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Training Strategic Thinking: Experimental Evidence

  • Juan M. Benito-Ostolaza

    (Universidad Pública de Navarra.)

  • Juan A. Sanchis-Llopis

    (Universitat de València and ERICES)

Strategic behavior is crucial for strong firm performance, especially in competitive environments. Thus, designing a good strategy is a key issue for firms. Designing a strategy requires a combination of strategic thinking—which involves analyzing a firm’s strategic environment, defining a vision of its future, and devising new ideas to out-think competitors—and strategic planning—which implies using these ideas to formulate a business plan. Although many firms excel at strategic planning, few devote enough resources to strategic thinking, which results in strategic insanity (i.e., firms repeatedly applying the same strategies with the expectation of different outcomes). To foster a strategic environment within a firm, firm managers and other workers must show willingness for active involvement in a firm’s strategic decisions. Nevertheless, not everybody has the skills to do so, as many firms lack work force training programs. This study shows, experimentally, how training affects firms’ strategic behavior. The starting point is two groups of individuals with initially equal qualifications who play in a sequential game whose rules hinder the calculation of equilibria. The members of only one of the groups previously receive a treatment entailing a process of training and learning that aims at fostering strategic thinking. The results point to a significant increase in the number of strategic decisions in the treatment group in sharp contrast to the control group, confirming the initial hypothesis (i.e., the positive impact of training).

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Paper provided by Department of Applied Economics II, Universidad de Valencia in its series Working Papers with number 1323.

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Length: 22 pages
Date of creation: Nov 2013
Date of revision:
Handle: RePEc:eec:wpaper:1323
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  1. Juan Miguel Benito & Pablo Brañas-Garza & Penélope Hernández & Juan A. Sanchis, 2012. "Strategic behavior in Schelling dynamics: A new result and experimental evidence," Discussion Papers in Economic Behaviour 0312, University of Valencia, ERI-CES.
  2. Colin F. Camerer & Teck-Hua Ho & Juin-Kuan Chong, 2004. "A Cognitive Hierarchy Model of Games," The Quarterly Journal of Economics, MIT Press, vol. 119(3), pages 861-898, August.
  3. Harris, Lloyd C. & Ogbonna, Emmanuel, 2006. "Initiating strategic planning," Journal of Business Research, Elsevier, vol. 59(1), pages 100-111, January.
  4. Antoni Bosch-Dom�nech & Jos� G. Montalvo & Rosemarie Nagel & Albert Satorra, 2002. "One, Two, (Three), Infinity, ...: Newspaper and Lab Beauty-Contest Experiments," American Economic Review, American Economic Association, vol. 92(5), pages 1687-1701, December.
  5. Juan Miguel Benito & Pablo Brañas-Garza & Penélope Hernández & Juan A. Sanchis, 2011. "Sequential versus Simultaneous Schelling Models: Experimental Evidence," Journal of Conflict Resolution, Peace Science Society (International), vol. 55(1), pages 60-84, February.
  6. ogilvie, dt, 1998. "Creative action as a dynamic strategy: Using imagination to improve strategic solutions in unstable environments," Journal of Business Research, Elsevier, vol. 41(1), pages 49-56, January.
  7. Schelling, Thomas C, 1969. "Models of Segregation," American Economic Review, American Economic Association, vol. 59(2), pages 488-93, May.
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