Many discussions of the creation and appropriation of value stop at the firm level. Imperfections in the market allow for a firm to gain competitive advantage, thereby appropriating rents from the market. What has often been overlooked is the continued process of appropriation within firms by parties ranging from shareholders to managers to employees. Porter’s “five forces” model and the resource-based view of the firm laid out the determinants of value creation at the firm level, but it was left to others to explore the onward distribution of that value. Many strategic management and strategic human capital scholars have explored the manner in which employees and managers use their bargaining power vis-à-vis the firm to appropriate value—sometimes in a manner that may not align with the interests of shareholders. In addition, cooperative game theorists provided unique insights into the way in which parties divide firm surplus among each other. Ultimately, the creation of value is merely the beginning of a complex, multiparty process of bargaining and competition for the rights to claim rents.
Andy El-Zayaty and Russell Coff
Wolfgang Steinel and Fieke Harinck
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.
Carmela Lutmar and Lesley Terris
War termination is not a monocausal event but rather the product of a multitude of strategic, political, and psychological factors. Variables at different levels of analysis, such as power distributions, regime types, leadership and leadership changes, and psychological factors are all found to influence war termination processes. Recent studies have also explored how variables at different levels of analysis interact with one another to impact the onset and outcome of war termination, across different types of conflict (interstate and intrastate). Dynamic Bargaining models contribute to our understanding by perceiving war termination in terms of the parties’ ability to reach a mutually beneficial agreement, against a background of accumulating costs and under conditions of incomplete information.
Frank M. Häge
The Presidency plays a crucial role in the management and organization of the Council of the European Union’s work and the institution’s interactions with third parties. Formally, the Presidency just chairs the meetings of Council bodies; but over time, member states have endowed it with a range of procedural prerogatives to structure the Council’s agenda and broker agreements, which post holders can potentially use to advance their own private interests. The potential for abuse of these powers raises two related questions: first, why would member states grant these powers to the Presidency, and second, is the Presidency actually able to use these powers to advance its own priorities and policy preferences? In response to the first question, functionalist theories suggest that member states delegate powers to the Presidency to reduce transaction costs and solve collective action. According to Tallberg, member states grant the Presidency procedural prerogatives and provide it with administrative resources to ensure an efficient management of the Council’s agenda, avoid inadvertent negotiation failure or suboptimal negotiation outcomes, and provide adequate representation of the institution vis-à-vis external actors. Kleine’s theory suggests that the Presidency acts as an adjudicator of the legitimacy of demands for concessions by member states that find themselves in the minority but claim to experience strong domestic pressures for non-compliance. By making impartial and thus credible recommendations about whether the formal voting rule or consensus decision-making should apply in these situations, the Presidency contributes to the long-term sustainability of international cooperation. The two explanatory accounts disagree about whether the growing role of the Presidency reflects an incremental accumulation of powers over time in response to new tasks or just an extension of already existing powers into new areas. Historical research on the development of Presidency powers could shed more light on this topic. Responses to the second question about the actual influence of the Presidency can be distinguished according to whether they relate to the Presidency’s scheduling power or to its proposal-making power. Control over the schedule and agenda of meetings, as well as the time devoted to different issues during a meeting, allows the Presidency to affect the relative allocation of attention to different policies. Allowing the Presidency to structure the agenda according to its own priorities comes with tangible collective benefits while resulting in little redistributive costs for other member states. In contrast, the Presidency’s exercise of proposal-making power, through its first-mover advantage, control over the negotiation text, and its privilege to call a vote or declare consensus, leads to biased negotiation outcomes with little or no benefits for member states but direct and tangible redistributive consequences. Thus, the Presidency’s prerogatives are largely based on informal norms and behavioral practices, which can always be superseded by recourse to formal rules. However, member states have little incentive to do so when the Presidency exercises its scheduling power but ample incentive if it exercises its proposal-making power. Existing empirical research provides clear evidence that the Presidency can exercise both scheduling power and proposal-making power at least to some extent and under certain conditions. Interesting questions for future research relate to the overall size and prevalence of the effects of the Presidency’s powers, the mechanisms through which these effects are generated, as well as the conditions that explain their variation over time, across policy areas, and across member state characteristics.
Michael Masterson and Jessica L. P. Weeks
What do we know about the causes and outcomes of international military conflict? Decades of research from different theoretical traditions have explored the outbreak and conclusion of international conflict from a variety of angles. Broadly speaking, scholarship about international conflict has tended to orbit around three core concepts: power, institutions, and the source of the interstate dispute. The question that remains is how well verified are the most important theories? Three influential theories seek to predict patterns of international conflict: power transition theory, which argues that shifts in power increase the likelihood of war; selectorate theory, which predicts that states that have large winning coalitions are more selective about war; and theories about issue indivisibility and war, which predict that issues that states view as impossible to divide—such as a national homeland—are more likely to lead to conflict. Each of these theories produces specific predictions, allowing an assessment of how well the evidence supports the theories’ main conjectures. Central to understanding the causes of conflict is whether empirical work has tested these three theories using well-validated measures; whether a variety of scholars have tested the core propositions of the theory; and whether scholars have found evidence of the causal mechanisms proposed by each theory. Although each theory has garnered some support, they all fall short on one or more of these criteria. In particular, more work is needed in both measurement and evidence of causal mechanisms before scholars can be confident of the theories’ explanatory power.
A major challenge for countries that emerge from civil war is the stabilization of the post-conflict order in a way that fighting does not break out again. Recent empirical and theoretical work on the resolution of civil wars and on the duration of peace strongly rely on the bargaining framework of war emphasizing information asymmetries and commitment problems as main reasons for why in some states civil wars recur repeatedly, whereas in other societies a conflict ends and a transition to a peaceful society is successful. The length of peace spells depends partly on information about the distribution of power that became available during the conflict, captured by the duration and intensity of the fighting as well as the type of conflict ending. Information problems are more relevant at earlier stages and with regard to the initiation of negotiations. In finding bargaining deals and securing their implementation, the conflict parties have to overcome commitment problems. The literature has investigated in more detail third-party security guarantees and power-sharing arrangements as mechanisms to get conflict parties to credibly commit to and adhere to a negotiated agreement. Recently, empirical research moved beyond the conclusion of peace agreements to the study of their implementation. Particular challenges for a peaceful order are the demobilization of ex-combatants, which is aggravated by time-inconsistency problems, the timing of elections, and the redistribution of economic resources. Finally, solutions become more difficult in multiparty conflicts and if the armed groups are fragmented.