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Article
Publication date: 5 March 2018

Gao Liu

Although most empirical studies find that competitive bidding can reduce the interest cost, the municipal bond primary market is dominated by negotiating offerings. The purpose of…

Abstract

Purpose

Although most empirical studies find that competitive bidding can reduce the interest cost, the municipal bond primary market is dominated by negotiating offerings. The purpose of this paper is to investigate this dilemma by empirically testing two hypotheses: self-selection bias and decision inertia hypotheses.

Design/methodology/approach

Logistic regressions and Heckman procedures are used to examine data from the California municipal bond primary market.

Findings

The paper finds that while information asymmetry does affect the selection of underwriting approach, self-selection bias cannot explain the cost difference between the two sale approaches. On the other hand, decision inertia has the highest explanatory power in the selection of sale approaches.

Originality/value

This paper provides a new explanation for the “competitive sale dilemma” from the perspective of decision inertia. The authors document that state and local governments show a greater propensity of adhering to previous choices, particularly in a context in which the outcome is uncertain or actors have little knowledge in comparing the outcome of the alternatives.

Details

Journal of Public Budgeting, Accounting & Financial Management, vol. 30 no. 1
Type: Research Article
ISSN: 1096-3367

Keywords

Article
Publication date: 2 July 2018

Gangxiang Xu, Bin Guo, Wen Li and Xiaoting Wang

The purpose of this paper is to use the theoretical perspective of structural inertia as a unique lens to study foreign sequential entry mode choices of multinational firms.

Abstract

Purpose

The purpose of this paper is to use the theoretical perspective of structural inertia as a unique lens to study foreign sequential entry mode choices of multinational firms.

Design/methodology/approach

It adopts quantitative analysis of a sample of 121 Chinese publicly listed firms with 564 foreign entry incidents in the 2001-2012 period to test the hypotheses.

Findings

The empirical results show that multinational firms have a tendency to adopt the same mode in the subsequent entry as the number of prior entry mode choice of a given type (joint venture (JV) in this study) increases. The results support the theoretical prediction that organizations repeat their past activities due to structural inertia. Moreover, such an inertia effect in foreign sequential entry mode choices becomes stronger for older multinational firms, larger multinational firms and state-owned multinational firms.

Research limitations/implications

Consistent with existing research, this study focuses on the entry mode choice between JV and wholly owned subsidiaries. However, it is better to examine the relationship identified in the study for different types of entry mode choices to assess result generalizability.

Practical implications

It reminds managers of multinational firms that they should be cautious to the influence of structural inertia that can be a barrier to strategic flexibility when they make entry mode choices.

Originality/value

The main contribution of this study resides in introducing structural inertia perspective to help understand the determinants of foreign sequential entry mode choices of multinational firms.

Details

Baltic Journal of Management, vol. 13 no. 4
Type: Research Article
ISSN: 1746-5265

Keywords

Article
Publication date: 5 October 2012

Susanne Engström and Erika Hedgren

Humans tend to rely on beliefs, assumptions and cognitive rules‐of‐thumb for making judgments and are biased against taking more uncertain alternatives. Such inertia has…

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Abstract

Purpose

Humans tend to rely on beliefs, assumptions and cognitive rules‐of‐thumb for making judgments and are biased against taking more uncertain alternatives. Such inertia has implications for client organizations' decision making about innovations, which are inherently more uncertain than conventional alternatives. The purpose of this paper is to contribute to furthering the understanding of barriers to overcoming inertia in client decision making in new‐build.

Design/methodology/approach

A descriptive behavioural decision‐making perspective is combined with an organizational information‐processing perspective. To identify and discuss individual and organizational barriers that potentially distort clients' decision making on innovation, the analysis addresses aggregated data from four studies. The analysis focuses on inferences and interpretations made by decision makers in Swedish client organizations, their information‐processing practices and the subsequent impacts on perceived meanings and judgments about industrialized multi‐storey, timber‐framed building innovations, which are perceived by Swedish clients as new and different building alternatives.

Findings

Cognitive and organizational barriers maintain status‐quo decisions. Clients are inclined to make biased judgments about industrialized‐building alternatives because non‐applicable cognitive rules‐of‐thumb, based on their experiences of conventional‐building alternatives, are used. Furthermore, client organizations' information‐processing practices do not allow different meanings to surface, interact and potentially suggest different conclusions, at odds with established beliefs.

