Cognitive Diversity, Managerial Characteristics and Performance Differences across the Cleantech Firms

Introduction

Today’s ambiguous and rapidly changing business environment is increasing interest in strategic cognition research, especially in top managements’ perceptions on their environment (see for review, Kaplan, 2011; Narayanan et al., 2011; Gavetti & Warglien, 2015; Bromiley & Rau, 2016). Research in managerial cognition and organizational theory has long noticed the fundamental importance of cognitive structures studying interaction of organizations and changing environment. The literature has provided several interesting research strands to investigate, e.g. systematic bias in interpretation and decision making (Kahneman & Lovallo, 1993), cognitive maps and cognitive categories (Axelrod, 1979; Porac et al. 1989; Tyler & Gnyawali, 2009), managerial attention and sense making (Dutton & Duncan, 1987; Weick, 1995; Ocasio, 1997), managerial dominant logic (Prahalad & Bettis, 1986; Nadkarni & Narayanan, 2007b; Targowski, 2014), and organizational behaviour and performance (Cyert & March, 1993; Tripsas & Gavetti, 2000; Powell et al., 2011). However, recent research has been advocating more comprehensive approaches with multiple methods to investigate the role of managerial cognition in organizational outcomes (Powell et al., 2011; Gavetti & Warglien, 2015; Bang & Phadtare, 2017).

When an environment is uncertain and ambiguous, managers continuously receive and interpret new information triggering them to adjust their assumptions of competition. These assumptions are bounded by managers’ existing beliefs influencing the manner in which they frame external changes and thus how they search for and enact the information (Daft & Weick, 1984; Tripsas & Gavetti, 2000; Vecchiato, 2017). Studies have shown that managers’ cognitive structures developed across time enhance as well as limit organizational sense making and actions responding to external stimuli (Kaplan & Tripsas, 2008; Salisbury, 2014; Martignoni et al., 2016). In organizational settings, managers act in groups gathering, sharing, and attending to relevant information and jointly analyse and integrate it establishing a shared understanding on a certain issue or situation (Daft & Weick, 1984; Klimoski & Mohammed, 1994). They also interact within the particular business environment and become influenced by their stakeholders’ beliefs and behaviours (Bogner & Barr, 2000). Consequently, managers begin to share a worldview with their stakeholders that holds commonly accepted beliefs on the business environment creating similarities in organizations’ strategies and future operations across the organizations (Porac et al., 1989; Nadkarni & Narayanan, 2007b, Gavetti & Warglien, 2015). For managerial cognition studies, an important question has been the extent to which individual managers within the organization and a wider population have similarities or differences in their cognitions and their linkages to firms’ outcomes and environmental changes (Lyles & Schwenk, 1992; Hodgkinson et al., 1999; Tyler & Gnyawali, 2009; Martignoni et al., 2016).