Building theory on the negotiation capability of the firm : evidence from Ryanair

Purpose: In an attempt to build upon existing theory, this paper aims to investigate the potentially reciprocal relationship between negotiation and strategy, and strive to contribute toward a better understanding of the ways in which organizations negotiate. Design/methodology/approach: Built upon the integration of two different bodies of literature, negotiation and strategy, and on the analysis of the case of Ryanair, this paper argues for an integrated approach to negotiation and organizational capabilities. Findings: The case study allows for a clearer understanding of how negotiation capability can play a significant role in supporting the creation and sustainment of competitive advantage, even under unfavorable industry settings. Originality/value: This paper contributes to theoretical development by offering new and insightful explanations of firms’ behavior, moving beyond the classic interpretation of industry dynamics, such as bargaining power. This study has implications for both practice and research, as it offers a better and more holistic understanding of the strategy-making process and the foundations of its success.