Is There a Payoff to Perceptual Accuracy?

INSEAD Working Paper No. 2003/49/MKT

57 Pages Posted: 4 Jan 2004

See all articles by Joachim Vosgerau

Joachim Vosgerau

affiliation not provided to SSRN

Erin Anderson

INSEAD - Marketing

William T. Ross

Pennsylvania State University - Department of Marketing

Date Written: July 2003

Abstract

Current theories of B2B relationships implicitly assume that the parties involved are accurate in their perceptions of each other. The present paper explores whether this assumption is justified, and what are the behavioral and economic consequences if parties misread the other party's states and behaviors. Using original dyadic data in the service industry, we show that firms that invest in developing accurate images of their counterparts are rewarded by relationships that function better and are more profitable. The mechanism by which this occurs is that perceptual accuracy leads firms to hold positive images of each other and to share the same goals. In turn, these factors reduce channel conflict and, thereby, increase the profit each side derives from its relationship. We show that perceptual accuracy improves over time, particularly when firms use the time to engage in frank communication.

Keywords: Perceptual accuracy, channel relationships, conflict, perceptual process, relationship duration, performance

JEL Classification: C42, D74, M31, L80

Suggested Citation

Vosgerau, Joachim and Anderson, Erin and Ross, William T., Is There a Payoff to Perceptual Accuracy? (July 2003). INSEAD Working Paper No. 2003/49/MKT, Available at SSRN: https://ssrn.com/abstract=438540 or http://dx.doi.org/10.2139/ssrn.438540

Joachim Vosgerau (Contact Author)

affiliation not provided to SSRN

Erin Anderson

INSEAD - Marketing ( email )

Boulevard de Constance
Fontainebleau, 77305
France
+33 1 6072 4000 (Phone)
+33 1 6074 5500/01 (Fax)

William T. Ross

Pennsylvania State University - Department of Marketing ( email )

University Park, PA 16802-3306
United States

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