The Destructive Influence of Complexity and Information Overload in Business Analytics: Evidence from a Longitudinal Field Experiment < Back
Abstract: The purpose of this seminar is to emphasize the perils of complexity and information overload in the context of managerial decision making using business analytics. The two papers report about a longitudinal field experiment conducted to estimate the impact of market research tools on firms' strategic choices and resource allocation decisions. Teams consisting of graduate students in Marketing play a marketing simulation game as part of their curriculum. We manipulated the availability of market research tools in order to generate three experimental conditions, i) simple tools only, ii) complex tools only, and iii) all tools (i.e. simple and complex tools) together. In Paper 1, we find that firms using simple market research tools behave venturesome by launching and upgrading their products more often, while firms using complex market research tools take more deliberative actions by innovating less and amplifying short-term gains with high priced products. In Paper 2, we fi nd that firms using simple market research tools downgrade competitive rivalry in brand-level advertising and promotional expenditures in the beginning of the game, compared to those using all tools together. We also find that firms using simple market research tools keep their overall marketing spending at a lower level, and spend less in brand-level marketing, especially in promotional activities, compared to when using all tools together. The findings from these two papers indicate that the complexity in business analytics destroys the entrepreneurial spirit and leads to a "milking the cash-cow" strategy, while the use of too many business analytics overemphasizes the competitive rivalry in marketing resource allocation decisions, and triggers overspending in marketing activities.
Coordinator: Prof. Miguel A. Canela
Speaker: Burçin Güçlü, IESE Business School Doctoral Program