Knowledge structures of prospectors,analyzers, and defenders: content,structure, stability,and performance

The managerial cognition perspective argues that managers operating in complex, dynamic environments develop knowledge structures that help them focus their attention, interpretation, and actions. We explore the content and structure of top managers' strategic knowledge structures by measuring differences in the level of attention they give in annual reports to strategic issues and themes that Miles and Snow used to describe their main strategic types. Twenty-one themes that form seven main factors describing managers' strategic cognition are identified, and these demonstrate reasonable fit with the Miles and Snow model. We show that expert raters can recognize these factors when they read annual reports that contain them. Cluster analysis is then used to identify groups of firms that share similar profiles on these strategic dimensions which are interpreted as examples of cognitive strategic groups. These groups show alignment with Miles and Snow's strategic types, are relatively stable over time, and differ in financial performance. The sample comprises 1,038 listed Australian firms between the years 1992 and 2003. Copyright © 2007 John Wiley & Sons, Ltd.     

Research notes and communications management and organizational change: A note on the railroad industry

Hypotheses which relate top-level managers' age, years of company and industry service, and education to strategic change are studied with a sample of 855 managers from 27 railroads. Results generally support hypotheses that younger managers and those with less experience are more likely to alter their strategies with changing environmental conditions.     

Examining the effect of complexity in strategic group knowledge structures on firm performance

A developing stream of research in the strategy field explores the competitive structure of industries from the perspective of industry participants. This work has demonstrated that managers develop strategic group knowledge structures in order to make sense of their competitive environment. This study extends this line of research by examining the complexity evident in the strategic group knowledge structures developed by firms' top management teams and assessing the relationship between complexity in these knowledge structures and subsequent firm performance. Specifically, we examine the complexity of top managers' knowledge structures regarding their competition using a sample of 76 top management teams from banks in three U.S. cities. Using hierarchical regression, we find a significant relationship between the complexity of cognitive strategic groups and subsequent firm performance. These results suggest that the structure of the cognitive templates that top managers use to understand their environment and the actions of their competitor influence the degree of strategic success of their firm. Copyright © 2002 John Wiley & Sons, Ltd.     

How do CEO emotions matter? Impact of CEO affective traits on strategic and performance conformity in the spanish banking industry

Research on how managers influence firm outcomes has generated promising explanations of differences in organizational strategies and performance within a given industry, but has largely ignored the role of emotions in shaping managers' strategic choices. This article analyzes the influence of the affective traits of CEOs—their long‐term tendency to experience positive or negative moods or emotions—on strategy and performance conformity in a sample of Spanish banks and savings banks. Our results show that managers' negative affective traits are related to more conformist strategies and more typical performance, whereas positive affective traits seem to promote outcomes that deviate from the central tendencies of the industry. Results also show that strategic conformity mediates the relationship between CEO negative affective traits and typical performance. Copyright © 2009 John Wiley & Sons, Ltd.     

Erratic strategic decisions: when and why managers are inconsistent in strategic decision making

While decision makers in organizations frequently make good decisions rooted in stable and consistent preferences, such consistency in outcomes is not always the case. In this study, we adopt a psychological perspective of judgment to investigate managers' erratic strategic decisions, which we define as a manager's inconsistent judgments that can shape the direction of the firm. In a study of 2,048 decisions made by 64 CEOs of technology firms, we examine how both metacognitive experience and perceptions of the external environment (hostility and dynamism) could affect the extent to which managers make erratic strategic decisions. The results indicate that managers with greater metacognitive experience make less erratic strategic decisions. The results also indicate that in hostile environments managers make more erratic strategic decisions. But contrary to our expectations, in dynamic environments managers make less erratic strategic decisions. Similarly, hostility and dynamism interact in their effect on erratic strategic decisions in that the positive relationship between environmental hostility and erratic strategic decisions will be less positive for managers experiencing high environmental dynamism than those experiencing low environmental dynamism. These results have important implications for strategic decision‐making research. Copyright © 2010 John Wiley & Sons, Ltd.     

