Strategic cognition  the strategic manager s
perception and interpretation
By Jesper Strandskov & Anders Drejer, Strategy-Lab
The essence
What is here termed strategic cognition, understood as the decision maker s
process of perceiving and interpreting the decision context surrounding a strategic
issue, is vital for the outcome and effectiveness of the decision process. The
importance of strategic cognition is only underlined by the fact that strategic
decisions are characterised by irreversibility, high degrees of ambiguity and
complexity, and are highly resource demanding. Hence, the strategist s process of
 mapping the information packed decision context, referred to as his cognitive
map, produces aspects of the specific decision environment and beliefs about
cause-and-effect relationships, and acts as a basis for strategic decision making.
This process is likely to be complicated if a group of individual decision makers
must align their cognitive maps in order for them to reach consensus and make a
decision. Further, the cognition process is influenced by individual traits of the
strategist as well as the implicit or explicit use of heuristics and biases. Several
mapping techniques have been developed theoretically and employed empirically
to encapsulate the cognitive maps of strategists.
Main contribution
- Viewing the human being as a limited information processing entity, which
necessarily must simplify his information world in order to make a decision.
Its normative implications
- Individual decision making (top manager)
o Top managers spend their time absorbing, processing, interpreting
and disseminating information about issues, opportunities, and
problems, and the more aware they are of their cognitive processes
the more capable are they of transforming complex information
environments into tractable ones
- Group decision making (top management team)
o The dynamics and effectiveness of the decision process are likely to
improve when the individual decision makers recognise that any
disagreement leads back to differences in colleagues cognitive
processes
- Organisational decision making
o The strategic decision makers in a company are more likely to
succeed with imposing major strategic decisions on the rest of the
organisation, when the organisational cognitive map is highly
cohesive. As such the top management team is both a sensemaker
and a sensegiver
1
Main topics
- Introduction
o What is meant by  cognition
o What is meant by  strategic
- The content of strategic cognition
o The interpretation process
o The strategists
o Cognitive maps
o The content of cognitive maps
o Biases and heuristics
- Methods to uncover strategic cognition
o Repertory grid
o Self-Q
o Object sorting
o Grounded theory
o Semi-structured interviews
o Questionnaires
o Archival data analysis
- Methodological issues
- Examples of empirical studies of strategic cognition
- Concluding comments
- References
Introduction
This writing intends to outline and discuss what may be understood by the concept
of  strategic cognition . This will involve the attempt to answer several important
sub-questions, including what is meant by  cognition and what is meant by
 strategic . Together they constitute strategic cognition, which is the focal point of
this writing, and hence receives the main attention. As an upshot, the remaining
discussion will include the scrutiny of significant contributions over the past 2
decades in order to show the reader how various authors have dealt with strategic
cognition. This includes further thoughts on phases in the interpretation process,
the people who  cognitise , the meaning and content of cognitive mapping, and
heuristics and biases that potentially impact the strategic cognition process.
 Cognition . The topic of cognition draws heavily on the field of cognitive science,
which in turn synthesises ideas from philosophy, neuroscience, linguistics,
psychology, sociology, artificial intelligence and anthropology (Laukkanen, 1994;
Stubbart, 1989). Up till the 1950s much of the formal study on decision making
tended to regard the decision making process as highly rational and the decision
maker capable of making decisions that maximised his interest. Two seminal
pieces with roots in behavioural science rejected the existence of economic or
rational man. First, Edwards (1954) introduced behavioural scientists to the work
on decision conducted by economists, statisticians and philosophers. Second,
Simon (1957; March & Simon, 1958) introduced the concept of  bounded
2
rationality , which suggests that if economists want to understand real decision
behaviour, they have to focus on the perceptual, psychological, and cognitive
factors that cause human beings to make imperfect decisions. Later, interest in
cognition flourished following Cyert & March s (1963) description of the flows of
information, and the sub-processes and tasks involved in Weick s (1969)
description of organising. The implication was that organisations were portrayed
as information processing systems (Galbraith, 1974; Tushman & Nadler, 1978),
multicephalous organisms capable of symbolic representation (Pondy & Mitroff,
1979), bodies of thought and sets of thinking practices (Weick, 1979),
interpretative systems (Daft & Weick, 1984), and as minds (Sandelands &
Stablein, 1987). These discussions represented efforts to dismantle the  black box
of organisational behaviour, to discover what went on between stimulus and
response. Hence, theories of cognition are concerned with how human beings
analyse information obtained from the environment and the organisation, how it is
stored in memory, and how the stored memory can be used to acquire and
interpret new information and direct behaviour towards the attainment of goals
(Grunert, 1994). This brings understanding and explanation to why an individual,
a group of people, or an organisation behave the way they do, how they make
sense of and interpret stimuli from their surroundings.
