Modifying Conjoint Methods to Model Managers’ Reactions to Business Environmental Trends: An Application to Modeling Retailer Reactions to Sales Trends

in economic and competitive environments and their effects on observed to model multi-attribute model consumer decisions sales levels. Because in general micro-level data on strategic decision (for reviews, see Green and Srinivasan, 1978, 1990; Louviere, making over time are difficult and expensive to obtain, this approach can 1988, 1994), also can be applied to model how managers are be of much value to the further study of managerial strategic behavior likely to react to various changes in economic and competitive and market dynamics. In our application we model retailer reactions to environments. Rather than using conjoint techniques to dechanges in their sales, focusing in particular on the actions that affect the velop multi-attribute product descriptions (profiles), we use demand for retail space and possibilities to improve retail sites. Choice them to create profiles of past and current levels of economic responses to hypothetical sales and environmental trend scenarios are conditions and trends in such conditions. Rather than expresscollected from 183 retailers and used to estimate to logit regression model ing preferences for, or intentions to, purchase product profiles, that predicts retailers’ probabilities of choosing actions. The model results the managers in our sample tell us which one or more of confirm that retailers are more likely to take action when sales go down several strategic actions they would be most likely to take now than when they go up, and also that they react more quickly if sales go or in the near future in response to the profile information. down. It is also found that retailers are more reluctant to change the Our results demonstrate that managers can and will provide positioning of their store when confronted with a sales increase than when reasonable responses to this type of survey, and the resulting confronted with a sales decrease. The model is compared with a nonmodels provide useful insights into their strategic thinking. experimental model that is based on retailers’ reactions to the trends they Our approach represents an extension of the choice-based report to have observed for their own stores. The article concludes with conjoint paradigm, which was pioneered by Louviere and a discussion of the implications of this research for the further development Woodworth (1983); for a recent review, see Carson et al. of conjoint-like approaches to studying entrepreneurial behavior. (1994). That is, using random utility theory (McFadden, J BUSN RES 2000. 50.245–257.  2000 Elsevier Science Inc. All rights 1974), we seek to model the choice of one or more strategic reserved. actions that managers say they are likely to take in response to information about economic conditions and trends. Our approach is motivated by the relative lack of, and difficulty in, obtaining the panel observations of managerial strategic Address correspondence to Harmen Oppewal, School of Management Studies for the Service Sector, University of Surrey, Guildford, Surrey Q42 5XH, decisions that could enhance our understanding of how strateU.K. Tel: 144 1453 259183; Fax: 144 1483 259387; E-mail: H.oppewal@surrey. ac.uk gic actions change over time in response to changing economic