Behavioral Strategy

Click here to Behavioral Strategy IG home.
VideoArticle Title/ Author(s)/Managerial Abstract
Hakonsson, Eskildsen, Argote, Monster, Burton, & Obel on emotions and team decisions. | SMJ Video AbstractEXPLORATION VERSUS EXPLOITATION: EMOTIONS AND PERFORMANCE
AS ANTECEDENTS AND CONSEQUENCES OF TEAM DECISIONS
Døjbak Håkonsson,Dorthe; Jacob Kjær Eskildsen, Linda Argote, Dan Mønster, Richard M. Burton,Børge Obel
We analyze performance and emotions as antecedents and consequences of team strategic decisions to explore a new routine versus exploiting an existing one. In a laboratory study, we examine team decision making over time and draw causal inferences about the relationships among team emotions, team performance, and explore–exploit decisions. We use self‐report data to measure team emotions, and validate results with psychophysiological data. We find that declines in performance increase the likelihood that teams decide to explore new routines rather than exploit existing ones. We also find a marginal positive effect of positive emotions, as measured by both self‐report and psychophysiological data, on team decisions to explore a new routine. Further, teams successful at implementing new routines report increased positive emotions, as measured by the self‐report data. This relationship is fully mediated by performance change.
Quantum leaps or baby steps? | SMJ Video AbstractQuantum leaps or baby steps? Expertise distance, construal level, and the propensity to invest in novel technological ideas
Matthew P. Mount; Markus Baer, Matthew J. Lupoli
While the pursuit of novel technological ideas is the driving force of sustained competitive advantage, managers often reject novel ideas in favor of more familiar ones. How then can managers who are out of their depth with a novel technology make sense of it without rejecting it outright? Some suggest that managers should mentally extrapolate from prior experiences with similar ideas. Yet, such extrapolation is impossible when ideas are truly novel and no previous experience with related ideas can be called upon. We resolve this issue by showing that the level at which managers who are unfamiliar with a novel technological idea mentally process it (abstract versus concrete) influences their perceptions of the idea's novelty and usefulness, which, in turn, influences their propensity to invest.
Strategic Intelligence: The Cognitive Capability to Anticipate Competitor Behavior | SMJ Video AbstractStrategic Intelligence: The Cognitive Capability to Anticipate Competitor Behavior
Levine,Sheen; Mark Bernard, Rosemarie Nagel
Why do some entrepreneurs outperform others? How can companies succeed against tough competition? Certainly, some benefit from unique resources, such as patents, and others can winnow competition, as through mergers. But some have entered highly competitive markets, lacking obvious resources, yet managed to achieve impressive success: think Under Armour, Wal‐Mart or Home Depot. Here we test how advantage can stem from managerial cognition. We measure two kinds of cognitive skill in market participants, and then let them vie for cash in intensely competitive markets. Some end up with far more profit than others. Tracing the root of high performance, we find it is predicted by a combination of analytic skills, the ability to solve abstract problems, and strategic intelligence—ability to anticipate competitors' behavior and preempt it .
Cognitive Flexibility and Adaptive DecisionMaking | SMJ Video AbstractCognitive flexibility and adaptive decision-making: Evidence from a laboratory study of expert decision makers
Laureiro-Martinez,Daniella; Stefano Brusoni
Humans are creatures of habits. We tend to prefer known courses of action over new ones. In many cases, habits are good. However, when things change in unpredictable ways, the past may not be good guidance for the future. We argue that “cognitive flexibility”—the ability of understanding when to rely on habits vs. when to explore new courses of action—enables managers to switch from a “fast” decision mode, based on habits, to a “slow,” more deliberate decision mode that facilitates the exploration of new courses of action. Managers high in cognitive flexibility reflect on the situation at hand, recognize and value diversity in viewpoints, and integrate such diversity in their own decision processes. By valuing diversity, they are more likely to overcome inertia.
Laureiro-Martinez, Brusoni, Canessa, Zollo - Neuroscience & explore-exploit | SMJ Video AbstractUnderstanding the exploration–exploitation dilemma: An fMRI study of attention control and decision-making performance
Stefano Brusoni; Daniella Laureiro-Martínez, Nicola Canessa, Maurizio Zollo
From Necessity to Opportunity: Scaling Bricolage | SMJ Video AbstractFrom necessity to opportunity: Scaling bricolage across resource‐constrained environments
Christian Busch; Harry Barkema
How do organizations emerge, survive, and scale in resource-scarce environments? Traditional scaling models tend to rely on considerable financial resources and companies often struggle to adjust to diverse contexts. In contrast, we identified and studied an organization in Sub-Saharan Africa that we argue used simple rules to scale bricolage—making the best out of what is at hand—successfully in diverse low-resource contexts. Our paper provides a novel conceptual model of scaling bricolage: a low-cost replication process of heuristics, enabling fit with a diversity of local environments, as well as cross-unit innovation and learning.
Jana Gallus & Bruno Frey on corporate awards | SMJ Video AbstractAwards: A Strategic Management Perspective
Gallus,Jana; Bruno S. Frey
Awards are widely used in the corporate sector. They fundamentally differ from monetary incentives, which risk crowding out employees' intrinsic motivation. Among the variety of awards, two general types can be distinguished: confirmatory awards based on explicit, pre‐determined performance criteria, and discretionary awards, which rely on broad performance evaluations and may be used ex post to honor outstanding performance. Appropriately designed and adjusted to the specific firm's characteristics, awards enhance employees' motivation and corporate performance. They express recognition and support their recipients' perceived competence and social status. Awards help to retain valuable employees and to establish role models. However, awards may also backfire, for instance, when they provoke envy among coworkers. We propose when awards risk destroying value and when they are particularly useful .