Risky shift: An empirical investigation and implications for industrial buying behavior and marketing management

Abstract

This study attempts to determine whether the nature of the industrial buying process has an effect on the riskiness of its decisions. Research has shown that group discussion of alternatives has a tendency to shift initial risk preferences of individuals and groups. This social phenomenon, known as “risky shift,” has important implications for marketers since many decisions involve group consensus or social influence if decisions are made by a single individual. It was posited that the influence of others, mainfested by group discussion, will change the risk preference in both individual and group consensus decisions. An industrial supplier selection decision was presented to 92 marketing students in which five alternative sources of supply were described in reference to various performance criteria. The data clearly reflected statistically significant changes in risk preferences as a result of group discussion in both the individual before-individual after and individual before-group after type decision.