Managerial Cognition and the International
Strategy-Making Process in European
Telecom Mncs
0. Executive summary 3
1. Introduction 4
2. Conceptual and contextual grounding 6
2.1 Objectives 12
2.2 Missing link between managerial cognition and the internationalisation process 14
3. Research Questions 21
4. Methodology 23
5. Literature 26
0. Executive summary
The following research sheds light on the missing link between managerial cognitive maps and the
international strategy-making process in the telecommunication industry of European MNCs.
Cognition refers to belief systems that individuals use to acquire, store, transform, and utilize
knowledge and that influence, frame, constrain and enable decision-making processes and sense
making of their environment. This research contributes to a body of work in which different
concepts and methods are distinguished to study the basic cognitive processes that influence
and shape heuristic decision-making behaviour. In particular, the influence of manager cognitive
maps on the internationalisation process and how the internationalisation process is grounded in
the managers´ cognitions will be analyzed. Furthermore an attempt is made to work out which
categories of managers´ cognitions explain the propensity for internationalisation process. This
subject matter will be examined through the analysis of in-depth interviews, using cognitive
mapping as a method to gain insights into the nature and significance of cognitive processes in
organizational decision making that govern the internationalisation processes within MNCs.
Keywords: managerial cognition, cognitive maps, strategic decision-making, internationalisation
process, telecommunication industry
1. Introduction
Over
the last two decades, the telecommunication industry in Europe has undergone dramatic
changes. The most significant triggers of transformation and corporate restructuring have been
the liberalisation and privatisation of formerly government-controlled activities in the year 1998,
and the arrival of various generations of technological innovations like mobile telephony and data
transmission, which led to a continuing globalisation of business activities within the sector. The
internationalization process of the European Telecommunication industry is apparent in Europe:
For example, Deutsche Telekom has subsidiaries in Austria (T-Mobile, T-Online), France (T Online), the Netherlands (T -Mobile), Portugal (Terravista), Spain (Ya.com) and in the UK (T Mobile). Vodafone (UK) has international subsidiaries in Ireland, Germany, Italy, Greece, the
Netherlands, Portugal, Spain, Sweden and France Telecom in Belgium (Mobistar), the
Netherlands (Orange), Spain (Uni2), Switzerland (Orange), UK (Orange) etc. [European
Foundation for the Improvement of Living and Working Conditions, 2005].
For this reason the business environment in the telecommunication industry can be
characterized as turbulent, complex and hypercompetitive and for MNCs it is necessary to gain
and sustain competitive advantages in the international playing field.
In this complex competitive environment managers are overstrained to make decisions and solve
problems about the uncertainty of future, the variety of targets and alternatives [Eisenführ and
Weber, 2001]. The task of the manager is to make a choice between alternatives and this in a
possibly rational manner. Although rational,
managerial decisions consist of a wide variety of heuristic strategies, ranging from careful and
reasoned examination of alternatives to simple and fast “rules of thumb”. [Simon, 1978] made
the point that managers are “bounded rational”. Bounded rationality is used to designate
rational choice that takes into account the limitations of both knowledge, and cognitive capacity.
It is concerned with the ways in which the actual decision-making process influences decisions
[Allingham, 2002 p. 27]. But what factors determine the strategy a decision maker will use in one
situation as opposed to another? It is well-known, that choice is defined by a preference relation
if items in a given menu which you choose are precisely those which are at least as good as every
item on the menu. In somewhat ordinary decision-making situations it is basically assumed that
managers have a repertoire of strategies for making judgements and choices and that the use of
these strategies is contingent upon a variety of task, context, and individual difference factors.
In contrast, an international strategy-making process is more complex. Here it is necessary to
focus on strategic cognitions at the individual, group, organization and industry levels.
Furthermore the inter-organizational level of cognitions in such an international strategy-making
process should be examined in more detail. Different cultures, beliefs, and cognitive structures of
managers must be coordinated and integrated and, moreover, a shared cognitive or “global mind
set” must be constructed. Within this context it must be emphasized that the framing of strategy
takes place in an organizational,
social and political context and that the art of devising strategy is inherently a political process
within the firm [Mintzberg and Quinn, 1998].
