Managerial Cognition, Sunk Costs, and The Evolution of Industry Structure  

Oleh:

Johnson, Douglas R. ; Hoopes, David G.

Jenis: Article from Journal - ilmiah internasional
Dalam koleksi: Strategic Management Journal vol. 24 no. 10 (Oct. 2003), page 1057-1068.
Topik: Managerial; competition; cognition; simulation; heterogeneity; complexity

Ketersediaan

Perpustakaan Pusat (Semanggi) Nomor Panggil: SS30.13 Non-tandon: 1 (dapat dipinjam: 0) Tandon: tidak ada

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Isi artikel

A significant body of research investigates whether intraindustry competitors hold acommon pattern of beliefs (or schema). Some work suggests that socially constructed shared beliefs, not technology - based economic factors, determine industry structure. While research on managerial cognition is important because it helps strategy research incorporate bounded rationality into otherwise hyper - rational theories, we take issue with the notion that the social construction works independently of economic factors. Emprical studies looking for share beliefs find conflicting results. Some work suggests that managers in an industry share a common set of beliefs, other work finds the opposite (managers do not share common beiefs). Understanding if and to what extent, managerial cognition influences industry structure and competitive heterogeneity would greatly expand our understanding of strategy and firm performance. We model bounded rationality, cognition (belief formation), competition (economic restraints) and industry structure (competitive heterogeneity). We find that competitive pressure and bounded rationality induce agents (firms or managers) to focus their attention on nearby competitors. Thus, firms develop biased estimates of their competitive environment. These estimates correlate with their estimates performance heterogeneity withihn an industry. However as competitive pressure and the costs of strategic change decrease, managerial beliefs tend to converge and the pattern of strategies that emerges is consistent with those predicted by economic theory, even under conditions of bounded rationality.

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