Playing Hardball In Claim Negotiations – The Impact of Hardball Tactics On The Business Relationship

The economic impact of COVID-19 or the Russia-Ukraine war (e.g., rising commodity prices) increasingly deprives contracts, concluded on previous market information, of their underlying economic foundation. This leads to a decrease in the profitability of an agreement for one party, thereby affecting stable, long-term business relationships. Thus, despite the absence of contractual entitlements, renegotiating has become a necessity for companies to ensure profitability. Since subsequent claims in turn negatively impact the recipient’s profitability, hardball tactics are often used in response. Hardball tactics refer to a particularly tough negotiation style (e.g., refusal to negotiate or hard concessionary behavior). Studies on buyer-seller negotiations indicate that using hardball tactics can harm the business relationship. Whether this also applies to claim negotiations has not yet been investigated. Therefore, our empirical study examines the impact of using hardball tactics within claim negotiations on the business relationship. Findings provide implications for outcome- and relationship-oriented renegotiation management.