 Strategic . Cognition is here related to issues, or situations calling for a
decision, that are considered strategic in organisations. Strategic decisions and
their decision processes are made to support and underpin the alignment of
resources and environment of an organisation that constantly deals with change
(Daugaard, 2003). Such decision situations are characterised by novelty,
complexity and openendedness (Mintzberg et al., 1976). Dean & Sharfman
(1993) and Mason & Mitroff (1981), in similar terms, contend that strategic
decisions often have no precedent or guide and are often difficult to model or
analyse. Likewise, Bass (1983) and Schwenk (1988) suggest that strategic
decision making is a messy rather than orderly process, especially in what they
refer to as  ill-structured decision scenarios. Mason & Mitroff (1981: 10-13)
observe that the lack of structure is caused by the complexity that surrounds
strategic problems, and claim that strategic problems have no clear formulation
and that it is very difficult to determine the criteria by which solutions should be
judged. Further, strategic decisions lead to significant commitment of resources
with significant impact on the company as a whole and on its long-term
performance (Papadakis et al., 1998; Eisenhardt,1992; Ghemmawat, 1991;
March & Simon, 1958; Porter, 1980). Such decisions may relate to situations
where companies diversify their business, adjust their product lines, choose
among competing technological standards, or change strategy when the market
is declining. These decisions affect the performance of the company, and needs
careful analysis, but the information necessary to make them is incomplete since
future decisions of customers and competitors are unknown (White, 1981). To
predict their response requires effective use of abundant and complex
information. Thus, strategic decision processes involve a high degree of
uncertainty and ambiguity for decision makers, and the potential number of
information variables is almost infinite.
3
Strategic cognition
Having clarified the basic meaning of strategic cognition, the following section
intends to discuss a set of academic articles that have had a significant impact on
the development of the concept of strategic cognition, and areas relating to
strategic cognition. The goal is to give the reader an overview of important
contributions on strategic cognition, which all deal with how strategists with
limited information processing capacities deal with this complexity in order to
make sense of strategic issues. First, however, it should be mentioned that the
review does not distinguish between the concepts of managerial cognition (e.g.
Greve, 1998; Huff, 1992; Johnson & Hoopes, 2003) and strategic cognition (e.g.
Hodgkinson et al., 1999). For purposes of convenience, this text applies the latter.
Further, only in cases where the selected articles explicitly do so will a distinction
take place between cognition at an individual level and cognition at a group level
(top management team).
The interpretation process. In recent years there has been a growing
recognition of the importance of cognition in the strategy process in general (e.g.
Huff, 1990; Schwenk, 1984), accompanied by a proliferation of studies seeking to
elucidate theoretically and empirically the precise ways in which strategic thinking
influences strategy development and implementation. The research relates
organisational decision making to cognitive structures and processes, and
addresses such topics as a decision maker s frame of reference (e.g. Mason &
Mitroff, 1981; Shrivastava & Mitroff, 1983; 1984), strategic assumptions (e.g.
Schwenk, 1988), knowledge structures (Prahalad & Bettis, 1986; Lyles &
Schwenk, 1992), categorisation (Dutton & Jackson, 1987), and the concepts of
scripts, cognitive maps, schemata, organisational learning, and interpretative
systems (see Lyles & Schwenk, 1992). As stated, strategists must constantly deal
with change and act effectively in order to ensure their companies
competitiveness. Such change leads to an on-going flow of strategic issues
relating to e.g.:
Purchase patterns of customers become unpredictable
Target groups are disappearing after a short period of time
Competitive advantages are non-persistent
Revenue decreases dramatically
A new competitor has changed  the rules of the game
Such change issues are detected and dealt with at the top management level and
defined into more concrete problem statements. In the subsequent decision
process, according to cognitive theories, the strategists are active processors of
information received from the decision environment (organisational and
environmental variables), and they respond to their construals of that information
(Ilgen & Klein, 1988). As illustrated, Daft & Weick (1984) characterised the
interpretation process in terms of three tasks.1
Scanning Interpretation Learning
(data collection) (data given (Action taken)
Figure 1: The interpretation process (Adapted from Daft & Weick (1984: 284))
1
According to Grunert (1994a) cognitivism implies the five basic cognitive steps
of attention; interpretation and integration; storage; retrieval; and problem
solving
4
First, strategists must scan an environment to collect data about actual or
potential changes in it. Second, they must analyse and interpret the information
collected during scanning in order to identify critical threats and opportunities.
Third, they must take action that is based on those interpretations. Figure XX
serves as inspiration for the multiple sources of data and information that could be
used as a basis for making strategic decisions.
Age
Values
Education
Managerial
stimuli
Risk
Cognitive propensit
capacity
Information Networks
New
Manageme Structure Political Economic
system entrants
nt
Potential
Mission
stimuli
Strateg Suppliers Buyers
&
Organisational Environmen
variables
y
stimuli tal stimuli
for
Source: own work
strategic
History Activities Technological Social
Culture decision Substitutes
Competitor
s
Figure 2: Potential stimuli for strategic decision-making.
The figure includes the stimuli received from external and internal surroundings as
well as the stimuli that come from the personal characteristics of the people who
are responsible for strategic decisions. An important notion needs to be made
concerning these people. They have been named e.g. the  dominant coalition
(Cyert & March, 1963),  strategists (Schwenk, 1988), and the  top management
team (Papadakis et al., 1998).2 They are the people who sit at the apex of the
company and possess formal, hierarchical or direct power to influence the strategy
making process. As such when the discussion revolves around strategic cognition,
the centre of attention is the managers or executives who are positioned to make
strategic decisions, and how they must construct simplified mental models when
dealing with strategic problems (Simon, 1957).