Originality/value

The paper's conclusions highlight how inertia is sustained in client decision making in new‐build. They illustrate the limitations of a common engineering approach, i.e. supporting decision making about innovations by focusing on providing more information to the decision maker in order to reduce uncertainty, as well as managing multiple meanings by reductionism.

Details

Construction Innovation, vol. 12 no. 4
Type: Research Article
ISSN: 1471-4175

Keywords

Article
Publication date: 12 October 2017

David M. Gray, Steven D’Alessandro, Lester W. Johnson and Leanne Carter

This paper aims to examine the antecedents of customer inertia (i.e. knowledge, confusion, perceptions of competitor similarity and switching costs) and their relationship to…

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Abstract

Purpose

This paper aims to examine the antecedents of customer inertia (i.e. knowledge, confusion, perceptions of competitor similarity and switching costs) and their relationship to customer satisfaction, service providers’ switching intentions and actual switching behavior. Customer inertia is said to reduce the incidence of service provider switching; however, little is known about the antecedent drivers of inertia.

Design/methodology/approach

The conceptual model was tested by a longitudinal/discontinuous panel design using an online survey research of 1055 adult (i.e. +18 years old) subscribers to cell phone services. Partial least squares (PLS) path modeling was used to simultaneously estimate both the measurement and structural components of the model to determine the nature of the relationships between the variables.

Findings

Findings of the PLS structural model provide support for the direct relationship between customer inertia and its antecedents (i.e. knowledge, confusion, perceptions of competitor similarity and switching costs). The results show that customer inertia has a moderate negative effect on the intention to change service providers but had no measurable effect on the actual behavior of changing service providers, other than indirectly, by influencing the perception of difficulty in switching some 11 months later. Further results from an analysis of indirect pathways of the antecedents to inertia show that switching costs are the only variable which indirectly reduce intentions to change service providers. The results also show that the effect of satisfaction on switching service providers is partially moderated by inertia. Importantly, these relationships are reasonably robust given past switching behavior and contract status of consumers.

Research limitations/implications

The authors find evidence which explains some of the causes of inertia, and show that it has both direct and moderating effects on service provider switching intentions, though not necessarily the behavior of changing service providers. However, support was found for its indirect role through intent as an influence on switching behavior. Importantly, the authors find that inertia has lingering effects, in that it influences the perception of switching difficulties and, hence, behavior up to 11 months in the future.

Practical implications

Managerial implications are that service firms can profit from customer inertia through a reduction in churn. However, high levels of customer inertia over the longer term may increase the level of customer vulnerability to competitor offers and marketing activities, as satisfaction with the provider does not in itself explain switching intentions or behavior.

Originality/value

This study is the first study to contribute to an understanding of the antecedent drivers of customer inertia with respect to service provider switching and to empirically evaluate a variety of antecedent factors that potentially affect switching intentions. Importantly, the long lasting latent effect of inertia in indirectly influencing service switching behavior was found to persist some 11 months later.

Details

Journal of Services Marketing, vol. 31 no. 6
Type: Research Article
ISSN: 0887-6045

Keywords

Article
Publication date: 28 July 2023

Vasanthi Mamidala, Pooja Kumari and Dakshita Singh

The purpose of this study is to examine the behaviour of retail investors while making an investment decision and how it gets affected by the behavioural biases of the investors…

Abstract

Purpose

The purpose of this study is to examine the behaviour of retail investors while making an investment decision and how it gets affected by the behavioural biases of the investors using a moderated-mediation framework.

Design/methodology/approach

A mixed method approach has been used to fulfil the objectives of the study. In the first study, a qualitative analysis of the interviews with 15 retail investors was conducted. As part of the quantitative study, a total of 201 responses from Indian retail investors were collected using systematic sampling and analysed using structural equation modelling and Process Macro.

Findings

The results indicate that anchoring bias, availability bias, herding bias, switching cost, sunk cost, regret avoidance and perceived threat have a significant effect on retail investors’ investing intention. The attitude of the investors towards investing decisions mediates the effects of behavioural bias and the status quo on investment intention. The results of the moderated-mediation analysis indicate that mediating effect of attitude varied at the low and high-risk aversion of investors.

