THE ETHICAL CHALLENGES OF GLOBAL

BUSINESS-TO-BUSINESS NEGOTIATIONS:
AN EMPIRICAL INVESTIGATION OF
DEVELOPING COUNTRIES' MARKETING
MANAGERS

Jamal Al-Khatib
University of St. Thomas

Mohammed Y. A. Rawwas
University of Northern Iowa

Ziad Swaidan
University of Houston - Victoria

Richard J. Rexeisen
University of St. Thomas

The present study examines the impact of idealism, relativism and Machiavellianism on the perceived appropriateness of five
opportunistic negotiation tactics (i.e., traditional competitive bargaining, attacking opponent's network, making false promises,
misrepresentation of infonnation, and inappropriate infonnation gathering) using a samplefromthe United Arab Emirates (U AE).
Results indicate that idealism and Machiavellianism are strong predictors of managers' perceptions of the ethical appropriateness
of negotiating tactics. Implications of these results for global firms and marketing executives are discussed and directions for
future research are provided.

46 Journal of Marketing THEORY AND PRACTICE

 INTRODUCTION The present study contributes to the global business-to-
business negotiation literature in several ways. First, unlike
Today, multinational firms consider the task of understanding prior research that conceptualizes and tests opportunistic
the ethical mindset of their global partners a major priority and behavior during the exchange relationship (ex post
a must for successfully operating in the global market opportunism), we conceptualize opportunistic negotiation
(Bagozzi 1995). Oil and recent geopolitical events have placed tactics as an ex ante form of opportunism (opportunistic
the Arab world at the center of attention on the global stage behavior exhibited during early stage ofrelationship initiation)
and have presented many potentially profitable opportunities that can be detected and used as an input to the decision
in the region for interested western firms. Universities have related to whether or not a firm may wish to be involved in an
also responded to such interest by offering executive seminars exchange relationship prior to making any costly commitment.
devoted to understanding the mindset of business executives Second, this paper focuses on the ethical determinants of ex
in the region. For example, the University of Memphis CIBER ante opportunistic negotiation tactics. While opportunism has
designed the GlobalEd Seminars in Business, Culture and been investigated by marketing, management and economics
Leadership to broaden cultural and leadership understanding scholars using variousframeworks(i.e., game theory, principle
among executives of international corporations to prepare them agent theory, transaction cost analysis) (e.g., Williamson,
for conducting business in the Arab region (Wang Center for 1985; Calfee and Rubin 1993; Wathne and Heide 2000),
International Education Business Education and Research opportunism has not been studied as a moral issue by business
2005). Despite this heightened interest, very limited effort has ethicists. As Romar (2004, p. 667) suggests
been made by social and behavioral scientists to study that part
of the world and its people. Most of the current research is Opportunism represents an important risk to
journalistic in nature and tends to lack any scientific support. contemporary business organizations, which is
Western executives continue to rely on simplistic formulas explored by economists and marketers and not by
such as "do as the Romans do" when dealing witii their Arab business ethicists. Opportunism is an important
counterparts (Little 2004). moral issue in an increasingly global world;
opportunism, whether by large or small firms or
As international trade and business opportunities grow in the entire industries, has the potential to have a
Arab region, western executives are constantly negotiating significant impact well beyond the boundaries of a
with Arab executives. The negotiation process is plagued with single firm or economy.
ethical dilemmas and opportunistic temptations. In a tactical
process, as two parties try to reach agreement, each wanting to Third, as corporations participate in Ae global economy, one
maximize their results, the temptations to use deceptive or of their challenges is to understand the ethical negotiation
dishonest tactics are undeniable. In fact, negotiation has been practices of their international partners (Volkema 2004).
defined as "a process of potentially opportunistic interaction Despite the feet that the negotiation literature is rich with
by which two or more parties, with some apparent conflict, numerous studies prescribing the means for managing
seek to do better through jointly decided action than they could confiicts in the negotiation process, very little attention has
otherwise" (Lax and Sebenious 1986, p. 11). Despite the been devoted to the ethically challenging component of the
potential for opportunistic tendencies in the negotiation negotiation process (Robinson, Lewicki and Donahue, 2000).
exchange, western firms' executives continue to deal with their Little guidance is provided to managers on how to deal
counterparts in different Arab countries by regulating their effectively with the ethical component of the negotiation
exchange partners' behavior through governance structures process. The present study fills this gap in the negotiation
(e.g., contractual agreements, ownership) that have varying literature by examining the ethical mindset of the business
capacities to respond effectively to disturbances (i.e., ex post negotiators using executives from the UAE.
opportunism that occurs during the relationship) (Williamson
1985). Given the considerable resources needed to monitor ex The UAE market is the most progressive and open market in
post opportunism and the opportunity costs in the form of the Arab region as evidenced by the country's early accession
valuable deals that will not be executed due to opportunistic to the World Trade Organization and the country's sig^iing of
behavior (Wathne and Heide 2000; Calfree and Rubin 1993), a Trade and Investment Framework Agreement (TIFA) with
it is essential that more research focus on ex ante opportunism Washington. In November 2004, UAB agreed to undertake
(i.e., opportunism that occurs in early stages ofthe relationship negotiations toward a Free Trade Agreement (FT A) with the
initiation and during the exchange partner selection stage) so U.S. These initiatives toward market openness and trade
that global firms can develop the knowledge and expertise liberalization make the UAE market an attractive destination
necessary to understand how to screen, select and manage for direct foreign investments by international firms from
exchange partners prior (ex ante) to the establishment of the around the globe and make it imperative for those interested
exchange relationship and any dependencies that may prove firms to understand how to negotiate effectively and efficiently
ineffective and costly. in this important market.

