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Organizational Beliefs and Managerial Vision

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Author Info
Van den Steen, Eric

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Abstract

This paper studies, in a world with differing priors, the role of organizational beliefs and managerial vision in the behavior and performance of corporations. The paper defines vision operationally as a very strong belief by the manager about the right course of action for the firm. The interaction between employees' beliefs and the manager's vision influences decisions and determines employees' motivation and satisfaction. Through sorting in the labor market, the manager's vision also shapes organizational beliefs. Under weak conditions, a company's board should select a manager with stronger beliefs than its own, although spurious effects may make vision often look better than it really is. The analysis shows that beliefs play an important role that goes beyond their information content. It also has implications for theories of corporate culture and business strateg

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File URL: http://hdl.handle.net/1721.1/1845
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Publisher Info
Paper provided by Massachusetts Institute of Technology (MIT), Sloan School of Management in its series Working papers with number 4224-01.

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Date of creation: 28 Mar 2003
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Handle: RePEc:mit:sloanp:1845

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Postal: MASSACHUSETTS INSTITUTE OF TECHNOLOGY (MIT), SLOAN SCHOOL OF MANAGEMENT, 50 MEMORIAL DRIVE CAMBRIDGE MASSACHUSETTS 02142 USA
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Postal: MASSACHUSETTS INSTITUTE OF TECHNOLOGY (MIT), SLOAN SCHOOL OF MANAGEMENT, 50 MEMORIAL DRIVE CAMBRIDGE MASSACHUSETTS 02142 USA

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Related research
Keywords: vision; organizational beliefs; culture; heterogeneous priors; differing priors;

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  1. Dessein, Wouter, 2007. "Why a Group Needs a Leader: Decision-making and Debate in Committees," CEPR Discussion Papers 6168, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  2. Hayes, Rachel M. & Oyer, Paul & Schaefer, Scott, 2005. "Co-worker Complementarity and the Stability of Top Management Teams," Research Papers 1846r, Stanford University, Graduate School of Business. [Downloadable!]
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  3. Landier, Augustin & Sraer, David & Thesmar, David, 2006. "Bottom-Up Corporate Governance," CEPR Discussion Papers 5500, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  4. Malmendier, Ulrike M. & Tate, Geoffrey, 2003. "Who Makes Acquisitions? CEO Overconfidence and the Market's Reaction," Research Papers 1798, Stanford University, Graduate School of Business. [Downloadable!]
  5. Lei Wen & Haiwen Zhou, 2009. "Ability, Openness, and Managerial Decision Making," Atlantic Economic Journal, International Atlantic Economic Society, vol. 37(2), pages 197-208, June. [Downloadable!] (restricted)
  6. Oliver Hart & Bengt Holmstrom, 2008. "A Theory of Firm Scope," NBER Working Papers 14613, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  7. Robert S. Gibbons, 2003. "How organizations behave: towards implications for economics and economic policy," Conference Series ; [Proceedings], Federal Reserve Bank of Boston, issue Jun. [Downloadable!]
  8. Cronqvist, Henrik & Low, Angie & Nilsson, Mattias, 2007. "Does Corporate Culture Matter for Firm Policies?," SIFR Research Report Series 48, Institute for Financial Research. [Downloadable!]
  9. Ulrike Malmendier & Geoffrey Tate, 2004. "Who Makes Acquisitions? CEO Overconfidence and the Market's Reaction," NBER Working Papers 10813, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  10. Cronqvist, Henrik & Low, Angie & Nilsson, Mattias, 2007. "Does Corporate Culture Matter for Firm Policies?," Working Paper Series 2007-1, Ohio State University, Charles A. Dice Center for Research in Financial Economics. [Downloadable!]
  11. Walls, Judith L. & Phan, Philip H. & Berrone, Pascual, 2008. "An assessment of the construct validity of environmental strategy measures," IESE Research Papers D/754, IESE Business School. [Downloadable!]
  12. Steven N. Kaplan & Mark M. Klebanov & Morten Sorensen, 2008. "Which CEO Characteristics and Abilities Matter?," NBER Working Papers 14195, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  13. Bertrand, Marianne & Schoar, Antoinette, 2003. "Managing With Style: The Effect of Managers on Firm Policies," Working papers 4280-02, Massachusetts Institute of Technology (MIT), Sloan School of Management. [Downloadable!]
    Other versions:
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