Practical implications

The findings of this study will help regulators and retail investors to understand the critical behavioural biases which affect the investors’ investing intention.

Originality/value

The paper contributes to the literature on investors’ behaviour, status quo bias theory (SQB) and behavioural bias. This study uniquely proposes a moderated-mediation framework to understand the effects of biases on retail investors’ investment intention.

Details

Qualitative Research in Financial Markets, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1755-4179

Keywords

Article
Publication date: 17 September 2021

Mostafa Rezaeirad and Alireza Koushki Jahromi

The growth and development of positive psychology approaches in the areas of human resource management has created a successful conceptual basis in the psychology of business and…

Abstract

Purpose

The growth and development of positive psychology approaches in the areas of human resource management has created a successful conceptual basis in the psychology of business and jobs and has led to a tendency to apply knowledge and skills to job expectations in line with job expectations. That profession will grow, and this can also lead to the development of ethical practices. The purpose of this paper is the effect of self-fulfilling prophecy on developing auditors' ethical values.

Design/methodology/approach

The target population of this study was auditors of auditing organizations and private sector audit firms that were selected through random sampling and evaluated over a period of 6 months. The research instrument was standard questionnaires, and partial least squares analysis was used to test and test the research hypotheses.

Findings

The results of this study show that the effect of self-fulfilling prophecy on ethical virtue and ethical conscientiousness as two dimensions of auditors' ethical values has a positive and significant effect.

Originality/value

This study explains how to clearly convey the social expectations of an auditor about value-based approaches in the audit profession, and it examines the role of these expectations in the professional performance of auditors. In fact, beliefs and expectations play a decisive role in improving auditors' level of value based on professional behavior, such as professional skepticism and objectivity, and this research can help increase the level of knowledge about this profession.

Details

International Journal of Ethics and Systems, vol. 38 no. 1
Type: Research Article
ISSN: 2514-9369

Keywords

Book part
Publication date: 3 July 2017

Alan Reinstein, Mohamed E. Bayou, Paul F. Williams and Michael M. Grayson

Compare and contrast how the accounting, organizational behavior and other literatures analyze sunk costs. Sunk costs form a key part of the decision-making component of the…

Abstract

Purpose

Compare and contrast how the accounting, organizational behavior and other literatures analyze sunk costs. Sunk costs form a key part of the decision-making component of the management accounting literature, which generally include previously incurred and unrecoverable costs. Management accountants believe, since current or future actions cannot change sunk costs, decision makers should ignore them. Thus, ongoing fixed costs or previously incurred sunk costs, while relevant for matters of accountability such as costing, income determination, and performance evaluation are irrelevant for most short- and long-term decisions. However, the organizational behavior literature indicates that sunk costs affect decision makers’ actions – especially their emotional attachments to the related project and the asymmetry of attitudes regarding the recognizing of losses and gains. Called the “sunk cost effect” or “sunk cost fallacy,” this conflict in sunk costs’ underlying nature reflects one element of incoherence in contemporary accounting discourse. We discuss this sunk cost conflict from an accounting and a philosophical perspective to denote some ambiguities that decision usefulness and accountability introduces into accounting discourse.

Methodology/approach

Review, summarize and analyze the above literatures

Findings

Managerial accountants can apply many lessons from the various literature sources.

Originality/value

We also show how differing opinions on how to treat sunk costs impact a firm’s decision-making process both economically and socially.

Details

Advances in Management Accounting
Type: Book
ISBN: 978-1-78714-530-6

Keywords

Open Access
Article
Publication date: 27 May 2021

Ilaria Galavotti, Andrea Lippi and Daniele Cerrato

This paper aims to develop a conceptual framework on how the representativeness heuristic operates in the decision-making process. Specifically, the authors unbundle…

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Abstract

Purpose

This paper aims to develop a conceptual framework on how the representativeness heuristic operates in the decision-making process. Specifically, the authors unbundle representativeness into its building blocks: search rule, stopping rule and decision rule. Furthermore, the focus is placed on how individual-level cognitive and behavioral factors, namely experience, intuition and overconfidence, affect the functioning of this heuristic.

Design/methodology/approach

From a theoretical standpoint, the authors build on dual-process theories and on the adaptive toolbox view from the “fast and frugal heuristics” perspective to develop an integrative conceptual framework that uncovers the mechanisms underlying the representativeness heuristic.

