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| Author: | Gary, M.S. Wood, R.E. |
| Title: | Mental models, decision rules, and performance heterogeneity |
| Journal: | Strategic Management Journal
2011 : JUN, VOL. 32:6, p. 569-594 |
| Index terms: | management decision making models heuristic methods knowledge |
| Freeterms: | representations cognitive frames schema |
| Language: | eng |
| Abstract: | This paper's focus is on the role of managerial cognition as a source of heterogeneity in firm strategies and performance. Differences (herein as: diffs.) in mental models (hereafter as: m-models) to diffs. in decision rules and performance in a management simulation are linked. The results show more accurate m-models leading to better decision rules and higher performance. It is also found that decision makers don't need accurate knowledge of the entire business environment. In order to achieve superiour performance, accurate m-models of the key principles are sufficient. A fundamental assumption is that managers having a richer understanding about organizational capabilities and the dynamics of industry structure can improve the performance of their firms. This paper's findings provide empirical evidence supporting this assumption. It is shown that diffs. in m-models help explain ex-ante why managers and firms adopt different strategies, achieving different levels of competitive success. |
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