The strategists. The strategists spend their time absorbing, processing, and
disseminating information about issues, opportunities, and problems. The most
fundamental challenge faced by them, however, is that their information worlds
are extremely complex, ambiguous, and munificent (Mason & Mitroff, 1981;
Mintzberg et al., 1976; Schwenk, 1984). Somehow they must see their way
through what may be a bewildering flow of information to make decisions and
solve problems. In that process the experience and background of the strategists
play a key role in the process of mapping a given decision situation. The classical
articles of Child (1972), Montanari (1978) and Hambrick & Mason (1984) all
emphasised the role of the strategist. Child (1972) highlighted that managers of
an organisation play an influential role in shaping the conditions and processes
that occur both outside and within the firm. Montanari (1978) remarked that a
strategist s personality exerts influence in the form of predispositions brought to
the decision making situation, and Hambrick & Mason (1984) saw the managerial
background of the upper echelon, or the strategists, as a major influence on
strategic choices. Besides including observable characteristics such as age,
education, and career experiences, this included the cognitive base and values of
2
For purposes of convenience, the concept of strategists are used throughout the text
5
the strategist. Later research by e.g. Daniels et al. (1995), Miller et al. (1998),
and Thomas & Venkatraman (1988) has also discussed the link between the
composition and outlook of upper echelon teams of executives and organisational
outcomes. From a group decision making perspective, the work of Mcdougal
(1995) and Nahavandi & Malekzadeh (1993) demonstrate how the demographic,
personality and psychological characteristics of individuals influence how they
perceive the decision environment and exert their cognitive biases and
assumptions The survey of Miller et al. (1998) of decision making in three different
industries, however, found that the value of cognitive diversity among the team of
strategists is dependent on the context of the decision.
Cognitive maps. Another stream of research has in a complementary fashion
involved the development of mapping techniques that seek to capture the
structure and content of actors strategic thought processes (reviewed in e.g. Huff,
1990; Fiol & Huff, 1992; Schneider & Angelmar, 1993; Walsh, 1995; Hodgkinson,
1997). This stream of work is based on the assumption that the strategist
constructs a cognitive map or a mental model, that is a simplified working model
of reality, which acts as a basis for strategic decision making. Warren (1995: 11)
sees a cognitive map as  a network of cause-effect relationships between factors
in the situation under debate . According to Huff (1992: 267),  cognitive maps are
graphic representations that locate people in relation to their information
environments . They provide a frame of reference for what is known and believed,
and exhibit the reasoning behind the strategic decisions. Yet, when the decision
context is marked by constant change, the less useful is a map that is a product of
past cognition. In such situations, strategists must make sense of changing
environments and update the context in which decisions will have to be made
even though important variables are unknown. A number of important direct
functions of managerial maps and the associated indirect impacts on decision-
making are summarised below.
Table 1: Functions of managerial maps
Direct operation Decision making
function

Focuses attention  triggers memory Issue structuring

Reveals gaps Issue closure

Highlights key factors  supplies missing Creative problem solving
information
Source: Huff (1992: 275)
At the level of the individual, cognitive maps have been touted for their ability to
focus attention and trigger memory on particular issues, and hence have an
impact on how strategists deal with and react to a given strategic issue. At a top
management team level, they can help strategists to draw incongruent
interpretations together and assemble past experience together. A graphic
representation may also reveal gaps in information or reasoning that require more
consideration, and also stress key factors when there is an abundant amount of
information available, and supply missing information when the opposite is true.
Yet, each decision making function, as depicted in above table, carries with it
potential dysfunctions, and thus the application of cognitive maps is not evidently
prescriptive. These are listed below.
6
Table 2 Function tradeoffs
Too little Too much
Splatter vision Focus Tunnel
vision
Inefficiency Memory Mechanistic
Analysis Closure Inflexibility
paralysis
Fragmentation Agreement Group think
Source: Huff (1992: 276)
There is a flip side to each function, when it is taken to its extreme. Too much
focus leads to tunnel vision; excessive use of past experience leads to repetitive
and mechanistic extension of past behaviour; rigid closure of gaps prevents
reanalysis (see Langley, 1995); and too much consensus among strategists may
lead to group think (see Janis, 1977). Regarding the latter, however, Fiol (1991)
contended that important decision processes are most effective when they are
balanced by participants with overlapping and non-overlapping maps in order to
create constructive conflict.3 Hence, the contributions and functions of cognitive
mapping, and its potential dysfunctions, are applicable to individual as well as
collective and group decision processes. Indeed, how individuals judge a particular
strategic issue directly affects the effectiveness of the group decision in terms of
the attainment of objectives and learning arising from that particular situation, as
does the type of conflict present (Butler et al., 1993; Dean & Sharfman, 1996;
Hickson et al., 1986; Marsh et al., 1988). As a consequence, the collective
cognition of the top management team is critical to the success group in
comprehending uncertainty inherent in a decision (Bantel, 1993; Korsgaard et al.,
1995; Luce & Winterfeldt, 1994).
3
See Ensley & Pearce (2001) for a more in-depth discussion of shared cognition, and strategic
consensus, among top management team members
7
The content of cognitive maps. So far the discussion has focused on the
general purpose of cognitive maps, and not the delineation of the components of
cognitive maps and their interrelationships. Inspired by the map of a physical
landscape, Huff (1990) identifies three submaps that characterise different aspects
of cognitive processes. A short explanation is given for their basic content in below
table.
