Impact of Negotiation and Conflict Management on Business Performance

This report investigates the negotiation behavior of entrepreneurs and the impact of negotiation and conflict management on business performance. It uses a mixed research design, including focus group interviews, to analyze the major causes of conflicts, negotiation strategies employed by managers, and appropriate conflict management strategies within industries. The study highlights the significance of conflict management for organizational performance, noting that while conflicts are inevitable, effective management is crucial. It reviews literature on conflict management styles such as accommodating, avoiding, collaborating, competing, and compromising, as well as the importance of negotiation in settling differences and achieving mutually beneficial outcomes. The report emphasizes that proper conflict management and negotiation skills can positively impact business productivity, strengthen relationships between employees and the organization, and foster a state of trust, ultimately leading to improved job performance and overall success.

HOW ENTREPRENEURS NEGOTIATE AND THE IMPACT OF NEGOTIATION AND
CONFLICT MANAGEMENT ON THE BUSINESS
Abstract
Despite of remarkable improvement on conflict management through the implementation
of various approaches across the world, conflicts issues on business are in high number of work-
related conflicts. The conflicts are inevitable part of an organization but what is important is how
the organization determines the root cause of the conflicts and manages them effectively. The
study investigates the negotiation behaviour of the entrepreneurs with focusing on how
negotiation and conflicts influence the business. A mixed research design adopted for this
research. The focus group interview has identified that conflict management has been regarded
as highly essential for organization due to the fact the conflict can not be avoided in
organization.
Keywords: Conflict management, Business, negotiation, Impact, Analysis
Introduction
The concept of conflict management has been observed in the business world for a long time
and the managers are working to reduce the impact of conflicts on the overall project or the
business. The conflicts in the team arise with the presence of two or more individuals working in
an organization. The research is aimed to identify the impact of conflicts on the overall business
1

within the entrepreneurship. Several researchers have explored the impact of conflict
management on the businesses that may damage the reputation of the organization as a whole
(Cascio, 2018). The study in hand has observed the impact of negotiation and conflict
management on the business with respect to the overall organizational performance and the
business profitability. It is necessary for the managers to carry out the conflict management and
to have the good negotiation skills that may reduce the chances of conflicts and resolve in the
real time.
The following study has mainly highlighted aspects of conflicts in the construction industry
that may cause a disturbance in the overall project. Moreover, it has provided with the
relationship between conflict management strategies that could secure and improve the
organizational performance. Additionally, the study has emphasized on developing the strategies
that can resolve the conflicts in the business. The study of (Kerzner, 2017) as highlighted some
of the various ways in terms of interactive and non-interactive conflict management strategies
that can assist the managers to resolve the conflict management issues and resolve the issues
within the team members of any project in the business.
Conceptual Background
Conflict among the employees is very common and develops the complex issues within
the business and its operations. Additionally, (Nicholas & Steyn, 2017) have argued that the
conflicts have a high negative impact on the employees in terms of their satisfaction and
organizational performance. It is essential for the management to resolve the issues and develop
effective techniques for the higher job satisfaction of the employees that can increase the
organizational performance as a whole according to the study (Bryson, 2016).
2

Research Problem
The significance of conflicts within the organization has been observed for a very long
time that is creating hurdles and has been imposing negative results on the organizational
performance. Frequent agitation by workers for enhanced working conditions and several other
interests have resulted in a decline in performance. According to the study of (Caputo, Ayoko &
Amoo, 2018) negotiating is associated with the culture, which affects the directions in which the
person behaves during negotiations. Therefore, it is necessary to comprehend the culture of the
entrepreneurs for understanding their negotiation and conflict management strategies. Thus, this
study is set to provide empirical evidence and contribute by enhancing the quality of evidence
for a positive relationship between the impact of negotiation and conflict management skills of
entrepreneurs on business performance.
Aim of the Study
The aim of the current research is to assess the issues that impact on negotiation and conflict.
Management on the business including the following objectives.
 To analyze the major causes of conflicts in the industry.
 To investigate the ways of negotiation by managers in the businesses.
 To analyze the impact of negotiation and conflict management on business.
 To identify the most appropriate conflict management strategies in the industry.
3

