The authors study the relationship among information processing, marketing decisions, and performance in turbulent markets—i.e., markets in which the time-sensitivity of information is a major factor in decision making. Drawing on both organizational contingency theory and individual behavioral decision research, the authors suggest that successful performance depends on the congruence between the level of marketplace turbulence and the information-processing style and associated decisions adopted. They focus by way of example on the decision processes embodied in formal planning procedures. Using the results from an experiment conducted with a strategic marketing simulation game, they show that “planning” leads both to an underweighting of the time-sensitivity of marketplace information and toward a bias in favor of certain marketing decisions over others—decisions that, in this case, result in inferior performance in turbulent markets when compared with that of decision makers not engaged in formal planning. They discuss the implications of the findings for managerial behavior in turbulent markets.
Get full access to this article
View all access options for this article.
References
1.
AakerDavid (1988), Developing Business Strategies.New York: John Wiley & Sons.
BellDaniel (1973), The Coming of Post-Industrial Society.New York: Basic Books.
4.
BettmanJames, and KakkarPradeep (1977), “Effects of Information Presentation Format on Consumer Information Acquisition Strategies,”Journal of Consumer Research, 3, 233–40.
5.
BourgeoisJay, and EisenhardtKathleen (1988), “Strategic Decision Processes in High Velocity Environments: Four Cases in the Microcomputer Industry,”Management Science, 34, 816–35.
6.
CohenMichael D., MarchJames G., and OlsenJohan P. (1972), “A Garbage Can Model of Organizational Choice,”Administrative Science Quarterly, 17, 1–25.
7.
DessGregory D., and BeardDonald W. (1984), “Dimensions of Organizational Task Environments,”Administrative Science Quarterly, 29, 52–73.
8.
DruckerPeter (1980), Managing in Turbulent Times.New York: Harper and Row.
9.
DuncanR., (1972), “Characteristics of Organizational Environments and Perceived Environmental Uncertainty,”Administrative Sciences Quarterly, 17, 313–27.
10.
EisenhardtKathleen (1989), “Making Fast Strategic Decisions in High-Velocity Environments,”Academy of Management Journal, 32, 543–76.
11.
FischerGregory, and HawkinsScott (1989), “The Prominence Bias in Multiattribute Decision Making: Scale Compatibility, Strategy Compatibility and the Contingent Strategies Hypothesis,” working paper, Carnegie Mellon University. Frederickson, James and Terrence Mitchell (1984), “Strategic Decision Processes: Comprehensiveness and Performance in an Industry with an Unstable Environment,”Academy of Management Journal, 27, 399–423.
GalbraithJay, and NathansonD. A. (1978), Strategy Implementation: The Role of Structure and Process.St. Paul: West Publishing.
15.
GlazerRashi (1991), “Marketing in Information-Intensive Environments: Strategic Implications of Knowledge as an Asset,”Journal of Marketing, 55, 1–19.
16.
GlazerRashi, SteckelJoel, and WinerRussell (1989), “The Formation and Use of Key Marketing Variable Expectations and Their Impact on Firm Performance: Some Experimental Evidence,”Marketing Science, 8, 18–34.
17.
GlazerRashi, SteckelJoel, and WinerRussell (1992), “Locally Rational Decision Making: The Distracting Effect of Information on Managerial Performance,”Management Science, 38, 212–26.
18.
GrantJ.H., and KingW.R. (1982), The Logic of Strategic Planning.Boston: Little Brown & Co.
19.
HogarthRobin, and MakradakisSpiro (1981), “The Value of Decision Making in a Complex Environment: An Experimental Approach,”Management Science, 27, 93–107.
20.
HuberGeorge (1984), “The Nature and Design of Post-Industrial Organizations,”Management Science, 30, 928–51.
21.
KahnemanDaniel, and TverskyAmos (1979), “Intuitive Prediction: Biases and Corrective Procedures,” in “Forecasting,”TIMS Studies in Management Science, MakridakisS., and WheelwrightS., eds., 12, 313–27.
22.
KudlaR.M. (1980), “The Effects of Strategic Planning on Common Stock Returns,”Academy of Management Journal, 23, 5–20.
23.
LarrecheJean-Claude, and GatignonHubert (1977), MARK-STRAT: A Marketing Simulation Game.Palo Alto, CA: Scientific Press.
24.
LarrecheJean-Claude, and GatignonHubert (1990), MARKSTRAT 2: A Marketing Strategy Simulation—Instructor's Manual.Palo Alto, CA: Scientific Press.
25.
LawrencePaul R., and LorschJay W. (1967), Organization and Environment: Managing Differentiation and Integration, Boston: Graduate School of Business Administration, Harvard University.
26.
MeyerAlan D. (1982), “Adapting to Environmental Jolts,”Administrative Sciences Quarterly, 27, 515–37.
27.
MilesRaymond, and SnowCharles (1978), Organizational Strategy, Structure and Process.New York: McGraw Hill.
28.
MintzbergHenry (1973), “Strategy Making in Three Modes,”California Management Review, 16, 44–53.
29.
NisbettRichard E., and RossLee (1980), Human Inferences: Strategies and Shortcomings of Social Judgment.Englewood Cliffs, NJ: Prentice Hall.
30.
PayneJohn, BettmanJames, and JohnsonEric (1992), “Behavioral Decision Research: A Constructive Processing Perspective,”Annual Review of Psychology, forthcoming.
31.
PearceJohn A., FreemanElizabeth B., and RobinsonRichard B.Jr. (1987), “The Tenuous Link Between Formal Planning and Financial Performance,”Academy of Management Review, 12 (4), 658–75.
32.
RossWilliam (1987), “A Re-Examination of the Results of Hogarth and Makridakis’ ‘The Value of Decision Making in a Complex Environment: An Experimental Approach,”Management Science, 33, 288–96.
33.
RuekertRobert, WalkerOrville, and RoeringKenneth (1985), “The Organization of Marketing Activities: A Contingency Theory Perspective,”Journal of Marketing, Winter, 41–52.
SlovicPaul, GriffinDale, and TverskyAmos (1990), “Compatibility Effects in Judgment and Choice,” in Insights in Decision Making: Theory and Applications — A Tribute to Hillel J. Einhorn, HogarthR., ed. Chicago: University of Chicago Press.
36.
TverskyAmos, and KahnemanDaniel (1986), “Rational Choice and the Framing of Decisions,”Journal of Business, 59, S251–78.
37.
TverskyAmos Shmuel Sattath, and SlovicPaul (1988), “Contingent Weighting in Judgment and Choice,”Psychological Review, 95, 371–84.
38.
WeissAllen M., and HeideJan B. (1993), “The Nature of Organizational Search in High-Technology Markets”, Journal of Marketing Research, 30 (May), 220–33.
39.
WeissAllen M., and JohnGeorge (1989), “Leapfrogging Behavior and the Purchase of Industrial Innovations,” Technical working paper, Marketing Science Institute, No. 89–110.
40.
WoodD. R., and LaForgeR. L. (1979), “The Impact of Comprehensive Planning on Financial Performance”, Academy of Management Journal, 22, 516–25.