Environmental context,managerial cognition,and strategic action: an integrated view

This study addresses an apparent disconnect between two views of strategic action: the ‘economic view,’ which contends that industry structure is the primary influence on strategic action, and the ‘cognitive view,’ which suggests that managerial cognition drives strategic action. We argue that this disconnect has created artificial boundaries between the two perspectives and has limited our ability to develop holistic explanations of strategic action. In response, we develop an integrated model that answers two questions: 1) Does industry context affect managerial cognition? 2) Does managerial cognition mediate the relationship between industry context and strategic responses to environmental changes? To examine these questions, we study the relationship between industry velocity, the structure of top management's cognitive representation of the environment, and the speed of response to environmental events. We find that industry velocity influences the structure of cognitive representations, which in turn influence the speed of response to environmental events. These results support our contention that both industry and cognition variables are critical in developing explanations of strategic actions. These results have implications for our understanding of the development of top managers' beliefs, the relationship between beliefs and action, and the nature of the complex relationship between industry context, managerial cognition, and strategic action. Copyright © 2008 John Wiley & Sons, Ltd.     

Increase in takeover protection and firm knowledge accumulation strategy

Research summary : We argue that the extent to which a firm faces takeover threats affects its knowledge structure. In particular, takeover threats may lead to managers' reluctance to adopt a strategy toward firm‐specific knowledge accumulation because implementing this strategy requires them to acquire specialized skills, which are at risk under takeover threats. Conversely, takeover protection leads to an increase in firm‐specific knowledge. Further, the relationship between takeover protection and firm‐specific knowledge is positively moderated by managerial ownership, which helps align managerial interests with those of shareholders. But the relationship is negatively moderated by managerial tenure, as long‐tenured managers have already committed to their firms. Using a differences‐in‐differences method with Delaware antitakeover rulings in the mid‐1990s as an exogenous shock, we found results supporting these arguments. Managerial summary : We examined how changes in the Delaware antitakeover rulings in mid‐1990s affected the knowledge structure of firms incorporated in Delaware. We reasoned that with a greater level of takeover protection, top managers of those firms incorporated in Delaware felt higher job security, thus providing them stronger incentives to make strategic decisions toward the development of firm‐specific knowledge and to make corresponding human capital investments in specialized skills. Empirically, firms incorporated in Delaware were found to have an increase in the level of firm‐specific knowledge in their knowledge structure after the mid‐1990s. Furthermore, our analysis suggests that the role of takeover protection on top manager incentives is particularly salient when the managers are awarded with more company shares and when the managers have shorter organizational tenure. Copyright © 2015 John Wiley & Sons, Ltd.     

Performance impact of middle managers' adaptive strategy implementation: The role of social capital

This article reconciles mixed findings about the performance impact of middle managers' strategy involvement. We propose that the relationship between middle managers' adaptive strategy implementation—through upward and downward influence—and objective business performance can be curvilinear and contingent on formal and informal structures. Applying a multilevel perspective to social networks, we empirically show that reputational social capital enhances the performance impact of middle managers' upward influence while informational social capital elevates the performance impact of their downward influence. The size of a business unit or region has differential moderating effects. The curvilinear effects of middle managers' upward influence and reputational and informational social capital on business unit performance reflect paradoxes. We discuss the implications of these findings for strategy implementation research and practice. Copyright © 2013 John Wiley & Sons, Ltd.     

Global mind-sets and cognitive shift in a complex multinational corporation

This article investigates attitudes that underlie international strategy processes. We propose survey scales of these attitudes and describe tests that support their reliability and validity as measures of constructs—including integration, responsiveness, and coordination—that researchers have used for many years in case analyses of international strategy and organization. We also propose and validate scales to capture the perceived alignment with firms' international objectives of key business policies that affect individuals, including accountability for global results, career opportunity and a globally shared meaning system that informs communication and discussion about change. Our discussion of these tests offers an assessment of how changing patterns of association among the measures over time conform to expectations generated by the case-based empirical literature. We argue that these patterns document a process of organizational learning that can link managers' mind-sets with senior managers' intentions in the course of proactive international strategic change. The analysis relies on survey responses taken in 1992 and 1995 from 370 managers in 13 country affiliates and the head office of a U.S.-based diversified multinational corporation (DMNC). © 1998 John Wiley & Sons, Ltd.     

Structural and relational influences on the role of reward interdependence in product innovation

This study examines the relationship between reward interdependence, or the extent to which managers' rewards are tied to the performance of colleagues in other functions, and product innovation. It also considers how structural and relational features of the organizational context might moderate this relationship. Our analysis of a sample of Canadian‐based firms reveals a positive relationship between reward interdependence and product innovation that is invigorated at higher levels of job rotation, social interaction, and interactional fairness, but we find no evidence of a moderating effect of decision autonomy. Consistent with a systems approach to organizational contingencies, we also find that the reward interdependence–product innovation relationship is stronger when the organization's context comes closer to an ‘ideal’ holistic configuration that is most conducive to knowledge exchange within the organization, with a more prominent role played by the relational sub‐context (social interaction and interactional fairness) than the structural sub‐context (job rotation and decision autonomy). The findings have important implications for innovation research as they shed light on how the extent to which individual rewards are tied to collective performance can be channeled to enhance innovation pursuits.     

