Does managerial personality influence pricing practices under uncertainty?
| Pages | 771-784 |
| Published date | 20 November 2017 |
| Date | 20 November 2017 |
| DOI | https://doi.org/10.1108/JPBM-11-2016-1352 |
| Author | Mario Kienzler |
| Subject Matter | Marketing,Product management,Brand management/equity |
Does managerial personality influence pricing
practices under uncertainty?
Mario Kienzler
Department of Management and Engineering, Linköping University, Linköping, Sweden
Abstract
Purpose –While marketing and management research suggests that managers’individual characteristics influence pricing decisions, the influence
of personality traits in this context remains unclear. This study aims to explore the relationship between the five basic personality traits of the five-
factor model (extraversion, conscientiousness, openness to experience, agreeableness and neuroticism) and three basic pricing practices (value-,
competition- and cost-informed).
Design/methodology/approach –On the basis of a non-experimental decision-making scenario, the analysis examines the pricing decisions of
57 managers in relation to a new business service.
Findings –The results suggest that managers’conscientiousness and openness to experience are positively related to preference for value-informed
pricing. Similarly, managers’agreeableness is positively related to preference for competition-informed pricing and managers ’openness to
experience and agreeableness are positively related to preference for cost-informed pricing.
Research limitations/implications –The cross-sectional study design does not support causal inference, and the modest sample size may limit the
external validity of the findings.
Practical implications –By increasing awareness of the influence of personality on pricing preferences, the findings are of relevance to managers
who are directly involved in pricing decisions. Additionally, the findings are informative for managers who must assign responsibility for pricing
authority within firms.
Originality/value –This empirical exploration of the relationship between certain personality traits and specific pricing practices contributes to the
literature on psychological aspects of pricing theory by showing how managerial personality influences pricing preferences under uncertainty.
Keywords Personality, Pricing, PLS modelling, Judgement and decision making
Paper type Research paper
1. Introduction
Pricing decisions are among the most important business
decisions. Direct impact on firm revenue (Forman and Hunt,
2005) and profitability (Hinterhuber, 2004) are frequent
reasons for the gravity of pricing decisions.Consequently, poor
pricing decisions can result in serious consequences, such as a
drop in profitabilityand market share (Simon, 1992).
Previous research on pricing practices has explored among
others, the congruence of pricing theory and pricing practice
(Noble and Gruca, 1999), the importance of pricing
capabilities (Dutta et al., 2003), effective new product pricing
(Ingenbleek et al.,2003;Ingenbleek et al.,2013), the
connection between pricing practices and pricing strategies
(Ingenbleek andvan der Lans, 2013) and its micro-foundations
(Töytäri et al., 2017).
Although that research has enhanced understanding of
pricing practices, personality has received more attention in
such areas as the influence of managerial personality on firm
strategy (Chatterjee and Hambrick, 2007;Miller and
Toulouse, 1986) or how frontlineemployees’personality affect
customer orientation (Brown et al., 2002;Widmier, 2002),
while the influence of managerial personality on pricing
practices remainslargely overlooked.
Conventional pricing theory neglects managerial behavior
(Diamantopoulos, 1991), and research has often overlooked
the individual manager’simpact on pricing practices (Iyer et al.,
2015). However, prior empirical research has identified the
influence of intuition and gut feelings (Carson et al., 1998;
Liozu and Hinterhuber, 2012;Rusetski,2014), risk perception
(Forman and Hunt, 2013;Hunt and Forman, 2006),
experience (Hallberg, 2017b;Töytäri et al., 2017) and moral
disposition (Arnett and Hunt, 2002) on pricing decisions,
suggesting that individual managers and their idiosyncratic
characteristicshave a clear impact on pricing practices.
The current issue and full text archive of this journal is available on
Emerald Insight at: www.emeraldinsight.com/1061-0421.htm
Journal of Product & Brand Management
26/7 (2017) 771–784
© Emerald Publishing Limited [ISSN 1061-0421]
[DOI 10.1108/JPBM-11-2016-1352]
The author would like to thank Thomas Brashear Alejandro, Erik
Edgarsson, Lovisa Kienzler, Martin Kienzler, Sonja Kienzler, Timo
Kienzler, Christian Kowalkowski, Natalie Müller, Felix Schyle, Caroline
Schütze and his colleagues at the Department of Management and
Engineering for their help with data collection and for valuable comments
on earlier versions of this article. In addition, the author is indebted to the
journal editor and two anonymous reviewers, who offered invaluable
suggestions during the review process. Financial support from Torsten
Söderbergs Stiftelse, Sweden (Grant No. E24/14) is gratefully
acknowledged.
Received 6 November 2016
Revised 2 April 2017
2 June 2017
Accepted 18 July 2017
771
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