Thus, the main objective of the proposed research sheds light on the managerial cognitive maps
and the international strategy-making process in the telecommunication industry of European
MNCs. The influence of manager cognitive maps on the internationalisation process will be
analyzed as well as how the internationalisation process is grounded in the managers´ cognitions.
Furthermore an effort is made to work out which categories of managers´ cognitions explain the
propensity for internationalisation process. This will be examined through the analysis of indepth interviews and the methodology of grounded theory by Strauss.
2. Conceptual and contextual grounding
In the last two decades there has been a growing interest in the topic of Managerial and
Organizational Cognition (i.e. the Managerial and Organizational Cognition Division is one of 21
divisions in the Academy of Management).
Social cognition, as a subfield of social psychology studies the mental representation and
processes that underlie social perception, social judgement and social influences that enable
individuals to perform decisions. Within the field of managerial and organizational cognition it is
assumed that human thinking and social functioning are essential parts of one another [Weick,
1979]. It is widely accepted that an organization is a network of inter-subjective shared meaning
that is sustained through a common language and social interaction. Cognitions refer to belief
systems that individuals use to perceive, construct
and make sense of their environment [Weick, 1979, Swan, 1997].
Research on managerial and organizational cognition is focusing on how exactly to explain to
what extent an organizational member models reality and how such models influence their
behaviours [Staehle, 1999 p. 149ff.].
In addition, Managerial and Organizational Cognition includes major topics such as how
individuals and organizations as a collective unit pay attention to particular phenomena, how
idiosyncratic attributions emerge in the course of day-to-day behaviour and how exactly these
processes influence decision-making processes, how individual and organizational behaviour is
shaped and constrained through information processing, learning, the use of memory, and the
emergence of mental representations and images [Fiske and Taylor, 1984].
Cognitive sciences (including diverse domains such as philosophy, cognitive psychology, artificial
intelligence and anthropology) help us to study managerial and organizational decision-making
processes by focussing on the characteristics of cognitive processes and cognitive structures in
an “objective” way.
As mentioned in the introduction, bounded rational managers rely to a large extent on their
mental constructs and cognitive structures (basically a knowledge structure) which are
elaborated assumptions about their environment, and which are defined as personal idiosyncratic
constructs that shape individual information capacities and frame their attitudes and habitual
behavior. At the individual level it is assumed that existing modes of knowledge structures are
employed in order to handle complex environmental information, basically
by converting received sensory data into tractable chunks of information, which facilitates and
frames existing information processing and decision-making capabilities [Huff, 1990, Porac and
Thomas, 1990]. Knowledge structures are conceived as a mental template on which decisionmaking processes rely, basically because these mental processes enforce a discriminating
constraint or filter on the perception of information. It is further argued that such a mental
template is elaborated in the course of past learning experiences, which enables us to give
complex patterns of information a meaning in order to manage that information.
I claim that these complex cognitive processes are best analyzed as evolutionary adaptive
processes that are formed by experience and routinized behaviour learned at the individual level
and embedded in a social context [Boyd and Richerson, 2005; Walsh, 1995].
Within the domain of managerial and organisational cognition, different concepts and methods
are distinguished to study the basic cognitive processes that influence and shape heuristic
decision-making behaviour. One proposed empirical research method – which is described in
more detail below – is termed cognitive maps.
Cognitive mapping is a theoretical and methodological approach contending that cognitive maps
represent managers´ causal knowledge. Cognitive maps are defined in this proposed research as
graphic or visual representations of thought or sense-making that locate people in relation to
their information environments and can be linked to decision-making [Fiol and Huff, 1992].
[Weick and Bougon, 1986 p. 102] unequivocally state that organizational
environments exist largely in the mind, and their existence takes the form of cognitive maps.
