with the technology and its application will have a power advantage. This could lead to an opportunity for gambits not currently known (discussed later).

Since the model that I am building for DVC use is toward relationship building and integrative strategies, I do not conclude that power advantages will be realized in most DVC-enabled negotiations. In DVC-enabled negotiations, power will still play a role, but will be diminished. The primary effect will be that negotiators will be using the medium for either rapport-building or repeated-play negotiations, thus will be more inclined toward integrative strategies. Furthermore, the DVC model will allow for a more level playing field amongst opposing parties.

Gambits: Gambits are those practices in negotiations that are intended to confuse, deceive, exploit, etc., the opposing party in order to gain an advantage. Their use is probably limited to distributive strategies thus will have limited impact in most DVC-enabled negotiations—given the model I am building. In traditional media there are a host of gambits that negotiators use, but in the DVC medium there are probably two that will translate differently. That is, others will either not be applicable or will translate unchanged. Silence and anger will appear differently in the new medium of DVC.

Given the buffer of a computer and the physical separation of DVC-enabled negotiators, participants in DVC will be able to remove themselves from the process more easily. That is, they will be able to do what Ury (1993) calls “going to the balcony” more easily. This will be critical when anger is expressed by one or both sides. By being “removed” from the setting, the negotiators will not be drawn into a gambit of anger as easily. However, given the greater importance of voice in DVC as compared to face-to-face, the silence gambit will become more unnerving to negotiators. Or possibly, a participant that goes silent may risk “losing” the attention of the other party. By being removed from the setting, it takes greater energy to maintain interest on the other side. This effect has been demonstrated repeatedly in distant learning environments. (Besser, 1996) While most negotiations will be more interactive than a remote classroom, there still exists the potential for one side to tune out. This could become particularly acute for negotiations that have been drawn out and for which one party has a particularly strong BATNA .[4] Given that scenario, it is conceivable that the party would lose interest and opt for its BATNA. It would be difficult for the non-affected party to detect and then overcome that disposition.

In this new medium, there will be the opportunity for a couple of new gambits: the cyber smart-dummy and the system failure. The former will be much like its traditional analogue, only now users of DVC will claim ignorance or inexperience with the equipment and/or process, while they are more likely to be fairly knowledgable users of the technology and medium. This is a likely gambit given the common feeling that people have great difficulty with technology, such operating their VCR. It could have the same effect as a normal smart-dummy gambit [5] would, to cause the other party to lower their guard or expectations. The system failure gambit is an entirely new one, although it has relations to a similar gambit on the telephone. That is, if a party feels particularly vulnerable or out of control, it could create a “failure” of the DVC equipment or network, in effect stopping the process. This is the same as hanging up the phone in the middle of a conversation, normally while the perpetrator is speaking to avoid the appearance of impropriety. Certainly there would be no way to prove any wrongdoing, but this would be a gambit that would have to be used as last resort because of its drastic nature and possible negative outcomes.

TECHNOLOGY

There exist many issues that will be quite important to DVC as a negotiations medium, such as eye contact through the monitor, spatial issues (The Cocktail Party Effect), parallel conversations, use of shared whiteboards or other shared applications (e.g. spreadsheets), etc., but most are beyond the scope of this paper. The most important issue from the negotiators perspective is resolution.

Resolution is related to display size, field of view, monitor quality (number of pixels per square inch and color depth), camera quality, and frame rate. In order to detect the subtle non-verbal cues so important in negotiations, it will be necessary to see them clearly. Fidgety behavior, smirks, hand motion, etc., are all things that can go undetected with low resolution video. Nearly all negotiators would deem that scenario unacceptable in the negotiating process. However, given the model that I have been building, these become much less important. That is, for early or pre-negotiations rapport-building or for repeated-play with high-trust adversaries, then the detection of lies or gambits becomes less important. But for DVC to become a widespread medium for negotiations, extremely high—almost life-like—resolution will be necessary. This will require a breakthrough technology.

Compression is another technical issue and it plays a factor in the overall length of the process. In order to transmit the signals, they must be compressed then decompressed, all of which adds delay. This delay can act to elongate the negotiating process. This may act to further level the playing field; i.e., taking the advantage away from those quick talkers, making the process more balanced. The bigger effect will probably be in the patience level of most negotiators for this delay. Will they tolerate it long enough to become accustomed to the DVC model?

MODEL FOR DVC-ENABLED NEGOTIATIONS

Based on the media choice theories and power bases of negotiations, I conclude that DVC will succeed as a medium for negotiations. Despite its lower media, as compared to face-to-face, it offers an approximation to face-to-face better than any other medium. Negotiations using DVC technology will change over time but will primarily be used in one of two ways: early or pre-negotiations rapport building, and/or repeated-play negotiations with high-trust parties. The technology will enable relationship building and strengthening, thus will facilitate integrative strategies. Persons using DVC as a negotiations medium will more than likely be technology early adapters, in companies and industries that are on the front edge of technology adaption, and who have high-trust orientations.

CONCLUSION

While there will be strong voices on both sides of this technology and its application to negotiations, there are some concrete examples of its success while the opponents tend to be using hand waving arguments. For example, Andrea Johnson, a law professor at California Western School of Law, has been teaching a course in video-conferencing and negotiations. She says, “We showed them that negotiations could be conducted using video-conferencing and that the body language and nuances that are so important to negotiating do get preserved."[6] While on the other hand, Tom Tripp, assistant professor of management and systems at Washington State University, states: “I least like video-conferencing when I am talking with jerks. Friends I don’t need to read because I already trust them; jerks I need to read.”[7]

In the end it comes down to trust. Desktop video-conferencing will work as a medium for negotiations if trust is either not a prerequisite for the given application or already exists between the two parties. As a true substitute for face-to-face, however, there will need to be a revolutionary technology breakthrough that offers all of the cues offered by an in-person interaction. That technology may exist someday, but until then, DVC-enabled negotiations will play a specific and limited role.

Copyrighted 1996 by Scott D. LiPera

ENDNOTES

1. 19% of 270 businesses surveyed currently use DVC; another 47% said they intended to deploy DVC by 1999. Kathryn Korostoff, “Desktop video is coming. Really!” Computerworld, v30, n38, 9/16/96, p. 35.

2. Jeanette Brown, “Running with a winning team--VARs are capturing corporate America’s embrace,” Computer Reseller News, 8/28/95, p. 6A

3. “Creating a cyberspace of our own,” http://gertrude.art.uiuc.edu/wits/infotechfootnote8.html, 11/5/96

4. Best Alternative to a Negotiated Agreement

5. The smart dummy/belly up practitioner is one who pretends not to understand or to be inexperienced. This gambit leads to more concessions as the other party becomes impatient and makes unilateral concessions.

6. Joshua Macht, “Professor gives students preview of cyberspace,” The National Law Journal, 9/2/96, p. B10

7. Tom Tripp, e-mail correspondence dated 10/29/96

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