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Literature  associated  with  cognition,  managerial  perception,  and  decision-­‐making  is   the  first  subset  of  literature  to  emerge  that  was  not  considered  during  initial  field   mapping.    The  search  results  and  thematic  map  show  that  significant  empirical   research  has  been  conducted  in  this  area  extending  from  some  early  writings  on   rationality  limits  (March  and  Simon,  1958).    Examining  strategic  performance   measurement  in  conjunction  with  strategic  decision-­‐making  provides  insights  into   how  managers  might  conceive  a  strategic  performance  measurement  system   regardless  of  the  environment  conditions  that  exist.      

One  of  the  most  frequently  cited  works  in  the  entire  literature  review  is  Child’s   (1972)  theoretical  piece  entitled  “Organizational  Structure,  Environment  and   Performance:    The  Role  of  Strategic  Choice.”    Child  examines  existing  theoretical   models  used  to  explain  firm  organization.    He  reviews  environmental,  technological,   and  size  variables  but  concludes  that  common  constraints  are  impartial  in  explaining   structure.    He  suggests  that  the  role  of  managerial  choice  has  been  overlooked  and   plays  a  greater  role  than  previously  thought.    

A  critically  important  paper  in  strategy  literature  is  “Strategic  Change:  Logical   Incrementalism”  (Quinn,  1978).    The  paper  actually  spans  two  theme  subsets:     managerial  perception/cognition/decision-­‐making  and  strategic  planning.    It  is   addressed  here,  since  it  is  foundational  for  other  studies  in  this  subset.    Prior  to  this   paper,  much  of  the  strategy  research  pertaining  to  strategic  planning  was  of  the   normative,  rational  type.    Quinn  revealed,  through  his  experience  in  working  with   organizations,  that  strategy  could  not  be  created  rationally  given  the  complexity  of   the  task.    Rather,  strategy  formed  over  time  as  a  result  of  incremental  steps  that   gradually  changed  managers’  frameworks  and  ultimately  their  decision-­‐making   processes.    Further,  he  asserted  that  organizations  also  possessed  processing  limits   and  that  they  could  only  progress  incrementally  over  time.    It  is  from  this  merging  of  

Edward  A.  Barrows,  Jr.  –  Cranfield  University  –  School  of  Management  –  DBA  Thesis   How  Firms  in  Turbulent  Environments  Measure  Strategic  Performance  

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processes  and  decision-­‐making  that  strategies  emerge.  This  incrementalist  view  was   validated  empirically  by  El  Sawy  and  Pauchant  (1988)  through  their  longitudinal   study  of  17  managers  with  data  from  the  cellular  phone  industry.    In  their  research   they  found  that  managers  change  or  accommodate  their  cognitive  frames—but  only   over  time—through  environmental  scanning  and  subsequent  group  discussion.    

Related  to  the  concept  of  group  discussion/consideration  and  environmental  

scanning  is  the  study  by  Bourgeois  (1985)  of  99  top  managers.    His  research  provides   insight  into  the  relationship  between  strategic  goals  among  top  management  teams,   the  common  view  of  environmental  uncertainty  and  performance  of  the  firm.    His   testing  yielded  mixed  support  for  his  four  hypotheses;  what  was  clear  however  was   the  finding  that  congruence  between  perceived  environmental  uncertainty  and   environmental  volatility  is  positively  associated  to  firm  performance.    As  he  states,   “perceptual  acuity”  will  achieve  higher  levels  of  firm  performance  (Bourgeois,  1985,   p.  565).  

In  a  sophisticated  study  conducted  with  84  CEOs  from  the  Canadian  industrial  metal   industry,  Lefebvre  et  al.  (1997)  found  that  managerial  perceptions  of  the  

environment  had  a  significant  impact  on  firm  innovation  levels  and  to  a  lesser   extent,  performance.    Where  in  previous  studies  the  environment  itself  had  been  a   variable  of  analysis,  the  researchers  assert  that  a  more  relevant  variable  may  be   managerial  perceptions  themselves.    Carpenter  and  Golden  (1997)  considered   managers’  “locus  of  control”  and  the  ways  in  which  it  impacted  their  perceptions  of   discretion.    Locus  of  control  is  a  personality  characteristic  that  affects  the  extent  to   which  a  manager  believes  they  have  discretion  to  act  in  a  given  environment  (Rotter,   1966).    Their  findings  indicate—at  a  summary  level—that  a  managers’  locus  of   control  may  predict  their  perception  of  discretion  level  and  ultimately  the  nature  of   their  decision-­‐making  in  certain  situations  or  contexts.    Extending  decision-­‐making   from  the  rational  standpoint,  researchers  Goll  and  Rasheed  (1997)  found  that   rationality  is  strongly  associated  with  performance  in  highly  munificent  and  highly   dynamic  environments.    

Another  key  paper  in  this  subset  is  the  qualitative  study  of  eight  microcomputer   companies  by  noted  technology  and  high-­‐velocity  researcher  Eisenhardt  (1989b).   She  demonstrates  that  firms  in  high-­‐velocity  environments  make  decisions  with   more,  not  less,  information  and  that  they  are  able  to  develop  more,  not  fewer,  

Edward  A.  Barrows,  Jr.  –  Cranfield  University  –  School  of  Management  –  DBA  Thesis   How  Firms  in  Turbulent  Environments  Measure  Strategic  Performance  

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strategic  alternatives  in  the  process  of  decision-­‐making.    These  practices,  when   practiced  within  firms,  lead  to  better  performance.      

The  final  study  in  the  area  of  cognition,  managerial  perception,  and  decision-­‐making   is  Fang  and  Wu’s  (2006)  longitudinal  case  study  of  UMC,  a  Taiwanese  semiconductor   firm.    The  study  concludes  with  the  presentation  of  research  propositions  that  state   firms  in  a  turbulent  industry  co-­‐evolve  by  using  micro-­‐evolutional  learning  inside  and   macro-­‐evolutional  learning  outside  as  a  means  of  closing  a  technology  based  

knowledge  gap.    These  two  forms  of  evolution  are  mutually  dependent,  and  a  firm   has  to  have  the  means  to  incorporate  externally  learned  knowledge  into  internal   routines.      

The  studies  in  this  subset  offer  several  pertinent  perspectives.    First,  strategy  is   formed  incrementally  as  both  processes  and  managerial  perceptions  shift  over  time.     Second,  this  shift  occurs  by  mixing  environmental  signals  with  group  discussion  with   top  leaders.  Third,  firms  that  are  able  to  accurately  sense  environmental  uncertainty   and  volatility  experience  enhanced  performance,  whereas  managers  who  hold   inaccurate  perceptions  of  the  environment  limit  the  quality  of  their  decision-­‐making.     Fourth,  different  perceptions  regarding  types  of  decision-­‐making  ultimately  

correspond  to  different  performance  levels  within  different  contexts.    Lastly,   managers  of  firms  in  turbulent  environments  need  more  not  less  information  and   more  alternatives  to  make  better  strategic  decisions.    This  summary  supports  

establishment  of  a  strategic  performance  measurement  system  that  helps  managers   sense  a  variety  of  signals  quickly,  discuss  and  understand  their  implications,  change   their  cognitive  frames  where  appropriate,  and  collectively  be  able  gauge  

environmental  uncertainty  all  the  while.