Alcohol and Negotiation: is it one or the other?

A shot of vodka in Russia, celebratory toasts in China, well-lubricated business lunches in France... alcohol is often a guest at the negotiation table... but at what cost?

Alcohol can be an expected part of tough negotiations (in Russia, China, and France), and can even cause serious offence if it is refused (such as in Japan and Korea), with major consequences to your business. Alcohol also has a damaging impact on the decision-making process; it causes aggressive behaviour, slows down physical and cognitive abilities and makes one vulnerable and prone to error. On the other hand, it also helps to break the ice and lowers inhibitions, which can move negotiations along more smoothly.

So, to drink or not to drink? This was the subject of a recent study by two researchers at Insead, Horacio Falcao and Alena Komaromi. Across the board, sober negotiators displayed better results than those who were intoxicated (although the latter claimed – hic – not to be affected). Even worse, they found that alcohol harmed the performance of negotiators faced with a drunk partner more than the performance of intoxicated negotiators themselves.

If you know that alcohol prompts you to adopt aggressive tactics, makes you prone to mistakes and results in lower value offers, why drink? It is because not doing so could be even more harmful to your dealings in “drinking” cultures. What a dilemma! It’s up to you to come up with the right strategic maneuvering to avoid ending up three sheets to the wind at the critical moment.

To Learn More: Can Alcohol Help You With Negotiations? by Horacio Falcão and Alena Komaromi ( Knowleadge@Insead, March 29th 2018)