Page 281 - DMGT519_Conflict Management and Negotiation Skills

Unit 13: Fairness and Trust in Negotiation

Notes
U.S. Ambassador, Merle Cochran and the Foreign Minister of Indonesia, Subardjo signed
an agreement that did not have the support of the Indonesian Cabinet. As matters developed,
it became clear that if the Americans were to use the purchase of large quantities of rubber
and tin conditional on Indonesian acceptance to the American interests, this perceived
obedience to American policies and interests would meet with stiff opposition within
Indonesia. In fact, the Indonesians made it quite clear they would walk rather walk than
submit to any attempt at coercion by the U.S. Potentially, Indonesia could have traded
with China instead.
As a result, Indonesia signed a very agreeable deal, known as the Cochran-Subardjo
agreement that was signed on January 5, 1952. Indonesia did not have to commit to any
mutual defence treaty with the U.S. However, when the agreement became public, a huge
outcry erupted from the Indonesian nationalists. Subardjo was removed form his office as
was the pro U.S. Indonesian cabinet.
At the insistence of the new Indonesian negotiators, negotiations were now conducted in
Washington. The more militant Indonesian negotiators gave up some very lucrative
military grants to satisfy the nationalistic concerns of its people, but they did so through
their own choice. In other matters, the Indonesian gained many of their other objectives,
but the overall aid they could have procured was considerably diminished. U.S. objectives
were watered down in the ensuing agreement because in the end, Indonesia held a stronger
hand due to their indifference to the influence of foreign aid as an inducement to comply
with the U.S. position.
Questions:
1. Interpret the case.
2. Discuss the case facts.

13.10 Trust-bases and Relationship in Negotiating Trust

Trust

There is widespread agreement among scholars that trust is important to effective negotiation.
However, a more sophisticated understanding of trust is necessary to understand how
it influences negotiation and decision-making in different ways. This paper will first
analyze whether trust is a precondition for negotiation. It will then discuss how trust may serve
as a goal of and a strategy in negotiation and conclude with two examples.

As a Precondition

Trust can be defined as “an expression of confidence in another person…that you will not be put
at risk, harmed or injured by [his/her] actions.” Thompson sees trust as the “bedrock” of
negotiation. This brings to mind the question of whether trust is therefore a precondition for
negotiation. In certain situations, the presence of trust is indispensable for parties to negotiate
at all. In traditional Chinese business circles, personal trust is so important that
businesspeople invest heavily to cultivate it. However, the significance of trust is culture- and
context-specific. Claiming that trust is necessary for all kinds of negotiation seems to be an
overstatement. To take an extreme example, in negotiation with hostage-takers, there is unlikely
to be any trust to start with. Yet this is a situation where negotiation is urgently needed, and one
objective of such negotiation is to build at least some mutual trust, so that the hostage-takers
will be more willing to communicate their intentions.

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