The impact of computer-mediated communication on the processes and outcomes of negotiated transfer pricing

https://doi.org/10.1016/0959-8022(93)90019-3Get rights and content

Abstract

New communication technologies are offering organizations options that were not previously available. These new opportunities have the potential to impact many aspects of the organization, including coordination and control efforts. Despite a growing literature concerning computer-mediated communication, the basic question of whether the simple switch from written to computer-mediated communication changes behavior still remains unanswered. We argue that advanced information technology has created a frame with enabling and limiting impacts that exists even when the major characteristics are not present.

This paper reports the results of a laboratory experiment concerning the effects of communication medium on the process and outcomes of negotiations in a transfer pricing situation. An organizational coordination mechanism and its interactions with communication medium were also examined. Structured negotiations were communicated through written exchanges and through computerized networks where the media richness and technical system capabilities were the same in both media. The negotiation process and outcomes were both measured. The results show that communication medium does effect both the process and outcomes of negotiations, even when media richness and system capabilities are the same in both media. Computer-mediated communication took fewer rounds of negotiation to reach an agreement, leading to an improved process, but had lower outcomes with lower firm profit and lower perceived autonomy. Thus, these results support our argument that medium provides a frame that affects behavior even when the major characteristics of the medium are absent. Further, medium interacts with arbitration, demonstrating the importance of considering other coordination and control mechanisms when examining the impact of medium.

References (77)

  • D.G. Pruitt et al.

    The effect of time pressure, time elapsed, and the opponent's concession rate on behavior in negotiation

    Journal of Experimental Social Psychology

    (1969)
  • J. Siegel et al.

    Group processes in computer-mediated communication

    Organizational Behavior and Human Decision Processes

    (1986)
  • B.H. Spicer

    Towards an organizational theory of the transfer pricing process

    Accounting, Organizations and Society

    (1988)
  • W.H. Starbuck et al.

    When is play productive?

    Accounting, Management and Information Technologies

    (1991)
  • R.J. Swieringa et al.

    Organizational views of transfer pricing

    Accounting, Organizations and Society

    (1982)
  • L. Thompson et al.

    Social perception in negotiation

    Organizational Behavior and Human Decision Processes

    (1990)
  • R. Abdel-Khalik et al.

    Transfer pricing: A synthesis

    The Accounting Review

    (1974)
  • Arunachalam V., Dilla W., (in press). Computer-mediated communication and structured interaction in transfer pricing...
  • J. Bell

    The effect of presentation form on the use of information in annual reports

    Management Science

    (1984)
  • P.D.J. Carnevale

    Strategic choice in mediation

    Negotiation Journal

    (1986)
  • R. Casson

    Schemata in cognitive anthropology

    Annual Review of Anthropology

    (1983)
  • P. Chalos et al.

    Transfer pricing under bilateral bargaining

    The Accounting Review

    (1990)
  • A.D. Chandler

    The visible hand: the managerial revolution in American business

    (1977)
  • J. Collins

    Creativity and the personal computer

    The Wall Street Journal National Business Employment Weekly

    (1989)
  • T. Connolly et al.

    Effects of anonymity and evaluative tone on idea generation in computer-mediated groups

    Management Science

    (1990)
  • P.C. Crampton

    Dynamic bargaining with transaction costs

    Management Science

    (1991)
  • M.J. Culnan et al.

    Information technologies

  • R.L. Daft et al.

    A tentative exploration into the amount and equivocality of information processing in organizational work units

    Administrative Science Quarterly

    (1981)
  • R.L. Daft et al.

    Information richness: A new approach to managerial behavior and organization design

    Research in Organizational Behavior

    (1984)
  • R.L. Daft et al.

    Organizational information requirements, media richness and structural design

    Management Science

    (1986)
  • R. D'Andrade

    A folk model of the mind

  • G. DeSanctis et al.

    A foundation for the study of group decision support systems

    Management Science

    (1987)
  • E. Diener

    Deindividuation: Causes and consequences

    Social Behavior and Personality

    (1977)
  • E. Diener

    Deindividuation, self-awareness, and disinhibition

    Journal of Personality and Social Psychology

    (1979)
  • W.N. Dilla et al.

    Communication structures, incentive systems and coordinated decision making

    (1989)
  • R.G. Eccles

    Control with fairness in transfer pricing

    Harvard Business Review

    (1983)
  • L. Festinger

    Informal Social Communication

    Psychological Review

    (1950)
  • T. Finholt et al.

    Electronic groups at work

    Organizational Science

    (1990)
  • Cited by (0)

    View full text