The strategic implications of managerial cognition and firm decision processes: Evidence from a new venture context

This study explores the effects of certain aspects of managerial cognition on the speed and comprehensiveness with which firms make decisions as well as the effects of decision processes on firm performance in a dynamic environment. It is theorized that the most successful firms will be those that make decisions that are both fast and comprehensive. In addition, it is argued that organizational determinants of managerial discretion will moderate the relationship between managerial cognition and firm decision processes. Research models are developed and tested using survey and interview data from a large sample of managers from New York's "Silicon Alley" community of internet firms.;Although aspects of managers' self-efficacy and problem-solving style were found to influence the comprehensiveness with which firms make decisions, virtually no other evidence was found of a relationship between managerial cognition and decision speed or of the hypothesized moderating effects of firm size, firm age or managerial influence. The combination of speed and comprehensiveness, moreover, was not positively related to any of several measures of firm performance. The results suggest instead that speed and comprehensiveness impact different aspects of firm performance.;The failure of the cognition-related model is attributed to the relative homogeneity of Silicon Alley firms with regard to managerial cognition and decision process as well as to the dominant role that social and economic factors are likely to play as determinants of decision process in this context. Results of the performance-related model are attributed to the distinctiveness of Silicon Alley as a business environment, which is characterized by an unusually high level of dynamism as well as high levels of ambiguity and entrepreneurialism. These environmental characteristics combine to reinforce the decision-related homogeneity of firms in the sample and diminish the strategic value of decision speed and comprehensiveness.;This research contributes to the management literature by calling attention to the contextual limits that bound prevailing theories of strategic decision making, illuminating the complexities of managerial discretion in new ventures, identifying critical dimensions along which dynamic environments may vary and laying the groundwork for a more nuanced understanding of the performance implications of decision processes.