Fall 2005 47
Fourth, the present research helps firms interested in the LITERATURE REVIEW AND HYPOTHESES
Middle Eastern market to test the external validity of their
code of ethics and the extent to which individual ethical values Opportunistic Negotiation Tactics:
facilitate or impede the universal application of a firm's ethical
code. This study assists in this endeavor by examining the Negotiation is a process by which the negotiating parties
impact of Arab executives' preferred ethical ideology and interact with one another to reach mutual agreements to
Machiavellianism on their perception of unethical negotiation provide terms, conditions, and guidelines for future behavior
tactics. Through the present study's exploration of patterns of (Ghauri and Fang 2001). Negotiation brings two or more
Arab executives' negotiation-related ethical beliefs and parties together to try to accomplish mutually beneficial
orientations, we hope to reveal interesting and significant outcomes, while meeting individual goals that may be at odds
differences in the ethical mindset of the Arab executive. By with the other parties' goals.
investigating the impact of these variables on their perceptions
of unethical negotiation practices, global firms' executives can "Negotiations involve serial communication between parties
better understand the ethical mindset of their Arab to exchange information and attempt to influence or persuade
counterparts. With this understanding it is then possible to one's counterpart," (Banas and Parks 2002, p. 237). The
utilize this knowledge to efficiently and effectively manage the negotiation process is plagued with ethical dilemmas. In a
negotiation process with their counterparts in this important tactical process, as two parties try to reach agreement, each
maricet. Public policymakers and researchers can also benefit wanting to maximize his or her results, they may be tempted
from this study by understanding the external validity and the to use deceptive or dishonest tactics. Negotiation behaviors
degree of ethnocentrism of not only their own code of ethics range from the ethical to the unethical. Ethical/appropriate
but also the validity of a imiversal code of ethics. bargaining in distributive negotiations include exaggerated
demands, hiding one's bottom line, and not being forthcoming
Fifth, despite the recent surge in the business ethics research, about one's negotiation timeline. More questionable tactics
the Middle East in general and the Arab-Gulf region in include false promises/bluffing where die negotiator shows an
particular, have been under investigated. A review of major intention to perform some act without actually having the
refereed journal articles in business and negotiation ethics intention to follow through; misrepresenting position, which
published between 1995 and 2005 revealed that less than 1% takes place when the negotiator distorts his or her acceptable
of the studies published have utilized Arab executives. This settlement point in order to convince the opponent to provide
massive neglect of the region by research poses a serious more concessions; attacking the opponent network, when the
question about the degree of ethnocentrism of concepts and negotiator attempts to bring members of the opponent team to
dieories developed on the West and their global applicability. join his or her team; and inappropriate infonnation gathering
As Curmingham and Green (1984, p. 9-10) correctly observed: tactic, where the negotiator uses bribes or payment to collect
information about the opponent (Lewicki and Robinson 1998).
There is also a need for more fundamental research in
international marketing in order to adapt established
Several studies have examined the relationship between
marketing concepts to the realities ofthe international
negotiation tactics and ethics (Lewicki and Robinson 1998;
marketplace ... This is essentially a question of
Robinson, Lewicki and Donahue 2000; Banas and Parks 2002;
external validity, and research should be encouraged
Volkema and Fleury 2002; Elahee and Brooks 2004). Lewicki
to determine which marketing principles can be
and Robinson (1998) suggest that there are a wide range of
universally applied and which are basically
negotiation behaviors that vary with respect to perceived
ethnocentric (applicable only in the United States Jind
ethicality and appropriateness. At the basic level there is
similar countries).
traditional competitive bargaining, consisting of tactics which
Finally, given the Arab culture's emphasis on trust as the are generally acceptable, such as exaggerating demands and
central theme in all exchange relations (Hofstede 1984), we appearing to be in no hurry to come to an agreement. In
propose that relational exchange is a more suitable form of addition, there are more questionable tactics, such as attacking
governance structure in the Arab region than the more your opponent's network, making false promises,
formalized forms. The present study surveys managers from misrepresenting information, and gathering inappropriate
the UAE on the impact of their preferred ethical ideology information.
(idealism vs. relativism) and degree of Machiavellianism on
their perceptions of various opportunistic negotiation tactics. In studying business executives' perceptions of unethical
This study has not been conducted, and therefore the study negotiation tactics, Lewicki and Robinson (1998) and
findings should contribute to the literatures of business ethics. Robinson, Lewicki and Donahue (2000) found that
The remaining sections of the paper review the literature respondents are generally more accepting of traditional
related to negotiation ethics and its relation to ethical ideology competitive bargaining tactics and less accepting of the other
and Machiavellianism; present research hypodieses, describe more serious and potentially illegal tactics. In contrasting U.S
the research methodology, present the results and discussion, and Mexican samples, Volkema (1998) reported similar
and discuss the managerial implications. results. Elahee and Brooks (2004), in examining the role of

