# The power of past performance in multidimensional supplier evaluation and supplier selection: Debiasing anchoring bias and its knock-on effects

## TL;DR

This study shows how past supplier performance influences managers' evaluations and choices, and how to reduce this bias using simple techniques.

## Contribution

The first study to examine anchoring bias in multi-dimensional supplier evaluation and its knock-on effects, with insights on debiasing techniques.

## Key findings

- Low past performance in one dimension leads to lower scores in other dimensions.
- Anchoring affects future supplier selection likelihood.
- Debiasing techniques like 'consider-the-opposite' and 'mental-mapping' have asymmetric effectiveness.

## Abstract

This research examines how anchoring bias affects managers’ multi-dimensional evaluations of supplier performance, supplier selection, and the effectiveness of two debiasing techniques. We consider the supplier past performance in one performance dimension as the anchor and investigate whether and how this anchor would have a knock-on effects on evaluating a supplier’s performance in other dimensions. We conducted two online experimental studies (Study 1, sample size = 104 and Study 2, sample size = 408). Study 1 adopts a 2 x 1 (high anchor vs. low anchor) between-subjects factorial experimental design, and Study 2 is a 3 (debiasing: no, consider-the-opposite, mental-mapping) x 2 (high anchor vs. low anchor) between-subjects factorial design. The results from Studies 1 and 2 suggest that when a supplier has received a low evaluation score in one dimension in the past, participants assign the same supplier lower scores in the other dimensions compared to a supplier that has obtained a high score in the past. We also find that anchoring has a knock-on effect on how likely participants are to choose the same supplier in the future. Our findings highlight the asymmetric effectiveness of ‘consider-the-opposite’ and ‘mental-mapping’ debiasing techniques. This research is the first study that examines how anchoring bias managers’ evaluations in a multi-dimensional setting and its knock-on effects. It also explores the effectiveness of two low-cost debiasing techniques. A crucial practical implication is that suppliers’ exceptionally good or disappointing past performance affects the judgement of supply managers. Hence, managers should use consider-the-opposite or mental-mapping techniques to debias the effect of high and low anchors, respectively.