Examining innovative entrepreneurs’ negotiation outcomes during the new product launching stage: a social cognition and psychological approach

Negotiation with corporate customers is a significant phase that innovative entrepreneurs must go through to launch their new products. Effective negotiation at the launching stage of a new product or service can be achieved by clearly communicating the values of a new product to customers, successfully selling new products, gaining financial profits, developing, and expanding relationships, generating trust, and opening more growth opportunities in future. However, the negotiation process during the launching stage often contains several prominent challenges for innovative entrepreneurs, including customers’ low trust of relatively unfamiliar products, lack of business competencies, and unprepared mindsets. Such challenges are major reasons that lead to low acceptance rates of a new product, which account for more than 40% of startups’ failures, according to surveys from CB Insight in 2019. To overcome these challenges, innovative entrepreneurs need negotiation knowledge and skills. While previous studies have mainly focused on differentiating the negotiation behaviours of entrepreneurs and non-entrepreneurship groups, little research has been done to discover the influence of certain negotiation behaviours on negotiation outcomes. Furthermore, despite the importance of the launching stage, recent entrepreneurship negotiation studies mainly focus on negotiation effectiveness during the fundraising stage, whereas outcomes and their determinants in the new product launching stage have not been thoroughly examined. Measurements of negotiation outcomes in previous entrepreneurship negotiation studies have employed quantifiable financial values such as profit/loss or deal/no deal to assess negotiation performance. It has been argued that financial negotiation outcomes are not able to capture other non-monetary aspects of the negotiation process, which may lead to inaccurate measurement and identification of the negotiation efforts, tactics, and performance of a negotiator. To overcome these limitations, this study incorporates psychological elements to measure negotiation outcomes. In particular, this thesis aims to identify and assess factors that affect entrepreneurs’ perceived negotiation performance with corporate customers during the launching stage of new products, using both behavioural negotiation theory (BNT) (Neal and Northcraft, 1991) and Thompson’s negotiation theory (1990), which have both suggested that social cognition and personal perceptions strongly influence the way the negotiators behave and evaluate negotiation performance. BNT is often used in business environments to develop negotiation frameworks based on negotiators’ social cognition and behaviours and suggests that while the negotiation context is static, the negotiators’ cognitions are dynamic and play a significant role in differentiating the negotiation process between specific negotiators. Thompson’s (1990) negotiation theory is well-known in assessing negotiation performance based on psychological constructs and indicates that differences in social cognition might lead to differences in performance evaluation and satisfaction in negotiation. The combination of BNT and Thompson's negotiation theory suggests that negotiation studies should explore negotiation behaviours and evaluate negotiation performance based on the negotiators’ social cognition to develop an accurate negotiation framework. As a result, this study provides a negotiation framework that innovative entrepreneurs can use to improve their negotiation performance with corporate customers during new product launching stage. The study employed a mixed method approach using both qualitative and quantitative methods in two stages. In the first stage, a series of semi-structured interviews were conducted individually with 14 Vietnamese innovative entrepreneurs to explore their practices of assessing negotiation outcomes when dealing with new products and services. Findings from this stage found clear support for the importance of psychological elements in forming the studied entrepreneurs’ negotiation performance. In the second stage, survey data from 387 participants were collected and analysed to ascertain a proposed research model. Results from stage two supported all seven proposed hypotheses. Findings from this study suggest future studies should expand their criteria when assessing negotiation outcomes to include both financial and non-financial aspects, especially during the early stage of product penetration into new markets. This study contributes to entrepreneurship and negotiation knowledge by exploring psychological elements and their determinants in exercising negotiation with corporate customers during the launch of new products. The identified psychological elements are: • Fairness of benefit sharing from the negotiating agreements • Self-expression throughout the negotiation process • Concern for the entrepreneurs’ preferences • The development of relationships Such inclusion will help entrepreneurs to change their focus to long term relationships and non-monetary achievements by indicating and exploring the significance of non-financial achievements gained from the negotiation process to the business development. The study found social cognition elements, including concern about personal outcomes and customers’ outcomes, building relationships, and emotional expression, exert a positive impact on negotiation performance. In contrast, risk-taking negatively affects negotiation outcomes. Furthermore, acquaintanceship and reputation were affirmed as having a strong positive influence on negotiation performance at this stage. Control variables, including age, educational level, years of experience, and industry were also found to affect the negotiation performance of innovative entrepreneurs. Practically, innovative entrepreneurs should consider the fairness in benefits sharing with customers, be cautioned about over commitment when taking risks to maximise profit, prepare an appropriate self-image, offer multiple pre-packed options and new product trials, clearly express positive emotion, and take advantage of acquaintanceship and reputation to optimise their negotiation performance. The study’s findings also provide recommendations for entrepreneurs’ training to enhance their negotiation outcomes. Vietnamese entrepreneurship education is recommended to focus more on promoting learning programs related to risk assessment and consequences, providing more soft skill trainings, and connecting with external associations to organise startup competitions.