Chávez Steinmann, Mariza (2024). Essays on Information Provision and Information Acquisition in Innovative Settings. (Thesis). Universität Bern, Bern
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Abstract
This thesis consists of three essays on information provision and information acquisition in innovative settings. Due to limited resources, decision-makers have to select new ideas and allocate budgets early in the innovation process. Therefore, decision-makers rely on various types of information, such as product and market information, to evaluate new ideas and their potential. While prior research has identified the types of information used in innovation decisions, it remains unclear how the provision of this information and management controls affect decision-makers' information behavior and, consequently, their decision performance. I investigate these issues through a customer feedback study and two experimental studies, using the market information collected in the customer feedback study. I contribute to research and practice by analyzing factors that facilitate decision-making in innovation. To investigate information provision and information acquisition, I collect market information in the customer feedback study. This allows me to design decision-making experiments with a more realistic setting instead of designing experiments with hypothetical scenarios. Participants in the customer feedback study evaluate several new ideas and indicate their purchase intention for each of them. The purchase intention represents the market potential of the new ideas. This approach has several advantages for the subsequent experiments. First, I can objectively measure decision performance in the experiments based on the market potential of those new ideas selected and budgeted by the participants in the experiment. Second, it allows me to design experiments with economic incentives for the experimental tasks comparable to financial incentives in practice, as participants in the experiments are paid based on the market potential of their selected and budgeted new ideas. Third, obtaining the market potential of new ideas and compensating participants in the experiments accordingly allows me to design decision-making experiments with an economic optimum to analyze how and why behavioral biases cause decision-makers to deviate from this optimum. In the first essay, I analyze the drivers of customers’ purchase intention to test the effects of various influence factors empirically and to obtain market information for the experimental studies. While one line of literature states that customers’ impressions of the functional aspects of a new idea influence their purchase intention, another stream argues that the purchase intention depends on how well a new idea solves customers’ problems. Based on both streams, I derive ten indicators each for the concepts of product impressions and customer problems. While some product impressions indicators are quantitatively defined by prior research, I translate the largely qualitative concept of customer problems into quantitative indicators. This allows for empirical testing of factors influencing purchase intention based on each stream. In addition, it allows the design of experiments in which participants can acquire both types of market information that provide different customer insights but can be made available on the same scale level for greater experimental control. To generate a pool of new ideas that can be evaluated based on the indicators, I develop app ideas for which I design app presentations. The results of this study reveal that six product impressions indicators (Usefulness, Interest, Design, Benefits, Convenience, Ease of Use) and five customer problems indicators (Degree of Problems, Behavioral Fit, Priority, Improvement, Comparative Gain) drive customers’ purchase intentions. In the second essay, I investigate how the provision of product and market information influences decision performance in idea selection. For innovation, firms either adopt a product-first or market-first approach, which influences the order in which the information is disseminated to decision-makers. Even though the information order differs, prior research shows that both types of information are essential for idea selection and should be provided at some point. However, in dependence on these innovation approaches, the R&D and marketing departments generate and prepare information for reporting with a certain time gap. This raises the question of whether product and market information should be provided to decision-makers as soon as they are available, i.e., with high separation, or combined in one report when both information are available, i.e., with low separation. While providing information at the time of availability keeps decision-makers updated, prior research shows that low information separation can positively influence decision performance. This study offers a more nuanced view by showing that the positive effect of low separation on decision performance depends on the information order. This study shows that while decision performance improves when both types of information are provided with low separation under market-first, this positive effect is weaker under product-first compared to market-first. The reason is that compared to market-first, under product-first, decision-makers have a less immediate need to combine both types of information, reducing the likelihood of information combination even if the separation is low. Consequently, in this study, I show that information separation and information order interactively influence decision performance. In the third essay, I investigate decision-makers' information processing and acquisition behavior under two control mechanisms: acquisition restrictions and justification. In this experiment, participants acquire information on product impressions and/or customer problems and allocate budget to new ideas. I provide controlled evidence that decision-makers generally prefer information on product impressions over customer problems, even though information on customer problems could be acquired for the same cost. The preference for information on product impressions leads to a negative performance effect when decision-makers can acquire both types of information but are not required to justify their decisions as decision-makers acquire more likely both types of information but process it selectively by ignoring more likely customer problems. This selective attention can lead to a misinterpretation of market potential, particularly in settings where market information is contradicting, for instance, when new ideas score high on product impressions but low on customer problems. However, this study also reveals that justification mitigates selective attention by increasing the likelihood that both types of information are processed. Thus, if firms want to base their innovation decisions on both types of information, justification mechanisms can have a positive impact. I show that when decision-makers have to justify their budget allocation, they are more likely to acquire and process both types of information.
| Item Type: | Thesis |
|---|---|
| Dissertation Type: | Cumulative |
| Date of Defense: | 22 August 2024 |
| Subjects: | 300 Social sciences, sociology & anthropology > 330 Economics |
| Institute / Center: | 03 Faculty of Business, Economics and Social Sciences > Department of Business Management > Institute for Accounting and Controlling |
| Depositing User: | Hammer Igor |
| Date Deposited: | 03 Feb 2025 11:18 |
| Last Modified: | 03 Feb 2025 11:18 |
| URI: | https://boristheses.unibe.ch/id/eprint/5790 |
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