48 Journal of Marketing THEORY AND PRACTICE

trust on Mexican managers' perception of six negotiation and relative to the likelihood for the consequences to occur,
tactics, empirically demonstrated diat there is a negative their desirability, and the importance of the impacted group
relationship between the trust and the likelihood of using (Hunt and Vitell 1986; Hunt and Vitell 1992).
inappropriate negotiation tactics. Ford et al. (1997) compared
the cognitive moral development and the percent of time Forsyth (1980; 1992) conceptualized two evaluative
allocated to various negotiation tactics of Chinese and U.S. dimensions that have long been used to classify an individual's
businesspeople. They concluded that U.S. businesspeople ethical and moral judgments: idealism and relativism.
negotiating with Chinese executives must be aware of a more Forsyth's (1992) use of idealism and relativism "assumes
collectivist approach to ethics. individuals can range from high to low in their emphasis on
principles and in their emphasis on consequences (p. 462)."
Several studies found that demographic factors impact the Idealism refers to the degree to which an individual believes
perception of the ethicality of negotiation behaviors. It has that the "right" decision can be made in an ethically tenuous
been shown that age, gender, and occupation lead to different situation. This is essentially the deontological perspective that
perceptions of deception in negotiation (Anton 1990). Women embodies concern for others' welfare when evaluating
have been found to be less accepting of unethical deception alternatives. Idealistic individuals believe that there is a
tactics than men (Lewicki and Robinson 1998; Robinson, morally correct alternative that will not harm others. Less
Lewicki, and Donahue 2000). In addition, nationality has been idealistic individuals may make decisions irrespective of the
shown to cause differences in perception of ethicalness of impjict on others.
negotiation tactics, with subjects from Western Europe and to
a lesser degree the Asian Pacific rim more likely to endorse Relativism, on the other hand, refers to the rejection of
ethically marginal tactics than other groups (Robinson, universal rules in making ethical judgments. People who
Lewicki, and Donahue 2000). espouse relativism make decisions on a situation-specific
basis. That is, high relativists evaluate the current situation and
Finally, situational factors have also been shown to have an use the evaluation as the basis for making a judgment. Low
effect on the perception of appropriate behavior (Volkema and relativists, on the other hand, believe that standard rules can be
Fleury 2002). Examples of situational factors include having applied regardless of the issue at hand. Forsyth (1992)
a counterpart who comes with a reputation as an unethical suggested that an individual's ethical ideology should have an
negotiator, being under a time deadline, and dealing with the impact on how she/he would handle ethically challenging
likelihood of future business relations with an opponent. situations.

Ethical Ideology and Opportunistic Negotiations Tactics: Scholars examining ethical issues in the marketing and
management fields have found that ethical judgments among
Marketing ethics theories suggest that when individuals are business executives and individuals are mediated by their
faced with morally questionable situations, they tend to apply ethical ideology (Vitell, Nwachukwu, and Barnes 1993;
rules that are based on different moral philosophies or Tansey, Brown, and H y m a n 1994; Bamett, Bass, and
orientations to guide their judgments (Ferrell and Gresham Brown 1994, 1996; Sin^apakdi et al., 1995; Rao and
1985; Hunt and Vitell 1986; Ferrell, Gresham, and Fraedrich Sin^apakdi 1997; Wong 1998; Singhapakdi et al., 1999;
1989; Hunt and Vitell 1992). For example, Ferrell, Gresham, Swaidan, Vitell and Rawwas 2003; Swaidan, Rawwas and Al-
and Fraedrich (1989) stated that, "moral philosophies provide Khatib 2004; Al-Khatib, Stanton and Rawwas 2005).
standards to judge the act, the actor's intentions, and the Examining these constructs, Vitell Nwachukwu, and Barnes
consequences of the act," (p. 56). Similarly, in Hunt and (1993), found that more idealistic and less relativistic members
Vitell's (1986) general theory of marketing ethics, normative showed higher levels of honesty and integrity than their less
moral philosophy was at the core of their model. These moral idealistic and more relativistic counterparts. In addition, those
philosophies could be deontological or teleologicai in nature who exhibited high levels of idealism and low relativism
(e.g. Murphy and Laczniak 1981). While the deontological tended to perceive ethics and social responsibilities as more
moral philosophy focuses on the specific actions or behavior important than their less idealistic and more relativistic
of the individual, the teleologicai philosophy stresses the counterparts (Singhapakdi et al., 1995).
consequences of the action or behavior (Hunt and Vitell 1986).
When faced with an ethically challenging situation, individuals
Examining ethical ideology and judgments regarding
who subscribe to the deontological philosophy tend to evaluate
inappropriate negotiation tactics, Banas and Parks (2002)
the inherent rightness or wrongness of a set of possible
found that ethical ideology and acceptability of the Self-
alternatives that he/she considers as possible courses of actions
Reported Inappropriate Negotiation Strategies Scale (SINS)
against predetermined deontological norms or rules that reflect
were correlated. The authors hypothesize that, individuals'
the individual personal value or behavior. As for those
ethical judgments as to the appropriateness of negotiation
individuals who subscribe to the teleologicai philosophy, their
tactics are mediated by their ethical orientations.
evaluations of actions are based on their perception of the
consequences of these actions on various stakeholder groups

