IDEAS home Printed from https://ideas.repec.org/a/sae/ausman/v44y2019i3p495-512.html
   My bibliography  Save this article

Analysing the dynamics of mental models using causal loop diagrams

Author

Listed:
  • Miles M Yang

    (Macquarie University, Sydney, NSW, Australia)

  • Feifei Yang

    (Asia Europe Business School, Faculty of Economics and Management, East China Normal University, Shanghai, China)

  • Tingru Cui

    (School of Computing and Information Technology, University of Wollongong, Wollongong, NSW, Australia)

  • Ying-Chu Cheng

    (Department of Business Management, National Sun Yat-Sen University, Kaohsiung City)

Abstract

Substantial evidence suggests that managerial mental models play an important role in firm performance. Yet managerial mental models are not static but dynamic. This research investigates the creation and evolution of mental models over time and how this dynamic process influences strategic choice and firm performance. We adopt the causal loop diagramming method, with in-depth case analysis over a period of 12 years, as the primary investigatory approach. Our research contributes to knowledge by identifying the shared mental model of the top management team, represented in the causal loop diagrams, for each stage of the company’s development. Our findings suggest that the dynamics of managerial mental models explains the changes in firm performance over time. JEL classification: L2

Suggested Citation

  • Miles M Yang & Feifei Yang & Tingru Cui & Ying-Chu Cheng, 2019. "Analysing the dynamics of mental models using causal loop diagrams," Australian Journal of Management, Australian School of Business, vol. 44(3), pages 495-512, August.
    • Handle: RePEc:sae:ausman:v:44:y:2019:i:3:p:495-512
    DOI: 10.1177/0312896218823831
    as

