An Exploration of Decision-Making under Threat

Abstract

The use of threats to force supplier compliance is a common practice in current business affairs. Unfortunately, little is known regarding the supplier's decision process to comply to or resist such a coercive strategy. The paper aims to develop a more comprehensive view of the decision process used by suppliers when threatened by their customers, as well as discover new phenomena regarding supplier Decision-Making Under Threat (DUT). More specifically, it aims at (1) gaining a better understanding of threats by looking at their patterns and commonalities and (2) identifying which consideration factors are relevant when suppliers evaluate threats. Method: To identify which consideration factors are relevant to suppliers when deciding how to react to threats, the study employed an exploratory approach by interviewing 17 marketing practitioners with experiences in DUT. The in-depth interviews lasted between thirty-five and sixty-five minutes and were transcribed. Descriptive coding and template analysis generated thirty-nine descriptors and nine categories that are deemed important when considering DUT. The authors also evaluated the intensity of each of the consideration factors present in the decision process. Findings: The results reveal that it is possible to categorize threats into three components: Objectives, Penalties and Manifestations. Objectives are what the customer is trying to achieve by using the threat, namely demanding price reductions, appropriating intellectual property, procuring financial statements, receiving a bribe, increasing technical requirements, accessing a cost breakdown, modifying delivery terms, and modifying payment terms. The penalty is what the supplier can expect to happen when refusing to comply, such as losing the customer's sales. Finally, manifestations describe how the threat is presented by the customer. Study results show that these manifestations may be categorized according to their level of ambiguity, predictability, and candor. The results also reveal that at least five cognitive decision criteria are typically considered during the decision process although at different intensity levels from each participant. These criteria include: Dependence, Cost-Benefit Analysis, Relationship Quality, Relational Norm Violations, and Mimetic Isomorphism. Several interesting discoveries were made. For example, Dependence is both the consideration factor for which most people emphasized its influence on their decision and for which most people said that it had no influence at all. Relational norm violations is unique by being the only criterion for which no participant mentioned that it does not influence their decision. The overwhelming majority of study participants considered more than three criteria during the DUT process. Finally, participants said that they experienced negative emotions such as anger and frustration when exposed to threats albeit most did not recognize that it played a role in their decision. These emotions are however believed to be a factor in reducing the su...

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