Debiasing competitive irrationality: How managers can be prevented from trading off absolute for relative profit

Lorenz Graf, Andreas König, Albrecht Enders and Harald Hungenberg

European Management Journal, 2012, vol. 30, issue 4, 386-403

Abstract: Managers sometimes sacrifice profits only to improve their relative competitive standing, a behaviour that is known as “competitive irrationality.” Previous research has generated a wealth of insight into the general foundations of this often dysfunctional type of managerial decision-making. However, almost no attention has been devoted to the question of how managers can reduce competitive irrationality. We address this issue by adopting the logic of debiasing research to hypothesize about five potential countermeasures: creating accountability, “considering the opposite,” making the bias of competitive irrationality salient to the decision maker, reducing time pressure and relying on external advice. We test our hypotheses on a sample of 934 managers using web-based experiments. Our empirical evidence supports our call for reducing time pressure in managerial decision-making and for providing managers with training in biases to attenuate competitive irrationality. However, our data also indicate that efforts to make managers feel accountable for their actions can have a detrimental effect on decision quality, which is contrary to our theorizing.

Keywords: Competitive irrationality; Positional concerns; Debiasing; Managerial decision-making (search for similar items in EconPapers)
Date: 2012
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0263237311001149
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:eurman:v:30:y:2012:i:4:p:386-403

Ordering information: This journal article can be ordered from
http://www.elsevier.com/wps/find/journaldescription.cws_home/115/bibliographic
http://www.elsevier. ... me/115/bibliographic

DOI: 10.1016/j.emj.2011.12.001

Access Statistics for this article

European Management Journal is currently edited by Michael Haenlein

More articles in European Management Journal from Elsevier
Bibliographic data for series maintained by Catherine Liu ().