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Electronic negotiations > Projects > Project 1



Building Business Models for E-negotiation Services
October 2002- December 2003



Y. Yuan, McMaster University

Key researchers:  

J. Etezadi, K. Laframboise and St. Strecker, Concordia University; Ch. Weinhardt, University of Karlsruhe

Ph.D. students:  

O. Turel and W. Zheng, McMaster University

Master students:  

F. Reyes and W. Rong, Concordia University

Project 1 began in October 2002 and is co-funded by ORNEC (Ontario Research Network of Electronic Commerce) and NSERC.

E-negotiation services review

With the growth of electronic commerce, there is a great demand and potential for online negotiation and dispute resolution services. A small but growing number of e-negotiation services have emerged in the market but they are still in the early stage of development and are struggling for survival. It is important to publicize and recognize the value of these services. We reviewed existing e-negotiation services and classified these services into four categories: e-negotiation process support, e-negotiation decision support, e-negotiation for contract management, and online negotiation training.

Business models for e-negotiation services

Although negotiation support systems have been studied and developed for more than two decades, they had very little influence in industry in the past. The advances of Internet technology and the growth of e-commerce make it possible and desirable to offer e-negotiation services through the Internet. However, can these e-negotiation services be profitable? What is the appropriate business model that may lead to the success of e-negotiation services? The objective of this research is to build business models for e-negotiation services. According to Afuah and Tucci (2000), a business model is the method by which a firm builds and uses its resources to offer its customers better value than its competitors and to make money doing so. They analyzed customer value, market scope, pricing, revenue source, connected activities, implementation, capabilities, and sustainability in their business model. Referencing their model, we proposed a a framework for e-negotiation business models to analyze e-negotiation services on the following aspects: :

  1. Identify the market demand for e-negotiation services and classify existing e-negotiation services that provide customer values to meet these demands,
  2. Identify the cost structure and source of revenue for e-negotiation services, and
  3. Identify issues and challenges for the success of e-negotiation.

Questionnaire for e-negotiation services

Most research on e-negotiation focuses on the usefulness of e-negotiation methods. In these studies, simulated negotiation cases are used in laboratory experiments using students as subjects. They are useful in investigating the human-computer interface and the efficiency and effectiveness of negotiation support. These types of studies however, do not address the issues of business adoption of e-negotiation services, such as the cost/value justification, security and privacy considerations etc. We investigate the perception on e-negotiation from potential business users and developed a questionnaire for business survey. The questions were designed to address three aspects on e-negotiation services: the perceived benefit, the perceived difficulties, and the outlook of the future of e-negotiation services. Telephone interviews were conducted to collect data from the industry. 70 responses were received from mainly two sectors: manufacturing and labour unions. We found that the awareness of e-negotiation services is very low in the business world. Although the majority of people we surveyed agreed that there are potential benefits of online negotiation, they also felt that there are many difficulties that need to be overcome in order to achieve successful adoption of e-negotiation services. The findings could be useful for e-negotiation service providers .

E-negotiation in supply chain management

Firms are turning their attention to global sourcing as a means to improve performance and enhance competitiveness. Some partnerships created with this strategy improve product development through collaborative design. With the advent of e-commerce, a new set of collaborative applications integrated to the firm's IT infrastructure allow a direct interaction between the firm and its suppliers, having an impact on negotiation. The issue is particularly relevant for industries with highly engineered products and extensive supply networks. We provide insights on the impact of the adoption of collaborative design technologies by an aerospace manufacturing firm and how these relate to electronic negotiations. We provide a set of consequences of the adoption of this technology to add to the body of knowledge of the impacts of e-commerce in supply chains.

Journal publications

Yuan, Y. (2003). "Online Negotiation in Electronic Commerce." International Journal of Management Theory and Practices, Vol. 4, No. 1: 39-48.

Conference proceedings

Laframboise, K. and F. Reyes (2003). "E-Negotiations, Supply Networks and Collaborative Product Development in Aerospace Manufacturing." Proceedings of the 2003 DEXA Conference, Prague, Czechoslovakia.


Yuan, Y. and Turel, O. (2004) "A Business Model for e-Negotiation in Electronic Commerce." InterNeg Working Paper INR 01/04 (full text).

Plan 2004

So far we have investigated the potential benefits and difficulties of using e-negotiation services from a users' perspective. We need to further investigate the marketing strategy, the value proposition and cost structure from a e-negotiation service providers' perspective. Company interviews and field studies are necessary to collect the data and to verify and enrich our theoretical business model.


We have close relationship with NovaForum Inc., provider of an electronic courthouse. Teri Kirk, the CEO of NovaForum was invited to attend and gave presentations about the online dispute resolution services at the E-Negotiation Workshop at St. Sauveur, McMaster MeRC Supply Chain Symposium in Toronto, and McMaster 25th Word Congress on e-Business Management in Hamilton.  Yufei Yuan is serving as academic liaison for NovaForum. We work together to explore business opportunities for online dispute resolution services. We also want to further investigate the business value of e-negotiation and dispute resolution services from both existing user and service providers' perspective.

Planned Events

  • Group Decision and Negotiation 2004, CORS/INFORMS Joint Meeting, The Banff Centre, Banff, Canada, May 16-19, 2004.
  • The Third Annual Forum on Online Dispute Resolution in Melbourne, Australia 5-6 July 2004.


February 9, 2004