Table 3: Three submaps that characterise different aspects of cognitive processes
Identity submaps Categorisation Causal and argument
submaps submaps
Basic Critical features of The interrelationship of Potential linkages among
content the landscape (key these key entities entities of importance to the
actors, events, and (scale, relative position) organisation through time
processes (routes)
Additional They are critical to The process of This submap provides
notions understand because categorisation is about understanding about how
they are the basic framing, structuring, strategists link events
building blocks with and making sense of the occurring at a particular
which the strategists strategist s time to other events
work, and resemble surroundings. An event occurring at other times.
the concept of or actor that appears on The relational links that
 dominant logic an identity submap these submaps convey
Prahalad & Bettis takes on meaning based capture judgements about
(1986). Hence, the on the larger categories the link between action and
basic assumptions, within which it is placed outcomes. A crucial aspect
experiences, theories An example is how of causal and argument
and propositions of a strategists use submaps is that they go a
team of strategists categorical thinking to step beyond identity and
produce a dominant identify similarities and categorisation, and provide
general management differences among evidence of strategists
logic groups of competitors assumptions or assertions
(Reger & Huff, 1993). regarding the use of the
map.
Source: own work based on Huff (1990)
All three submaps, which are complementary, are necessary to make sense of the
map as a whole in order for the strategist to make sense of ambiguous and
changing environmental stimuli and make effective decisions. The interpretation
process is heavily influenced by the strategic decision assumptions dealing with
e.g. the anticipated behaviour of stakeholders who are key to the success of the
decision. Ultimately, the cognitive map, consisting of concepts about aspects of
the specific decision environment and beliefs about cause-and-effect relationships,
helps the strategists to select certain aspects of an issue as important for
diagnosis. The assumptions of the strategists are vital when defining critical
entities, because of their ability to sustain certain selective views of reality
(Argyris & Schon; Mason & Mitroff, 1981; Weick, 1979; Shrivastava & Mitroff,
1984). Since strategic information has a highly speculative and evaluative
component and attempts to deal with future uncertainties, assumptions play a
very crucial role because they shape the collection and interpretation of
information (Shrivastava & Mitroff, 1984).
Heuristics and biases On the basis of a detailed review of experimental
cognitive psychology and behavioural decision theory literature, several
researchers (Barnes, 1984; Bazerman, 1998; Schwenk, 1984, 1988, 1995) have
identified a number of potential cognitive biases. Such biases suggest that
strategists use cognitive heuristics to simplify complex problems and a number of
decision biases, which may have an impact on strategic decisions. Schwenk
(1988) lists several selected heuristics and biases: availability, selective
8
perceptions illusory correlation, conservatism, low of small numbers, regression
bias, wishful thinking, illusion of control, logical reconstruction, and hindsight bias.
For present purposes the most interesting of these heuristic principles is the
availability bias. Basically, the availability heuristic leads people to make decisions
by using information that can easily be brought to mind. Strategic decisions are
often influenced by the degree to which the decision maker can predict
environmental changes, and the strategist accordingly judges a future event to be
likely if it is easy to recall past occurrences of the event. Another bias is the
illusion of control, which may affect people s assessments of their chance of
success at a venture, since it leads to overestimation of personal control of
outcomes. Schwenk (1988) argues that the effects of cognitive heuristics and
biases may be seen in the decision makers assumptions about strategic problems,
which form the basic elements of a strategist s frame of reference (Mason &
Mitroff, 1981). It is argued that such heuristics allow organisational experts to
make sense of strategic issues quickly and respond in an efficient and effective
manner (Day & Lord, 1992).
Methods to uncover strategic cognition
Walsh (1995) has shortly reviewed various measurement methods facing a
prospective cognition researcher in the organisation science. The most popular of
these methods are here shortly explained for their basic connotation. It should be
mentioned that separate methods, e.g.  self-Q and  semi-structured interviews ,
may be used in the same survey to  make sure that the ground is well covered
(Markóczy & Goldberg, 1995: 310).
Repertory grid. The technique of the  repertory grid is used to represent the
repertoire of constructions that an individual has acquired from his personal
observations of the world (Reger, 1990). It is the preferred methodology for
mapping the cognitive mapping of individuals (Dutton et al., 1989; Reger, 1990;
Brown, 1992; Reger & Huff 1993; Hunter 1997). The repertory grid is a group of
procedures for uncovering the constructs which individuals use to structure and
understand their environments. It is both a structured interview process in which
respondents classify and evaluate elements on a numerical scale according to
their own personal constructs, and a grid of elements by constructs that is the
product of these procedures (Ginsberg, 1989). Accordingly, there are three
components to a repertory grid: 1) elements; 2) constructs; and 3) links
(Easterby-Smith, 1980). Elements are the subject within the domain of the
investigation. They define the material upon which the grid is based. Constructs
are the ways that the individual groups and differentiates between the elements.
Constructs are bi-polar in nature. They describe how some elements are alike and
yet different from others. Simply, elements are the objects of strategists
thoughts and constructs are the qualities that strategists attribute to those
objects. The third component of a repertory grid is the links between elements
and constructs. These links show how each element is being assessed on each
construct. The links reveal the similarities and differences between the elements
and between constructs.
The way in which strategists get to know and interpret their milieu, their
understanding of themselves and others, is guided by an implicit theory which is the
result of conclusions drawn from their past experiences. The repertory grid, in its
many forms, is a method used to explore the structure and content of these implicit
theories/personal meanings through which strategists perceive and act in their day-
to-day existence. The personal constructs are bipolar dimensions which group the
elements into varying clusters according to their similarities and differences
within the informant s frames of reference. The elements may be people, things,
9
events, or experiences, which are related to the particular problem or purpose for
using the grid.
