The informational prerequisites of pricing decisions: determinants and implications of pricing information acquisition in SMEs.

Achterberg, Lars Hendrik

Abstract

Pricing information is an important prerequisite in deciding optimal prices. Firms are advised to gather and analyse pricing-related information to arrive at profitable pricing decisions and to ensure long-term firm survival and success. Nevertheless, managers and researchers tend to overlook the first step in the process of making pricing decisions that focuses on the fundamental question of how firms should collect pricing infor-mation to determine pricing strategies and to arrive at profitable and competitive prices for their products and services. This question is especially relevant, but largely overseen in the small and medium-sized enterprise (SME) context. Confronted with the com-plexities of pricing, many SME managers feel overwhelmed and admit that pricing de-cisions are frequently guided by gut feelings, as they lack an effective information basis when making such decisions. These shortcomings in SME pricing are particularly criti-cal given the high economic relevance of the SME sector in many European economies. However, the bulk of pricing research tends to overlook investigating the informational prerequisites of pricing decisions. The existing research on pricing information acquisi-tion practices remains inconclusive and is very scant, inhibiting a detailed understanding of the underlying mechanisms.
The main aim of the research is therefore to critically investigate and explore in detail the role of pricing information acquisition in SMEs, and to structure and model the an-tecedents and consequences of SME pricing information acquisition practices as crucial constituents of market-oriented pricing management. Resting on the positivist research philosophy, the adopted survey design used an online questionnaire that addressed the general management of manufacturing SMEs at the executive level. The questionnaire yielded 173 responses representing a response rate of seven per cent.
The comprehensive statistical analysis determined a positive link between pricing per-formance and overall firm performance, indicating that superior pricing capabilities are an important lever for firm success in SMEs. Pricing information acquisition practices were found to have a positive impact on pricing performance, showing that informa-tional pricing practices should receive particular attention by SME managers. Despite the high relevance of pricing information acquisition practices, the overall amount of pricing information acquisition actually conducted by SMEs was found to be low, indicating that SMEs tend to overlook the informational prerequisites of pricing decisions. This thesis developed a novel typology of pricing information acquisition behaviour at the information source level, and, thereby, clarified the dimensionality of this construct. This will enable future research and discussion on the modes of firms’ pricing infor-mation acquisition practices and help SME managers to implement professional pricing information acquisition practices. Further, the detailed investigation of ten influencing factors identified important internal and external determinants of pricing information acquisition, thereby helping research and practice to understand the key drivers behind this important construct. The innovative theoretical perspective adopted in this thesis may help future researchers studying the informational prerequisites of pricing decision-making by adopting or modifying the developed theoretical framework.

Citation

Achterberg, L. H. The informational prerequisites of pricing decisions: determinants and implications of pricing information acquisition in SMEs. (Thesis). Edinburgh Napier University. http://researchrepository.napier.ac.uk/id/eprint/8799

• Thesis Type: Thesis
• Deposit Date: Jul 13, 2015
• Peer Reviewed: Not Peer Reviewed
• Keywords: Informational; prerequisites; pricing; decision making
• Public URL: http://researchrepository.napier.ac.uk/id/eprint/8799
• Contract Date: Jul 13, 2015
• Award Date: 2015-05