The Curse of Competitiveness: How Advice from Experienced Colleagues and Training Can Hurt Marketing Profitability

The literature suggests that mangers are overly competitive and overemphasize competitors’ payoffs in making decisions.The authors demonstrate how two seemingly innocuous but common decision inputs that midand entrylevel managers use—(1) advice from colleagues and (2) training—could propagate this bias. The authors conduct an experiment in which one generation of participants plays a noncooperative game and then passes on advice on how to play the same game to the second generation. The authors find that the second generation is more likely to accept decisions that negatively impact the competitor’s profits, even when those decisions result in lower payoffs. The results suggest that the advice of the first generation causes the second generation to be more sensitive to relative performance. In a second experiment, the authors show that training films that create negative feelings toward competitors can have adverse effects on managers’ decisions. The training increases the willingness of managers to sacrifice own profits to reduce competitor profitability. These findings have important implications for managers in competitive markets. This research suggests that standard training materials that emphasize beating competitors should be carefully assessed for their unintentional but potentially damaging effects. In particular, training designed to evoke affective responses toward competitors must be used judiciously. Firms that give junior managers more autonomy and responsibility should also be cognizant that the advice these managers get and the information they share may propagate a competitive bias. To mitigate this problem, an option is to devote resources to better understand the content and nature of advice that managers share with one another.