    Download full text from publisher

    File URL: https://journals.sagepub.com/doi/10.1177/0312896218823831
    Download Restriction: no
    File URL: https://libkey.io/10.1177/0312896218823831?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Mary Tripsas & Giovanni Gavetti, 2000. "Capabilities, cognition, and inertia: evidence from digital imaging," Strategic Management Journal, Wiley Blackwell, vol. 21(10‐11), pages 1147-1161, October.
    2. Ari Ginsberg, 1988. "Measuring and modelling changes in strategy: Theoretical foundations and empirical directions," Strategic Management Journal, Wiley Blackwell, vol. 9(6), pages 559-575, November.
    3. Michael Shayne Gary & Miles M. Yang & Philip W. Yetton & John D. Sterman, 2017. "Stretch Goals and the Distribution of Organizational Performance," Organization Science, INFORMS, vol. 28(3), pages 395-410, June.
    4. Kaplan, Sarah & Tripsas, Mary, 2008. "Thinking about technology: Applying a cognitive lens to technical change," Research Policy, Elsevier, vol. 37(5), pages 790-805, June.
    5. Kroes, James R. & Manikas, Andrew S., 2014. "Cash flow management and manufacturing firm financial performance: A longitudinal perspective," International Journal of Production Economics, Elsevier, vol. 148(C), pages 37-50.
    6. Yves Fassin & Andrea Werner & Annick van Rossem & Silvana Signori & Elisabeth Garriga & Heidi von Weltzien Hoivik & Hans-Jörg Schlierer, 2015. "CSR and Related Terms in SME Owner–Managers' Mental Models in Six European Countries : National Context Matters," Post-Print hal-02313143, HAL.
    7. C. K. Prahalad & Richard A. Bettis, 1986. "The dominant logic: A new linkage between diversity and performance," Strategic Management Journal, Wiley Blackwell, vol. 7(6), pages 485-501, November.
    8. Herbert A. Simon, 1955. "A Behavioral Model of Rational Choice," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 69(1), pages 99-118.
    9. Joseph F. Porac & Howard Thomas & Charles Baden‐Fuller, 1989. "Competitive Groups As Cognitive Communities: The Case Of Scottish Knitwear Manufacturers," Journal of Management Studies, Wiley Blackwell, vol. 26(4), pages 397-416, July.
    10. Giovanni Gavetti, 2005. "Cognition and Hierarchy: Rethinking the Microfoundations of Capabilities’ Development," Organization Science, INFORMS, vol. 16(6), pages 599-617, December.
    11. Rhonda K. Reger & Anne Sigismund Huff, 1993. "Strategic groups: A cognitive perspective," Strategic Management Journal, Wiley Blackwell, vol. 14(2), pages 103-123, February.
    12. Rogelio Oliva & John D. Sterman, 2001. "Cutting Corners and Working Overtime: Quality Erosion in the Service Industry," Management Science, INFORMS, vol. 47(7), pages 894-914, July.
    13. John D. Sterman & Nelson P. Repenning & Fred Kofman, 1997. "Unanticipated Side Effects of Successful Quality Programs: Exploring a Paradox of Organizational Improvement," Management Science, INFORMS, vol. 43(4), pages 503-521, April.
    14. Mary J. Benner & Mary Tripsas, 2012. "The influence of prior industry affiliation on framing in nascent industries: the evolution of digital cameras," Strategic Management Journal, Wiley Blackwell, vol. 33(3), pages 277-302, March.
    15. Banjo Roxas & Alan Coetzer, 2012. "Institutional Environment, Managerial Attitudes and Environmental Sustainability Orientation of Small Firms," Journal of Business Ethics, Springer, vol. 111(4), pages 461-476, December.
    16. Darren D. Lee & Robert W. Faff & Kim Langfield-Smith, 2009. "Revisiting the Vexing Question: Does Superior Corporate Social Performance Lead to Improved Financial Performance?," Australian Journal of Management, Australian School of Business, vol. 34(1), pages 21-49, June.
    17. Betty Vandenbosch & Chris Higgins, 1996. "Information Acquisition and Mental Models: An Investigation into the Relationship Between Behaviour and Learning," Information Systems Research, INFORMS, vol. 7(2), pages 198-214, June.
    18. John D. Sterman & Rebecca Henderson & Eric D. Beinhocker & Lee I. Newman, 2007. "Getting Big Too Fast: Strategic Dynamics with Increasing Returns and Bounded Rationality," Management Science, INFORMS, vol. 53(4), pages 683-696, April.
    19. Dirk Martignoni & Anoop Menon & Nicolaj Siggelkow, 2016. "Consequences of misspecified mental models: Contrasting effects and the role of cognitive fit," Strategic Management Journal, Wiley Blackwell, vol. 37(13), pages 2545-2568, December.
    20. James P. Walsh, 1995. "Managerial and Organizational Cognition: Notes from a Trip Down Memory Lane," Organization Science, INFORMS, vol. 6(3), pages 280-321, June.
    21. Michael Shayne Gary & Robert E. Wood, 2016. "Unpacking mental models through laboratory experiments," System Dynamics Review, System Dynamics Society, vol. 32(2), pages 99-127, April.
    22. Jerker Denrell, 2004. "Random Walks and Sustained Competitive Advantage," Management Science, INFORMS, vol. 50(7), pages 922-934, July.
    23. Rhonda K. Reger & Timothy B. Palmer, 1996. "Managerial Categorization of Competitors: Using Old Maps to Navigate New Environments," Organization Science, INFORMS, vol. 7(1), pages 22-39, February.
    24. Theresa S. Cho & Donald C. Hambrick, 2006. "Attention as the Mediator Between Top Management Team Characteristics and Strategic Change: The Case of Airline Deregulation," Organization Science, INFORMS, vol. 17(4), pages 453-469, August.
    25. Michael Shayne Gary & Robert E. Wood & Tracey Pillinger, 2012. "Enhancing mental models, analogical transfer, and performance in strategic decision making," Strategic Management Journal, Wiley Blackwell, vol. 33(11), pages 1229-1246, November.
    26. Herbert A. Simon, 1991. "Bounded Rationality and Organizational Learning," Organization Science, INFORMS, vol. 2(1), pages 125-134, February.