The repertory grid technique is a good technique for requirements elicitation
because it does not impose any structure on the informant as is the case with a
questionnaire or interview, but represents the subject s own construction. This can
make the subject to feel at ease and as such can make him/her to release more
information. Also since the subject has the free will to select the elements from a
domain that he/she knows very well, it becomes easy to gather requirements
through this process. One major advantage in this type of requirements elicitation
is that the researcher (requirements engineer) does not need to have a profound
knowledge of the domain of the system to be developed. He simply needs to guide
the informant through the process. If this technique if well administered, it can be
a very useful tool, but it does require the investigator to possess a high degree of
insight and expertise into the method
The technique has been used in many settings to probe the construct systems of
psychiatric patients, student teachers, effective managers, knitwear inspectors,
and rivet selectors in the aircraft building industry (for other domains of use, see
e.g. Dunn & Ginsberg, 1986; Dutton et al., 1989; Reger & Huff, 1993). The
research of Reger & Huff(1993) focused on the competitive strategies among 18
bank holding companies (BHC) in the Chicago area, US, between 1982 and 1985,
involving the usable data from 23 strategists employed in 6 BHC. Reger & Huff
(1993: 107) collected data via semi-structured interviews using the repertory grid
technique to address the following questions: 1) do strategists group competitors
in an industry?; and 2) are perceptions of competitor groupings widely shared or
are they idiosyncratic?. Each informant in the study was interviewed separately
and personally identified dimensions, which were used to elicit judgement about
competitors strategies, including judgements about strategic similarities and
differences. Hence, the elements were the 18 BHC, the constructs the dimensions
defined by the informants, and the links revealed the similarities and differences
between the elements and between constructs.
Self-Q technique. The  self-Q technique is a non-directive cognitive mapping
technique developed by Bougon (1983). It is a self-interviewing technique that
draws on the respondent's account of his/her beliefs to generate the constructs.
The technique is well equipped to elicit tacit knowledge as reasoned by the
following quote:  in self-Q interviews, participants essentially interview
themselves. The first key idea is that participants are the experts on the personal
knowledge that guides their social behaviour. The second key idea is that
participants formulate their questions on the basis of their own personal
knowledge [...] and on the basis of their own thinking [...] about the situation
they are questioning (Bougon et al., 1990: 328-29). Bougon et al. (1990: 329)
also assert that with the self-interviewing technique  the events, objects, and
concepts [the participants] use to express their questions [...] reveal their tacit
and explicit knowledge . The technique involves that people ask themselves
questions about whatever topic is being mapped, e.g. why a given strategic
decision was not successful, and the concepts are then extracted from the
questions (Weick & Bougon, 1986). In practise,  the Self-Q technique uses a
framing statement and a [...] diagram. The framing statement is read by
participants and is intended to set the stage for selfquestioning and to provide the
subject with enough information to begin the selfquestioning process. [...] The
diagram is intended to be used by participants to cue themselves to ask additional
questions (Sheetz et al. 1994: 37). What is appealing about this technique is that
it lowers the participant's resistance to open up. The reason is that people are not
practised in defending against questions that they ask themselves and over which
they have control. Besides, since the person is asking questions rather than
making assertions, the questions themselves seem harmless (Weick & Bougon)
10
Another benefit of this technique is that the researcher does not hinder the
production of constructs by his lack of knowledge of the organisation under
observation. As Bougon et al. (1989: 353) argues: "often a researcher [...] does
not really know enough to ask the right questions , and this is not an issue when
using the selfquestioning technique.
Object sorting. The  object sorting method collects data for the purpose of
assessing manager's belief structures (see the study of Walsh,1988, which has
been frequently referred to), and be seen as a simplified version of Bougon's
(1983) self-Q technique. In Walsh's data collection procedure managers sort a pile
of cards (consisting of 50 cards, each one containing a factor  thought to be
broadly related to the success of organizations (Walsh, 1988: 877)) containing
factors relevant for the information domain in a three step procedure. In step one,
the managers sort factors into one pile with important and one with unimportant
factors. Thereafter in step two, they categorise the important factors into a free
number of smaller piles based on similarity between the factors. Finally in step
three, they prioritise among these piles. The idea of the procedure is to gather
information both about which factors are assessed unimportant in step one, how
the remaining factors are categorised in step two, and how these attributes or
constructs are prioritised according to relative importance in step three. The main
reasons for researchers to choose this procedure might be that 1) it allows
subjects to categorise a set of stimuli independently of the researcher's own
category system, though the researcher has to do an initial structuring; 2) the
output of the sorting procedure can be used as input to different analytical tools;
3) it takes reasonable time to complete, that is usually less than 30 minutes (i.e.,
for piles up to a limited number of factors); 4) it allows subjects to sort stimuli
into as many piles as they think is appropriate and is easier to perform than
 pairwise comparison (pairwise comparison technique is not reviewed here) when
the number of stimuli is large (Bijmolt and Wedel, 1995); and 5) it is easy to
administer and has high face validity, i.e., the respondents quickly understand
what to do.
However, Bowman & Daniels (1995) have criticised Walsh's study, among other
things because they believe he mixes factors related to causing with factors
related to measures of organisational success. Secondly, the list of items seems to
contain many factors that cannot be clearly associated with any particular
function. This was supported by the fact that a panel of five experienced strategy
academics was on average only able to associate appr. 50 percent of the factors
with the mentioned functions. It is therefore possible, in their view, that the high
number of managers with 'generalist' belief structures could be explained by
reference to the list of factors employed, rather than the group of managers
studied. Bunderson & Sutcliffe (1995) suggest alternative explanations by
developing a more complete theoretical framework. In this more complete
framework they include the reinforcement effect of functionally-oriented belief
structures through positive outcomes, acquired through the manager's complete
work history. In addition they include individual accountability, what they call
'situational strength' and firm strategy as intermediate variables.
