Managers’ Marketing Strategy Decision Making During Performance Decline and the Moderating Influence of Incentive Pay

Daniel Han Ming Chng (First Author), Matthew S. Rodgers (Participant Author), Xiao-Bing Song (Participant Author), Eric Shih (Participant Author)

Research output: Contribution to journalJournal

7 Citations (Web of Science)

Abstract

This paper focuses on managers’ marketing decision making during performance decline. Drawing on the reconciliation of theories of failure-induced change and threat-rigidity by Ocasio (1995), we examine how performance decline may result in a rigid decision-making process and decision characteristics that reflect the narrowing of attention and increased risk seeking. Furthermore, drawing on managerial compensation research, we consider how incentive pay may affect the marketing decision-making process and decision characteristics of managers during performance decline. Using a simulation game with experienced Chinese managers, our results indicate that performance decline decreases marketing strategy process comprehensiveness but increases reliance on short-term marketing decisions, strategic change, and strategic risk taking. Moreover, incentive pay attenuates the rigid decision-making process of managers but accentuates their heightened risk seeking during performance decline. This paper offers unique behavioral insights into how managers make marketing decisions.
Original languageEnglish
Pages (from-to)629-647
JournalJournal of the Academy of Marketing Science
Volume43
Issue number5
DOIs
Publication statusPublished - 2014

Corresponding author email

eshih@skku.edu

Project name

消费者感知面子的形成机理及其对购买意向的影响研究

Project sponsor

国家自然科学基金

Project No.

70902031

Keywords

  • Incentive pay
  • Marketing strategy process comprehensiveness
  • Performance decline
  • Strategic change
  • Strategic risk taking

Indexed by

  • ABDC-A*
  • Scopus
  • SSCI

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