Research Questions
The research questions of the study have been mentioned below that are aimed to be answered in
the following study.
Q1. What are the major causes of conflicts in the industry?
Q2. What are the ways of negotiation by managers in the businesses?
Q3. What is the impact of negotiation and conflict management on business?
Q4. What are the appropriate conflict management strategies in the industry?
Significance of Study
The study is highly significant for investigating the major causes and reasons for the
conflicts among the team of an organization that may create a hurdle for the overall
organizational performance. The strategies that have been identified in the following study for
conflict management has a huge impact towards the creation of better environment and overall
organizational performance (De Dreu, Kluwer, Euwema, & Vegt, 2017). The study is highly
essential for the managers to develop higher negotiation skills for the effective practice of
conflict management. The significance of study is to improve the issues of negotiation in
organization where employee communicate with other people.
The collection and analysis of the primary data collected from the entrepreneurs have
added value to the overall study and has provided with their views and remarks regarding the
dependent and independent variables of the following study (Broome B. J., 2017).
4

Literature Review
Conflict Management
Conflicts occurs when there are differences between opinions of people. There are multiple
reasons of conflicts in a workplace which includes alterations of views, different beliefs,
communication gap, etc. (Caputo, Ayoko, & Amoo, 2018).
According to (Masuda & Kostopoulos, 2016) conflict can be prevented by taking prompt
actions to the conflicting issues and by addressing the issues first place. The negotiation that help
for organization to improve conflict between people because they are properly communicate with
other to resolve the issues between them.
Conflicts can be managed and avoided by taking necessary steps. Such practice of
identifying and handling the issues fairly is called conflict management. Conflict can be
managed when it can be resolved the issues of negotiation by adopting new style that manage
avoidance.
It is said that issues may occur when people work together. People who know how to resolve
conflict are required in an organization. There are basically five styles presented by (Caputo,
Ayoko, & Amoo, 2018) to manage conflict that are: accommodating, avoiding, collaborating,
competing, and compromising.
In accommodating strategy, a manager needs to cooperate with team. This may result in
going against manager’s own beliefs and views but this style is effective if cooperation and
effective solution are presented. In avoiding one must simply avoid the main issue for the
conflict. In this strategy manager or the employee who is having a conflict just suppose that
issues will resolve on their own. This strategy might be effective if the employees want space,
but it can also be defective as the issue can escalate if not discussed (Maiti & Choi, 2018).
5

Collaborative strategy refers to integration of ideas to resolve an issue. The aim is to find an
optimal solution for the issue. Competing strategy is a win-lose situation in which one party loses
and other wins. This can be effective in emergency situations. In compromising either side have
to let go out of issue or put aside their differences.
Negotiation
Negotiation is a technique through which people settle their differences (Pauly, Scherer, &
Palazzo, 2015). Negotiations are an essential part of the organization. In this process, arguments
and disputes are avoided through mutual agreement. In any conflict or disagreement, the
employee or the individual wants the best possible outcome for the issue or for the company or
organization they represent. Since the aim is to reach a constructive outcome, individuals must
negotiate and may reach a mutual agreement that leads to a certain outcome which can be
beneficial for the company. It involves a sensible discussion on which both the parties accept the
results (Zhu & David, 2018). In this method both the parties try to persuade each other to accept
their solutions and come on the same page to find an optimal solution on which everyone agrees.
The method of negotiation involves various stages which include: preparations, clarification of
goals, discussion, negotiate to achieve a win-win result, agreement on a mutual decision and
implementation. It is the responsibility of the higher management to resolve issues of employees
working in the lower levels. (Lu, Kong, Ferrin, & Dirks, 2017) Resolving issues by negotiation
proves helpful as negotiation is a win-win proposal and employees often wants to put their
demands and claims forward. By negotiating among the employees, management also fulfills
their requirements and also satisfy the employees.
6

Importance of Negotiation and Conflict Management for Business
Conflict can be in any workplace or organization as it the part of the working environment.
Conflict arises when employees with different state of minds are working together. Conflicts are
good in a way as when an individual is having a conflict with someone or with something; it
means that individual contains an opinion of his/her own which is a good thing but it can escalate
and result in a bad situation if not discussed or addressed properly. The practice of conflict
management is necessarily required in all organizations as conflicts can happen anywhere in any
situation even on small things like borrowing a pen and not returning it afterwards. Companies
need managers who can understand the situations and acts accordingly. Resolving issues is not
an easy task, the person resolving the issue have a neutral mind and must not be biased.
Understanding the issue sensibly and communicating it effectively is the key to solve a conflict
(Broome B. J., 2017). Negotiations can be made to avoid or to solve a conflict as negotiations
include mutual agreement on which both the parties will agree and proceeds towards a
productive outcome. Negotiation can prove effective if both the parties listen to the situation
with open minds and act to resolve the issue and not try to prove themselves right. Conflict
management and negotiations go hand in hand as both the techniques try to solve an issue among
employees. Conflicts can arise at any level and it needs to be resolved as to avoid any quarrel.
Managers need to resolve issues by negotiation.
It can be resolved the issues by negotiation through implementing conflict resolution
strategies to enhance quality of services. It including to use proper time management, creating
strategies and also avoiding being provoked in terms of emotional response.
7

