A Matter of Survival - Determinants of Rational Behavior in B-to-B Markets

The paper focuses on the question of whether the frequently stated industrial/consumer dichotomy with respect to the involved degree of rationality in decision making, namely that it is high in b-to-b and low in b-to-c markets, is in fact justified. We develop a universal framework to determine which factors lead to rational behavior. The framework may be used for determining if a given decision situation should be analyzed by means of an economic or rather a behavioral approach. When adapting this framework to evaluate decisions in business markets, we identify conditions under which rational behavior is unlikely. Thus, from a purely theoretical standpoint, the proposed dichotomy seems questionable. Whether or not, however, the identified conditions promoting ‘irrationality’ in both industrial and consumer markets in fact must be determined empirically. Therefore, we also suggest an empirical test for the universal framework.