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 resource‐based 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.

An important task in the analysis of a behavioral simulation model is to explain clearly how the model's organizational assumptions lead to its simulated behavior. All too often, model-based arguments involve an uncomfortable "leap of logic" between equations and consequences. This paper proposes two methods of analysis, premise description and partial model testing, which provide stepping stones between model equations and their simulated consequences. Premise description examines the bounded rationality of policies or decision functions in the model, pointing out the process and cognitive limitations assumed in decisionmaking. Partial model tests expose the intended rationality of smalt combinations of policies, showing that policies produce "sensible" actions with respect to their premises. The application of those methods is illustrated with a simulation model of a sales organization in which sales-force productivity is prone to decline. The behavior of productivity is traced to dysfunctional interactions between objectives, overtime, and salesforce motivation.behavioral simulation models, system dynamics, bounded rationality, simulation analysis, salesforce and productivity

The resource-based view of strategy seeks to explain why some firms consistently outperform rivals in the same industry by acquiring a unique set of strategic assets (or resources). However, differences between dominant managerial mental models in management teams lead to disagreement at the moment of implementing distinct resource-building strategies. This managerial and cognitive view of strategic decision making and competition lends itself to investigation through problem structuring methods. We suggest that resource maps, as a problem structuring method, can be used to interpret managerial mental models for strategic decision making in terms of resource-building processes. Through resource maps, we represent the system of asset stocks believed to be most important for driving business performance. We illustrate the framework by comparing and contrasting maps of the system of resources (asset stocks) that best characterize two leading firms in the UK commercial radio broadcasting industry.

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