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Bounded Rationality, Sunk Costs and Industry Structure

In: Handbook of Top Management Teams

Author

Listed:
  • David G. Hoopes
  • Douglas R. Johnson

Abstract

Managerial cognition is an important topic in strategy; variation in beliefs across an industry might help explain sustained competitive differences between close competitors (competitive heterogeneity). Most work in the area of managerial cognition and industry structure examines cognitive strategic groups (e.g., Grønhaug and Falkenberg, 1989; Hodgkinson and Johnson, 1994; Porac et al., 1989; Reger et al., 1993). Often, writers like Porac and his colleagues argue that industries are socially constructed by industry members. Managers across the industry have similar cognitive schemata that delineate the industry and market. We too believe that managerial cognition will influence industry structure. However, we also believe that the underlying economics of an industry can force industry members to accept a reality they might not have enacted on their own.

Suggested Citation

  • David G. Hoopes & Douglas R. Johnson, 2010. "Bounded Rationality, Sunk Costs and Industry Structure," Palgrave Macmillan Books, in: Frank Bournois & Jérôme Duval-Hamel & Sylvie Roussillon & Jean-Louis Scaringella (ed.), Handbook of Top Management Teams, chapter 63, pages 540-546, Palgrave Macmillan.
    • Handle: RePEc:pal:palchp:978-0-230-30533-5_64
    DOI: 10.1057/9780230305335_64
    as

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