The effect of decision context on perceived risk in pricing strategies: how managers view uncontrollable environmental forces

Abstract

Purpose

The purpose of this article is to assess managers' evaluation of risk associated with applicable uncontrollable forces when developing pricing strategies.

Design/methodology/approach

The present study is based on attribution theory. An experiment using more than 100 business managers was conducted to assess the perceived risk of uncontrollable environmental factors.

Findings

The findings suggest that when uncontrollable environmental factors dominate pricing managers tend to select pricing strategies with external orientations to deflect risk away from themselves personally.

Research limitations/implications

This research is limited to pricing strategies and not a broader selection of marketing strategies. The present research provides greater insight as to why managers make certain strategic pricing decisions.

Practical implications

This paper suggests management should frame decision‐making contexts so that minimizing personal exposure is consistent with corporate goals and objectives.

Originality/value

This paper is an extension of previous research examining the managers' perception of risk. In particular, this paper focuses on how managers examine/evaluate risk and how that impacts their decision‐making process when selecting pricing strategies.

Citation

Forman, H. and Hunt, J.M. (2013), "The effect of decision context on perceived risk in pricing strategies: how managers view uncontrollable environmental forces", Journal of Product & Brand Management, Vol. 22 No. 1, pp. 79-86. https://doi.org/10.1108/10610421311298722