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Managerial decision making and firm performance under a resource‐based paradigm

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  • Martin H. Kunc
  • John D. W. Morecroft

Abstract

A framework is presented that connects managerial decision making to resource building and firm performance. The framework takes a behavioral view of decision making and distinguishes two distinct decision‐making processes. First there is the creative conceptualization of new resource configurations that are intended to deliver competitive advantage. Then there is the painstaking development of resources required to implement strategy. We argue that heterogeneity in the resources of rival firms arises from the interplay of these two processes: resource conceptualization and resource development. Heterogeneity spawns performance differences that can be explained ex ante from characteristics of managerial decision‐making processes. We illustrate the approach in a simulated decision‐making environment representing a highly competitive and dynamically complex industry. Results from repeated simulation experiments conducted with executive and MBA students show vast differences in performance among firms, even when they started with identical resource positions. In a departure from traditional resource‐based literature, we explain how these differences stem from path dependent accumulation of resources and spontaneous variety in the way rivals conceptualize resources. Copyright © 2010 John Wiley & Sons, Ltd.

Suggested Citation

  • Martin H. Kunc & John D. W. Morecroft, 2010. "Managerial decision making and firm performance under a resource‐based paradigm," Strategic Management Journal, Wiley Blackwell, vol. 31(11), pages 1164-1182, November.
    • Handle: RePEc:bla:stratm:v:31:y:2010:i:11:p:1164-1182
    DOI: 10.1002/smj.858
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    Cited by:

    1. Soomin Han & Sunghyun Kim, 2023. "Does outward foreign direct investment improve the performance of domestic firms? Case of Korea," Asian Economic Journal, East Asian Economic Association, vol. 37(4), pages 519-549, December.
    2. Chien Chi Chu & Xiu‐Fen Su & Yu‐En Lin & Akihiro Omura & Bin Li & Adrian Wai‐Kong Cheung, 2023. "Love thy neighbour: Evidence from capital structure decisions," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 63(3), pages 2907-2933, September.
    3. John D. W. Morecroft, 2012. "Metaphorical Models for Limits to Growth and Industrialization," Systems Research and Behavioral Science, Wiley Blackwell, vol. 29(6), pages 645-666, November.
    4. Kazakov, Rossen & Howick, Susan & Morton, Alec, 2021. "Managing complex adaptive systems: A resource/agent qualitative modelling perspective," European Journal of Operational Research, Elsevier, vol. 290(1), pages 386-400.
    5. Munjal, Surender & Bhasin, Niti & Nandrajog, Divya & Kundu, Sumit, 2022. "Examining the evolution of emerging market multinational enterprises’ competitive advantages: Evidence from India," Journal of Business Research, Elsevier, vol. 145(C), pages 732-744.
    6. Stumpf, Lukas & Schöggl, Josef-Peter & Baumgartner, Rupert J., 2023. "Circular plastics packaging – Prioritizing resources and capabilities along the supply chain," Technological Forecasting and Social Change, Elsevier, vol. 188(C).
    7. Wu, Chih-Wen & Botella-Carrubi, Dolores & Blanco-González-Tejero, Cristina, 2024. "The empirical study of digital marketing strategy and performance in small and medium-sized enterprises (SMEs)," Technological Forecasting and Social Change, Elsevier, vol. 200(C).
    8. Zhu, Minghao & Liang, Chen & Yeung, Andy C.L. & Zhou, Honggeng, 2024. "The impact of intelligent manufacturing on labor productivity: An empirical analysis of Chinese listed manufacturing companies," International Journal of Production Economics, Elsevier, vol. 267(C).
    9. Forliano, Canio & Ferraris, Alberto & Bivona, Enzo & Couturier, Jerome, 2022. "Pouring new wine into old bottles: A dynamic perspective of the interplay among environmental dynamism, capabilities development, and performance," Journal of Business Research, Elsevier, vol. 142(C), pages 448-463.
    10. Fox, Stephen & Groesser, Stefan N., 2016. "Reframing the relevance of research to practice," European Management Journal, Elsevier, vol. 34(5), pages 457-465.
    11. Hazhir Rahmandad & Jerker Denrell & Drazen Prelec, 2021. "What makes dynamic strategic problems difficult? Evidence from an experimental study," Strategic Management Journal, Wiley Blackwell, vol. 42(5), pages 865-897, May.
    12. Federico Barnabè & Maria Cleofe Giorgino & Martin Kunc, 2019. "Visualizing and managing value creation through integrated reporting practices: a dynamic resource-based perspective," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 23(2), pages 537-575, June.
    13. Zhan, Yuanzhu & Tan, Kim Hua, 2020. "An analytic infrastructure for harvesting big data to enhance supply chain performance," European Journal of Operational Research, Elsevier, vol. 281(3), pages 559-574.
    14. Balázs Gyenge & László Kasza & László Vasa, 2021. "Introducing the EPP house (topological space) method to solve MRP problems," PLOS ONE, Public Library of Science, vol. 16(6), pages 1-20, June.
    15. Torres, Juan Pablo & Barrera, Jose Ignacio & Kunc, Martin & Charters, Steve, 2021. "The dynamics of wine tourism adoption in Chile," Journal of Business Research, Elsevier, vol. 127(C), pages 474-485.
    16. Lee TingKo & Liu Hsian-Ming, 2018. "How do Firms with Management Ability Promote Competitive Advantages? An Integrated Model from Entrepreneurial Strategy Making and Internal Resources," Entrepreneurship Research Journal, De Gruyter, vol. 8(2), pages 1-15, March.
    17. Maria Cleofe Giorgino & Federico Barnabè & Martin Kunc, 2020. "Integrating qualitative system dynamics with accounting practices: The case of integrated reporting and resource mapping," Systems Research and Behavioral Science, Wiley Blackwell, vol. 37(1), pages 97-118, January.
    18. Wang, Juite & Lai, Jung-Yu, 2020. "Exploring innovation diffusion of two-sided mobile payment platforms: A system dynamics approach," Technological Forecasting and Social Change, Elsevier, vol. 157(C).
    19. Kevin J. Johnson & Joé T. Martineau & Saouré Kouamé & Gokhan Turgut & Serge Poisson-de-Haro, 2018. "On the Unethical Use of Privileged Information in Strategic Decision-Making: The Effects of Peers’ Ethicality, Perceived Cohesion, and Team Performance," Journal of Business Ethics, Springer, vol. 152(4), pages 917-929, November.
    20. Jancenelle, Vivien E., 2021. "Tangible−Intangible resource composition and firm success," Technovation, Elsevier, vol. 108(C).
    21. Vincent de Gooyert, 2019. "Developing dynamic organizational theories; three system dynamics based research strategies," Quality & Quantity: International Journal of Methodology, Springer, vol. 53(2), pages 653-666, March.
    22. Heredia Pérez, Jorge A. & Geldes, Cristian & Kunc, Martin H. & Flores, Alejandro, 2023. "The effect of local institutions on the competitive strategies of exporters. The case of emerging economies in Latin America," Journal of Business Research, Elsevier, vol. 169(C).
    23. Enzo Bivona & Federico Cosenz, 2021. "Designing a Multi‐Sided Platform business model assessment framework: a Dynamic Performance Management perspective," Systems Research and Behavioral Science, Wiley Blackwell, vol. 38(1), pages 93-107, January.

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