Field Experiment on the Profit Implications of Merchants' Discretionary Power to Override Data-Driven Decision-Making Tools

• 成果类型: Article
• 署名作者: Kesavan, Saravanan; Kushwaha, Tarun
• 署名单位: University of North Carolina; University of North Carolina Chapel Hill; George Mason University
• 刊物名称: MANAGEMENT SCIENCE
• ISSN/ISSBN: 0025-1909
• DOI: 10.1287/mnsc.2020.3743
• 发表日期: 2020
• 页码: 5182-5190
• 关键词: field experiment; spare parts retail; discretionary power; automation

摘要

Data-driven decision-making (DDD) is rapidly transforming modern operations. The availability of big data, advances in data analytics tools, and rapid gains in processing power enable firms to make decisions based on data rather than intuition. Yet, most firms still allow managers to override decisions from DDD tools, as managers might possess private information not present in the DDD tool. We report on a field-experiment conducted by an automobile replacement parts retailer that examines the profit implications of providing discretionary power to merchants. We find that merchants' overrides of the DDD tool reduce profitability by 5.77%. However, our analysis over product life cycle (PLC) reveals that merchants increase (decrease) profitability for growth-(mature-&decline-) stage products.