Abstract
We examine how groups fall prey to the sequence effect when they make choices based on informed assessments of complex situations, for example, when evaluating research and development (R&D) projects. The core argument is that the temporal sequence of selection matters because projects that appear in a sequence following a funded project are themselves less likely to receive funding. Building on the idea that selecting R&D projects is a demanding process that drains participants’ mental and emotional resources, we further theorize the moderating effect of the influence of the timing of the panel meeting on the sequence effect. We test these conjectures using a randomization in sequence order from several rounds of R&D project selection at a leading professional service firm. We find robust support for the existence of a sequence effect in R&D as well as for the moderating effect. We further explore different explanations for the sequence effect and how it passes from the individual to the panel. These findings have broader implications for the literature on innovation and search in general and on group decision making for R&D, specifically, as they suggest that a previously overlooked dimension affects selection outcomes.
| Original language | English |
|---|---|
| Pages (from-to) | 987-1008 |
| Number of pages | 22 |
| Journal | Organization Science |
| Volume | 32 |
| Issue number | 4 |
| Early online date | 15 Jan 2021 |
| DOIs | |
| Publication status | Published - 1 Jul 2021 |
Bibliographical note
Funding Information:Open Access Statement: This work is licensed under a Creative Commons Attribution 4.0 International License. You are free to copy, distribute, transmit and adapt this work, but you must attribute this work as “Organization Science. Copyright © 2021 The Author(s). https://doi.org/10.1287/orsc.2020.1413, used under a Creative Commons Attribution License: https://creativecommons.org/licenses/by/4.0/.” Funding: This work was supported by the Engineering and Physical Sciences Research Council [Grant EP/F036930/1] and the Economic and Social Research Council [Grant ES/G042993/1]. L. Dahlander’s research was funded by the Deutsche Forschungsgemeinschaft (German Research Foundation) [Grant 411843692].
Funding Information:
Independent Variables Prior Funding Decision. Our main independent variable captures the funding decision made before the focal decision. We can measure the outcome of a prior funding decision either as a dichotomous variable— whether the prior proposal received funding (prior proposal funded)—or as a continuous variable—the amount of funding awarded to the previous application (prior funding awarded). Because of the high skewness of the last variable, we log-transformed it to reduce the impact of outliers on our results. To derive these variables, we used the order in which projects appear in the secretary’s booklet. If a decision regarding a project application was postponed, we consider this to be a decision not to fund. Because postponing a project is often a difficult decision that takes as much time and mental energy as rejecting a project, we wanted to ensure that this was captured in our prior-funding-decision variable.
Publisher Copyright:
© 2021 INFORMS Inst.for Operations Res.and the Management Sciences. All rights reserved.
Keywords
- Contrast effect
- Decision making
- Gambler's fallacy
- Innovation
- Law of small numbers
- Panel
- Professional service firm
- Quota model
- R&D project selection
- Sequence effect
ASJC Scopus subject areas
- Strategy and Management
- Organizational Behavior and Human Resource Management
- Management of Technology and Innovation