Connecting Diversification to Performance: A Sociocognitive Approach

This article develops a sociocognitive model of diversification that grounds the role of top managers' belief systems in the cognitive and behavioral attributes of corporate strategy. Its approach addresses several important questions: (a) How do top managers' belief systems reflect the ways in which they interpret their firms' business environments? (b) In what sense can we talk about the shared interpretations of the individuals that manage a diversified portfolio of businesses? (c) How do the characteristics of shared belief systems reflect the ability of the corporate management team to learn? (d) What specific predictions and prescriptions emerge from a sociocognitive theory of diversification?

[1]  A. Murray.  Top management group heterogeneity and firm performance , 1989 .

[2]  Charles R. Schwenk,et al.  Conjectures on Cognitive Simplification in Acquisition and Divestment Decision Making , 1985 .

[3]  Henry Mintzberg,et al.  Power in and Around Organizations , 1983 .

[4]  R. Bettis.  Performance differences in related and unrelated diversified firms , 1981 .

[5]  L. Smircich,et al.  Strategic Management in an Enacted World , 1985 .

[6]  E. A. Locke,et al.  Participation in Decision-Making: One More Look , 1979 .

[7]  J. Dutton,et al.  IMPORTANT DIMENSIONS OF STRATEGIC ISSUES: SEPARATING THE WHEAT FROM THE CHAFF* , 1989 .

[8]  Mark W. Dirsmith,et al.  Strategy, external communication and environmental context , 1983 .

[9]  S. Kiesler,et al.  Managerial Response to Changing Environments: Perspectives on Problem Sensing from Social Cognition. , 1982 .

[10]  John W. Meyer,et al.  Institutionalized Organizations: Formal Structure as Myth and Ceremony , 1977, American Journal of Sociology.

[11]  G. Day.  Diagnosing the Product Portfolio , 1977 .

[12]  S. Winter,et al.  An evolutionary theory of economic change , 1983 .

[13]  D. Denison,et al.  Organizational Culture and Organizational Effectiveness: A Theory and Some Preliminary Empirical Evidence. , 1989 .

[14]  D. Teece.  The Competitive challenge : strategies for industrial innovation and renewal : the Transamerica lectures in corporate strategy, School of Business, University of California, Berkely , 1987 .

[15]  B. Hedberg,et al.  Strategy Formulation as a Discontinuous Process , 1977 .

[16]  Igor H.Ansoff.  Strategic Management , 1979 .

[17]  J. Barney.  Strategic Factor Markets: Expectations, Luck, and Business Strategy , 1986 .

[18]  Colin F. Camerer,et al.  The economic efficiency of corporate culture , 1988 .

[19]  K. Palepu.  Diversification strategy, profit performance and the entropy measure , 1985 .

[20]  J. Bettman,et al.  Knowledge Structure Differences between More Effective and Less Effective Salespeople , 1988 .

[21]  H. Thomas,et al.  Competitive Groups as Cognitive Communities: The Case of Scottish Knitwear Manufacturers Revisited , 1989 .

[22]  P. Haspeslagh,et al.  Portfolio Planning: uses and limits , 1989 .

[23]  Ari Ginsberg,et al.  Construing the Business Portfolio : A Cognitive Model of Diversification , 1989 .

[24]  D. Bannister,et al.  The evaluation of personal constructs , 1968 .

[25]  J. Dutton,et al.  Categorizing Strategic Issues: Links to Organizational Action , 1987 .

[26]  Gareth R. Jones,et al.  Transaction cost analysis of strategy‐structure choice , 1988 .

[27]  Vasudevan Ramanujam,et al.  Research on corporate diversification: A synthesis , 1989 .

[28]  J. Bartunek.  Changing Interpretive Schemes and Organizational Restructuring: The Example of a Religious Order , 1984 .

[29]  Aubrey Silberston,et al.  Diversification and Integration in American Industry. , 1962 .

[30]  Terence R. Keen,et al.  Personal Construct Psychology and Education , 1981 .

[31]  Cynthia A. Montgomery,et al.  Corporate economic performance: Diversification strategy versus market structure , 1981 .

[32]  L. Ross,et al.  Biased Assimilation and Attitude Polarization: The Effects of Prior Theories on Subsequently Considered Evidence , 1979 .

[33]  Henry Mintzberg.  The Strategy Concept I: Five Ps for Strategy , 1987 .

[34]  Ari Ginsberg,et al.  Measuring and modelling changes in strategy: Theoretical foundations and empirical directions , 1988 .

[35]  Jay R. Galbraith,et al.  Strategy implementation : structure, systems, and process , 1986 .

[36]  M. Bougon.  Cognition in Organizations: An Analysis of the Utrecht Jazz Orchestra. , 1977 .

[37]  Arnoldo C. Hax,et al.  The Use of the Growth-Share Matrix in Strategic Planning , 1983 .

[38]  Paul Shrivastava,et al.  Organizational Frames of Reference , 1984 .

[39]  K. Andrews.  The Concept of Corporate Strategy , 1971 .

[40]  C. H. Berry.  Corporate Growth and Diversification , 1971, Journal law and economy.

