Negotiating in Life, Business Negotiation April 15, 2011

Reciprocity and Business Negotiations

Reciprocity, which the business glossary on AllBusiness.com defines as “generally, relationship between persons, corporations, states, or countries whereby privileges granted by one are returned by the other,” is sometimes frowned upon in negotiations.

Critics of reciprocity generally think in terms of antitrust regulations or avoiding unfair competition. How can there be a level playing field if a company grants business to those that are doing already doing business with it? In the advertising and editorial field, there is a fear that if a company is a large advertiser at a magazine, that the editorial side will only publish favorable articles about that company.

Dr. Chester L. Karrass, writing in his book Give and Take, has different perspective. He writes:

Reciprocity is a dirty word in America. Not so elsewhere in the world. There, one hand washes the other.



A seller should know from whom his or her company buys. A buyer should know the extent to which his or her company markets its products to the seller's organization. Being aware of these things is not the same as violating the laws against reciprocity. Knowing that you can act with restraint, good taste, propriety, and better business judgment. There isn't an antitrust law in the world that can or ought to keep you from doing just that.

Basically, it is incumbent on anyone in business negotiation to exercise good business judgment. You can reciprocate business with a vendor, but do so only if it really is in the best interest of your company. Are you getting a fair price or favorable terms? If not, and you are doing it as a return favor, you are not doing your company a favor at all.

How do you deal with tacit or implicit suggestions of the need for reciprocity?