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Can FICO scores be used to explain managerial decision making?: Evidence from a supply-chain resilience experiment

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  • Choi, Yiseon
  • Dormady, Noah

Abstract

We present the results of a controlled experiment using a national sample of C-suite executives from mid-cap businesses in the United States. The experiment evaluates key production decisions in the context of repeated catastrophic events to mimic a naturalistic risk environment (e.g., natural disasters) impacting business supply-chains. When faced with a catastrophe, a firm's ability to acquire needed production inputs can be substantially limited, and the experiment evaluates the effect of advisory information and disaster exposure on resilience investment decisions and business performance over time. Treatments vary resilience advisory information presented to executives to inform their resilience investment decisions. We evaluate the role of individual credit (FICO scores of the executive) in explaining how executives respond. Findings indicate that FICO score is highly robust in explaining managerial resilience decisions. Executives with a sub-prime credit score are about twice as responsive to advisory recommendations, even when that advisory information is inaccurate. Contrariwise, executives with a strong FICO score adhere to resilience guidance only conditional on its historical record of accuracy. The results provide an initial indication that FICO scores may be a predictive screening mechanism for staffing key risk- or resilience-related business functions.

Suggested Citation

  • Choi, Yiseon & Dormady, Noah, 2025. "Can FICO scores be used to explain managerial decision making?: Evidence from a supply-chain resilience experiment," International Journal of Production Economics, Elsevier, vol. 288(C).
    • Handle: RePEc:eee:proeco:v:288:y:2025:i:c:s0925527325001604
    DOI: 10.1016/j.ijpe.2025.109675
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