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The psychological context of strategic decisions: A model and convergent experimental findings

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  • Thomas S. Bateman
  • Carl P. Zeithaml

Abstract

Strategic decision‐makers typically are involved in a series of incremental decisions, each affected by a variety of contextual factors. This papers develops a model of the psychological context of strategic decisions and reports two experiments. First, students made reinvestment decisions faced with success or failure feedback on a past decision, high or low perceived organizational slack, and decisions framed to depict a positive or negative future outlook. All three variables had main and interactive effects. Second, managers made similar decisions in a related experimental design. Results confirmed and extended the initial findings. Implications and directions for future research are discussed.

Suggested Citation

  • Thomas S. Bateman & Carl P. Zeithaml, 1989. "The psychological context of strategic decisions: A model and convergent experimental findings," Strategic Management Journal, Wiley Blackwell, vol. 10(1), pages 59-74, January.
    • Handle: RePEc:bla:stratm:v:10:y:1989:i:1:p:59-74
    DOI: 10.1002/smj.4250100106
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    1. Anisya S. Thomas & Kannan Ramaswamy, 1994. "Matching Managers to Strategy: An Investigation of Perfor Mance Implications and Boundary Conditions," Australian Journal of Management, Australian School of Business, vol. 19(1), pages 73-93, June.
    2. Alipour, Ali & Yaprak, Attila, 2022. "Indulgence and risk-taking behavior of firms: Direct and interactive influences," Journal of International Management, Elsevier, vol. 28(2).
    3. Norris Krueger, 1993. "The Impact of Prior Entrepreneurial Exposure on Perceptions of New Venture Feasibility and Desirability," Entrepreneurship Theory and Practice, , vol. 18(1), pages 5-21, October.
    4. Beleska-Spasova, Elena & Glaister, Keith W., 2013. "Intrafirm causal ambiguity in an international context," International Business Review, Elsevier, vol. 22(1), pages 32-46.
    5. Gerard P. Hodgkinson & Barbara Burkhard & Nicolai J. Foss & Dietmar Grichnik & Riikka M. Sarala & Yi Tang & Marc Van Essen, 2023. "The Heuristics and Biases of Top Managers: Past, Present, and Future," Journal of Management Studies, Wiley Blackwell, vol. 60(5), pages 1033-1063, July.
    6. Kuhberger, Anton, 1998. "The Influence of Framing on Risky Decisions: A Meta-analysis," Organizational Behavior and Human Decision Processes, Elsevier, vol. 75(1), pages 23-55, July.
    7. Roger Moser & Srinath Rengarajan & Gopalakrishnan Narayanamurthy, 2021. "Decision Intelligence: Creating a Fit between Intelligence Requirements and Intelligence Processing Capacities," IIM Kozhikode Society & Management Review, , vol. 10(2), pages 160-177, July.
    8. Franz HAAS, 2017. "Model Building – A Circular Approach to Evaluate Multidimensional Patterns and Operationalized Procedures," Expert Journal of Business and Management, Sprint Investify, vol. 5(2), pages 136-141.
    9. Patzelt, Holger & zu Knyphausen-Aufseß, Dodo & Fischer, Heiko T., 2009. "Upper echelons and portfolio strategies of venture capital firms," Journal of Business Venturing, Elsevier, vol. 24(6), pages 558-572, November.
    10. Lowell W. Busenitz & Douglas D. Moesel & James O. Fiet & Jay B. Barney, 1997. "The Framing of Perceptions of Fairness in the Relationship between Venture Capitalists and New Venture Teams," Entrepreneurship Theory and Practice, , vol. 21(3), pages 5-22, April.
    11. Lisa Schurer Lambert, 2000. "… And not a drop to drink: an integrated model of ethics and strategic issue diagnosis," Business Strategy and the Environment, Wiley Blackwell, vol. 9(5), pages 318-327, September.
    12. Tjemkes, Brian V. & Furrer, Olivier & Adolfs, Koen & Aydinlik, Arzu Ülgen, 2012. "Response strategies in an international strategic alliance experimental context: Cross-country differences," Journal of International Management, Elsevier, vol. 18(1), pages 66-84.
    13. Lewellyn, Krista B. & Bao, Shuji ‘Rosey’, 2015. "R&D Investment in the Global Paper Products Industry: A Behavioral Theory of the Firm and National Culture Perspective," Journal of International Management, Elsevier, vol. 21(1), pages 1-17.
    14. Simon, Mark & Houghton, Susan M. & Savelli, Sonia, 2003. "Out of the frying pan...?: Why small business managers introduce high-risk products," Journal of Business Venturing, Elsevier, vol. 18(3), pages 419-440, May.
    15. Wood, Matthew S. & Williams, David W. & Drover, Will, 2017. "Past as prologue: Entrepreneurial inaction decisions and subsequent action judgments," Journal of Business Venturing, Elsevier, vol. 32(1), pages 107-127.
    16. Peter J Buckley & Liang Chen & L Jeremy Clegg & Hinrich Voss, 2018. "Risk propensity in the foreign direct investment location decision of emerging multinationals," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 49(2), pages 153-171, February.
    17. Ipsmiller, Edith & Dikova, Desislava & Brouthers, Keith D., 2022. "Digital Internationalization of Traditional Firms: Virtual Presence and Entrepreneurial Orientation," Journal of International Management, Elsevier, vol. 28(4).
    18. Samson, Kelly & Bhanugopan, Ramudu, 2022. "Strategic human capital analytics and organisation performance: The mediating effects of managerial decision-making," Journal of Business Research, Elsevier, vol. 144(C), pages 637-649.
    19. Tae Jun Bae & James O. Fiet, 2021. "Imprinting Perspective on the Sustainability of Commitments to Competing Institutional Logics of Social Enterprises," Sustainability, MDPI, vol. 13(4), pages 1-27, February.
    20. Lowell W. Busenitz & Chung-Ming Lau, 1996. "A Cross-Cultural Cognitive Model of New Venture Creation," Entrepreneurship Theory and Practice, , vol. 20(4), pages 25-40, July.
    21. Ruth, Julie A. & York, Anne, 2004. "Framing information to enhance corporate reputation: The impact of message source, information type, and reference point," Journal of Business Research, Elsevier, vol. 57(1), pages 14-20, January.
    22. Amankwah-Amoah, Joseph, 2014. "Explanations for strategic persistence in the wake of others’ failures," MPRA Paper 63409, University Library of Munich, Germany.
    23. Meissner, Philip & Wulf, Torsten, 2017. "The effect of cognitive diversity on the illusion of control bias in strategic decisions: An experimental investigation," European Management Journal, Elsevier, vol. 35(4), pages 430-439.
    24. Busenitz, Lowell W. & Barney, Jay B., 1997. "Differences between entrepreneurs and managers in large organizations: Biases and heuristics in strategic decision-making," Journal of Business Venturing, Elsevier, vol. 12(1), pages 9-30, January.

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