an experimental investigation of the interactions ... - Vlerick Public

For each supplier selection, subjects had to indicate their purchase intention for bothsuppliers by moving a slider over a horizontal bar. 6 By doing this, they divided 100 points betweenthe two new suppliers. The more points they gave at a supplier, the higher their purchase intentionfor that supplier. If subjects were indifferent between both suppliers, then both suppliers received 50points. Based on the subjects’ purchase intention, we constructed the dependent variable for ourstatistical tests. We transformed the purchase intention to a scale from zero to 100 where zeroindicates the highest preference for the supplier that optimizes the performance of the purchasingdepartment (i.e. supplier that causes the lowest total costs) and 100 indicates the highest preferencefor the supplier that optimizes the performance of the firm as a whole (i.e. supplier that optimizesthe trade-off between total costs and revenue-generating possibilities). Thus, the higher the score forour dependent variable, the more subjects prefer a supplier that improves overall firm performance.For our statistical tests, we take for each subject the average score of the six supplier selections. Wewill call our dependent variable the degree of firm-optimizing supplier selections.3.3 Experimental ManipulationsThe incentive system is manipulated by providing participants with an incentive to maximizethe performance of the purchasing department (i.e. minimize the total costs of a supplier) or tomaximize firm performance (i.e. optimize the trade-off between revenue-generating possibilities andtotal costs). The department-based incentive formula is as follows:Total costs of a supplier – 10% of the revenues that a supplier will generate if he isselected.Subjects with the department-based incentive were informed that they should focus onminimizing the value of their incentive formula (i.e. minimizing total costs of a supplier). The firmbasedincentive formula is as follows:and in two supplier selections the total costs of one supplier was higher while the total costs of the other supplier waslower compared to the current supplier. Within each group of two supplier selections, there was one (one) supplierselection in which the total costs of both new suppliers were in a small (large) range around the total costs of the currentsupplier.6 Marketing research has already shown that purchase intention scales are good predictors of real buying behavior (Wrigthand MacRae 2008).14