“Fake it until you make it”

“Fake it until you make it” is an image associated with startups. But what if startups are not the actor but the target? Are they deceived more often than established companies are? Professor Dr. Lutz Kaufmann, Professor of International Business & Supply Management at WHU – Otto Beisheim School of Management, explores this question in his study recently published in the Harvard Business Review.

Photo: Fotolia / Narong Jongsirikul

Another belief associated with startups is that the pitch as a one-time event is the most decisive moment in the entrepreneurial journey. Of course, this also produces exciting TV formats in almost all languages. However, in reality, the most important skill of a founder is the ability to negotiate intelligently. Their negotiations typically consist of many individual episodes, which together resemble a negotiations campaign.

This observation led WHU negotiation expert Professor Dr. Lutz Kaufmann and his doctoral student Jörg Rottenburger to ask the following research question: Are managers who negotiate with startups more likely to deceive their counterpart than managers who negotiate with mature firms? The research team conducted an experimental study with 250 experienced sales and purchasing managers and interviewed some 40 founders and venture capitalists. Harvard Business Review has recently published the results online.

One of the core findings is that “roughly fifty percent of the participants negotiating with a mature firm deceived their negotiation partner. However, when their counterpart was working for a startup, these numbers skyrocketed. Two-thirds of the purchasing managers and almost three in four sales managers opted to deceive the startup.” This has, of course, huge implications for startups and becomes even more salient given the fact that most founders went through no or only inadequate negotiation training.

Article in Harvard Business Review