Fall 2005 49
Machiavellianbm and Opportunistic Negotiations Tactics: H2c: Marketing managers' Machiavellian orientation will
have a negative impact on their perception of the
Machiavellianism, a personality trait measured along a opportunistic negotiation tactic of attacking the
continuum, is often examined in relation to ethical decision- opponent's network.
making. A high Machiavellian individual believes it is
appropriate to use any means to accomplish personal and H3a: Marketing managers' idealistic orientation will have
organizational goals, including manipulation, persuasion, and a positive impact on their perception of the
deceit (Hunt and Chonko 1984). Hundreds of studies have opportunistic negotiation tactic of false promises.
investigated Machiavellianism (Gunnthorsdottir, McCabe, and H3b: Marketing managers' relativistic orientation will
Smith 2002). Researchers have also applied this concept to the have a negative impact on their perception of the
business arena with many looking at die level of current and opportunistic negotiation tactic ojffalse promises.
future business executives (Chonko 1982; Hunt and Chonko H3c: Marketing managers 'Machiavellian orientation will
1984; Corzine, Buntzman and Busch 1999). The research have a negative impact on their perception of the
indicates that individuals scoring high on the Mach scale are opportunistic negotiation tactic of false promises.
likely to behave unethically. For example, Christie and Geis
(1970) found that Machiavellian individuals lie more H4a: Marketing managers' idealistic orientation will have
plausibly, manipulate others more, are persuaded by others a positive impact on their perception of the
less, and pay bribes more than non-Machiavellian individuals. opportunistic negotiation tactic of misrepresentation
Shapiro, Lewicki, and Devine (199S) found that Machiavellian of position.
individuals tend to engage in deceptive tactics to achieve H4b: Marketing managers' relativistic orientation will
personal objectives more often dian non-Machiavellian have a negative impact on their perception of the
individuals. Beu, Buckley and Harvey (2003) reported opportunistic negotiation tactic of misrepresentation
significant correlation between Machiavellianism and the of position.
intent to behave unethically. Examining the impact of
H4c: Marketing managers 'Machiavellian orientation will
personality factors, cognitive moral development, and
have a negative impact on their perception of the
demographic factors on unethical intent was die strongest
opportunistic negotiation tactic of misrepresentation
predictor of unethical intent. It has been found that high Machs
of position.
are more likely than low Machs to behave unethically (Beu,
Buckley and Harvey 2003). Machiavellian individuals do not
H5a: Marketing managers' idealistic orientation will have
mind bending the rules to achieve their desired gains. High
a positive impact on their perception of the
Mach managers would not hesitate to take advantage of
opportunistic negotiation tactic of inappropriate
personal connections. In summary, current research predicts a
information gathering.
direct relationship between relativism, Machiavellianism, and
an inverse relationship between idealism and the five H5b: Marketing managers' relativistic orientation will
questionable negotiation tactics. Based on the above theory, have a negative impact on their perception of the
flndings and discussions, we hypothesize that: opportunistic negotiation tactic of inappropriate
HI a: Marketing managers' idealistic orientation will have information gathering.
a positive impact on their perception of the HSc: Marketing managers' Machiavellian orientation will
opportunistic negotiation tactic of traditional have a negative impact on their perception of the
competitive bargaining. opportunistic negotiation tactic of inappropriate
information gathering.
HJb: Marketing managers' relattvistic orientation will
have a negative impact on their perception of the METHODOLOGY
opportunistic negotiation tactic of traditional
competitive bargaining. United Arab Emirates (UAE) was selected as the research
Hlc: Marketing managers 'Machiavellian orientation will setting—and provided the sampling frame—for this study.
have a negative impact on their perception of the There were several reasons for this selection. First, UAE is
opportunistic negotiation tactic of traditional relatively wealthy, included in the top seven Middle Eastern
competitive bargaining. nations in GDP per capita while holding huge oil and natural
gas (Central Intelligence Agency Publications, 2005). UAE is
H2a: Marketing managers' idealistic orientation will have the commercial gate to the Gulf region. This makes the UAE
a positive impact on their perception of the an attractive destination for foreign direct investment (FDI)
opportunistic negotiation tactic of attacking the and an excellent setting for testing our research hypotheses.
opponent's network. Second, the country is in the process of diversifying and
H2b: Marketing managers' relativistic orientation will privatizing its economy. As part of the process of accession to
have a negative impact on their perception of the the World Trade Organization (WTO), foreign direct
opportunistic negotiation tactic of attacking the investment is likely to rise in the region, making UAE at the
opponent's network center of globalization.

50 Journal of Marketing THEORY AND PRACTICE

Sampling and Data Collection: Lewicki and his colleagues (Lewicki 1983; Lewicki and
Robinson 1998; Robinson, Lewicki, and Donahue 2000).
The difficulties associated with conducting research in SINS was utilized to measure marketing managers'
developing economies necessitated the use of in-country perceptions ofthe appropriateness of questionable negotiating
contacts to identify specific participants (Teagarden et al., tactics and their likelihood of using those tactics. Volkema,
1995). A sample of 400 UAE marketing executives with Fleck, and Hofineister-Toth (2004) concluded that the SINS
budgetary and personnel responsibilify was identified. Those appears to be a useftil tool in assessing attitudinal differences.
identified were pre-notified of the purpose of the research and There were many studies that confirmed the predictive validity
given basic procedural instructions. One week later, the survey of the instrument (e.g., Banas and Parks 2002). Also, SINS
instrument was hand-delivered in the morning and picked-up was used successfully by many researchers (e.g., Volkema
at the end of the same workday using sealed boxes. This 1999; 2004; and Volkema, Fleck, and Hofineister-Toth 2004).
method resulted in an operational data set of 208 respondents, The scale contained 16 items representing five dimensions:
for a response rate of 52%. The majority of the sampled traditional competitive bargaiaing, attacking the opponent's
respondents were males who are employed by firms operating network, making felse promises, misrepresenting of
in various sectors of the economy (manufacturing, service and information, and inappropriate infonnation gathering. The five
trade). On average respondents have been serving in their dimensions achieved acceptable levels of reliabilities as
current positions for four years. Nearly all respondents have a measured by Cronbach's alpha (i.e., coefficient alpha ranged
college or graduate degree. Table 1 provides details on the from .71 to .86).
demographic profile of the sample.
Machiavellianism Scale: Machiavellianism was measured
TABLE 1
using the MACH IV scale developed and validated by Christie
DEMOGRAPHIC PROFILE OF THE SAMPLE (N=208)
and Geis (1970). MACH IV scale was used successfully by
GENDER: many researchers to explore ethical judgments (e.g., Raybum
Male: 69.7 % and Raybum 1999; Bass, Bamett, and Brown 1999; and
Female: 30.3% Razzaque and Hwee 2002), and ethical intentions (e.g., Ross
and Robertson 2003). This scale contains 20 items with ten
Average number of years in Average work experience: S.S
cnrrentjob: 4 years
items worded in a Machiavellian direction and ten items
years
Levet of Education:
worded in the opposite direction. Each respondent was asked
7ype of business:
Some College: 2.1% Retail/wholesale (Trade): 78% to indicate the degree of either agreement or disagreement
College Degree: 85.1% Manufacturing: with each of the 20 items using a five-point Likert scale where
Graduate Degree: 12.8% Services: 14% a 5 indicated strong agreement. Two items of the original scale
were deleted (up front) due to their irrelevance to the culture
of the country under study. The 18-item scale achieved an
Measurement of Key Variables acceptable level of reliabilify (coefficient alpha= .71).
A one-page (front and back) survey was administered to
respondents. The instrument consisted of four major sections. Ethical ideology Scales: A person's predominant ethical
Machiavellianism was measured in the first part of the survey ideology or perspective was measured using the EPQ
using the MACH IV scale. Moral ideologies (i.e., idealism and developed and validated by Forsyth (1980, 1992). EPQ
relativism) were measured in the second part of the survey consists of two scales with each containing ten items; one is
using the EPQ scales. The third portion ofthe survey measured designed to measure idealism, or the acceptance of moral
the opportunistic negotiation tactics using the SINS scale. The absolutes, and the second is designed to measure relativism, or
last part of the survey measured the demographics of the the rejection of universal moral principles. Respondents were
participants. All measures used in this study were developed asked to indicate their agreement or disagreement with each
by researchers, validated by previous studies, used by many item using a five-point Likert format where a 5 indicated
scholars, and published in scientific journals. Factor analysis strong agreement with a statement. All questions were worded
using principle components analysis with varimax rotation was in a positive direction. Idealism and relativism scales have
performed to confirm the underlying dimensionalify of these been shown to be both reliable and valid in several studies
scales. As expected, all items loaded on the intended factors (e.g., Sivadas et al. 2003; Kim 2003; Elias 2002). Many
(MACH IV, Idealism, Relativism, and the five dimensions of studies used the EPQ successfully to explore ethical awareness
the SINS). Table 2 provides a list of constructs used in the (e.g., Yetmar and Eastman 2000; Sparks and Hunt 1998),
study, number of statements used to measure each construct, judgments (e.g., Elias 2002; Boyle 2000; Bass, Bamett, and
a sample statement from each construct, and the reliability Brown 1999), and intentions (e.g., Singhapakdi et al. 2000).
measurements. The coefficient alpha reliabilities for the Idealism and
Relativism scales were (.84) and (.78) respectively.
The Self-Reported Inappropriate Negotiation Strategies
Scale (SINS): The SINS was developed and validated by

