Perceptions of Resource Scarcity in Factor Markets: The Effect on Managerial Attention and Collaboration

Abstract

In globalized factor markets, firms face threats of resource scarcity, which challenge purchasing managers in interpreting signals about complex and uncertain factor-market conditions. When future resource supply is threatened, purchasing managers are affected not only by the expected scarcity but also by the uncertainty of the scarcity threat. We investigate how expected resource scarcity and scarcity uncertainty affect managerial attention to scarcity perceptions, which, in turn, impacts the likelihood to respond to the scarcity threat by collaborating with the major supplier. We collected data from 203 purchasing managers about their experience with a scarcity incident and developed new scales for assessing perceived scarcity. Our findings indicate that expected resource scarcity results in increased levels of managerial attention while scarcity uncertainty reduces managerial attention. Importantly, managerial attention mediates the effect of expected resource scarcity and scarcity uncertainty on purchasing managers’ propensity to collaborate. The results illustrate the contrary impact of expected resource scarcity and scarcity uncertainty on purchasing managers’ attention and highlight managerial attention as an important behavioral consideration to understand how purchasing managers mitigate environmental risk. Finally, we identify individual (responsibility, experience) and organizational (trust) factors that increase purchasing managers’ attention to scarcity threats and collaboration.