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

Abstract

PurposeThe 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.Design/methodology/approachThe 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.FindingsIt 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.Originality/valueThis 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.