Who needs experts most? Board industry expertise and strategic change—a contingency perspective

Research summary: We analyze the effects of board industry expertise on corporate strategic change and the moderating role of institutional quality. We suggest that country‐level contingency factors mitigate the effect of experienced boards on strategy formation by providing alternative sources of information and control in strategic matters. We develop institutional quality as institutional information provision and institutional control provision to test our hypotheses on a sample of firms from MSCI Europe and the S&P 500. Our findings confirm that industry expertise is a salient driver of strategic change across countries. The strength of the effect, however, depends on the institutional quality. We submit that weak institutions require greater board industry expertise as an alternative channel of information and control. Management summary: This study provides new empirical evidence that experience in the firms' industries enables directors to increase strategic change. Our findings show that this effect is even stronger in countries with weak regulatory environments. We hereby provide guidance for multiple stakeholders. First, shareholders seeking a more active adjustment of their firms' strategies may want to compose boards that leverage such experienced directors. Second, directors can use their industry experience to control and to challenge managers better to move beyond the status quo. Third, managers lacking access to information on potential strategic change can use such experienced directors for strategic advice and as a source of information. Overall, we add to the understanding of the corporate board's role in shaping strategy and the influence of weak regulations. Copyright © 2016 John Wiley & Sons, Ltd.     

The modified Tichy TPC framework for pattern matching and hypothesis development in historical case study research

Scholars' calls for an integrating view of the technical, political, and cultural (TPC) aspects of management lead to examining Tichy's TPC framework as the basis of such a view. Tichy's framework is shown to require modification to include the TPC systems of a firm's customers and competitors, and a modified TPC framework is proposed. This framework's usefulness for pattern matching to identify causes of performance is demonstrated in historical case research into a strategic group marketing IBM‐compatible mainframes. A result is four testable hypotheses suggesting how firms' success marketing to organizations depends on effective integration between marketing and general management, and a potential cause of variations in performance within strategic groups and during movement between strategic groups. In addition, a method for testing and developing hypotheses by pattern matching on a modified TPC framework is demonstrated. Copyright © 2000 John Wiley & Sons, Ltd.     

Strategy making as iterated processes of resource allocation

Capitalizing on the Bower-Burgelman process model of strategy making in a large, complex organization, we investigate the multilevel managerial activities that lead firms facing similar new business opportunities to respond with different strategic commitments. Our field-based data provide evidence on (I) the role of ‘corporate contexts’ that reflects top managers' crude strategic intent in shaping strategic initiatives of business-unit managers; (2) the critical influence of early business development results on increasing or decreasing middle managers' enthusiasm to the new businesses and top managers' confidence in these middle managers in a resource allocation; (3) the escalation or deescalation of a firm's strategic commitment to the new businesses as a consequence of iterations of resource allocation. We conclude that it is useful to conceptualize strategy making in a large, complex firm as an iterated process of resource allocation.     

Cash is surprisingly valuable as a strategic asset

Academics, politicians, and journalists are often highly critical of U.S. firms for holding too much cash. Cash holdings are stockpiled free‐cash flow and incur substantial opportunity costs from the perspectives of economics. However, behavioral theory highlights the benefits of cash holdings as fungible slack resources facilitating adaptive advantages. We use the countervailing forces embodied in these two theories to hypothesize and test a quadratic functional relationship of returns to cash measured by Tobin's q. We also build and test a related novel hypothesis of scale‐dependent returns to cash based on the competitive strategy concept of strategic deterrence. Tests for both of these hypotheses are positive and show that returns to cash continue to increase far beyond transactional needs. Copyright © 2013 John Wiley & Sons, Ltd.     

Management control systems and their effects on strategy formation at middle‐management levels: evidence from a U.K. organization

The relationship between management control systems (MCS) and the strategy process is a largely unexplored area of strategic management. This paper reports the findings of an in‐depth, longitudinal case study of a major British‐based organization operating within the increasingly globalized telecommunications industry. Informed by Simons' ( 1991 , 1994 , 1995 ) theoretical model of the strategy process–MCS relationship, the study examines the nature and extent of this relationship at middle‐ and lower‐management levels. Of particular interest were the effects that the design and use of three groups of MCS have on the development of new ideas and initiatives. Findings suggest that beliefs systems influence managers' initiation or ‘triggering’ decisions, the use of administrative controls affects the location of strategic initiatives and may lead to the polarization of roles, and simultaneous emphasis on a range of key performance indicators can create a bias towards one set of measures and against another. Copyright © 2002 John Wiley & Sons, Ltd.     

