The effect of group influence on organizational buying

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Virginia Tech

This research explores the process by which individual buying decisions are modified as a result of group discussion to arrive at a buying center decision. Existing evidence shows that, in some cases, group decisions are more cautious than those of individuals while in other situations they are more risky. The objective of this paper is to examine how individual buying center member choices are formed, how these choices and preferences are influenced by group discussion, and how the purchase decision context influences the riskiness of individual versus group purchasing discussions.

One of the key concepts from prospect theory that guides an individual buying decision is the decision frame. However, little is known about how the decision frame of multiple individuals coming together to discuss a decision issue affects the group's overall decision. This research develops a model which describes (1) how an organizational buyer's individual choice is formed, (2) how the influence processes that transpire during buying center discussion changes those choices resulting in a different buying center choice, and (3) explores how the purchasing context may impact these processes.

The model was tested in two controlled laboratory experiments in which 256 undergraduate business students made supplier selection decisions both individually and in groups based on information contained in four hypothetical procurement scenarios. The results were analyzed using a partially confounded experimental analysis of variance procedure and a series of t tests which tend to provide Support for the model.

Specifically, the findings suggest that the decision frame used by individual buyers combined with group influence affects buying center choices. However, contrary to the predictions offered by prospect theory, when decision were framed as a gain, buyers selected the risky supplier and when decisions were framed as a loss, buyers selected the cautious supplier.

For this study, no evidence was found to support the notion that group discussion intensifies the effect of the decision frame. Finally, whether the procurement is goods- or service-based seems to impact the effect of influence on the polarization of the buying centers choice.