[41]  J. Walsh,et al.  The Role of Negotiated Belief Structures in Strategy Making , 1986 .

[42]  R. Daft,et al.  Toward a Model of Organizations as Interpretation Systems , 1984 .

[43]  G. S. Saffold.  Culture Traits, Strength, and Organizational Performance: Moving Beyond “Strong” Culture , 1988 .

[44]  C. Stabell.  Integrative complexity of information environment perception and information use. An empirical investigation , 1978 .

[45]  Judith R. Gordon,et al.  Developing “Complicated” Understanding in Administrators , 1983 .

[46]  Cynthia A. Montgomery,et al.  Product-Market Diversification and Market Power , 1985 .

[47]  K. Eisenhardt,et al.  Politics of Strategic Decision Making in High-Velocity Environments: Toward a Midrange Theory , 1988 .

[48]  Robert K. Kazanjian,et al.  Implementing Internal Diversification: Contingency Factors for Organization Design Choices , 1987 .

[49]  R. Normann,et al.  Management for growth , 1977 .

[50]  Richard Bell,et al.  A manual for repertory grid technique , 1977 .

[51]  D. Hambrick,et al.  Upper Echelons: The Organization as a Reflection of Its Top Managers , 1984 .

[52]  Robert E. Hoskisson,et al.  Strategy and Structure in the Multiproduct Firm , 1987 .

[53]  S. Jackson,et al.  Top management and innovations in banking: Does the composition of the top team make a difference? , 1989 .

[54]  Danny Miller,et al.  Momentum and Revolution in Organizational Adaptation , 1980 .

[55]  James P. Walsh,et al.  Selectivity and selective perception: An investigation of managers''belief structures and informatio , 1988 .

[56]  C. Prahalad,et al.  The dominant logic: A new linkage between diversity and performance , 1986 .

[57]  R. Reger.  Competitive positioning in the Chicago banking market : mapping the mind of the strategist , 1988 .

[58]  Eric J. Walton,et al.  Managers’ Prototypes Of Financial Terms , 1986 .

[59]  T. S. Bateman,et al.  The psychological context of strategic decisions: A model and convergent experimental findings , 1989 .

[60]  Cynthia A. Montgomery,et al.  What is an Attractive Industry , 1986 .

[61]  R. Lamb,et al.  Competitive strategic management , 1984 .

[62]  A. Lemelin,et al.  Relatedness in the Patterns of Interindustry Diversification , 1982 .

[63]  G. Gardner.  THE PSYCHOTHERAPEUTIC RELATIONSHIP. , 1964, Psychological bulletin.

[64]  Ellen Earle Chaffee,et al.  Three Models of Strategy1 , 1985 .

[65]  I. Janis.  Victims Of Groupthink , 1972 .

[66]  J. Ford,et al.  Organizational Adaptation to Performance Downturns: An Interpretation-Based Perspective , 1987 .

[67]  H. Donald Hopkins,et al.  Firm Diversity: Conceptualization and Measurement , 1982 .

[68]  R. Grant.  On 'Dominant Logic', Relatedness and the Link between Diversity and Performance , 1988 .

[69]  D. Schweiger,et al.  The utilization of individual capabilities in group approaches to strategic decision‐making , 1989 .

[70]  David J. Teece,et al.  Towards an economic theory of the multiproduct firm , 1982 .

[71]  Jack R. Borsting,et al.  Decision-Making at the Top , 1982 .

[72]  O. Williamson.  The Modern Corporation: Origins, Evolution, Attributes , 1981 .

[73]  R. Rumelt.  Towards a Strategic Theory of the Firm , 1984 .

[74]  James P. Walsh,et al.  Negotiated belief structures and decision performance: An empirical investigation , 1988 .

[75]  S. Ranson.  The Structuring of Organizational Structures. , 1980 .

[76]  S. Sitkin,et al.  Corporate Acquisitions: A Process Perspective , 1986 .

[77]  G. Kelly.  The Psychology of Personal Constructs , 2020 .

[78]  Robert A. Burgelman.  A Model of the Interaction of Strategic Behavior, Corporate Context, and the Concept of Strategy , 1983 .

[79]  William N. Dunn,et al.  A Sociocognitive Network Approach to Organizational Analysis , 1986 .

[80]  M. Hannan,et al.  The Population Ecology of Organizations , 1977, American Journal of Sociology.

[81]  Gerald J. Wacker.  Toward a Cognitive Methodology of Organizational Assessment , 1981 .

[82]  P. Gorecki,et al.  An Inter-Industry Analysis of Diversification in the U.K. Manufacturing Sector , 1975 .

[83]  K. Goldstein,et al.  Cognitive style: Five approaches and relevant research , 1978 .

[84]  Michael Lubatkin,et al.  Diversification, Systematic Risk, and Shareholder Return: A Capital Market Extension of Rumelt's 1974 Study , 1989 .

[85]  K. R. Harrigan.  Formulating Vertical Integration Strategies , 1984 .

[86]  Richard Reed,et al.  Diversification: The growing confusion , 1986 .

[87]  William H. Starbuck,et al.  CONGEALING OIL: INVENTING IDEOLOGIES TO JUSTIFY ACTING IDEOLOGIES OUT , 1982 .