Fall 2005 51
 TABLE 2
STUDY MEASURES AND RELUBILITY OF CONSTRUCTS
VARIABLE NUMBER SAMPLE STATEMENT ALPHA
OF ITEMS COEFnCIENT
Idealism 10 A peison should make certain that their actions never intentionally harm .84
another even to a small degree.
Relativism 10 What is ethical varies from one situation and society to another. .78
Mach IV 18 One should take action only when sure it is morally right .71
Traditional Competitive 3 Make an opening demand that is far greater than what you really hope to settle .86
Bargaining (TCB) for.
Attacking Opponent's 3 Threaten to make your opponent look weak or foolish in front of a boss or .71
Network (AON) others to whom he/she is accountable, even if you know that you won't
actually carry out the threat
False Promises (FP) 3 Promise that good things will happen to your opponent if he/she gives you .80
what you want, even if you know that you can't (or won't) deliver these things
when the
other's cooperation is obtained.
Misrepresentation of Position 3 Intentionally misrepresent information to your opponent in order to strengthen .85
(MP) your negotiating arguments or position.
Inappropriate Information 3 Gain information about an opponent's negotiating position by trying to recruit .84
Gathering (IIG) or hire one of your opponent's teammates(on the condition that the teammate

TABLE 3
REGRESSION ANALYSIS RESULTS
DEPENDENT VARIABLE: TRADITIONAL COMPETmvE BARGAINING (HI)
F Value =16.420
Significant F = .000
Adjusted R' = .661
Variable II Standardized Beta Ii T-test 1 Significance of T-Test
Idealism (Hla) II -.486 II -4.680 1 .000
Relativism (HIb) II -.099 II -1.273 1 .205
Machiavellianism (HIc) ||-.083 II -.819 1 .414
DepcDdent Variable: Attacking Opponents Network (H2)
F Value = 21.77
Significant F = .000
Adjusted R' = .305
Variable II Standardized Beta T-test Significance of T-Test
Idealism (H2a) II -.301 -2.896 J .004
Relativism (H2b) II .170 2.263 .025
Machiavellianism (H2c) II .229 2.192 .030
Depcadent Variable: False Promises (H3)
F Value = 29.19
Significant F = .000
Adjusted R' = .321
Variable Standardized Beta T-test Significance of T-Test
Idealism (H3a) -.469 -4.762 .000
Relativism (H3b) .118 1.653 1.10
Machiavellianism (H3c) -.142 -1.438 .153
Dependent Variable: Misrepresentation of Information (H4)
F Value = 9.028
Significant F = .000
Adjusted R' = .221
Variable Standardized Beta T-test 1 Significance of T-Test
Idealism (H4a) -.143 -1.240 .217
Relativism (H4b) .032 .384 1.701
Machiavellianism (H4c) .282 2.428 1.016
Dependent Variable: Inappropriate Information Gathering (HS
F Value = 27.175
Significant F = .000
Adjusted R' = .364
Variable II Standardized Beta T-test Significance of T-Test
Idealism (H5a) II -.344 -3.444 .001
Relativism (H5b) II 1251 .725 .087
MarhinvplHiini-im (HSr) II 7^0 nil

