The image of the purely rational hero is long since passé in the economic sciences. We see this, among other things, in the area of Controlling, where the impact of allied fields of knowledge is ever more visible. Doctoral candidate Ann Tank at the University of Stuttgart has studied neurobiological processes and their role in the appraisal of commercial key indicators. She did so by employing magnetic resonance tomography, a standard technology in medical analysis. One may well ask: What does this method have to do with Controlling, which deals with the analysis of dust-dry data?
In every company, decisions are made each day that have an impact on employees, customers, and owners. In turn, these decisions are nearly always based on key indicators that show the company’s current status. While the decision-making process often displays a similar pattern, it is carried out by persons with very different makeups, and only in recent years has science directed its attention to thought processes in the brain that lead to such decisions.
This new area is the territory in which Ann Tank has written her dissertation. Her aim: to cast light on neurobiological processes that play a role in the appraisal of commercial key indicators. In pursuing this path, 30-year-old Tank has chosen an unusual topic, part of the field of neuro-economics. This is a discipline which has grown up at the meeting point where economics, biology and psychology come together. ‘What I want to do is to make processes which take place in the body during business decisions objectively and directly measurable,’ says Tank. She takes her theoretical basis for this above all from ‘neuromarketing’ - a branch of research promoted by businesses which hope to understand what makes people decide to buy.
Looking for the right partner
When writing her dissertation at the Department of General Management Accounting and Control at the University of Stuttgart, Tank found few publications in the literature about her topic. Although some experiments had been carried out to study human behavior in economic decision-making situations, the human brain’s role in these situations was unexplored territory, and she found she needed partners. After a woman scientist in her circle of friends told her about the University of Tübingen’s Center for Neurology, she contacted Dr. Axel Lindner there. He heads up a task force studying the neurobiology of decision-making at the Hertie Institute’s Department of Cognitive Neurology for Clinical Brain Research. The very first meeting was a meeting of minds: Lindner was enthusiastic about Tank’s idea. Together they resolved to join forces in tracking neuronal processes in business decisions. Tank then discussed with Lindner and her thesis advisor, Prof. Burkhard Pedell, how to design the project.
Student volunteers had to decide
The experiment was divided into two phases. In the first, each of 125 student volunteers had the task of acting as controller for a toolmaking company owner who must decide on the basis of complex commercial key indicators whether to continue or discontinue a development project. Then the volunteers reported their feelings about the exercise. They also answered questions about their own background of experience and their responses to risk. ‘This information allowed us to draw some initial conclusions about processes which take place in the brain during this decision-making process,’ says Tank.
Participants in the first part of the experiment were allowed to apply for the second phase, namely a study using functional magnetic resonance tomography (fMRT). It’s a method usually familiar to non-professionals only from visits to the doctor. But in neurobiology it provides not only important but also easily understandable data. First a magnetic scanner records metabolic processes in the brain. Areas there which become active consume more oxygen from the blood. This changes the density of the blood at that location, triggering magnetic changes which are then recorded by the scanner. The results can then be shown as if in a video. This represents a major step forward over the electro-encephalographic method (EEG) previously used for such experiments. It merely recorded changes in brain flows, viewed from the surface of the head.
The second phase of the experiment was more selective about participants. For example, artificial metal joints, bone screws or tooth stabilizers were grounds for exclusion. The reason: metal in the body is incompatible with MRT. ‘We also wanted to avoid even minimal health risks for those in the study,’ says Tank. After being selected, the 30 participants carried out their tasks lying flat in the MRT tunnel, where the scanner recorded their brain activities. When areas become active, it is reasonable to conclude that they are affecting the decision-making process.lussen.
An hour of looking at the tube
The study took a long time: participants were asked to remain motionless for four times 12 minutes, while their heads were gently held in place by cushions. During processing of the key indicators, a special MRT-camera recorded eye movements to provide further information about how the test persons arrived at their decisions. Was all relevant information taken into account? What information was central? The tasks were presented in the MRT tunnel through a system of mirrors which made curves and numbers easily legible for the participants. Their job: to use this information as if they were controllers, as in the prior experiment, to arrive at decisions about a development project. The test persons answered by means of a pushbutton in their hand.
Dissertation describes basic research
Empirical studies have already indicated that emotions also play a part in commercial decisions. For the first time, Ann Tank’s work has provided neurobiological support for this interaction in the field of Controlling. For example, she found that the quality of the recorded decisions was related in many cases to activation of the affected brain area. This includes not only areas which are responsible for cognitive processing of information but also areas which may be related to the emotional assessment of information. The experiment also provided evidence that an affinity for risk can affect the quality of decisions in certain cases.
The results may be unspectacular for non-professionals, since they do not directly give rise to concrete solutions for companies. At least, not yet. But that was not Tank’s aim. Rather, her dissertation describes basic research which aims not to give answers but to generate as many new questions as possible. The importance of this is that they allow a still-young field of research, like neuro-economics, to continue growing.
Heimo Fischer