Publication Type
Journal Article
Version
acceptedVersion
Publication Date
2-2014
Abstract
Explicit formal mechanisms dominate the discussion about incentives in Operations Management, yet many other mechanisms exist. Social comparison between peers may provide strong implicit incentives for individuals. Social comparison arises naturally in all social settings and may thus be unintended; however, many companies deliberately use it to motivate employees. In this study, we model a social context in which purchasers evaluate their performance relative to their peers; a feeling of inferiority results in a negative contribution to utility, whereas a feeling of superiority results in a positive contribution. We find that social comparison induces characteristic deviations from the newsvendor optimum ordering decision: if fear of inferiority outweighs anticipation of superiority, then purchasers herd together; the converse scenario incites actors to polarize away from each other. In both cases, actors will deviate from ordering the newsvendor optimum in order to satisfy social goals. Demand correlation and profit margins moderate the extent of the deviation.
Keywords
purchasing, organizing purchasing, newsvendor, social comparison
Discipline
Operations and Supply Chain Management
Research Areas
Operations Management
Publication
Production and Operations Management
Volume
23
Issue
2
First Page
303
Last Page
301
ISSN
1937-5956
Identifier
10.1111/j.1937-5956.2012.01354.x
Publisher
Wiley
Citation
AVCI, Buket; LOUTFI, Zeina; MIHM, Jurgen; BELAVINA, Elena; and KECK, Steffen.
Comparison as Incentive: Newsvendor Decisions in a Social Context. (2014). Production and Operations Management. 23, (2), 303-301.
Available at: https://ink.library.smu.edu.sg/lkcsb_research/4600
Copyright Owner and License
Authors
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.
Additional URL
https://doi.org/10.1111/j.1937-5956.2012.01354.x