Findings

The authors’ conceptualization suggests that the search rule used in representativeness is based on analogical mapping from previous experience, the stopping rule is the representational stability of the analogs and the decision rule is the choice of the alternative upon which there is a convergence of representations and that exceeds the decision maker's aspiration level. In this framework, intuition may help the decision maker to cross-map potentially competing analogies, while overconfidence affects the search time and costs and alters both the stopping and the decision rule.

Originality/value

The authors develop a conceptual framework on representativeness, as one of the most common, though still poorly investigated, heuristics. The model offers a nuanced perspective that explores the cognitive and behavioral mechanisms that shape the use of representativeness in decision-making. The authors also discuss the theoretical implications of their model and outline future research avenues that may further contribute to enriching their understanding of decision-making processes.

Details

Management Decision, vol. 59 no. 7
Type: Research Article
ISSN: 0025-1747

Keywords

Article
Publication date: 4 January 2021

Juan Dempere

This research aims to study some national government success factors at controlling the first wave of COVID-19. The author placed special attention on democracy-related factors.

Abstract

Purpose

This research aims to study some national government success factors at controlling the first wave of COVID-19. The author placed special attention on democracy-related factors.

Design/methodology/approach

A sample of 156 countries were studied during the first half of 2020 and their government effectiveness was analyzed regarding six dependent variables, namely, the government’s daily average of stringency index, the outbreak response time, the daily average of cases and deaths per million, the daily average of tests per thousand and the mortality rate.

Findings

The study finds that countries with the highest democracy indexes applied the softest social constraints measured by the daily average stringency index. These countries suffered a more severe pandemic impact confirmed by the highest daily averages of cases and deaths per million and the highest mortality rate. Similarly, these countries exhibited the shortest outbreak response time and the most extensive daily average tests per thousand.

Research limitations/implications

The limitations of this study include lack of universal consensus for the dependent variables’ definitions, inconsistencies in how countries record COVID-19 deaths, differences in testing efforts, variances on health services, unreliable data from less democratic countries and so on.

Originality/value

To the best of the author’s knowledge, no previous research paper has studied the explanatory power of the author selected government success factors at controlling the first wave of COVID-19, which constitutes this study’s original contribution.

Details

Transforming Government: People, Process and Policy, vol. 15 no. 4
Type: Research Article
ISSN: 1750-6166

Keywords

Article
Publication date: 1 June 2006

Kurt Matzler, Andreas Würtele and Birgit Renzl

The purpose of this paper is to explore the dimensionality of price satisfaction. It argues that price satisfaction is composed of several dimensions (price transparency…

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Abstract

Purpose

The purpose of this paper is to explore the dimensionality of price satisfaction. It argues that price satisfaction is composed of several dimensions (price transparency, price‐quality ratio, relative price, price confidence, price reliability, and price fairness) and that companies should consider these dimensions when monitoring customer satisfaction.

Design/methodology/approach

Based on a theoretical discussion of the price dimensions, a questionnaire is developed that measures customer satisfaction with individual price dimensions. Using regression analysis the impact of price satisfaction dimensions on overall price satisfaction is measured, using a sample of 160 students.

Findings

The results show that price satisfaction can be conceptualized as a multidimensional construct and that five dimensions influence overall price satisfaction. The application of the questionnaire allows for measuring price satisfaction in firms.

Research limitations/implications

The paper introduces price satisfaction as a multidimensional construct and the study empirically supports the hypotheses. The student sample, however, restricts generalizability and more studies are needed to test the validity and reliability of the questionnaire.

Practical implications

Based on the measurement of price satisfaction, managers are able to identify the drivers of price satisfaction, their satisfaction and relative importance in different market segments and, consequently they are able to take the right measures to increase customer satisfaction and loyalty.

Originality/value

So far price satisfaction has been treated as a one‐dimensional construct. This paper contains a theoretical argumentation for why price satisfaction should be treated as a multi‐dimensional construct consisting of several dimensions, i.e. price‐quality ratio, price fairness, price transparency, price reliability and relative price. These dimensions constitute the determinants of overall price satisfaction.

Details

International Journal of Bank Marketing, vol. 24 no. 4
Type: Research Article
ISSN: 0265-2323

Keywords

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