Variant impacts of managers' cognitive propensities on bullwhip effect mitigation

The Bullwhip effect (BWE) was identified as a problem for the supply chains more than half a century ago. Complicating the inventory management and order fulfilment, it caused higher cost throughout the supply chain. Although a great amount of effort was spent by the researchers to identify its reasons and to find solutions, BWE continues to appear. Previous studies investigated the issue from various operational and behavioural aspects, however, the impact of individuals’ cognitive differences on the occurrence and mitigation of the bullwhip has been understudied. Adopting the dual-process theory from cognitive sciences as the theoretical lens, this study identified interpersonal cognitive differences and their associated bullwhip mitigation performance under three decision-making environments: information presence, time pressure and problem complexity. To test the hypotheses that measure these performance differences concerning various configurations of managerial cognitive propensity and environmental conditions, this study applied an online experiment (n=623), which comprised of two sections. Participants were manipulated for their cognitive propensities for either the intuitive (System 1) or the rational (System 2) thinking system via a customised Cognitive Reflection Test (CRT). A devised Order Management Game was utilised to measure their bullwhip management performance under different environmental conditions. The findings initially affirmed the previous findings with regards to the outperformance of System 2 managers to System 1 managers. It was observed that both types of managers track the customer demand better when they were provided with additional information, although this performance improvement was not expected for System 1 managers. However, this positive impact of information was eliminated when the time pressure or problem complexity was added to the decision-making environment. It was viewed that although the System 2 managers continued to outperform System 1 managers under time pressure, the performance gap between the managerial groups decreased. Time pressure boosted System 1 managers’ bullwhip mitigation performance while reduced that of System 2 managers. Problem complexity, however, decreased the bullwhip mitigation performance of both managerial groups. But it was noteworthy that the performance decrease of System 2 managers was much lower than that of System 1 managers. This study initially contributed to the field of the bullwhip effect by revealing the behavioural and context-dependent variations concerning its mitigation. These inferences can also be utilised for practical aims to efficiently utilise human resources. Secondly, the adopted dual-process theory was extended with the perspective of this study. Lastly, the prepared experiment tool brought novel aspects for the measurement of this study’s variables. Regarding these expansions, this study also provides future research directions for the researchers