Mapping managers' market orientations regarding new product success

Research shows that managers' cognitive structures influence their decisions and firm outcomes, and that managers' shared understanding is critical to new product success. Yet, little is known about the content and structure of managers' knowledge regarding their business's market orientation (MO) and how such orientation relates to new product development. By drawing from research on managerial cognition, we suggest that an examination of managers' cognitive maps of their business's MO can provide valuable insights. First, cognitive maps provide information regarding the relative ranking of concepts that managers consider important to new product success. Second, they offer insights about the relationship among concepts by illustrating the causal logic flow, centrality, and strength of the association between concepts. Finally, cognitive maps reveal a gestalt or pattern of managers' understandings. This pattern provides an overall view of their perceptions of their firms' MO. Accordingly, the purpose of this article is to begin developing theory to explain the nature and extent of the sharing of managers' understanding of their business's MO across a company within the context of new product development. We develop several theoretical propositions using established research on market orientation and an exploratory investigation of the cognitive maps of a stratified sample of thirty managers of a highly successful frozen food division of a multinational company. We argue that managers of innovative companies with a history of successful new products in moderately dynamic industries will have established market orientations, as reflected in cognitive maps, which emphasize customer orientations more than competitor or technological orientations. Moreover, we suggest that managers will consistently recognize the importance of interfunctional coordination because it influences the firm's orientations towards customers, competitors, and technology by facilitating sharing of important market information necessary for successful new product development. Furthermore, we propose that the division of labor and functional specialization in a company will result in predictable differences across cognitive maps of managers in different functions and levels of the organization. For example, senior managers are likely to have a more balanced and integrated MO than junior managers, due to their knowledge of organization wide issues. The article also proposes an agenda for scholars interested in investigating the relationship between managers' cognitive maps of their company's market orientation and new product success. We note the importance of studying managers' cognitive structures in different types of industries over time, and how managers' cognitive structures may relate to their company's ability to learn. Managers could use cognitive mapping to recognize and evaluate beliefs that inhibit the sharing and interpretation of information between managers, departments, and levels and could design appropriate interventions.     

The architecture of coopetition: Strategic intent,ambidextrous managers,and knowledge sharing

The study investigates the significance of strategic intent, manager's ambidexterity, and knowledge sharing routines for firms in their quest to pursue coopetition. We utilize the resource-based view and the dynamic capabilities theory to ground our hypotheses. We test the hypotheses using the data collected from 313 firms that engage in coopetition relationships through an online survey. The findings forward knowledge sharing and ambidextrous managers as intervening variables, in that when complemented with knowledge sharing, a firm's strategic intent could better guide the firm's managers to pursue coopetition successfully. Findings further advocate that knowledge sharing complements to enable the relationship between a firm's strategic intent and its ambidextrous managers, as well as the relationship between strategic intent and coopetition. Furthermore, results also indicate that ambidextrous managers, with a skillset of a combination of exploration and exploitation, are positively associated to coopetition. Overall, the findings make important theoretical as well as empirical contributions to the coopetition and strategic alliance literature.     

Technology Acquisition in Family and Nonfamily Firms: A Longitudinal Analysis of Spanish Manufacturing Firms

