The impact of individual debiasing efforts on financial decision effectiveness in the supplier selection process

Lutz Kaufmann, Craig Carter, Christian Buhrmann

Research output: Contribution to journalArticle

17 Scopus citations

Abstract

The nascent behavioral supply management (BSM) research stream has raised the level of attention given to deviations from the standard assumptions of the rational paradigm in economics. The adaptation of cognitive heuristics, which add vulnerability to judgment and decision making, creates a pressing need to identify and develop mitigation strategies to debias decision making in the supply chain management environment. The purpose of this paper is to investigate debiasing measures, corresponding contextual variables in the supplier selection process, and their implications for financial decision effectiveness. The authors used a large-scale empirical survey among 306 buyers to investigate the relationships among individual and organizational contextual factors, debiasing measures in the supplier selection decision, and the financial effectiveness of the supplier selection decision. It was found that organizational and individual contextual factors have differing effects on the use of debiasing approaches in the supplier selection decision. Further, the debiasing tactics can have a positive (in the case of supplier selection task decomposing) or a negative (in the case of an interactional challenging of the supplier selection) impact on the financial effectiveness of the supplier selection decision. These findings suggest that supply managers must better understand the contextual factors that influence the supplier selection decision, and carefully choose the correct debiasing tactics when selecting suppliers. This paper relaxes the economic assumption of rational actors and addresses the need to identify and use debiasing tactics in supply chain management contexts. The research also complements the broader-based behavioral decision-making literature, which has often relied upon experimental methodologies that use undergraduate or MBA students, by employing a survey-based approach with supply managers as key informants.

Original languageEnglish (US)
Pages (from-to)411-433
Number of pages23
JournalInternational Journal of Physical Distribution & Logistics Management
Volume42
Issue number5
DOIs
StatePublished - Jun 8 2012

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Keywords

  • Behavioral supply management
  • Buyers
  • Debiasing strategies
  • Decision effectiveness
  • Decision making
  • Structural equation modelling
  • Supplier evaluation
  • Supplier selection
  • Supply chain management

ASJC Scopus subject areas

  • Transportation
  • Management of Technology and Innovation

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