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Digital Embeddedness and its Effect on Organizational Purchase Decisions

46 Pages Posted: 22 Apr 2017  

Haris Krijestorac

University of Texas at Austin, Red McCombs School of Business, Students

Rajiv Garg

University of Texas at Austin - Department of Information, Risk and Operations Management

Prabhudev Konana

University of Texas at Austin - Department of Information, Risk and Operations Management

Date Written: March 2017

Abstract

Popular media and business thought leaders suggest that the emerging millennial workforce makes business-to-business purchase decisions differently, because of its increased reliance on digital information sources (e.g., blogs, social media, and online forums). This argument appears to contradict extant research, which indicates that organizational buyers rely on decision shortcuts (e.g., brand, loyalty, and peer opinions) to mitigate risks or to simplify purchasing decisions. One can argue, however, that decision makers gain more information from digital sources, and thus may rely less on these shortcuts. At the same time, digital sources also can strengthen prior biases, which may not necessarily change decision outcomes. In this study, we systematically evaluate the role of digital information sources in decision-making using information processing theory. We introduce a new Digital Embeddedness construct to conceptualize the extent to which information from digital sources is integral to an individual’s decision-making. This construct is developed using the Accessibility-Diagnosticity framework, which posits that information processing depends on the ease with which information can be retrieved (accessibility) and its perceived relevance (diagnosticity). Analysis of survey responses from 196 purchasing managers suggests that more digitally embedded buyers are more willing to adopt innovations, yet interestingly, they rely more on brand and peer opinions when making decisions. We also find that while digitally embedded buyers feel more attached to their existing vendors, they are less likely to re-purchase from them. These results suggest that digital information sources reinforce some decision shortcuts (e.g. brands and peer opinions) for digitally embedded buyers, but make them more objective and reduce the reliance on other decision shortcuts (e.g. loyalty). Implications are discussed for digital marketing, and for understanding the effect of digital sources on organizational decision-making.

Keywords: digital embeddedness, digital information, millennials, b2b purchasing, decision-making, information processing theory, Accessibility-Diagnositicy, dual process theory, heuristic systematic model

JEL Classification: M15, L86, D81, D83, D79

Suggested Citation

Krijestorac, Haris and Garg, Rajiv and Konana, Prabhudev, Digital Embeddedness and its Effect on Organizational Purchase Decisions (March 2017). Available at SSRN: https://ssrn.com/abstract=2954805 or http://dx.doi.org/10.2139/ssrn.2954805

Haris Krijestorac

University of Texas at Austin, Red McCombs School of Business, Students ( email )

Austin, TX
United States

Rajiv Garg (Contact Author)

University of Texas at Austin - Department of Information, Risk and Operations Management ( email )

CBA 5.202
Austin, TX 78712
United States

HOME PAGE: http://www.RajivGarg.org

Prabhudev Konana

University of Texas at Austin - Department of Information, Risk and Operations Management ( email )

CBA 5.202
Austin, TX 78712
United States

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