Managerial biases and their differential impacts on marketing behaviour under different situations : a study using strategy simulation data.
Goh, May San.
Le, Thi Lan Huong.
Date of Issue2008
College of Business (Nanyang Business School)
Research generally assumes that human biases produce a uniform (usually negative) effect on managerial behaviour regardless of the circumstances. However, it is possible that biases have different degrees and directions of effects under different circumstances. Knowing the differential impacts of biases in different situations is important because managers need to recognize their own biased tendencies and better predict the behaviours of their competitors who operate in either similar or different situations. Therefore, we undertake this study to examine the effects of biases on managers’ marketing behaviours under different circumstances. Specifically, we investigate five major biases (namely, Wrong Shoe, Sales Volume Illusion, Price Cutting Momentum, Magnified Expectation of Loss, and Risk Aversion) and three marketing behaviours (namely, Market Aggressiveness, Price Reactivity, and Firm Innovation) in four different situations - high and low revenue market conditions as well as market leader and market follower positions. We obtained behavioural and survey data from CESIM, a strategy simulation game, to test the various effects. Our findings show different directions of relationships between biases and behaviours across the different conditions. Interestingly, the results also suggest a significantly positive relationship, instead of a commonly believed negative relationship between certain firms’ behaviours and some biases. We draw implications of these findings for managerial practice.
Final Year Project (FYP)
Nanyang Technological University