52 Joumal ofMarketing THEORY AND PRACTICE

 DATA ANALYSIS AND RESULTS indicating that Machiavellian managers tend to engage in such
tactic. This result provides support for hypothesis H4c.
To examine the relationships between employees' preferred
ethical ideology/orientation, Machiavellianism and UAE's The final equation investigated marketing managers' use of
marketing managers' perception of opportunistic negotiation inappropriate information gathering tactics. Idealism,
tactics, five regression models were used (Table 3). Each relativism and Machiavellianism explained 36.4% of the
equation used the manager's perception of: 1) traditional variance in the equation {F = 27.18, />< .05). Idealism was
competitive bargaining tactics; 2) attacking an opponent's found to be negatively related to the respondents' tendencies
network; 3) false promises; 4) misrepresentation opposition; to engage in this tactic {Beta = -.344, p < .05) and
and 5) inappropriate information gathering as a dependent Machiavellianism was found to be positively related to
variable and the idealism, relativism and Machiavellianism as participants' tendencies to engage in the questionable tactic of
the independent variables. inappropriate information gathering {Beta = .260, p < .05).
These results provide partial support forhypotheses H5a and
The first equation examined the impact of idealism, relativism, H5c.
and Machiavellianism on marketing managers' propensity to
engage in traditional competitive bargaining tactics. The three DISCUSSION AND MANAGERIAL IMPLICATIONS
independent variables explained 66.1 % of the variation on the
equation {F= 16.42,/? < .05). Idealism was the only influential Several factors have been described as predictors of ethical
factor of the three variables {Beta = -.486, p < .05). The behavior, including personality variables (Hunt and Chonko
negative Beta indicates that marketing managers in UAE who 1984), demographics (Volkema 2004), ethical orientation (Al-
possess high levels of idealism are less likely to become Khatib, Vitell, and Rawwas 1997), trust (Al-Khatib, Stanton
involved in traditional competitive bargaining tactics. This and Rawwas 2005), cultural values (Vitell, Nwachukwu, and
result supports the hypothesis Hla. Hypotheses Hlb and Hlc Bames 1993), opportunism (Al-Khatib, Stanton and Rawwas
were not supported. 2005) and economic Actors (Ford and Richardson 1994).
Given the presumption of conflicting interests among the
The second equation investigated the determinants of negotiating parties, it has been shown that many negotiators
mariceting managers' engagement in attacking opponents' attempt to seek advantages through opportunistic behavior or
network tactics. The three predictive variables explained other unethical means (Lewicki et al. 1994).
30.5% of the variance in the equation {F = 21.77, P < .05).
Idealism was the most influential factor {Beta=-.301 ,/> < .05), This study explored the relationship between three
followed by Machiavellianism {Beta = .229, p < .05) and independent variables (i.e., idealism, relativism, and
relativism {Beta = .170,/? < .05). Examining the directions of Machiavellianism) and five dependent variables (i.e.,
the signs of the Beta coefficients indicate, as hypothesized, traditional competitive bargaining, attacking your opponent's
that marketing managers exhibiting h i ^ level of idealism, low network, making false promises, misrepresentation of
levels of relativism, and low levels of Machiavellianism are information, and inappropriate informadon gathering) using a
less likely to engage in attacking their negotiating opponent's sample of managersfiromthe UAE. This was the first study to
network. These results confirm hypotheses H2a, H2b and H2c. explore these relationships between the three independent
variables and the five dependent variables using a sample of
When examining the role of the independent variables on marketing managers from the UAE. The findings of current
managers' tendencies to make false promises, the thr«e study are comparable to other ethical studies that used the
independent variables explained 32.1% of the variance in the three independent variables to explore ethical awareness,
marketing managers' perceptions of the false promises judgments, intentions and behavior. This study found an
behavior {F = 29.19, P < .05). Idealism was the only inverse relationship between idealism and direct relationships
influential variable in this equation {Beta=-.469,p < .05). The between relativism, Machiavellianism and the five
direction of the beta sign indicates an inverse relationship questionable negotiations tactics. These results cotifinn the
between the degree of the respondent's idealistic orientation outcomes of other ethical studies that tested similar
and the engagement in actions involving making false relationships. For example, Kim (2003) found that individuals
promises to a negotiating partner. That is, idealistic marketing with high idealism or low relativism tend to make stricter
managers are less likely to be involved in such unethical ethical judgments. Yetmar and Eastman (2000) found that
behavior. This result supports the hypothesis H3a. relativism is negatively associated with ethical sensitivity.
Raybum and Raybum (1996) found that Machiavellians are
When examining the determinants of marketing managers' less ethically-oriented than non-Machiavellians. O'Fallon and
engagements in misrepresentation ofposition to opponents, the Butterfield (2005) in their review of the empirical ethical
three independent variables explained 22.1% of the variance decision making literature for the period 1996-2003 concluded
in the dependent variable {F = 9.03, P < .05). that idealism, relativism, and Machiavellianism revealed fairly
Machiavellianism was positively related to the consistent findings over the last two decades of ethical
misrepresentation of information fector {Beta = .282,;? < .05) research. They concluded that idealism was positively related

