ANALOGICAL THINKING AND NEW OPPORTUNITIES: FACTORS UNDERLYING MANAGERS’ USE OF STRUCTURAL SIMILARITY

In making decisions about new opportunities, managers are faced with both uncertainty regarding the opportunity itself and the difficulty of gaining stakeholder commitment as a result of this uncertainty. Herein, we draw upon the psychology literature to investigate the question of when and why managers utilize structurally similar analogies in discussing their decisions about new opportunities as a way to manage these uncertainties. Specifically, we hypothesize that general and specific human capital, metacognitive experience and environmental dynamism increase managers’ use of structurally similar analogies. We also hypothesize that specific human capital and metacognitive experience each interact with environmental dynamism to affect use of structurally similar analogies. Using data from 127 CEOs of technology firms, we find that environmental dynamism is positively related to managers’ use of structurally similar analogies and that the relationship between environmental dynamism and use of structurall...