A Negotiation-Oriented Model of Auditor-Client Relationships

The increasing frequency and complexity of inter-organizational relationships suggests that inter-organizational negotiations should represent an area of increasing concern to management and academicians. Unfortunately, there is little theorizing about, nor study of, these negotiations. The few extant models are heavily influenced by models of individual negotiating styles that are then raised to the inter-organizational level with minimal change. The model developed here attempts to provide a framework for understanding the context of these inter-organizational negotiations by identifying and illuminating factors that influence the outcome of interactions in various long-term supplier relationships. Factors discussed include dynamic and stable environments, organizational cultures, role involvement, previous interactions between the individuals and organizations, and the unique characteristics of the decision-making processes that characterize the specific parties. As a framework for our presentation, we draw upon Kleinman and Palmon's (1999) theory of audit firm-client firm relationships, which is based on Kahn et al.'s (1964) Role Episode Model and Merton's (1966) Role Set Model. This paper incorporates Shakun's (1988) theory of evolutionary system design. The inclusion of the latter improves upon Kleinman and Palmon's work by first providing a better motive for the interaction between the parties, and second by shedding further light on the dynamics of the negotiation process.