Technology acquisition from external sources has been identified as a critical competence for sustained success in innovation, and research has paid a good deal of attention to studying its advantages, drawbacks, determinants, and outcomes. Traditionally, research has modeled the choice to acquire technology from outside a firm's boundaries as the result of a trade‐off between the benefits of external acquisition (e.g., higher return on investment, lower costs, increased flexibility, access to specialized skill sets, and creativity) and its drawbacks (e.g., opening the market to new entrants, risk of imitation of core competencies, and reduced value appropriability). Yet, this view does not capture the behavioral considerations that may potentially encourage or discourage managers from sourcing technology outside the firm's boundaries. This behavioral aspect is especially important if one wants to understand the conduct in external technology acquisition of family firms, which are found to favor strategic actions that preserve the controlling families' control and authority over business, even at the cost of giving up potential economic benefits. Thus, external technology acquisition is likely to be interpreted differently in family and nonfamily firms. Despite its importance, how the involvement of a controlling family affects decisions in technology and innovation management and specifically external technology acquisition is an overlooked topic in extant research and requires further theoretical and empirical examination. This study attempts to fill these gaps by extending the tenets of the behavioral agency model and prior research pointing to particularistic decision‐making in family firms to uncover the behavioral drivers of external technology acquisition in family and nonfamily firms. Theory is developed that relates performance risk, family management, and the contingent effect of the degree of technology protection on external technology acquisition, and the hypotheses are tested with longitudinal data on 1540 private Spanish manufacturing firms. The analyses show that managers are more likely to acquire technology from external sources through research and development contracting when firm performance falls below managers' aspirations. Family firms are generally more reluctant to acquire external technology, and the effect of negative aspiration performance gaps becomes less relevant as family management is higher, which is attributed to family managers' attempts to avoid losing control over the trajectory that technology follows over time. However, family firms become more favorable to considering the adoption of an open approach to technology development when some protection mechanisms (specifically, the filing of patents on the firm proprietary technologies) increase the managers' perceptions of control over the technology trajectory. As such, this study makes a contribution to the understanding of the behavioral factors driving external technology acquisition, and it offers important insights regarding technology strategy in family firms.     

Strategic Suppliers' Technical Contributions to New Product Advantage: Substitution and Configuration Options

Current theory lacks clarity on how different kinds of resources contribute to new product advantage, or how firms can combine different resources to achieve a new product advantage. While several studies have identified different firm‐specific resources that influence new product advantage, comparatively little research has explored the contribution of strategic supplier resources. Combining resource‐based and relational perspectives, this study develops a theoretical model investigating how a strategic supplier's technical capabilities impact focal firm new product advantage and how firms combine different resources to gain this advantage. The model is tested using detailed survey data collected from 153 interorganizational new product development projects in the United Kingdom within which a strategic supplier had been extensively involved. Empirical results support our research hypotheses. First, supplier technical performance is shown to have a significant positive impact on new product advantage. Next, we show that while supplier technical capabilities have a positive influence on supplier technical performance, the a priori nature of the supplier's task moderates the relationship. Finally, our data support our hypotheses related to the positive relationship between relationship‐specific absorptive capacity and new product advantage, and the proposed negative moderation of supplier technical capabilities on this relationship. Based upon these findings, we encourage managers to recognize that strategic suppliers' with greater technical capabilities perform better regardless of the degree of creativity required by their task; but that strategic suppliers with lower technical capabilities may partially compensate (substitute) for their lack of technical capabilities, if they are able to respond to high problem‐solving task requirements. Furthermore, we suggest that the firm's development of relationship‐specific absorptive capacity is much more important when a strategic supplier is less technically capable. A buying firm's relationship‐specific absorptive capacity can, according to our data, substitute for low supplier technical capabilities. On the other hand, where the supplier has strong technical capabilities, investments in relationship‐specific absorptive capacity have no effect on new product advantage. Our findings reinforce recent calls for research on how firms can combine different resources and capabilities to achieve superior performance.     

Opening the Black Box of Upper Echelons in China: TMT Attributes and Strategic Flexibility

Many scholars have suggested that strategic flexibility is a critical firm capability to survive in today's competitive arena. The decision to take strategic actions to make the firm more strategically flexible typically originates in the top management team (TMT). As the principal decision‐making unit of the firm, TMT members' information acquisition and processing capabilities and subsequent interpretation of environmental changes critically influence the decision to make the firm more strategically flexible to achieve a better fit with its market environment. Therefore, in order to understand how firms can adapt to environmental changes, scholars must study the sociopsychological processes of interaction among members of the TMT. This study examines the relationships between TMT's sociopsychological attributes (shared vision, social integration, and political ties) and strategic flexibility, which is decomposed into organizational flexibility and technological flexibility. The study further investigates how the level of competitive intensity can moderate the relationships. All the hypotheses are tested using structural equation models based on the survey data from 227 firms in China. The results show that organizational flexibility mediates the impact of TMT's social integration and political ties on technological flexibility. Surprisingly, a TMT's shared vision for the firm neither impedes nor facilitates the firm's effort in attaining the desired degree of organizational flexibility. However, TMT's shared vision does have a positive and direct impact on technological flexibility. Moreover, intense competition amplifies the positive impact of TMT social integration on the degree of organizational flexibility, but there is no significant moderating effect of competitive intensity on the relationship between a TMT's political ties and organizational flexibility. The results extend previous research by highlighting the importance of TMTs' sociopsychological attributes in driving technological flexibility, through the mediating impact of organizational flexibility.