Grounded theory.  Grounded theory is a research method developed by Glaser &
Strauss (1967). It is a general methodology for developing theory that is grounded in
data systematically gathered and analysed (Strauss & Corbin, 1994). Theory develops
and evolves during the research process due to the interplay between data collection
and analysis phases. It is important to note that the result of a grounded theory study is
the generation of a theory, consisting of a set of plausible relationships proposed
among concepts and sets of concepts. This differs from other ethnographical methods
where often the information is often presented with little comment from a researcher.
11
A grounded theory, it is claimed, is a theory which is inductively derived from the
phenomenon it represents and meets four central criteria: fit, understanding, generality
and control (Strauss & Corbin, 1990). Fit entails that the theory fits the substantive
data. Understanding entails that the theory be comprehensible to all involved in the
area of study. Generality entails that the theory is applicable in a variety of contexts.
Control implies that the theory should provide control with regard to action toward the
phenomenon. Grounded theory provides a systematic method involving several stages
which is used to  ground the theory, or relate it to the reality of the phenomenon
under consideration (Scott, 1996). A grounded theory is derived from the phenomenon
under study. This contrasts with the hypothetico-deductive method, where theories are
generated from cyclical testing and refining of a previously constructed hypothesis. In
grounded theory studies, theory emerges from the systematic examination of the
phenomenon. An important feature of grounded theory is theoretical sensitivity, which
refers to a personal quality of the researcher and relates to understanding the meaning
and subtlety of data. Theoretical sensitivity has been described by Glaser (1978) as the
process of developing the insight with which a researcher comes to the research
situation. Such insight should be conceptual rather than concrete. It is often referred to
as a creative aspect of grounded theory and involves the researcher working in the area
to obtain experience and expertise. By gaining theoretical sensitivity the researcher
will be able to recognise important data and formulate conceptually dense theory. An
important feature of the grounded theory method involves systematic methods of data
collection and analysis (see Strauss & Corbin, 1990, for a description of these
methods). The implication is that grounded theory may be applied to research
problems. The systematic nature of the method is useful in judging, generalising and
comparing the results of grounded theory research. This is not always possible with
alternative ethnographical methods where no clear system is involved.
In summary, this research process is best described as a constant movement between
empirical and theoretical work. Actors are subjects or witnesses who communicate
their stories or interpretations to the researcher, who is responsible for framing the
theory and provides his/her own final interpretation of the phenomenon. The result is
to discover the social order and values developed by the actors in real-life situations.
One example of its application is the work of Gioia & Chittipeddi, 1991). It set out to
investigate the nature of strategic change and the CEO s role of instigating it, using
both first- and second-order analyses. The former analysis used standard
ethnographical analytical techniques to discover themes and patterns in events and
informants accounts. The focus was mainly on the interpretations by and about the
President in his role as CEO and leader of strategic change effort. The subsequent
second-order analysis examined the first-order findings for underlying explanatory
dimensions, and sought to provide further insights by means of theory and further data
collection. Ultimately this lead to a an alternative way of viewing the role of the CEO
in instigating strategic change (Gioia & Chittipeddi, 1991)
Semi-structured interviews. Semi-structured interviews are conducted with a fairly
open framework which allow for focused, conversational, two-way communication.
They can be used both to give and receive information. Basically,  semi-structured
interviews are pre-determined in their purpose and structure, and may be used
together with other mapping techniques, e.g. successive to a self-Q method where
the revealed information become the basis for a limited number of general
questions or topics. The framework, or guide, serves as a checklist during the
interview and ensures that basically the same information is obtained from a
12
number of people. Yet, there is a great deal of flexibility. The order and the actual
working of the questions is not determined in advance. Moreover, within the list of
topic or subject areas, the interviewer is free to pursue certain questions in
greater depth. The advantage of the interview guide approach is that it makes
interviewing of a number of different persons more systematic and comprehensive
by delimiting the issues to be taken up in the interview. Logical gaps in the data
collected can be anticipated and closed, while the interviews remain fairly
conversational and situational. The weakness of this approach is that it does not
permit the interviewer to pursue topics or issues of interest that were not
anticipated when the interview guide was elaborated. Also, interviewer flexibility in
wording and sequencing questions may result in substantially different responses
from different persons, thus reducing comparability.
Examples of the use of semi-structured interviews are Isabella (1990), Lyles &
Schwenk (1992), and Daniels et al. (2002). The latter investigated the similarity
of cognitive maps of competition among 32 British managers from different
companies but within the same industry. Each participant was administered a
semi-structured interview, typically lasting less than half an hour, to uncover the
informant s cognitive map of the relationships among competitors in the industry.
For the purpose of increasing the validity of the results, the interview was based
on two techniques: a  visual-card sorting 4 technique (not discussed here), which
was followed by the repertory grid. These techniques were implemented in order
to elicit attributes and bases of the competition that could determine the degree of
similarity between the managers mapping of their competitive environment.
Questionnaires. Questionnaires involve the use of fixed (standardised) questions,
batteries of questions, tests and/or scales, which are presented to respondents in
the same way, with no variation in question wording, and with mainly pre-coded
response choices. Written questionnaires provide a means of accessing the
opinions and experiences of large numbers of individuals, some of whom may be
unavailable for participation in interviews, which is likely to be the case with
strategic decision makers. Most often, such questionnaires are distributed and
collected by mail. Questionnaires, like many evaluation methods occur after the
event, so participants may forget important issues.
