The Destructive Effect of Complex Analytics on Innovativeness

The Destructive Effect of Complex Analytics on Innovativeness

Burçin Güçlü, Miguel-Ángel Canela
Copyright: © 2017 |Pages: 19
DOI: 10.4018/IJABE.2017100103
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Several studies have raised a common concern in the field of management, the lack of innovation. However, they either attribute this phenomenon to the inefficiency of marketing analytics, or to managerial despair in evaluating innovation projects. In this article, the authors propose and empirically test cognitive effort spent on marketing analytics which can lead to the lack of innovativeness, due to the negative impact of high cognitive effort on the managers' mood. In a longitudinal experiment, where manipulating the complexity of the decision context through marketing analytics, the authors demonstrate that managers employing simple marketing analytics expect their competitors to launch more products, compared to managers using complex marketing analytics. They also demonstrate that firms employing simple marketing analytics behave venturesome by embarking upon innovative activities. At the same time, firms using complex marketing analytics take more deliberative actions by innovating less and amplifying short-term gains with high priced products.
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Literature Overview And Theory

Many contemporary studies indicate mixed results for the effective applications of management tools and that highlights the ongoing dilemma regarding the usefulness of such tools (Little, 2004; Natter, Mild, Wagner & Taudes, 2008; Schilling & Schulze-Cleven, 2009). Christensen, Kaufman, and Shih (2008) raise an important concern of the last decade referring to the lack of innovativeness. They attribute this problem to management tools like financial metrics and methods employed in evaluating research and development (R&D) projects.

A study on the effect of decision making compares the attitude of two different profiles of people; the first person enrolls in fast and frugal decision making which requires less cognitive effort, whereas the second person conducts rigorous analyses when making a decision which requires more cognitive effort. As argued by Schwartz and colleagues (2002) the first person is found to be more optimistic with higher self-esteem compared to those who conduct rigorous analyses who outstand in depression, perfectionism, regret, and self-blame. These attitudes are attributed to a negative correlation of cognitive effort and mood, stating that the higher the cognitive effort required for a decision the lowest the mood and vise versa. Optimistic individuals show confidence in their self-capabilities and it is their optimistic attitude that encourages them to consistently approach challenges (Scheier, Carver & Bridges, 1994). This indicates that pessimistic managers are more likely to overestimate the risk of failure compared to optimistic managers who foresee more opportunities. In all cases, whether managers behave in an optimistic or a pessimist way, their attitude is what creates a shared understanding of the competitive environment not to mention what shapes their expectancies in terms of behavior.

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