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The psychological context of strategic decisions: A model and convergent experimental findings

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  • Thomas S. Bateman
  • Carl P. Zeithaml

Abstract

Strategic decision‐makers typically are involved in a series of incremental decisions, each affected by a variety of contextual factors. This papers develops a model of the psychological context of strategic decisions and reports two experiments. First, students made reinvestment decisions faced with success or failure feedback on a past decision, high or low perceived organizational slack, and decisions framed to depict a positive or negative future outlook. All three variables had main and interactive effects. Second, managers made similar decisions in a related experimental design. Results confirmed and extended the initial findings. Implications and directions for future research are discussed.

Suggested Citation

  • Thomas S. Bateman & Carl P. Zeithaml, 1989. "The psychological context of strategic decisions: A model and convergent experimental findings," Strategic Management Journal, Wiley Blackwell, vol. 10(1), pages 59-74, January.
    • Handle: RePEc:bla:stratm:v:10:y:1989:i:1:p:59-74
    DOI: 10.1002/smj.4250100106
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    Cited by:

    1. Kuhberger, Anton, 1998. "The Influence of Framing on Risky Decisions: A Meta-analysis," Organizational Behavior and Human Decision Processes, Elsevier, vol. 75(1), pages 23-55, July.
    2. Patzelt, Holger & zu Knyphausen-Aufseß, Dodo & Fischer, Heiko T., 2009. "Upper echelons and portfolio strategies of venture capital firms," Journal of Business Venturing, Elsevier, vol. 24(6), pages 558-572, November.
    3. Lowell W. Busenitz & Douglas D. Moesel & James O. Fiet & Jay B. Barney, 1997. "The Framing of Perceptions of Fairness in the Relationship between Venture Capitalists and New Venture Teams," Entrepreneurship Theory and Practice, , vol. 21(3), pages 5-22, April.
    4. Peter J Buckley & Liang Chen & L Jeremy Clegg & Hinrich Voss, 2018. "Risk propensity in the foreign direct investment location decision of emerging multinationals," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 49(2), pages 153-171, February.
    5. Tae Jun Bae & James O. Fiet, 2021. "Imprinting Perspective on the Sustainability of Commitments to Competing Institutional Logics of Social Enterprises," Sustainability, MDPI, vol. 13(4), pages 1-27, February.
    6. Lowell W. Busenitz & Chung-Ming Lau, 1996. "A Cross-Cultural Cognitive Model of New Venture Creation," Entrepreneurship Theory and Practice, , vol. 20(4), pages 25-40, July.
    7. Alipour, Ali & Yaprak, Attila, 2022. "Indulgence and risk-taking behavior of firms: Direct and interactive influences," Journal of International Management, Elsevier, vol. 28(2).
    8. Beleska-Spasova, Elena & Glaister, Keith W., 2013. "Intrafirm causal ambiguity in an international context," International Business Review, Elsevier, vol. 22(1), pages 32-46.
    9. Lisa Schurer Lambert, 2000. "… And not a drop to drink: an integrated model of ethics and strategic issue diagnosis," Business Strategy and the Environment, Wiley Blackwell, vol. 9(5), pages 318-327, September.
    10. Tjemkes, Brian V. & Furrer, Olivier & Adolfs, Koen & Aydinlik, Arzu Ülgen, 2012. "Response strategies in an international strategic alliance experimental context: Cross-country differences," Journal of International Management, Elsevier, vol. 18(1), pages 66-84.
    11. Lewellyn, Krista B. & Bao, Shuji ‘Rosey’, 2015. "R&D Investment in the Global Paper Products Industry: A Behavioral Theory of the Firm and National Culture Perspective," Journal of International Management, Elsevier, vol. 21(1), pages 1-17.
    12. Ipsmiller, Edith & Dikova, Desislava & Brouthers, Keith D., 2022. "Digital Internationalization of Traditional Firms: Virtual Presence and Entrepreneurial Orientation," Journal of International Management, Elsevier, vol. 28(4).
    13. Ruth, Julie A. & York, Anne, 2004. "Framing information to enhance corporate reputation: The impact of message source, information type, and reference point," Journal of Business Research, Elsevier, vol. 57(1), pages 14-20, January.
    14. Amankwah-Amoah, Joseph, 2014. "Explanations for strategic persistence in the wake of others’ failures," MPRA Paper 63409, University Library of Munich, Germany.
    15. Anisya S. Thomas & Kannan Ramaswamy, 1994. "Matching Managers to Strategy: An Investigation of Perfor Mance Implications and Boundary Conditions," Australian Journal of Management, Australian School of Business, vol. 19(1), pages 73-93, June.
    16. Norris Krueger, 1993. "The Impact of Prior Entrepreneurial Exposure on Perceptions of New Venture Feasibility and Desirability," Entrepreneurship Theory and Practice, , vol. 18(1), pages 5-21, October.
    17. Roger Moser & Srinath Rengarajan & Gopalakrishnan Narayanamurthy, 2021. "Decision Intelligence: Creating a Fit between Intelligence Requirements and Intelligence Processing Capacities," IIM Kozhikode Society & Management Review, , vol. 10(2), pages 160-177, July.
    18. Franz HAAS, 2017. "Model Building – A Circular Approach to Evaluate Multidimensional Patterns and Operationalized Procedures," Expert Journal of Business and Management, Sprint Investify, vol. 5(2), pages 136-141.
    19. Simon, Mark & Houghton, Susan M. & Savelli, Sonia, 2003. "Out of the frying pan...?: Why small business managers introduce high-risk products," Journal of Business Venturing, Elsevier, vol. 18(3), pages 419-440, May.
    20. Samson, Kelly & Bhanugopan, Ramudu, 2022. "Strategic human capital analytics and organisation performance: The mediating effects of managerial decision-making," Journal of Business Research, Elsevier, vol. 144(C), pages 637-649.
    21. Busenitz, Lowell W. & Barney, Jay B., 1997. "Differences between entrepreneurs and managers in large organizations: Biases and heuristics in strategic decision-making," Journal of Business Venturing, Elsevier, vol. 12(1), pages 9-30, January.
    22. Gerard P. Hodgkinson & Barbara Burkhard & Nicolai J. Foss & Dietmar Grichnik & Riikka M. Sarala & Yi Tang & Marc Van Essen, 2023. "The Heuristics and Biases of Top Managers: Past, Present, and Future," Journal of Management Studies, Wiley Blackwell, vol. 60(5), pages 1033-1063, July.
    23. Wood, Matthew S. & Williams, David W. & Drover, Will, 2017. "Past as prologue: Entrepreneurial inaction decisions and subsequent action judgments," Journal of Business Venturing, Elsevier, vol. 32(1), pages 107-127.
    24. Meissner, Philip & Wulf, Torsten, 2017. "The effect of cognitive diversity on the illusion of control bias in strategic decisions: An experimental investigation," European Management Journal, Elsevier, vol. 35(4), pages 430-439.

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