Choosing among alternative new product development projects: The role of heuristics

• DOI: 10.1002/mar.21397
• Publication Date: 2020-08-20
• Authors: West D. C.; Acar O. A.; Caruana A.; Douglas C. West; Oguz A. Acar; Albert Caruana
• Keywords: Technological innovations -- Case studies; Decision making -- Case studies; 0502 economics and business; 05 social sciences; decision-making; heuristics; innovation; intuition; product screening; Heuristic algorithms; BF; HD28; Commercial products -- Testing; Intuition; Heuristics; Intuition; Decision maker

AbstractThe initial screening decision that marketing managers make is critical. It requires the selection of what innovation project to invest in, which is fundamental to marketing success. However, our knowledge of how managers make these decisions and how this impacts performance is limited. By drawing upon cognitive psychology and the managerial decision‐making literature, we address two critical questions. The first question focuses on identifying specific decision‐making types (e.g., specific heuristics, intuition) used when making an innovation screening decision. Based on this analysis and prior research, we develop specific decision‐maker profiles about how an individual manager decides. The second research question is about connecting these profiles with performance. Specifically, it addresses what the consequences of different decision‐maker profiles are on the perceived accuracy and speed of decision‐making? Data were collected from 122 senior managers in these industries. We find that when heuristics are used alone, or concurrently with intuition, managers make decisions that are as accurate as when they rely on analytical decision‐making. However, the process is significantly faster. The findings provide an important step toward a more comprehensive understanding of decision‐making at the front‐end of innovation.