The Curse of Competitiveness: How Advice from Experienced Colleagues and Training Can Hurt Marketing Profitability

Abstract

The literature suggests that mangers are overly competitive and overemphasize competitors' payoffs in making decisions. The authors demonstrate how two seemingly innocuous but common decision inputs that mid-and entrylevel managers use-(1) advice from colleagues and ( 2) training-could propagate this bias. The authors conduct an experiment in which one generation of participants plays a noncooperative game and then passes on advice on how to play the same game to the second generation. The authors find that the second generation is more likely to accept decisions that negatively impact the competitor's profits, even when those decisions result in lower payoffs. The results suggest that the advice of the first generation causes the second generation to be more sensitive to relative performance. In a second experiment, the authors show that training films that create negative feelings toward competitors can have adverse effects on managers' decisions. The training increases the willingness of managers to sacrifice own profits to reduce competitor profitability. These findings have important implications for managers in competitive markets. This research suggests that standard training materials that emphasize beating competitors should be carefully assessed for their unintentional but potentially damaging effects. In particular, training designed to evoke affective responses toward competitors must be used judiciously. Firms that give junior managers more autonomy and responsibility should also be cognizant that the advice these managers get and the information they share may propagate a competitive bias. To mitigate this problem, an option is to devote resources to better understand the content and nature of advice that managers share with one another.

Incompetency training: Theory, practice, and remedies

“…Thus, subjects in the harm and beat treatments were two to more than four times more likely to select the less profitable decision than when no information was provided about competitors. Kalra and Soberman (2008) provide similar findings in additional experiments using other scenarios. In reviewing additional studies, Kalra and Soberman (2008, p. 32) conclude, "These studies show that managers do not naturally gravitate to strategies that maximize outcomes.…”

Can’t Live With Them, Can’t Live Without Them: The Ambivalent Effects of Existential Outgroup Threat on Helping Behavior

“…For example, in the marketing literature, competition is considered a zero-sum situation where one firm can only benefit at the expense of another (Henderson, 1983). Consequently, brands go to great lengths to inflict harm on their rivals and eliminate them economically (Kalra & Soberman, 2008). Our findings suggest that the elimination of relevant outgroups may not be something highly identified consumers are craving.…”