33 research outputs found
A Formal Framework for Strategic Representations and Conceptual Reorganization
No full textIn this paper, we introduce a formal language for modeling the structure of strategic representations and operations that conceptualize change on basis of them. Strategic representations are lower dimensional representations of the world, that underlie the understanding of what business environments are, how they may change, and attempts to shape them. We start from discussing known strategic representations like Porter's five forces model or the strategy canvas. We elicit the conceptual structure underlying these representations by capturing them in our formal language. We demonstrate that our formal language can express operations of conceptual change of strategies such as stretching (the extension of value ranges), lifting (deleting dimensions), extending (adding dimensions), amalgamation (enabling new combinations of features by amalgamating different domains), and transferring structure (exploring analogies). These operations can be the basis for strategizing: for seeing possible reorganizations of strategies and even to become aware of new opportunities. We apply these operations to explain classical business cases, including a detailed study of the conceptual structure underling Steve Jobs' digital hub concept. Our formal language is, to our knowledge, the first attempt to capture the variety of conceptual operations underlying strategic change using one comprehensive mode
An exploratory study of heuristics for anticipating prices
No full textPurpose: this research explores how investment and central bankers cope with strategic uncertainty when they anticipate prices. The uncertainty originates from others’ decisions and their consequences, and cannot be meaningfully reduced to risk. We postulate that, in order to cope with this type of uncertainty, bankers use simple rules, also called heuristics. This study aims to identify such heuristics and the psychological processes that underlie them.Design/methodology/approach: we interviewed 22 managers of teams tasked toanticipate prices, in two leading investment and central banks. The primary data came from indepth, semi-structured interviews lasting 30 to 60 minutes, supplemented by our observations during the on-site visits, emails and phone calls when preparing the interviews, and reports published by the banks. Data was coded and heuristics were induced over multiple rounds by multiple researchers.Findings: bankers (1) construct simple game representations of markets, (2) makeinferences to gauge opponents, (3) become alert when they see too much agreement, and (4) communicate coherent narratives. Heuristics (1)–(3) are employed when the pace of decision making is fast, whereas (4) is used for longer time scales. In sum, bankers exhibit reciprocal bounded rationality, wherein interaction partners are mutually aware of and adapted to the fundamental uncertainty of the task and their limited resources.Originality: heuristics for anticipating prices have not been studied empirically outside the lab. The findings may help integrate conceptualizations of heuristics in the simple-rules and fast-and-frugal-heuristics research programs, and improve market efficiency
Nudge, boost, or design? Limitations of behaviorally informed policy under social interaction
No full textNudge and boost are two competing approaches to applying the psychology of reasoning and decision making to improve policy. Whereas nudges rely on manipulation of choice architecture to steer people towards better choices, the objective of boosts is to develop good decision-making competences. Proponents of both approaches claim capacity to enhance social welfare through better individual decisions. We suggest that such efforts should involve a more careful analysis of how individual and social welfare are related in the policy context. First, individual rationality is not always sufficient or necessary for improving collective outcomes. Second, collective outcomes of complex social interactions among individuals are largely ignored by the focus of both nudge and boost on individual decisions. We suggest that the design of mechanisms and social norms can sometimes lead to better collective outcomes than nudge and boost, and present conditions under which the three approaches (nudge, boost, and design) can be expected to enhance social welfare
Neubau Atmospheres: East German Cultural Remediations of Modernist Architecture
No full textThe artistic potential modern, urban housing (“Neubau”) offered to writers and directors in East Germany from the 1960s to 1980s remains underexplored. Neubau Atmospheres seeks to bridge that gap by providing an incisive analysis of East German cinematic, literary, and architectural case studies, highlighting how the modernist housing of the GDR provided a potent vehicle for mediating the emotional and social experience of its denizens. Considering how these cinematic and literary representations focalized ideas of class, gender, and age, author Stephan Ehrig makes a compelling case for viewing this engagement with the urban environment as a cultural genre in its own right
Theory-based learning and experimentation: How strategists can systematically generate knowledge at the edge between the known and the unknown
No full textResearch summary: We present a framework for theory-based learning and experimentation under uncertainty. Strategists' assumptions about how an envisioned future can be reached are likely incomplete and possibly wrong, for instance, if critical contingencies have been overlooked. We explain how strategists can learn from thinking about and testing necessary conditions for an envisioned future to materialize. By logically linking assumptions to consequences our framework allows drawing inferences from experiments with testable assumptions about elements of a strategy that cannot be tested without major investments. Our framework contains the first formal model of learning from arguments in the strategy literature. By using our framework, strategists can maintain focus on an envisioned future while at the same time systematically seeking out reasons and evidence for why they are wrong. Managerial summary: We develop a framework that helps strategists to learn and understand what it takes to reach ambitious goals when there is substantial uncertainty. We ask strategists to formulate their assumptions as a theory: what needs to be true for their goal to materialize. Our framework enables strategists to scrutinize and improve their assumptions by raising objections against their theory and by pointing them to critical experiments to learn whether their assumptions hold. Using our results, strategists can in particular identify overlooked critical contingencies. Overall, we suggest how strategists should revise their beliefs about what it takes to be successful in the light of evidence and arguments for and against their strategy.Peer reviewe
Competing with Theories: Using Awareness and Confidence to secure Resources and Rents
No full textAn assumption of factor market efficiency is often used to grant primacy to firms’ existing unique and valuable resources as the source of economic rents. But this assumption is difficult to reconcile with observed market outcomes. For instance, five of the six companies with the highest global market capitalization in 2022 were upstarts in their industries with few resources at their origins. More surprising, three of these entrants were assisted by incumbents with vastly superior resources in assembling the resources they required. In this paper we explore how entrants compete with theories to secure resources from incumbents and capture rents. We introduce a modeling approach in which theories with causal logic generate awareness of valuable potential future states and shape the beliefs about payoffs and probabilities associated with these states. We combine work in the theory-based view and value capture theory to distinguish among three distinct sources of economic rents that are potentially available to entrants: awareness rents, confidence rents, and resource rents. We explore the circumstances under which these three types of rents are available. By exploring the role of theories and awareness in value creation and capture, our paper seeks to deepen our understanding of how entrants both attract resources and secure rentsinfo:eu-repo/semantics/publishe
Forward-looking Reasoning and Persuasion: Resistance and Readiness in Revising Managerial Beliefs
No full text
Making biased but better predictions: The tradeoffs strategists face when they learn and use heuristics
No full textTARKISTA VOIKO TIEDOSTON AVATA SITTEN KUN ON ILMESTYNYTThe heuristics strategists use to make predictions about key decision variables are often learned from only a small sample of observations, which leads to a risk of inappropriate generalization when strategists misjudge regularities. Building on the statistical learning literature we show how strategists can mitigate this risk. Strategies to learn heuristics that accept a bias, that is, a systematic deviation of predictions from actual outcomes can outperform unbiased strategies because they can reduce the variance component of prediction error: The degree to which random fluctuations in observational data are inappropriately generalized. We demonstrate how strategists who are aware of the trade-off between bias and variance can learn heuristics more effectively if they are also aware of the relevant characteristics of their learning environment. We discuss the implications of our results for our understanding of heuristics, (dynamic) capabilities and managerial cognitive capabilities, and we outline opportunities for empirical work.Peer reviewe
