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Extending the bargaining power model: Explaining bargaining outcomes among nations, MNEs, and NGOs

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Abstract

Participants in international bargaining include different types (nation states, MNEs, NGOs, and multilateral organizations) and different numbers of these actors. Our theoretical contribution is to extend the bargaining power paradigm with a framework that models bargaining in this complex environment as a network. The configuration of supports and constraints among all participating actors in the bargaining environment is captured in the structure of the network. Antecedents of an actor's bargaining influence in the network include the actor's basis of power, network position, bargaining outcome preferences, and motivation to influence bargaining. The network bargaining power (NBP) model uses network theory to build upon and integrate insights from previous literature in a way that allows us to simultaneously apply these different insights to explain bargaining outcomes. These insights include effects of coalitions, strategies of less powerful actors leveraging more powerful allies, integration of international and domestic politics, and applicability to MNE-related issues beyond FDI. Finally, we illustrate NBP in a scenario of privatized utilities in the Dominican Republic, in which the bargaining power outcome predicted by NBP differs from that of the canonical bargaining power perspective.

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Notes

  1. An actor is defined herein as someone (as a member of a political elite) or something (an organization, institution, government, or any part or subunit of these entities) that influences bargaining. It does not imply a level of analysis.

  2. We are leaving out reference to the “third face of power” (Digeser, 1992). Strongly influenced by Marxist and world systems perspectives (Lukes, 1975), the third face of power suffers in our view from important conceptual problems, which make it difficult to distinguish it from the second and fourth faces.

  3. An important debate in the literature on power is the extent to which agency can exist in the “fourth face of power” – in other words, whether actors can shape cognitive institutions to their advantage (Digeser, 1992; Barnett & Duvall, 2005). The private authority literature shows that this possibility should not be a priori excluded.

  4. An MNE's economic power over an HC may include both MNE resources valued by the HC, e.g., export potential, as well as HC constraints, e.g., external debt problems, because both are of an economic nature. As Kobrin (1987: 618) observes, the “line between resources and constraints is diffuse and its location may be situationally specific.”

  5. These four antecedents should not be confused with the “four faces of power” (Digeser, 1992), although, as previously discussed, our choice of antecedents is informed by scholarship on the faces of power.

  6. Data collection procedures and measures one would use to obtain numerical scores for NBP variables are provided in a working paper available from the authors.

  7. Information about the example is from AEAI (2003) and AES Dominicana (2004), and information gathered through fieldwork conducted by one of the authors as part of several consulting engagements for USAID from 2002 to 2004. Information presented herein does not represent the views of the US government, its agents, or representatives.

  8. Although Edes was 50% owned by GDR and 50% by UF, the latter also had operating control, making Edes in effect a UF subsidiary. UF appeared to exercise a clear control over Edes, with little participation by GDR in managerial decisions.

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Acknowledgements

This paper is dedicated to Dr. Douglas Nigh, international business professor at the University of South Carolina from 1987 to 2002, and my inspiration in political economy. He was taken from us much too soon, passing away at the age of 55 years. We miss him.

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Authors and Affiliations

  1. Management Department, Belk College of Business, University of North Carolina Charlotte, Charlotte, NC, USA

    James Nebus

  2. Strategy and International Business Department, Sawyer Business School, Suffolk University, Boston, MA, USA

    Carlos Rufin

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Accepted by Witold Henisz, Area Editor, 26 February 2009. This paper has been with the authors for three revisions.

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Nebus, J., Rufin, C. Extending the bargaining power model: Explaining bargaining outcomes among nations, MNEs, and NGOs. J Int Bus Stud 41, 996–1015 (2010). https://doi.org/10.1057/jibs.2009.43

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  • DOI: https://doi.org/10.1057/jibs.2009.43

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