Notwithstanding such a bold pronouncement, it is not empirically proven that managers actually
have cognitive maps in their heads, but it is widely accepted within the domain of organisational
and managerial cognition that cognitive maps have become a useful metaphor that allows
cognitive processes to be analysed [Huff, 1990].
It is important to note that individual decision makers rely on more than one cognitive map. Huff
1990 has convincingly shown in her research that, in reality, map makers often use more than
one mapping approach. In accordance to the basic findings in managerial and organisational
cognition research, I generally assume that decision makers actually swap one approach for
another, depending entirely on the situational context of the decision-making process.
As my proposed research will focus on the understanding of the strategic decision-making
processes in the internationalisation of MNCs I do not only propose the concept of cognitive
maps as a promising tool to analyse managerial decision-making processes. In addition I propose
the managerial and organisational cognition approach as a strong tool to shed light on the black
box of decision making of internationalisation processes.
Basically, I envisage five aspects that allow me to use cognitive maps as a promising research
tool to analyse the cognitive processes and how these process constrain and enable the
internationalization processes of MNCs.
First, I simply conceive of cognitive maps as a promising tool to analyse exactly how managers
distribute and deploy attention,
how they associate different chunks of information and how the decision makers construct
concepts of meaning in the internationalization process. I argue that cognitive maps highlight the
dynamic elements of the internationalization processes that MNCs face today and put more light
onto the unresolved process of managerial and organizational decision making and the related
dynamics of internationalization.
Second I strongly argue that cognitive maps show how and to which dimensions categories and
cognitive taxonomies are used to feed the process of decision making in the internationalization
of MNCs and/or upon which categories and cognitive taxonomies heuristic decision are based in
the course of internationalization. Cognitive psychologists (cf. Huff 1990) support the
assumption that a map maker draws maps by ordering dichotomized concepts and perceptions of
reality and it will be shown that these concepts are placed into a hierarchical relationship
between broader and more specific conceptions and subcategories of the perceived environment.
Cognitive maps of this type have been used to define the competitive environment and to
explore the range and nature of choices imposed by decision makers in a given setting to capture
dynamic and complex environmental factors, which are perceived as threatening and/or
challenging.
Third it is contended that maps, which I use to analyse managerial decision making in the
internationalization processes, will demonstrate the influence, causality and dynamics among
cognitive elements that are employed in heuristic decision-making processes. It is important to
emphasize the fact that causal cognitive
maps enable as well as constrain the map maker to focus on a particular action - e.g. how the
respondent explains the current situation in terms of previous events, a particular/idiosyncratic
perception and accentuation of current facts and what changes he or she is expecting in the
future. This kind of cognitive map is currently the most popular mapping method in organization
theory and strategic management [ for example Eden, 1992].
The fourth disposition of maps analyzes the logic of the structure of an argument and how
exactly a conclusion is found or built [Huff, 1990]. Emphasizing these processes, it is argued
that a map maker imports particular causal beliefs from different sets of meanings in order to
construct a cognitive map. A map of this type emerges, as proposed, in the course of being
locked into a routinized and habitual behaviour that is constrained and enabled by a specific
context. Here the individual focuses more broadly on the context as a whole to select a
cumulative impact of varied evidence and to draw the links between established chains of
reasoning, which are enacted and changed in the course of the internationalization processes the
MNC is faced with.
And finally – as a fifth perspective - I use cognitive maps simply because there is much evidence
that a cognition function exists in the course of identifying and specifying conceptual schemes,
frames and perceptual codes which govern managerial and organisational decision-making
processes. Research on linguistic structure, cognitive psychology, comparative culture and
artificial intelligence provide various evidence that cognition is best conceived of as a mental
framework that is not completely accessible to the individual involved, but nevertheless
constantly used.
I will briefly summarize the use and development of these five cognitive theories in the following
section, and I will elaborate on how they have been evolved in the current research in the field of
managerial and organizational cognition.
