Data Envelopment Analysis Journal > Vol 2 > Issue 1

Conceptualizing and Measuring the Efficiency of Negotiated Exchanges between Buyers and Sellers: A Data Envelopment Analysis Approach

P.V. (Sundar) Balakrishnan, University of Washington Bothell, School of Business, USA, , Charles Patton, Rutgers University, Rutgers Business School, USA, , Robert Wilken, ESCP Europe Business School Berlin, Chair of International Marketing, Germany,
Suggested Citation
P.V. (Sundar) Balakrishnan, Charles Patton and Robert Wilken (2016), "Conceptualizing and Measuring the Efficiency of Negotiated Exchanges between Buyers and Sellers: A Data Envelopment Analysis Approach", Data Envelopment Analysis Journal: Vol. 2: No. 1, pp 1-34.

Publication Date: 26 Oct 2016
© 2016 P. V. Balakrishnan, C. Patton and R. Wilken
Channel management,  Customer relationship management,  Group choice and negotiation,  Sales force management,  B2B commerce,  B2B marketing,  Economic theory,  Industrial organization,  Operations research
Inter-organizational contractseconomic outcomessociopsychological outcomesbuyer–seller negotiation efficiencydiagnosticsdyadic outcomesmarketing exchanges


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In this article:
1. Introduction 
2. Review of Traditional Negotiation Efficiency Measures 
3. Desiderata and Assessment of Negotiation Efficiency Measures 
4. DEA: A Rich Measure of Negotiation Efficiency 
5. Applications of DEA As Negotiation Efficiency Measures 
6. Discussion and Conclusions 


Buyer–seller negotiations (BSN) are the fundamental mechanism of deal-making in business markets. However, it is well-known that many such negotiations fail to exploit their integrative potential and remain inefficient. Therefore, defining, measuring, and understanding the causes of BSN efficiency are of great consequence to researchers, managers, and policy makers. Based on an assessment of the shortcomings in extant measures, we posit the conceptual and analytical desiderata for any measure of negotiation efficiency. Specifically, we refine the conceptual understanding of BSN efficiency beyond the standard economic viewpoint and extend it to encompass a) affective responses to complement economic outcome measures, b) resources expended to reach these outcomes, and c) the multi-dimensional nature of both the outcome and input (resource) aspects. We propose Data Envelopment Analysis (DEA) as a means to measure our conceptualization of BSN efficiency to alleviate the shortcomings identified. We use two studies to illustrate the face validity and additional insights that employing DEA provides compared to traditional outcome measures. We conclude by discussing the directions for future research.