Corporate Negotiation Pitfalls: The Case of Facebook

In corporate negotiation, dealmakers can be so focused on scoring great terms for their company and closing the deal that they overlook issues that could become problems during implementation.

By on / Business Negotiations

corporate negotiation

In corporate negotiation, negotiators often care most about getting the best price possible, assessing the other party’s ability to follow through, and closing the deal. Unfortunately, such business preoccupations can lead dealmakers to overlook potential ethical concerns, as current negotiations in the news often attest. Examining some of Facebook’s recent corporate negotiation mistakes, we describe how you can ensure that your latest corporate negotiation will thrive in the long term.

A Breach of User Trust

In June 2018, the New York Times reported that since at least 2010, Facebook has negotiated more than 60 data-sharing partnerships with hardware manufacturers such as Apple and Samsung, as well as four Chinese companies. One of the business deals gave the companies access to sensitive data on Facebook users—including their work history, relationship status, and religious and political views—to Huawei, a Chinese telecommunications company that U.S. intelligence officials consider to be a national security threat.

The news about Facebook’s data sharing broke just months after the revelation that Facebook exposed data on up to 87 million of its users to Cambridge Analytica, a research firm tied to Donald Trump’s presidential campaign. Appearing before Congress in April 2018, Facebook CEO Mark Zuckerberg apologized for allowing the data to be accessed and vowed to do better in the future. In June, he faced scrutiny for failing to disclose the data-sharing deals during his congressional testimony. “Sure looks like Zuckerberg lied to Congress about whether users have ‘complete control’ over who sees our data on Facebook,” David Cicilline, the ranking member of the House Judiciary antitrust subcommittee, tweeted in response to the Times story.


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Ethical Fading in Corporate Negotiation

Facebook’s deals with device makers involved two of the social media company’s well-specified business goals: generating more mobile users and making inroads in China, where Facebook has been banned since 2009. Facebook negotiators likely were paying less attention to other critical issues in the corporate negotiation, such as the potential for the agreements to compromise user privacy, as well as any negative publicity or punishment that could result from such data sharing.

In his book The Power of Noticing: What the Best Leaders See (Simon & Schuster, 2014), Harvard Business School professor Max H. Bazerman writes that negotiators and other decision makers often focus so narrowly on their immediate goals and tasks that they miss important information that falls outside their field of vision. Bazerman and New York University professor Dolly Chugh call this common tendency bounded awareness.

In a corporate negotiation, the tendency to focus on narrow financial and business goals can contribute to ethical fading, or the tendency for the ethical dimensions of a decision to fade from consideration. Organizational practices can lead us to classify a decision as a “business decision” rather than as an “ethical decision,” according to Notre Dame University professor Ann Tenbrunsel and Kellogg School of Management professor emeritus David Messick. When we fail to recognize the ethical dimensions of a corporate negotiation, we may end up behaving unethically—perhaps without even realizing it.

In particular, when trying to negotiate business contracts, we face the risk of engaging in parasitic value creation, according to Bazerman. The term describes the tendency of parties in a corporate negotiation to focus so narrowly on how they would benefit from a deal that they overlook the potential harm the agreement could impose on outsiders.

New Guidelines for Corporate Negotiation

We don’t know whether the data-sharing built into Facebook’s deals with device makers raised ethical red flags during the negotiations. But given the news that emerged, it seems quite possible that negotiators minimized or overlooked the ill effects of data sharing on Facebook users, as well as the scrutiny and potential sanctions Facebook could face for sharing the data.

Looking beyond business negotiations in the news, how can business negotiators ensure they include ethical considerations in their decision making? First, organizations need to hold their negotiators accountable for weighing ethical considerations as well as financial factors.

Second, all parties in a corporate negotiation need time and space to sift through the many implications of a deal—and their organizations must ensure that they do so. That’s because our quick, intuitive judgments tend to be both less ethical and less rational than slower, more analytical decision making.

Through these business negotiation solutions, organizations can avoid unpleasant surprises, accusations, and conflict resolution scenarios once their deals are in effect.

What other ethical pitfalls have you observed in corporate negotiation?

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