Some clear disadvantages exist when questionnaires are used to map strategists
cognition: 1) they are standardised so it is not possible to explain any points in
the questions that participants might misinterpret, which of course could be
partially solved by piloting the questions on a small group strategists; 2) open-
ended questions can generate large amounts of data that can take a long time to
process and analyse, but one way of limiting this would be to limit the space
available to the strategists so their responses are concise; and finally 3); because
the mapping revolves around strategic issues, the strategists may not be willing
to answer the questions in full, or they might think that they will not benefit from
responding perhaps even be penalised by giving their real opinion. Thus, they
should be told why the information is being collected and how the results will be
beneficial, and if possible the questionnaire should be anonymous. On the other
hand, the main advantages are that the information can be collected from a large
portion of a group, and the responses are gathered in a standardised way, so
questionnaires are more objective, certainly more so than interviews
4
The visual-card sorting technique produces the same initial information as the repertory grid, but
more quickly (Daniels et al., 2002). In Daniels et al. s (2002) study, the informants were required to
state which firms they perceived to be competing with their firm, and these names were written on
cards, including the informant s own firm. The participant then arranged the cards such that those
firms in close competition were placed most closely together, and after that the participant was asked to
state why the firms were so arranged in order to elicit attributes of the competition
13
Recently both Kuvaas (2002) and Ensley & Pearce (2001) have applied
questionnaires to investigate strategic cognition. Kuvaas (2002) studied how
members of top management teams (TMT) were affected by their cognitive
capacity to perceive environmental stimuli on strategic issues and how their
sense of control was influenced by informational availability. Survey
questionnaires were mailed to 231 TMT members of the 93 largest newspaper
firms in Norway with a response rate of appr. 70 percent. Their findings indicated
that the availability of environmental information is positively correlated to
perceiving higher control among TMT members, and TMT with higher information
processing capacity search for less data in strategic issue interpretation, than
TMT with lower cognitive capacity. Ensley & Pearce (2001)gathered data from the
TMT of 158 new ventures in order to examine the overlap of TMT members
strategic cognitive maps, and integrate shared cognition into models of group-
decision making, group process, and new venture performance. Their results
indicate that the group processes leading to the development of shared strategic
cognition are more important than the outcome of shared strategic cognition in
terms of predicting organisational performance.
Archival data analysis. So the approaches to strategic cognitive mapping have
been self-reports (e.g. questionnaires) and interactive reports (e.g. semi-
structured interviews). Archival data can also be used to map the cognition of
strategists and may stand alone or be used for generating ideas for questions
that pursued through observation and interviewing. A researcher may supplement
observational fieldwork and interviewing with gathering and analysing
documentary material. These kinds of documents are a useful source of
information on the activities and processes that lead to a strategic decision. A
major advantage of this method is that the documents were generated
contemporaneously with the strategic decision they refer to. Hence, they are less
likely to be subject to memory decay or memory distortion compared with data
obtain from an interview. The main constraints in using archival data are
instrument decay, selective judgment of the recorder, discontinuity in recording
activity, discontinuity of method of recording, change in archival practices, and
issues of translation and interpretation. Conversely, archival data are relatively
inexpensive, accessible, manipulable, and offer an excellent pool of information
for longitudinal research, without such threats to validity as mortality and
otherwise absence of respondents (Campbell and Fiske, 1959; Webb et al.,
1966).
Several researchers, including Barr et al. (1992) and Fletcher & Huff (1990), have
applied archival data analysis (see Walsh, 1995, for other examples). Barr et al.
(1992) used the technique to study their hypothesis that organisational decline
may result if strategists fail to make significant changes in their cognitive maps
given a substantial change in the environment. Their interest was in the
interpretations of top managers, how these interpretations change, and the
subsequent impact of these interpretations on organisational responses. Using
the US railroad industry as the context for the study, their source of data was
letters to shareholders published by the companies over a 25-year period. Their
main findings were that in successful companies organisational renewal is a
continuous process of changes in the cognitive maps.
14
Methodological issues
In the field of managerial and organisational cognition research, methodology has
always been problematic and a matter of compromise. The fundamental problem
results from the subject matter itself: human thinking and its relationship to and
explanation of human behaviour. The research topic is captivating and rich but
persistently illusive (Johnson & Johnson, 2002). The search for managers
knowledge can yield a powerful source of explanation to help making sense of
organisational reality, but the assumption of causality between the way a manager
thinks and how that manager behaves is too simple a link to make. Primarily this
is so because the evidence brought forward by the mapping technique is always
disputable. The strategist may not, consciously and/or unconsciously, reveal his
true motivations for making a given strategic decision, and hence important
assumptions and decision variables are not included.
Johnson & Johnson (2002) discuss two common pitfalls in cognitive mapping: 1)
the employment of methods that are context-independent, and 2) the use of
secondary data allowing the informant little of no expressive adequacy. The
former concerns research methods when the parameters of context are ignored as
researchers assume that their results will be valid independent of the context in
which their data are gathered. Hence, context-independent methods do little to
allow informants to define their own constructs and therefore the context in which
they verbalise their current thoughts. Contrary to this approach, context-
dependent methods impose no pre-defined hierarchy on the constructs elicited,
and hence take account of the context dependency of cognition.
