Waldeck The Effect of Team Composition on Strategic Sensemaking

1. Auflage 2007
ISBN: 978-3-8350-5402-8
Verlag: Deutscher Universitätsverlag
Format: PDF
Kopierschutz: 1 - PDF Watermark

E-Book, Englisch, 244 Seiten, Web PDF

Reihe: Business and Economics

Top management teams constantly need to deal with changes in their environment, for instance changing customer demand, social environments, or supplier situations. They try to understand how these changes can affect their organization and adapt their organizational strategy. But teams differ in the ways they make sense of their environment and accordingly in the decisions they make and the success they have.

Tanja Prinzessin zu Waldeck analyzes the effects of the composition of top management teams on their strategic sensemaking process. Based on the results of ten case studies, she shows that the diversity of experiences of team members supports the team to pick up strategically relevant environmental changes early and to develop a wide range of strategic alternatives. The author also indicates that the diversity of a team does not affect the speed with which teams come up with strategic decisions, but that speed appears to be influenced more by the personalities, leadership style, and culture in a top management team. Furthermore, she implies that family and state-controlled businesses are more likely to experience problems in their team composition than public ones.

Zielgruppe

Research

Autoren/Hrsg.

Waldeck, Tanja

Weitere Mitwirkende

Schäffer, Prof. Dr. Utz

Inhaltsverzeichnis

The Cognitive Theory of Strategic Sensemaking.- Empirical Research on Strategic Sensemaking of Top Management Teams.- Research Design.- Ten Management Teams and Their Strategic Sensemaking.- Propositions on Strategic Sensemaking of Top Management Teams.- Implications and Outlook.

Leseproben

B The Cognitive Theory of Strategic Sensemaking (p. 5)

1. Strategy Theory from Economic, Behavioral and Cognitive Perspectives

For a long time strategy research has grounded its theories on the assumptions of traditional economic theories. They have based their research and recommendations on the assumptions that managers observe an objective environment and make rational decisions, at least in the context of their own utility optimization. In the light of these assumptions, their work has focused on developing concepts and recommendations for managers on what strategic actions they should take and analyzed the impact of these decisions on firm performance. Thus, strategy research has addressed the question "what shall managers decide?". However, their work has widely ignored the question "how do managers decide?".

HUFF/HUFF/BARR argue that "… firms within the same competitive environment respond in idiosyncratic ways to changing environmental conditions". The question of why firms react differently and what role managers play in these decisions has been of central importance to a new wave of research contributions, shifting to behavioral and cognitive perspectives on strategy. These contributions loosen and expand the strict assumptions of the economic theories in order to develop more realistic and dynamic theories of the firm and its environment.

While the behavioral theories found their way into the field of strategy, cognitive theories are not as prominent. Reviews of previous research attribute the lack of recognition to the absence of generalizable research and useful guidance for managers, as well as to the fact that the different cognitive literature streams have long developed in isolation building their own terminology and operationalizations. The following paragraphs discuss the different assumptions and contributions of economic, behavioral and cognitive theories. They highlight how cognitive theories and especially the cognitive theory of sensemaking can further enhance the understanding of researchers for strategy outcomes and the process of strategy formulation.

2. Economic Perspectives on Strategy

Theories that take an economic or rational perspective on strategy assume that firms react to environmental changes in form of a "… sequential, planned search for optimal solutions for well-defined problems […] based on previously defined firm objectives". In this context, managers search for a new fit between the environment and their organization by changing or creating a strategy which optimizes the organizations outcome and performance. The objectives of the organization are assumed to be equivalent to profit maximization.

Thereby the economic theories build on three implicit assumptions. First, they assume that managers act rationally, although not always rational in the context of the organizational goals, but at least in the context of their selfinterests. Second, profit maximization continues to be the dominating organizational objective, although newer economic theories like the principal-agent theory start to integrate aspects of owners and managers as entities with different interests and objectives.

And third, the environment is assumed to be objectively observable by the organization as well as its managers. The organization encounters low complexity in its environment. Therefore, economic researchers can treat the organization and managers as a "black box" and analyze how changing environmental or organizational antecedents directly influence the content of organizational strategy.

While treating the organization and its managers as a black box has helped researchers to base their theories on large samples and to understand the impact of strategic change on organizational performances, they cannot explain how organizations and managers shape strategies and why organizations react so differently to environmental changes.

Über Autor(innen)

Dr. Tanja Prinzessin zu Waldeck promovierte bei Prof. Dr. Utz Schäffer am Lehrstuhl für Controlling der European Business School, Oestrich-Winkel. Sie war fünf Jahre als Beraterin bei McKinsey & Company tätig. Seit Mai 2007 hat sie sich mit NetMoms.de selbständig gemacht – einer Internetplattform für Mütter.