Problem Solving through the Lenses of Identity, Identification, and Work Groups: A Socio-Cognitive Theory of the Firm

Strategy management as a phenomenon needs greater integration in order to clarify and progress knowledge development and accumulation (Durand et al., 2017. "The Expanding Domain of Strategic Management Research and the Quest for Integration." Strategic Management Journal 38(1): 4–16). In this paper we integrate three canonical pillars of strategy: (1) how to firms differ from other firms, (2) why a firm organization differs from a market organization, and (3) the process of strategic decision-making. Consistent with others, we view strategic decision-making as a problem-solving arena in which firms grapple with complex problems and face situations in which goals exist, yet the paths that yield an effective solution are indeterminate and not clearly understood, established, or defined. Our first assertion is that the work group is the critical level for problem solving, not the firm or the individual manager. Our second claim focuses on our socio-cognitive contribution: the social levers of identity and identification are a fundamental design solution when groups are the focal level of analysis for, they align individual and collective interests and cognition, thereby facilitating the work necessary to think about and solve complex problems. Our third claim is that this base model distinguishes firms from each other (e.g., a source of firm differences) as well as firms from hybrid market forms of organization due to: (1) a relational advantage and (2) a cognitive advantage stemming from congruency in organizational and group goal frames. Relational advantages strengthen members' interest in the work group and project at hand, enabling greater levels of knowledge work at individual and group levels. Cognitive advantages occur when organizational and group goal frames are congruent and linked, for when group members' attention is directed by organizational goals, they are primed to think more holistically and thus generate more effective creative solutions. While our model relates to any group charged with problem solving, we envision this model operating: (1) as organizations adapt their businesses processes and products due to changes in the external environment, (2) in sequence with strategic formulation and implementation, (3) for problems that relate to the most important parts of a firm's value chain, and (4) in groups, which may include top managers, RD specialists, those tasked with business development, or any number of other organizational members.