Publication Type

Journal Article

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

Copyright Owner and License

Authors

Creative Commons License

Creative Commons Attribution-Noncommercial-No Derivative Works 4.0 License
This work is licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 4.0 License.

Additional URL

http://doi.org/10.1111/j.1937-5956.2012.01354.x

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