Strat. Mgmt. J., 31: 1164–1182 (2010) Published online EarlyView in Wiley Online Library (wileyonlinelibrary.com) DOI: 10.1002/smj.858 Received 16 September 2008; Final revision received 11 March 2010
MANAGERIAL DECISION MAKING AND FIRM PERFORMANCE UNDER A RESOURCE-BASED PARADIGM
MARTIN H. KUNC1 * and JOHN D. W. MORECROFT2
Warwick Business School, Coventry, U.K. London Business School, London, U.K
A framework is presented that connects managerial decision making to resource building and ﬁrm performance. The framework takes a behavioral view of decision making and distinguishes two distinct decision-making processes. First there is the creative conceptualization of new resource conﬁgurations that are intended to deliver competitive advantage. Then there is the painstaking development of resources required to implement strategy. We argue that heterogeneity in the resources of rival ﬁrms arises from the interplay of these two processes: resource conceptualization and resource development. Heterogeneity spawns performance differences that can be explained ex ante from characteristics of managerial decision-making processes. We illustrate the approach in a simulated decision-making environment representing a highly competitive and dynamically complex industry. Results from repeated simulation experiments conducted with executive and MBA students show vast differences in performance among ﬁrms, even when they started with identical resource positions. In a departure from traditional resourcebased literature, we explain how these differences stem from path dependent accumulation of resources and spontaneous variety in the way rivals conceptualize resources. Copyright 2010 John Wiley & Sons, Ltd.
The resource-based literature offers a number of explanations about the conditions under which competitive advantage arises—such as unique resources or the capabilities to build them. But these explanations do not... [continues]
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