Integrative or Interest-based bargaining is a negotiation strategy in which all parties collaborate to find beneficial outcomes for each. The strategy focuses on finding a ‘win-win’ solution by developing mutually beneficial agreements. Interests, needs, and concerns of each party are taken into consideration to ensure that there is mutual agreement instead of a conflict.
Integrative bargaining helps the parties to combine their interests to create additional value and enlarge the pie. The ‘pie’ refers to the share of benefits. However, there can only be a discussion where negotiation is possible. Also, the parties should recognize the possibility of a mutually beneficial solution.
Integrative bargaining differs from positional bargaining in terms of decision-making power. In integrative bargaining, every party is given an equal chance to negotiate whereas in positional bargaining, a party at a higher position has a compromise or a failed negotiation as an outcome. In positional bargaining, one of the most common outcomes is a 50:50 division of the pie without any increase in its value.
In Integrative bargaining, it is important to share information with others, being honest, and outlining all priorities – because something that might be very critical to one might be a minor consideration for the other. Stating the facts clearly at the beginning helps in future negotiations and lays down a transparent field for negotiations. It is also important to compromise on one’s requirements if one feels that the compromise might help develop relationships which will be useful in the future.
An example of integrative bargaining can involve two kids and a video game. If they follow the distributive bargaining approach, each kid will receive 50:50 of the total time allotted. However, through an integrative bargaining approach, each kid might find out the reasons of the other for playing the gain and discover that one wanted to test it while the other one wanted to complete it. In this way, the one who wanted to test it might take only 5% of the total time and move on to testing other games while the one who wanted to complete it might get enough time for the same.
This example can be applied to two businesses fighting over a common resource. One of the outcomes can be that one business is interested in processing the resource whereas the other is interested in the waste generated after processing.