Credibility of a contracting party in business negotiations

competi-tion, practices specific for a given market or the general functioning of a sector. A wide range of information about a negotiating partner con-cerns the characteristics of their enterprise. It includes for example the size and organizational structure of the company; innovativeness and development dynamics; the range of products and services and their quality as well as a company’s image and reputation in a sector; stabil-ity of employment and its corporate culture.

The abovementioned economic information will allow a business to avoid mistakes, point out good practices in solving specific prob-lems, provide knowledge about market and economic trends, which enables them to gain a competitive advantage [Jastrzbska-Smolaga, 2007, pp. 10, 66, 6875]. The significance of this information can also be examined in the context of identifying the credibility of business partners.

3. Credibility of a contracting party in business negotiations

Collecting complex and reliable information at the stage of preparing negotiations enables managers to focus on credible contracting parties with whom it will be possible to build long-term trade relationships based on the knowledge of a business partner and mutual trust. Under-taking economic actions by an enterprise, often abroad, imposes the necessity of establishing new business contacts, concluding contracts

and making transactions with new contracting parties. Such relation-ships are often burdened with a risk connected with unreliability or dishonest practices of entrepreneurs. What seems very important is a problem of verification of a multifaceted credibility of a potential negotiating partner.

In order to draw adequate conclusions it is indispensable to get in-formation related to a contractor’s reputation in a sector and also their history and image. What proves really useful is information about the efficiency of order realization, meeting obligations, reliability of de-liveries, timeliness as well as the quality of products. Information needed to verify the economic credibility of a contracting party should also include a company’s profitability, financial credibility, current turn-over and its financial results. The analysis can be complemented with information about development dynamics, a company’s innovative-ness, conducted research and development activities as well as patents and certificates. The stability of a company can also be judged on the basis of its absolute market share and market share in a target seg-ment. Additional useful information is the size of a company (meas-ured by the number of employees), its assets, technical base and ma-chinery park.

To gather the abovementioned information, negotiators can use secondary sources (it is usually processed data obtained as a result of previous surveys conducted for specific purposes, by certain people or organizations [Kaczmarczyk, 2007, p. 298]), such as: archives and public registries, papers and information services, the internet, profes-sional literature and periodical press, information bulletins, prospec-tuses, state institutions and embassies, trade and marketing associa-tions, market research agencies, credit information agencies, Economic Information Bureaus, domestic and international databases, European Information Centers, the Polish Information and Foreign Investment Agency and the Polish-foreign Chambers of Commerce, etc. [Jastrzb- ska-Smolaga, 2007, pp. 10, 66, 6875; Bartosik-Purgat, Mruk and Schroeder, 2012, pp. 1415, 3245]. Negotiators can also obtain nec-essary information from primary sources i.e. from former business partners, contractor’s clients and the contractor himself, consultants and specialists from a given sector.

In the context of gathering the information needed to verify a nego-tiating partner’s credibility, the sources that are considered most useful are Economic Information Bureaus, i.e. the National Debt Register or

the Info-monitor. The purpose of these organizations is to gather and share information about companies and individuals who do not settle their financial liabilities. The list of debtors that they offer are a useful tool while preparing for negotiations, both when deciding about the co-operation with new partners and constant monitoring of current partners’ credibility are concerned.

Information bulletins that are issued due to a public offer or appli-cation for admission for trading of securities in a regulated capital market are also a very useful source of information. Prospectuses in particular provide potential negotiators with the data to assess eco-nomic, financial, property situation as well as prospects for a contrac-tor’s development. They enable them to obtain knowledge about cur-rent investments, basic company activity or ongoing legal proceed-ings, which have influence over a contractor’s financial situation.

In highly developed European countries, the source that is used most frequently are the credit information agencies whose aim is to support an enterprise in decision-making in the area of establishing and concluding trade contracts. These specialized institutions deal with the professional and lawful collection of information about economic entities, its gathering and processing. They also offer commercial re-ports containing the description of legal-organizational and financial situations of a contractor’s company as well the assessment of their credibility.

In the light of these discussions an attempt to check how compa-nies verify a negotiating partners’ credibility has been made and it included satisfying information needs and checking how companies assess the usefulness of the information which it had obtained. Con-clusions were drawn on the basis of the results of the empirical re-search conducted in December 2012 and January 2013 by the Depart-ment of Marketing of the University of ód. The project aimed to asses a degree of using marketing research in the context of supporting ne-gotiations as a specific decision-making process and was a comple-mentation of a research project concerning the usefulness of market-ing research in companies practice which started in October 2011.

The research was conducted on the sample of medium-sized and big enterprises (entities employing 50 to 249 workers or entities em-ploying 250 workers or more) located in ód and the ódzkie region.

They were examined by means of non-probability sampling – through purposive sampling using the address base made available by the

Voivodeship Statistical Office. Research procedures were purposefully focused on bigger enterprises assuming that they more frequently than the small ones conducted negotiations and more often gathered infor-mation, using marketing research. The research was conducted by means of personal interviews carried out with high management level repre-sentatives or individuals responsible for conducting business negotia-tions (president, vice-president, director, marketing manager or sales manager). The research tool was an interview questionnaire.

The research comprised 285 enterprises, among which 267 (i.e.

nearly 94%) were conducting business negotiations in the last three years and the research procedures focused on them (Tab. 1).

Table 1. Characterization of enterprises which conducted business negotiations (by selected features)

International market 133 49.8

Total 267 100.0 Source: Own study.

4. Assessment of a negotiating partners credibility