This study attempts to fill the gap in our understanding of the differences between socially embedded and arm's-length transactions by examining the micro-processes of negotiations--in particular, the dynamic creation of a shared logic of exchange--as a way of thinking about the micro-processes of definition, interpretation, and interaction that take place in a negotiation.
The presence and nature of the social ties between the negotiating parties affects their expectations and preferences about outcomes, eases coordination of a shared logic, and determines the normative constraints operating within the interaction.
We investigated the dynamics of improvisation and the creation of a shared logic of exchange and examined ways in which these form a critical link between social ties and the outcomes of economic transactions.
In qualitative analyses of the transcripts, we studied the process of coming to a shared logic of exchange and looked for ways in which the shared logic was affected by social embeddedness.
This excerpt gives a clear flavor of the shared logic in haggling improvisations (#305):
Because these observations do not match our original conceptualization of a shared logic of exchange, we investigate them in detail below.
Because we conceive of improvisations as dynamic, creative acts, we were interested in how the initiation stage (Holmes, 1992) shaped the negotiation that ensued and how transitions subsequent to this stage eased or hindered coordination of a shared logic. To investigate this, we separated the first six exchanges from the rest of the transcript and attempted to categorize these initial interactions.
To explore how negotiating parties come to share a logic of exchange, and to check how social embeddedness affects coordination of a shared logic, we looked for incongruence between the initiation stage and the full improvisation.
"Initially, recyclers just wanted to track inventory," says Shared Logic's Smith.
"In the early days, we would make a modification for one customer at a time, but over time you would have fewer people on staff who understood the custom modifications that had been made for a given client," says Smith of Shared Logic. "Modifications are now made for one customer and given to everyone else for free.