Fall 2005 53
to ethical decision making, while relativism and involves a third party (e.g., inappropriate information
Machiavellianism were negatively associated with ethical gathering, attacking opponent network and inappropriate
judgments. Our study's results support the extemal validity of information gathering). These results are consistent with
the previous studies conducted in westem cultures. previous research (Volkema and Fleury 2002) and suggest that
UAE negotiators may be more concemed with face saving in
Forsyth (1992) used both idealism and relativism to classify direct negotiation by employing negotiation tactics that are
people into four different ethical groups. First, absolutists are less harsh and generally accepted tactics in distributive
individuals with low relativism and high idealism. Absolutists negotiation. However, when the tactic involves an indirect
believe that their actions are moral only if they yield positive third party, they may act in a more bmtal, opportunistic and
consequences through conformity to moral absolutes. They unethical manner. These results can be explained in the
believe that deception is always wrong since it violates context of the Arab culture. Previous research has shown that
fiindamental moral principles. Second, subjectivists are cultures characterized by high power distance and uncertainty
individtials with high relativism and low idealism. avoidance, such the UAE culture, produce a lack of tmst with
Subjectivists are those who reject moral mles and base their the imfamiliar, and outsiders are viewed with suspicion and
moral judgments on personal feelings about their actions. They distmst (Volkema 1998; Volkema and Fleury 2002). Second,
believe that deception is a personal matter to be decided upon in the UAE culture, cell loyalty is of great importance
by the individual. Third, exceptionists are individuals with low (Sommer, Welsh, and Gubman 2000). There is a great focus
relativism and low idealism. Exceptionists believe that on tmst and building relationships and doing business with
conformity to moral mles is desirable, but that exceptions are those people in the inner circle. To the Arab manager,
permissible. They believe that if deception cannot be avoided, engaging in behaviors that exploit the "stranger" is
then it is allowable as long as safeguards are used. Last, permissible; however, behaviors that exploit colleagues or an
situationists are individuals with high relativism and high irmer circle member are frowned upon. Given the nature of the
idealism scores. Situationists are those who reject moral mles relationship among negotiating parties, the UAE negotiator's
while asking if their actions yield the best possible outcome in counterpart is an outsider who is not trustworthy and thus
a situation. deserves exploitation.

To gain better understanding of the various types of ethical The lack of significant relationship between relativism and the
ideologies, we classified the sample into four groups using the respondents' perceptions of unethical negotiation practices
median points of the idealism (3.90) and relativism (3.10) fails to support the hypothesized relationship; however, it is
scales (Forsyth 1992). In past researeh we found two studies not completely inconsistent with previous researeh findings
(i.e., Vitell et al. 1991 and Rawwas 1996), which used this linking relativism to the acceptance of questionable ethical
scheme to classify respondents. Overall, the UAE managers practices (Forsyth 1980; Bamett, Bass, and Brown 1994; and
were mostly "absolutists" (38.6%) who strictly conform to Bass, Bamett, and Brown 1998). These studies have found that
moral standards and norms. The second sub-group was the idealism has a stronger impact than relativism on ethical
"subjectivists" (24.8%); individuals belonging to this subgroup judgments. The present study's result suggests that the
not only reject moral standards, but also base their ethical individuals' concems for the consequences of actions may be
judgments on their personal whims. The third group, who hold less influential than their idealistic moral philosophy when
the same moral standards as the "absolutists" but who may judging questionable negotiation practices.
bend them somewhat under certain extraordinary
circumstances are the "exceptionists." The "exceptionists" Since little research has focused on the ethical mindset of Arab
formed 22.8% of the sample. The fourth group was the negotiators, the findings from this study can be used to help
"situationists" (13.9%), who judge ethics by the consequences multinational companies doing business in the Arab-Gulf
of the situation. Most of the individuals in the fourth group are region to become more aware of their host country's ethical
probably utilitarian who believe that an act is right only if it environment. Intemationai managers should also find the
produces a greater balance of positive consequences than do results of this study intriguing and helpful in their dealings
other available alternatives. with associates in the UAE.

The mean score for the idealism scale was 3.77 and for the Given the important role of Machiavellianism in shaping Arab
relativism scale was 3.03. It is clear that UAE managers are executives' perceptions of opportunistic negotiation tactics,
giving higher weight to idealistic rather than to relativistic coupled with high levels of hostility (the legal environment
moral philosophies when making their ethical decisions. It is favoring local businesses regardless ofjust cause) (Cavusgil,
interesting to note that idealism emerged as the most important Deligonul, and Zhang 2004), westemfinmsneed to be cautious
factor in determiningrespondents'perceptions of inappropriate when drafting legal contracts. That is, if westem firms impose
negotiation tactics that involves one's negotiating opponent explicit legal contracts on their Arab counterparts, the
directly (e.g., making false promises, traditional competitive counterparts may perceive such action as a means of
bargaining). The Machiavellianism constmct manifested its controlling them. This can raise the inclination to behave more
significant impact on questionable negotiation practices that opportunistically. Westem firms negotiating in the Arab region

