Sealing the Deal with Trust: The Essential Role Trust Plays in Business Negotiations

In business, the subtle art of negotiation is critical for success; and at the heart of every successful negotiation lies a fundamental element—trust. This crucial factor can determine whether a negotiation turns into a prosperous long-term relationship or fizzles out into a lost opportunity (with a trail of dead bodies in its wake). For business leaders and managers, understanding and leveraging trust can be the gateway to more fruitful negotiations and sustained business growth because without trust, you can’t play the long game.

The Psychological Underpinnings of Trust in Negotiations

Trust in business is not just about believing the other party will fulfill their promises. It is about creating a psychological safety net that encourages open communication, risk-taking, and cooperation. Harvard professor and negotiation expert Dr. Daniel Shapiro emphasizes that trust acts as a ‘lubricant’ in negotiations, easing friction and fostering an environment where parties can share information openly and negotiate more creatively.

Negotiations permeated with trust tend to be more about finding a win-win case scenario rather than a zero-sum game. This psychological comfort allows negotiators to move from defensive positions to collaborative problem-solving, where the focus shifts from ‘me against you’ to ‘us against the problem’.

After all, the word trust includes the word “us” within its center.

Trust as a Dealmaker:

Example: Disney and Pixar in 2006, The Walt Disney Company and Pixar Animation Studios showcased how trust can transform negotiations into landmark deals. After a period of strained relations, Disney’s CEO, (who was their new CEO at the time) Bob Iger, made repairing the bond with Pixar a top priority, recognizing the mutual benefits of a continued partnership. By addressing Pixar’s concerns about creative autonomy directly and fostering a climate of mutual respect and trust, Disney was able to successfully negotiate the acquisition of Pixar. This not only preserved Pixar’s creative culture but also turned out to be tremendously profitable for Disney, enhancing their capabilities in animation and broadening their market share.

Deals like these are common in the biographies of successful entrepreneurs like Richard Branson, who often speaks about the importance of trust in all his business dealings. Branson’s philosophy is that trust empowers people, which in turn accelerates negotiations and drives better outcomes.

To paraphrase Stephen M.R. Covey, trust develops when you do what you say you are going to do, when you say you are going to do it.

When Trust Breaks: The Deal-Breaker Scenario

Conversely, the absence of trust can cripple negotiations. Imagine a scenario where one party constantly feels the need to guard their interests closely, leading to withheld information and a lack of genuine dialogue. Such negotiations often result in either party walking away or agreements that are brittle and likely to fail under pressure, with healthy long-term business relationships and/or partnerships rarely an option.

Example: Yahoo and Microsoft in 2008, Yahoo and Microsoft were involved in a highly publicized negotiation when Microsoft attempted to acquire Yahoo. However, trust issues surfaced due to disagreements on the valuation and future strategies, leading Yahoo to reject Microsoft’s offer. The lack of trust and the failure to agree on key terms caused the deal to fall through. The aftermath saw Yahoo’s market value decline significantly, illustrating how the absence of trust can result in lost opportunities and decreased shareholder value.

Building and Rebuilding Trust

Building trust is not an overnight process, especially if previous actions have damaged it. Business leaders and managers can foster trust through consistency, transparency, and by honoring commitments. In negotiations, this could mean openly sharing information, acknowledging the other party’s concerns, and proposing fair solutions.

Example: Volkswagen’s Emissions Scandal, Volkswagen faced a severe trust crisis during the 2015 emissions scandal, where they were found to have manipulated emissions tests. This deception damaged trust with consumers, regulators, and investors worldwide. To rebuild trust, Volkswagen took several corrective steps, including investing in electric vehicle technology and pledging transparency in their operations. Their efforts to restore trust were crucial in renegotiating partnerships and maintaining customer loyalty, demonstrating the importance of rebuilding trust in ensuring a company’s resilience and long-term success.

These specific examples provide clear insights into how trust can either be a catalyst for successful business relationships or a critical factor in their downfall.


For business leaders and managers, embracing the role of trust in negotiations is not just a strategic decision but a necessary ethos. Trust is the foundation upon which negotiations are built and without which, even the strongest strategies can crumble. By investing and demonstrating trust, businesses not only enhance their negotiation outcomes but also build stronger, more resilient relationships with their partners, customers, and employees.

Remember, when trust is present, negotiations become not just about making deals, but about forging alliances that can stand the test of time.

Dr. Patty Ann

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