Journal of Business Research
Call for papers: The micro-foundations of pricing
(Deadline 31 August 2015)
Guest editors: Andreas Hinterhuber, Hinterhuber
& Partners
Stephan Liozu, Chatham University
Aims and scope
Research on the micro-level of organizational decision making has
witnessed a surge in interest as of recent. In a dedicated special issue in the Strategic
Management Journal (Powell,
Lovallo, & Fox, 2011) Levinthal (2011) asks the question “A behavioral approach to strategy
– what’s the alternative?”. The SMJ Editors state that
“strategic management theory lacks adequate psychological groundings” and that
“until strategy theory builds stronger foundations in psychology, it will
struggle to explain the facts of firm performance” (Powell, et al.,
2011, p. 1370). Recent developments in finance,
organization theory and strategic management have moved micro-level aspects of
decision making solidly within mainstream research. The literature on pricing,
however, has not yet dedicated attention to the examination of its
micro-foundations, although pricing is arguably the most important driver of
short-term profits (Nagle & Holden, 2002). While arguably journals do publish studies examining aspects related
to micro-foundations (Che-Ha, Mavondo, & Mohd-Said, 2014; Mousavi & Kheirandish, 2014; Raghubir, 2006),
there is, as of today, no systematic research on the micro-foundations of
pricing.
Research on the micro-foundations of organizational decision making is
based on the following premises (Hodgson, 2012): “Organizations are made up of
individuals, and there is no organization without individuals” (Felin
& Foss, 2005, p. 441); “Nothing is more
fundamental in setting our research agenda and informing our research methods
than our view of the nature of the human beings whose behavior we are studying” (Simon,
1985, p. 303); “Combining methodological
individualism with an emphasis on causal mechanisms implies that strategic
management should fundamentally be concerned about how intentional human action
and interaction causally produce strategic phenomena” (Abell,
Felin, & Foss, 2008, p. 492).
The planned JBR special issue, The micro-foundations of pricing, will
examine how individual-level characteristics affect how organizations deal with
pricing. We define “pricing” broadly to include the following elements:
determination of list prices, price-setting practices, price realization, price
negotiations with customers, freedom to set prices/grant discounts to
customers, price flexibility, price communication, value communication,
information processing on competitor prices, information processing on
customers/customer needs, information processing on costs, incentive systems,
bonus systems, headquarter support on pricing, CEO championing of pricing,
pricing capabilities.
Our interest in the micro-foundations of pricing springs from the simple
recognition that organizations do not act--individuals do. As scholars,
however, we have a tendency to attribute to organizations properties which only
individuals can have. The literature speaks of “organizational
capabilities” and describes organizations as “innovative”; however,
organizations do not have capabilities, individuals do; organizations are not
innovative, individuals are. We thus want to explore how individual
characteristics affect pricing in organizations.
Consequentially, in this call for papers we aim to shed light on the
following non-exhaustive list of research questions. Individual
characteristics and pricing decisions: How do individual psychological traits
(e.g. altruism, intelligence) influence preferences for price setting practices
(e.g. preferences for value-based pricing as opposed to cost-based pricing)?
Are pricing approaches at the individual level (again: value-based pricing may
be an example) the result of particular psychological traits? How do individual
characteristics influence negotiation in pricing? Are negotiation styles of
individuals (e.g. collaborative, competitive, accommodating) the result of
particular psychological traits? Or: how do psychological traits (e.g.
aggressiveness versus assertiveness) influence price negotiation outcomes?
The persistence
dysfunctional pricing practices: Why and how do dysfunctional pricing practices
persist? Does hard-wiring of pricing practices happen differently for
functional as opposed to dysfunctional pricing practices? Conversely: What are
triggers of innovative pricing practices at the individual level? How do
innovative pricing practices at the individual level gain traction to lead to
new pricing practices at the organizational level? Or again: which mechanisms
prevent innovation at the individual level from emerging at the organizational
level?
Goal framing and
pricing: How do hedonic goals (concerned about short-term
gains), gain goals (concerned about longer term benefits), and normative goals
(concerned with adhering to moral principles) interact at the individual level
to influence pricing decisions? What is the effect of the focal goal frame on
individual pricing decisions? Does an individual preference for a given pricing
approach (e.g. value-based pricing) reflect a given focal goal frame?
Individual considerations and collective actions in pricing: Pricing is, by
nature, an activity that touches virtually all aspects of business: sales,
marketing, finance, general management, human resources, and research and
development. The pricing function, if present, leads and influences actors from
these different functions. This leads to the question: What is the origin of
individual beliefs and assumptions on pricing by different organizational
actors in pricing and how are these individual factors aggregated at a
collective level to produce pricing decisions? How do individual assumptions on
pricing and individual hierarchical power interact to lead to collective
pricing decisions? Do relationships of friendships in the organization favor
the emergence of given pricing practices?
Bounded rationality
and pricing: How do cognitive biases affect pricing decisions? What is the
impact of behavioral or cognitive biases on the price setting and price
negotiation process?
Irrationality
explained: What is irrational behavior in pricing? In Hamlet we read: “Though
this be madness, yet there is method in’t”. Is there a rationale for irrational
behavior in pricing? Individual preferences and pricing: How stable are
customer preferences in B2B? Are preferences in B2B constructed? Intuition
and pricing: What is the role of intuition in pricing decision-making process?
Research methods and
guidelines
We are open to a wide number of research methods and expect all papers
to either make a strong empirical contribution or to challenge conventional
wisdom concerning all aspects of pricing at the intersection between individual
characteristics and organizational practices through novel, insightful and
carefully crafted conceptual propositions.
References
Contact
information:
Andreas Hinterhuber
Partner, Hinterhuber
& Partners
Strategy Pricing
Leadership
Innsbruck, Austria
Phone: +43 664 402 7 402
