Digital Embeddedness and its Effect on Organizational Purchase Decisions

Abstract

Business scholars and thought leaders suggest that increased reliance on digital sources (e.g., blogs, social media, and online forums) exhibited by the emerging millennial workforce may affect procurement decisions. These arguments contend with research that indicates that organizational buyers rely on decision shortcuts (e.g., brand, loyalty, and peer opinions) to mitigate risks or to simplify purchase decisions. One can argue that buyers gain more information from digital sources, which may attenuate their reliance on heuristics. At the same time, digital sources may strengthen prior beliefs, which can increase reliance on decision proxies. This study draws from information processing theory to understand the role of digital sources of information in decision-making, in the context of business purchasing. Based on the Accessibility-Diagnosticity framework, we introduce a novel Digital Embeddedness construct to conceptualize the extent to which information from digital sources is integral to an individual’s decision-making. Analysis of survey responses from 196 purchasing managers suggests that more digitally embedded buyers are more willing to adopt innovations, yet interestingly, rely more on decision shortcuts such as brand and peer opinions. We also find that while more digitally embedded buyers feel more attached to their existing vendors, they are less likely to re-purchase from them. We discuss implications for B2B collaboration, including customer relationship management. This research elucidates individual-level differences in the use of digital sources, and thus has implications for future work that examines the interpretation of digital information to inform business decisions.