Session 358

Cognitive Processes in Strategy

Track P

Date: Tuesday, September 23, 2014

 

Time: 08:00 – 09:15

Common Ground

Room: Budapest


Facilitator:

  • Siggi Gudergan, University of Newcastle

Title: Cognition Under Uncertainty: Empirical Evidence from an Investment and a Central Bank

Authors

  • Timo Ehrig, Max Planck Institute for Mathematics in the Sciences
  • Konstantinos Katsikopoulos, Max Planck Institute for Human Development

Abstract: In virtually all economics and finance, reasoning and decision-making in banking is studied by using models that represent uncertainty as a probability distribution. But in practice bankers face problems where uncertainty cannot be fully handled by probability as when it is not clear how to revise an economic theory, team members disagree on forecasts or policy, information has to be extracted from prices and possible reactions of other players are not known. Which ways of coping with uncertainty do practitioners use? To find out, we conducted in-person, in-depth, semi-structured interviews in two leading investment and central banks. We identify a multitude of coping ways beyond probability and discuss their functionality and adaptive use.

Title: Doing the Same Thing: The Impact of CEOs’ Characteristics on Patterns of Company Strategies’ Similarities

Authors

  • Massimo Garbuio, University of Sydney
  • Daniele Mascia, LUISS Guido Carli University

Abstract: Defining and implementing innovative strategies is of quintessential importance for company’s survival and growth. However, competitors’ imitation practices are not uncommon. Similarities may be unintended, but they may be also the result of similarities in executives’ profiles. Having studied in the same business schools and having a similar career path may lead executives to see the world in a similar way and therefore adopt similar strategic choices. Using a dyadic approach, this study aims to investigate the relationship between CEOs’ career histories and strategic similarities. Preliminary results from the retail industry point toward evidence that prior experience that top managers gathered within and outside the industry play a major role in predicting the similarity of strategies across companies in the this industry.

Title: Effects of Holistic and Analytic Attention on Firm Responsiveness and Exploration

Authors

  • Luke Rhee, New York University
  • William Ocasio, Northwestern University

Abstract: This study examines an unexplored cognitive mechanism--holistic and analytic attention--to explain how firms are able to create new business opportunities and also respond to them in a timely manner. Drawing on psychological studies on cognition, we consider that decision makers engage in cognitive search by attending to particular objects or events either holistically or analytically and propose two hypotheses. First, decision makers with holistic attention are more likely to respond to the emergence of new business opportunities in a timely manner than those with analytic attention. Second, decision makers with analytic attention are more likely to create new business opportunities than those with holistic attention. This proposal introduces topic modeling techniques to measure each firm’s holistic or analytic attention using its shareholder letter.

Title: Making Complex Strategic Decisions: An Attention Load Perspective on Dynamics and Impact of Decision Context

Authors

  • Emmanuelle Reuter, University of St. Gallen

Abstract: This paper advances both constraining and enabling attention load dynamics when executives make complex strategic decisions, in order to contribute a more fine-grained understanding of attention capacity limitations in complex settings. We argue that internal and external context factors –decision characteristics, decision frames and decision support- interact in complex ways to predict decision-makers’ ability to develop a comprehensive and transferable mental model of the surrounding decision situation. The process framework highlights how extrinsic, intrinsic and germane attention load interact and compete for finite attention capacity. We wish to contribute to attention, strategic decision-making and upper echelons research.

Title: Microfoundations of Strategy: Potential, Challenges and Implications

Authors

  • José F. Molina-Azorin, University of Alicante
  • María Dolores López-Gamero, University of Alicante
  • Jorge Pereira-Moliner, University of Alicante

Abstract: Over the last ten years, a new stream of research has emerged in the field of strategic management, namely microfoundations. The microfoundations and behavioral project in strategy examines strategic topics studying their foundations rooted in individual actions, characteristics and interactions. The main purpose of this paper is to examine this literature of microfoundations through a systematic literature review. This paper contributes to the field of strategy by identifying the main characteristics of the microfoundations approach, the areas studied, the benefits and potential of this approach to improve strategy research, and some limitations and challenges that must be overcome to advance this microfoundations project.

Title: The Degree of Analysis of New CEOs’ Cognitive Reasoning and Firms’ Cash Holding Strategy

Authors

  • Qingan Huang, City University London
  • Naaguesh Appadu, City University London

Abstract: Based on the cognitive continuum theory (CCT), this research advocates that new CEOs’ cognitive reasoning provides new explanations for the mechanism behind the cash holding phenomenon. It is down to CEOs to appreciate the needs and the risks associated. This study examines the relationship between the level of analysis (LoA) in new CEOs' cognitive continuum and the cash holding policies; it suggests that LoA will increase firms’ cash holding level because LoA tends to raise the calculated transaction costs, the management controls, the uncertainty avoidance behaviors and the opportunity costs. Using a psycholinguistic approach and computer aided text analysis (CATA) technique, empirical results of this longitudinal study support these claims for non-financial and non-utility firms in the FTSE allshare index.

All Sessions in Track P...

Sun: 08:00 – 09:15
Session 459: Theoretical Foundations of Behavioral Strategy I
Sun: 09:30 – 10:45
Session 460: Theoretical Foundations of Behavioral Strategy II
Sun: 11:15 – 12:30
Session 461: Theoretical Foundations of Behavioral Strategy III
Sun: 15:45 – 17:00
Session 360: Heuristics and Biases in Strategy Choices
Session 363: Social Influence & Comparisons
Sun: 17:15 – 18:30
Session 612: Behavioral Strategy IG Business Meeting
Mon: 08:00 – 09:15
Session 354: Goals and Aspirations
Mon: 11:00 – 12:15
Session 352: CEO Decision Making
Mon: 14:45 – 16:00
Session 265: Learning, Search, Slack: The behavioral theory revisited
Session 353: Behavioral Foundations of Mergers & Acquisitions
Mon: 16:30 – 17:45
Session 359: Cognition Under Uncertainty & Risk Taking
Tue: 08:00 – 09:15
Session 358: Cognitive Processes in Strategy
Session 362: Search for Better Strategies
Tue: 11:00 – 12:15
Session 361: Creativity and Innovation
Tue: 15:30 – 16:45
Session 355: Behavioral Elements of Institutional Theory
Session 453: Competitive Dynamics
Tue: 17:15 – 18:30
Session 356: Affective and Cognitive Processes in Strategy
Session 357: Learning Processes


Strategic Management Society

Madrid