Bridging psychological distance of negotiation failure in construction dispute negotiation

Negotiators are not always rational. Prior studies have found that negotiators tend to be overconfident about their ability to win and underestimate the possibility of negotiation failure. This biased judgment may lead to irrational evaluation and miss the chance to settle. It is argued that negotiators handle a negotiation respective to their perception of the risk of failing. The meaning of failure therfore may have a pivotal influence on the negotiation outcome and warrant deeper conceptual treatments. In this regard, this study aims to conceptualize construction dispute negotiators’ perception of negotiation failure. Applying the construal-level theory (CLT) and the concept of psychological distance (PD), a psychological distance of negotiation failure (PDNF) framework was developed. With data collected from construction negotiators in Hong Kong, the PDNF framework was statistically supported by the partial least squares structural equation modeling (PLSSEM) results. Four types of psychological distance of negotiation failure were identified: temporal distance, social distance, uncertainty, and frequency. The empirical findings provide a psychological perspective of how negotiators perceive the potential failure during negotiation process. Management can adopt the PDNF framework to gauge negotiators’ perceptions of failure. Timely interventions, such as inviting third-party neutrals and internal reviews with new information collection, are suggested to offset negotiators’ biased judgment of the potential negotiation outcome.