Psychological Foundations of Dynamic Capabilities: Reflexion and Reflection in Strategic Management.

Abstract

In recent years, there has been a move to identify the behavioral foundations underpinning the evolutionary and economic fitness of the enterprise. Indeed, the dynamic capabilities project now occupies center stage in the field of strategic management. Yet the accounts developed thus far-like much of the field's theory and research more generally-are predicated upon a cold cognition logic that downplays the significance of emotional/affective and nonconscious cognitive processes for strategic adaptation. In this article, we rectify this imbalance by drawing upon contemporary advances in social cognitive neuroscience and neuroeconomics to develop a series of countervailing insights and new prescriptions for the development of dynamic capabilities. Using Teece's (2007) influential framework to organize and illustrate our arguments, we demonstrate how the fundamental capabilities of sensing, seizing, and transforming each require firms to harness the cognitive and emotional capacities of individuals and groups to blend effortful forms of analysis with the skilled utilization of less deliberative, intuitive processes.'The decision-making paradigm, as it has developed, is the product of a marriage between cognitive psychology and economics. From economics, decision theory inherited, or was socialized into, the language of preferences and beliefs and the religion of utility maximization that provides a unitary perspective for understanding all behavior. From cognitive psychology, decision theory inherited its descriptive focus, concern with process, and many specific theoretical insights. Decision theory is thus the brilliant child of equally brilliant parents. With all its cleverness, however, decision theory

The Impact of Managerial and Adaptive Capabilities to Stimulate Organizational Innovation in SMEs: A Complementary PLS–SEM Approach

“…Prior studies showed that managerial capability directly stimulates organizational innovation; however, this was not supported in our study, as managerial capabilities need to be engulfed within adaptive capabilities prior in order to stimulate organizational innovation. Managerial style also showed a positive relationship with adaptive capability, which is justified by the literature [32,139], where managers sense the opportunities and threats and then reconfigure the firm's sources and capabilities in order to sustain the competitive advantage. Also, management style and people development play a vital role in organizational innovation if managers and employees are provided with such training and knowledge, which will sustain the competitive advantage by carefully scanning the competitors and anticipating future trends.…”

“…Therefore, the development of a firm relies on the existing experience and learning of the managers, since they are the enablers of organizational capability [31]. Managerial capability relies on more than just cognition; it also requires the understanding of human emotions, and non-cognitive processes that develop and enable strategic adaption behaviors (adaptive capability) in volatile environments [32,33].…”

How do Firms Adapt? A Fuzzy-Set Analysis of the Role of Cognition and Capabilities in U.S. Defense Firms’ Responses to 9/11

“…If indeed DC must consist of several elements, such as the "sensing-seizing-reconfiguring" tripod (Teece, 2007), then one could reasonably argue that our cognition variables capture the first leg of the tripod, "sensing the environment" (Pavlou & El Sawy, 2011: 239), and that our asset reconfiguration variables provide a good proxy of the last leg, "reconfiguring assets and structures to maintain competitiveness" (Hodgkinson & Healey, 2011: 1501. In this context, this study would demonstrate that adaptation to shifting conditions can occur either without superior "sensing" (C3 and C4 in Table 3), or without increasing the pace of "reconfiguring" (C1).…”

Publishing at the interfaces of psychology and strategic management

“…Further illustrating the efficacy of this third framing strategy of fostering broader conversations with more specialist audiences, I turn now to consider finally one of my relatively recent papers on the psychological foundations of strategic management (Hodgkinson and Healey, 2011).…”

“…Drawing on the insights of state-of-the-art-advances that have taken place in the affective sciences over the past two decades, our goal in the Hodgkinson and Healey (2011) paper, which appeared in a special issue of Strategic Management Journal devoted to 'the psychological foundations of strategic management' was to move along the conversation on cognition and strategy away from an affect-free conception of strategists as cognitive misers (and sensemakers), toward a 'hot' cognition alternative, one that recognizes that strategists are ultimately, "governed by thoughts and feelings: always boundedly rational, but manifestly driven by emotion" Healey, 2011, P. 1512). Using the much-cited dynamic capabilities paper of Teece (2007) as an overarching framework, our analysis demonstrated systematically how each of the psychological foundations underpinning Teece's (2007) framework are predicated on psychological conceptions that are outmoded when viewed in the light of more recent advances in social cognitive neuroscience (e.g.…”