Regarding the latter pitfall, cognitive maps crafted from documented archival data
such as memos, company reports and minutes of meetings (for examples of
archival mapping see Barr et al, 1992; Fiol, 1989), tell little of what strategists are
actually thinking about issues that are likely to guide future actions of the
company and its employees. For this reason Eden (1992) and Golden (1992,
1997) have heavily criticised the use of retrospection in management studies,
since it mainly tells what the strategists want the outside world to think what they
are thinking. Instead, cognitive mapping methods that access thoughts directly
from informants are better approximations of thinking, but still suffer from the
effect of audience, that is for reasons of social desirability the informants say what
they think the mapper wants to hear (Johnson & Johnson, 2002).
Examples of empirical studies of strategic cognition as
artefacts of human reasoning:
- How managers create cognitive maps of the industry by grouping together
organisations that are similar on important characteristics, and that these
mental models are to some degree shared by managers in different firms in
the industry (Reger & Huff, 1993; Lant & Baum, 1995; Porac et al., 1995;
Johnson & Hoopes, 2003)
- How knowledge structures of a group of managers in the machine tool
industry explained some of the variance in measures of their organisations
strategies (Day & Lord, 1992)
- How chief executives perceptions of strong interdivisional boundaries
within their organisations, and weak boundaries with other firms in their
external environment, predict formation of joint ventures (Fiol, 1989)
15
- How a university president s sense-making and sense-giving activities
facilitated a change effort in the university (Gioa & Chittipeddi, 1991)
- How the way Swedish engineering firms implemented new computer-aided
design technology may have been a function of content differences in the
cognitive structures of the  key actors in those three firms (Löwstedt,
1993)
- How the scanning and interpretation behaviour of 156 hospital CEOs
predicted strategic action and performance in the hospitals three years
later (Thomas et al., 1993)
- How the socio-cognitive capability in a TMT and competitive advantage may
be linked (Ginsberg, 1995)
- The study of how top management teams perceive the strategy and
strategy changes of their own company and its competitors, and it is
demonstrated that 1) the strategists in the strategic team differ greatly in
perception of their own company strategy as well as of competitors
strategies, and indicated that 2) managers tend to focus their attention
more on internal activities than on competitors and other external forces
(Falkenberg & Grłnhaug, 1989)
- The issues of integration of HRM into the corporate strategy, the
devolvement of HRM to line managers and the perceived influence of
national culture on HRM in a cross-national comparative context (between
48 Indian and British firms) (Budhwar & Sparrow, 202)
- The facilitation of customer-focused strategic change by connecting
customer thinking with current managerial assumptions (Rughause, 2002)
Concluding comments
Figure 3 summarises the main content of the discussion of strategic cognition.
Assuming that a process of detecting a strategic issue has already occurred, the
strategist goes through the cognitive processes of scanning, perceiving,
interpreting and interrelating, acting, and learning, which are all influenced by the
background of the strategist. For example, the educational background of the
strategist is likely to direct him in which type of data he scans, and his cognitive
capacity denotes how much data and information he is capable of perceiving. The
strategist s experience and values influence how he interprets and interrelates the
set of decision variables and hence the cognitive map that functions as the basis
for making a strategic decision. The degree to which the strategist learns from the
implementation of the decision is e.g. determined by his cognitive capacity and
age. The intermediate factors of biases of heuristics, which admittedly are not
independent from the personal and professional background of the strategist, are
here assumed to influence the processes of perceiving and acting. The former is
represented by e.g. the availability bias and implies that the strategist in the
process of perceiving stimuli includes information that can easily be brought to
mind. Heuristics are here assumed to be applied when the strategist is trying to
make sense of and interrelate the perceived data set but finds it to be too
incomplete and hence has to  close the gap by using some simplification rule.
Both may be subject to cognitive adjustment when learning occurs. Finally, figure
3 suggests that the focus of mapping techniques so far have been to reveal the
cognitive process from scanning to acting, and the cognitive process of learning.
16
Focus for mapping
techniques
The strategist
- cognitive capacity
- education
- experience
Cognitive
Interpreting &
Scanning ObjectivePerceivin Acting Learning
interrelating
decision
Detection of Perceived A Strateg
context
strategic stimuli cognitive ic
Biases Heuristics
Figure 3: Summary.
References
Overview of cognitive literature
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Latest work on cognitive literature
Budhwar, P. S. & Sparrow, P. R. (2002): Strategic HRM through the cultural
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Management Studies, Vol. 23, No. 4, pp. 599-638
Clarke, I. (2001): Management  intuition : an interpretative account of structure
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Daniels, K., Johnson, G. & de Charnatonay, L. (2002): Task and institutional
influences on managers mental models of competition, Organization Studies, Vol.
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Ensley, M. D. & Pearce, C. L. (2001): Shared cognition in top management
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Huff, A. & Jenkins, M. (2002.): Mapping strategic knowledge, Sage Publications
Johnson. D. R. & Hoopes, D. G. (2003): Managerial cognition, sunk costs, and the
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68
17
Kuvaas, B. (2002): An exploration of two competing perspectives on
informational contexts in top management strategic issue interpretation, Journal
of Management Studies, Vol. 39, No. 7, pp. 977-1001
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Budhwar, P. S. & Sparrow, P. R. (2002): Strategic HRM through the cultural
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18
Daniels, K., Johnson, G. & de Charnatonay, L. (2002): Task and institutional
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