Impact of Negotiation and Conflict Management on the Business
Conflict can have a very bad impact on the organization, especially on its productivity as by
having conflicts, employees may feel disturbed and might not work effectively. Managers need
to be trained in resolving the conflict as it is important for the productivity. Conflict management
can have a positive impact on the organization as it increases the productivity by resolving issues
of the employees. When issues are resolved, it strengthens the relationship between the
employees and the organization (Grant, 2016) As employees may feel confident and it also
increases their job performance (Wong, & et.la., 2018) and they develop a state of trust in the
organization that the organization is paying attention to their issues and problems. Negotiation
serves as another factor to resolve issues and affect the employees positively and indirectly
having an impact on the productivity. Negotiations are often made on a higher level like
finalizing business deals and coming to a mutual decision to have a win-win situation. But
negotiations can be made on the lower level as well when discussing the contradicting views and
beliefs of the employees. Negotiation and conflict management are two important factors of the
organization which can satisfy the employees and management and can have a win-win situation.
Any organization where conflicts occurs, it needs to work on their management as those issues
will be a concern for company. Employees feel satisfied when their issues are being addressed
and they feel as a part of the organization and this result in the increment in the confidence level
and this increases their efficiency. Hence, negotiation and conflict management is very much
needed especially when the workforce is diverse relating to different social and ethical
backgrounds. It is the need in today’s time of globalization that companies requires diverse
workforce but it brings various conflicts regarding their backgrounds. Therefore, the
8

management of the company should be considerable and sensible enough to cater all those
issues.
< Figure 1>
Methodology
Introduction
The research methodology is an important part of the study that highlights the method that has
been used in the following study in hand. The succeeding section of the study has highlighted the
research design, philosophy, and approach of the study. Moreover, the section has also identified
the tools of analysis for following study. The focus group interview has identified that conflict
management has been regarded as highly essential for organization.
Research Philosophy
According to Veal, 2017 The research philosophy represents the philosophical framework of the
following. Since the study has been designed on the basis of the mixed methodology to identify
the impact of negotiation and conflict management on the business the most suitable philosophy
to be used is pragmatism.
Research Approach
According to Giacomantonio, Femke, & Carsten, 2018 The research approach refers to the flow
of investigation. Hence, the study has been formulated to investigate the impact of conflict
management and has developed the hypothesis of the study; the researcher has used the
deductive approach for carrying out the following study.
9

Research Design
The research design refers to the data extraction method that has been used in the study. The
following study has been designed to collect the responses from the respondents through survey
questionnaire whereas, the study has also been carried out using the secondary sources of
literature and other major sources for gaining the qualitative data. Hence, the following study has
used the mixed methods that have included the aspects of both qualitative and quantitative data.
Data Collection Method
The data collection method refers to the medium of collecting data that has been used in the
following study (Creswell & Creswell, 2017). The qualitative data collection methodology is
applied. In this data will be collected from focus groups whereas the study has also gained the
secondary data for the analysis and meeting the study objectives to assess the impact of
negotiation and conflict management on the business.
Sample Size and Target Population
For present study the population selected is employees who are working in construction
companies. The sample size taken is 50 respondents and the data has been collected from them
through questionnaire.
Research Instruments
The research instrument that has been used in the following study is correlation and regression
using SPSS tool to determine the nature of the relationship and gauge the impact of negotiation
and conflict management on business performance. The analysis has been performed through the
SPSS software for getting the most significant results of the following study. Moreover, the
10

analysis of qualitative data has been done through the process of thematic analysis. If SPSS was
used in other studies it would have been reliable in generating precise results.
Limitation of Study
The researcher has faced limitation to get the access to the managers in the industry and to
persuade them to take part in the research process by giving their valuable responses. Moreover,
the biggest limitations were that of the cost and time of the study that has been allocated for the
study.
Ethical Consideration
The study that has been carried out is ensured to be unique and includes the most appropriate
information that has been collected from the primary and secondary sources. Moreover, the data
collected from the respondents have not been violated and has been used for the purpose of
research only.
Data Analysis
This section includes the analysis of the data collected through survey questionnaire and focus
group interview. For this purpose, the survey interview has been analyzed by dividing into
themes whereas questionnaire has been analyzed by conducting regression and correlation
analysis.
Results from Focus Groups
The researcher has carried out interviews with employees representing different professionals.
The researcher has not disclosed the identity of the respondents to maintain anonymity. Thematic
11

analysis has been used by the researcher for analyzing the responses that has been received from
the professionals.
12