Reducing uncertainty in supplier selection decisions: Antecedents and outcomes of procedural rationality

Abstract

a b s t r a c tSupplier selection decisions are characterized by a high degree of uncertainty. We draw upon the behavioral operations management and decision-making literatures to examine factors that lead to the adoption of procedural rationality as a decision strategy. In addition, we emphasize the effect of procedural rationality on decision-makers' perceived uncertainty and subsequent supplier decision performance. Our structural equation model with cross-country survey data from 461 respondents in the United States and China reveals that (i) organizational, situational, and personal antecedents significantly influence the use of procedural rationality, (ii) procedural rationality is effective in reducing uncertainty in supplier selection decisions, and (iii) the reduction in decision uncertainty improves supplier decision performance. We also emphasize contextual idiosyncrasies between China and the United States.

Supplier Selection Behavior Under Uncertainty: Contextual and Cognitive Effects on Risk Perception and Choice

“…Ellis et al (2010) found that high supply disruption risk perceptions lead toward behavior that seeks new supply sources. Similarly, we view a high level of perceived risk as prevalent in supplier selection decisions because of the uncertainty associated with predicting selected suppliers' performance (Talluri, Narasimhan, & Nair, 2006;Wouters, Anderson, Narus, & Wynstra, 2009;Riedl, Kaufmann, Zimmermann, & Perols, 2013). As agents of the firm, supply managers are tasked with protecting the firm's competitive position (Zsidisin & Ellram, 2003;Fiegenbaum & Thomas, 2004).…”

“…Experience is especially important as individuals' behavior toward risk can change over time (Sitkin & Weingart, 1995). Previous studies note the importance of experience because decision-makers draw from past successful decision strategies (Beach & Mitchell, 1978;Riedl et al, 2013).…”

Analyzing buyer behavior when selecting green criteria in public procurement

“…Mantel et al (2006) revealed that make-or-buy evaluations were influenced by environmental factors such as the vividness of the information and perceived risk. Riedl et al (2013) also argued that organizational, situational, and personal characteristics influence the extent of rationality in supplier selection. Furthermore, their study found some differences in the effects of those characteristics between two countries.…”

Researching at the Intersection of Innovation, Operations Management, and Entrepreneurship

“…This type of research would likely further develop and expand current operations management research on the various forms of uncertainty entrepreneurs and entrepreneurial firms face in the new product development process (e.g., market, creative, and process uncertainty [Anderson & Joglekar, 2005]) and methods to handle these uncertainties, including, for example, flexible manufacturing capacity (Fine & Freund, 1990), trial-and-error learning or real options reasoning (Sommer & Loch, 2004), supplier selection (Riedl, Kaufmann, Zimmermann, & Perols, 2013;Simangunsong, Hendry, & Stevenson, 2016), and maybe even supply chain management (Seshadri & Subrahmanyam, 2005;Tomlin, 2003).…”