Top management teams' cognitive models of interorganizational social networks, strategic decision-making and firm performance

While research on social networks and managerial cognition has shown that: (1) the interorganizational social structure (IOSS) is a significant source of competitive advantage and (2) that managers' perceptions of the environment play a critical role in shaping firm behavior and organizational outcomes, the impact of managers' cognition of the IOSS in these processes has so far been overlooked.; Joint findings from two inductive studies conducted for this thesis make a first step towards filling these gaps in the literature by sketching a "cognitive and networks strategy" (CANS) framework relating TMTs' cognition of the IOSS to the actual IOSS, to strategic decision-making and to firm performance. Specifically, these two studies address the following core research questions: (1) are there systematic relationships between top management teams' (TMTs') perceptions and knowledge of the IOSS and strategic decisions? (2) does the way in which TMTs use their perceptions and knowledge of the IOSS affect firm performance? (3) how accurate are TMTs' perceptions and knowledge of the IOSS? (4) does the accuracy of TMTs' perceptions of the interorganizational social structure impact firm performance? The context for these studies was the population of full-service advertising agencies in Northland1.; In brief, the CANS framework proposes that: (1) TMTs' perceptions and knowledge of the IOSS impact strategic decision-making by partially structuring patterns of information search particularly when fast, highly uncertain strategic decisions are made. (2) The type of knowledge of the IOSS used by TMTs in strategic decision-making, as well as how it is used to enact the actual social structure has a significant impact on firm performance. (3) There is a significant and positive relationship between the accuracy of TMTs' perceptions of the social networks of negative interorganizational ties and firm performance.; The propositions of the CANS framework have important theoretical implications for current models in strategy and social networks as they provide new extensions and complementary explanations for prior conceptual models. From a practical perspective, this thesis also makes a significant contribution as it points out that managers' cognition of the IOSS may be a critical, if overlooked, source of competitive advantage.; 1Northland is the alias of a mid-sized city in the North Eastern United States. Aliases are used throughout this thesis to protect the confidentiality of the respondents.