    27. Don Knight & Craig L. Pearce & Ken G. Smith & Judy D. Olian & Henry P. Sims & Ken A. Smith & Patrick Flood, 1999. "Top management team diversity, group process, and strategic consensus," Strategic Management Journal, Wiley Blackwell, vol. 20(5), pages 445-465, May.
    28. Roger I. Hall, 1984. "The Natural Logic of Management Policy Making: Its Implications for the Survival of an Organization," Management Science, INFORMS, vol. 30(8), pages 905-927, August.
    29. Elaine Romanelli & Michael L. Tushman, 1986. "Inertia, Environments, and Strategic Choice: A Quasi-Experimental Design for Comparative-Longitudinal Research," Management Science, INFORMS, vol. 32(5), pages 608-621, May.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Kaplan, Sarah & Tripsas, Mary, 2008. "Thinking about technology: Applying a cognitive lens to technical change," Research Policy, Elsevier, vol. 37(5), pages 790-805, June.
    2. Camblanne, Lionel, 2013. "Family vision and cognition: An illustration through forest owners’ harvesting decisions," Journal of Family Business Strategy, Elsevier, vol. 4(4), pages 245-259.
    3. Markku V. J. Maula & Thomas Keil & Shaker A. Zahra, 2013. "Top Management’s Attention to Discontinuous Technological Change: Corporate Venture Capital as an Alert Mechanism," Organization Science, INFORMS, vol. 24(3), pages 926-947, June.
    4. Felipe A. Csaszar & Daniel A. Levinthal, 2016. "Mental representation and the discovery of new strategies," Strategic Management Journal, Wiley Blackwell, vol. 37(10), pages 2031-2049, October.
    5. Giovanni Gavetti & Jan W. Rivkin, 2007. "On the Origin of Strategy: Action and Cognition over Time," Organization Science, INFORMS, vol. 18(3), pages 420-439, June.
    6. Emilie R. Feldman, 2016. "Corporate spinoffs and analysts' coverage decisions: The implications for diversified firms," Strategic Management Journal, Wiley Blackwell, vol. 37(7), pages 1196-1219, July.
    7. Donal Crilly & Pamela Sloan, 2014. "Autonomy or Control? Organizational Architecture and Corporate Attention to Stakeholders," Organization Science, INFORMS, vol. 25(2), pages 339-355, April.
    8. Thomas Moellers & Lars von der Burg & Bastian Bansemir & Max Pretzl & Oliver Gassmann, 2019. "System dynamics for corporate business model innovation," Electronic Markets, Springer;IIM University of St. Gallen, vol. 29(3), pages 387-406, September.
    9. Rahul Kapoor & Daniel Wilde, 2023. "Peering into a crystal ball: Forecasting behavior and industry foresight," Strategic Management Journal, Wiley Blackwell, vol. 44(3), pages 704-736, March.
    10. Shinjinee Chattopadhyay & Janet Bercovitz, 2020. "When one door closes, another door opens … for some: Evidence from the post‐TRIPS Indian pharmaceutical industry," Strategic Management Journal, Wiley Blackwell, vol. 41(6), pages 988-1022, June.
    11. Jordi Surroca & Diego Prior & Josep A. Tribó Giné, 2016. "Using panel data dea to measure CEOs' focus of attention: An application to the study of cognitive group membership and performance," Strategic Management Journal, Wiley Blackwell, vol. 37(2), pages 370-388, February.
    12. Vecchiato, Riccardo, 2020. "Analogical reasoning, cognition, and the response to technological change: Lessons from mobile communication," Research Policy, Elsevier, vol. 49(5).
    13. Dean A. Shepherd & Jeffery S. Mcmullen & William Ocasio, 2017. "Is that an opportunity? An attention model of top managers' opportunity beliefs for strategic action," Strategic Management Journal, Wiley Blackwell, vol. 38(3), pages 626-644, March.
    14. Bart Leten & Rene Belderbos & Bart Van Looy, 2016. "Entry and Technological Performance in New Technology Domains: Technological Opportunities, Technology Competition and Technological Relatedness," Journal of Management Studies, Wiley Blackwell, vol. 53(8), pages 1257-1291, December.
    15. Giovanni. Gavetti & Daniel A. Levinthal, 2004. "50th Anniversay Article: The Strategy Field from the Perspective of Management Science: Divergent Strands and Possible Integration," Management Science, INFORMS, vol. 50(10), pages 1309-1318, October.
    16. Riccardo Vecchiato & Giampiero Favato & Francesco di Maddaloni & Hang Do, 2020. "Foresight, cognition, and long‐term performance: Insights from the automotive industry and opportunities for future research," Futures & Foresight Science, John Wiley & Sons, vol. 2(1), March.
    17. Callen Anthony & Andrew J. Nelson & Mary Tripsas, 2016. "“Who Are You?…I Really Wanna Know”: Product Meaning and Competitive Positioning in the Nascent Synthesizer Industry," Strategy Science, INFORMS, vol. 1(3), pages 163-183, September.
    18. Sean T. Hsu & Susan K. Cohen, 2022. "Overcoming the Incumbent Dilemma: The Dual Roles of Multimarket Contact During Disruption," Journal of Management Studies, Wiley Blackwell, vol. 59(2), pages 319-348, March.
    19. Shinkle, George A. & Hodgkinson, Gerard P. & Gary, Michael Shayne, 2021. "Government policy changes and organizational goal setting: Extensions to the behavioral theory of the firm," Journal of Business Research, Elsevier, vol. 129(C), pages 406-417.
    20. Felipe A. Csaszar, 2018. "What Makes a Decision Strategic? Strategic Representations," Strategy Science, INFORMS, vol. 3(4), pages 606-619, December.

    More about this item

    Keywords

    causal loop diagrams; mental model; performance change;
    All these keywords.

    JEL classification:

    • L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sae:ausman:v:44:y:2019:i:3:p:495-512. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: SAGE Publications (email available below). General contact details of provider: http://www.agsm.edu.au .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.