54 Journal of Marketing THEORY AND PRACTICE

 can promote honesty, enhance trust and curb opportunism by demonstrate the ability to trust, western firms need to use a
exhibiting benevolence, moral commitment, and mutual trust personalized trust approach suitable for the Arab culture. This
to their Arab coimterparts. approach may include the creation of more opportunities for
face-to-face meetings over a longer period of time and the use
of preliminary meetings prior to the actual negotiation to
Westem firms negotiating with Arab counterparts can also discuss issues of mutual concems, the use of pre-negotiation
curb opportunistic behavior by implementing screening and social contacts and even gift exchange among the parties
selection programs of various types that result in selecting involved (Cramton and Dees 1993).
partners who are not opportunistically inclined or inherently
cooperative (Orbell and Dawes 1993). These selection efforts The strong negative relationship between idealism and the
should identify the criteria to be used in screening and Arab executives' likelihood of using opportunistic negotiation
selecting future exchange partners. One possible criterion is tactics indicates that the groimds for ethical dealing is fertile
the reputation or past behavior in other relationships. Existing and underscores the need for multinational corporations, joint
reputation provides disincentive for opportunistic behavior venture partners to Arab firms, and intemational managers
(Wathne and Heide 2000) and can be useful in judging the operating in the UAE to codify the desirable and undesir^le
potential exchange partner's willingness, motivation and behavioral activities ofthe Arab negotiating partner. Given the
ability to behave ethically in the current relationship (Shapiro, high power distance and high uncertainty avoidance
Lewicki, and Devine 1995). However, for this tool to be characterizing the Arab culture, these codification efforts ar«
effective, westem firms operating in the Arab region should likely to prove successful. However, such efforts need to be
have information on their negotiating partner's past and developed with the Arab culture and past history in mind;
current behavior. Westem firms who have an established otherwise, any effort to codify behavior is bound to fail.
presence in the region may find this information gathering task
manageable; however, for first time movers, the employment Moreover, understanding the Arab negotiator's ethical mindset
of a local and independent consultant may be a more efficient provides a valuable decision-making tool for firms interested
way to assess potential partners' reputations. Basic reputation in this maricet. The strong emphasis that the Arab culture
assessment tools such as a credit rating bureau and better places on trust as the backbone of all social, organizational and
business bureau can also be useful in this assessment process; transactional relationships infiuences both firm-level
however, in case these databases are not readily available, perceptions of transaction costs and the preference for foreign
local media coverage of legal actions taken or pending against direct investment (FDI) as an entry strategy (Hofstede 1984;
the negotiating counterpart may be an effective altemative. Shane, Venkataraman, and MacMillan 1995). Intemational
firms capable of developing trustworthy relationships with
Another means of curbing opportunistic tendencies (e.g., Arab strategic partners can reduce transaction costs and
making false promises) is ex ante verification which involves increase FDI in the region.
the verification of claims or promises before making
commitments that depend on these claims or promises Finally, situational factors such as possibilify of future/long
(Cramton and Dees 1993). Given the long-term ramification of term business with the negotiating partners, ethicality of the
this opportunistic tactic, it is essential that westem firms negotiating counterpart, and the degree of favorabilify of the
negotiating in the region employ a local agent (i.e., an insider) negotiation condition, can dramatically affect the negotiator's
who can assist in this verification effort. In a similar manner, perception of the appropriateness of opportunistic negotiation
a local agent can be employed to represent the westem firm in tactics and the likelihood of their use (Volkema and Fleury
early stages of negotiation to reduce the potential use of 2002). Thus, it is possible for westem negotiators to influence
opportunistic tactics used against a third party (i.e., their Arab counterparts' choice of appropriate negotiation
inappropriate information gathering, attacking opponent tactics by discussing long term business opportunities,
netwoik and in^propriate infonnation gathering) and resulting exhibiting high ethical standards during the negotiation
from the Arab culture's distrust of outsiders. process and by understanding the conditions under which their
Arab partners are negotiating. Such understanding can then be
The high emphasis on trust in relationship building in the Arab integrated into training programs tailored to each specific
region heightens the need to rely on trust-based exchange as negotiation situation and offered to westem negotiators as part
the most effective and efficient negotiation process in the of their preparation for the negotiation process.
region. Westem firms operating in the region can enhance
mutual trust by exhibiting to their Arab partners that they are LIMITATIONS AND FUTURE RESEARCH
trustworthy and that they can be trusted. One way to
demonstrate trustworthiness early in the negotiation process is The difficulfy of drawing a true random sample impairs the
for the westem firm to ^cilitate the other party's verification generalizability of the specific findings of the current study.
efforts by providing privileged information that is otherwise Procurement of data from additional nations in the Middle
not obtainable, thus reducing information asymmetry and East would also add to the appeal of the existing database.
imcertainfy ( e.g., causes of opportunistic behavior). To Given the sensitive nature of die topic being investigated and

Fall 2005 55
despite the effort to control for it, social desirability bias may Another avenue of research suggested by this study would be
have been an issue among respondents. Future research should to empirically investigate how other intervening variables
include measures for controlling such bias and seek methods mediate the impact of cultural values on ethical judgments and
of data collection that provide greater levels of respondents ideologies. For example, what role does national identity play
identities confidentiality. in shaping the ethical mindset of individuals from different
nations? This can be contrasted with other well established
Future research should also investigate negotiation ethics in cultural value approaches (e.g., Hofstede's typology). It would
Middle Eastem countries with more social, economic and also be interesting to examine the impact of various levels of
political problems than are evidenced in the current study. This religiosify in the Middle East on ethical conduct. This is
will provide a deeper understanding of the impact of especially important considering the speed at which
environmental factors (e.g., the civil unrest in Lebanon, the modernization is taking place in the countries of the region
economic and political hardships in Iraq, and the strong and the subsequent possible erosion of religious values at the
foreign cultural infiuence on the population ofthe Arab nations individual level. Finally, the roles of trust among exchange
of North Africa) on consumers' ethical beliefe and preferred partners as well as their ethical ideologies and their impact on
ethical ideologies. the individual's perceptions of negotiation practices should be
an interesting and useful area for future research.

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AUTHOR BIOGRAPHY

Jamal Al-Khatib (Ph.D., University of Mississippi), Professor of Marketing, College of Business, University of St.
Thomas, St. Paul, MN, jaalkhatib@stthomas.edu.

AUTHOR BIOGRAPHY

Mohammed Y.A. Rawwas (Ph.D., University of Mississippi), Professor of Marketing, College of Business
Administration, University of Northern Iowa, Cedar Falls, IA, Mohammed.Rawwas@uni.edu

Fall 2005 59
 AUTHOR BIOGRAPHY

Ziad Swaidan (Ph.D., University of Mississippi), Assistant Professor of Marketing, School of Business Administration,
University of Houston Victoria, Victoria, TX, swaidanz@uhv.edu.

AUTHOR BIOGRAPHY

Richard Rexeisen (Ph.D., University of Minnesota), Professor of Marketing, College of Business, University of St.
Thomas, St. Paul, MN, rjrexeisen@stthomas.edu

60 Journal of Marketing THEORY AND PRACTICE