An impressive number of studies now exist that contribute to the growing theoretical and
empirical research on cognitive mapping, which is increasingly applied to analyse the strategic
management and organizational challenges for practitioners and theory [Walsh, 1995]. I have
already mentioned that this research is motivated by the need to link the current insight of the
analysis of managerial and organisational decision making to the analyses of the different phases
and dynamic steps in the internationalization processes of MNCs.
[Eden, Ackermann and Cropper, 1992] argue that the use of cognitive maps basically helps us to
identify how organisational members develop a conceptual understanding of their environment
upon which they act. In addition I emphasize that cognitive maps should not been taken as
models of cognition, but rather as tools to analyse decision and/or cognitive processes of
decision makers. As such it is a tool for reflective thinking, problem solving and/or simply a
“model of thinking” that help to explain the heuristics of decision-making processes [Eden,
Jones and Sims, 1979, Eden, 1992). With this as a background, it has been emphasized that
cognitive maps can assist individuals in their work on strategy development [Ackermann et al.,
1991, Eden, 1990]. Cognitive maps may also
act as a means to facilitate decision-making, problem solving and negotiation within the context
of organizational intervention, although, as I believe, not so much as a conscious pattern but
much more as an unconscious and habitual phenomenon in which managerial and organisational
decision-making processes are grounded. Further, in this research cognitive maps serve as a
tool, providing new ways of examining and improving managerial judgments.
Current research in cognitive science and in biology [Mayr, 1999] suggests strongly that it is a
valuable and effective methodological tool that enables managers to make sense in a growing
complexity [Fiol and Huff, 1992]. The primary purpose of causal maps as a methodological tool is
simply to describe an individual´s conscious perception of reality, in other words how someone
distributes his/her limited attention to selective phenomena in order to grasp sufficient detail to
construct – on the grounds of previous experiences – an idiosyncratic world view that frames and
enacts ongoing decision-making processes. It is important to note that what is perceived as an
important fact relates basically to a specific situation or detailed instance of an individual
experience [Langfield- Smith, 1992]. As has been emphasized in the research literature, the aim
is never to map an individual’s entire set of beliefs, which is in fact impossible. Nor is the
intention to explicate a model that simulates actual cognition. Rather the objective is to use
cognitive maps as models – simply as a particular and idiosyncratic mode of representing the
world in which the map maker is situated.
I have to contend that cognitive
maps are always incomplete and neither true nor false representations of the world. A cognitive
map serves much like a road map, which does not provide a driver with much information about
road conditions, nor does it indicate traffic congestion [Fombrun, 1994, p. 71]. Individual maps
reflect both the mode of processing current information and a myriad of factors associated with
the demographic and job characteristics of the individual [Porac and Thomas, 2002 p. 168].
Moreover I assume that managers´ mental models vary widely in detail and depth, basically
because different managerial experiences, job training, socialization, the emergence of individual
habits, educational background and career patterns are strongly linked to differences in mental
models [Hodgkinson and Johnson, 1994]. The broader significance of cognitive mapping as a tool
for investigating individuals´ cognitive representations (basically a set of an actors´ causal belief
system) in strategic decision making and in strategic phenomena concerning a particular issue or
event is emphasized by [Hodgkinson, Maule and Bown, 2004].
In general I will use cognitive maps as a method to gain insights into the nature and significance
of cognitive processes in organizational decision making that govern the internationalization
processes within MNCs.
2.1 Objectives
Building upon past and current research on the internationalization processes of MNCs, I
strongly propose to study in detail how cognition and managerial and organisation cognitive maps
frame different stages and modes of the internationalization process of European Telecom MNCs.
I hypothesize that both managerial
cognition and the internationalization process have to be analyzed in relation to each other and I
propose that the processes of managerial cognition and the dynamic aspects of internationalizing
firms influence each other in a mutually dependent way. My major focus in this research is the
content level of knowledge structures in order to explain the interdependence and dynamic
processes between internationalization processes of MNCs and managerial decision-making
processes. Further, I hypothesize that managerial cognition frames the commitment decision and
enacts a particular dynamic relation in the internationalization process, but I do emphasize that
both processes are mutually dependent to a high degree.
In order to shed light on these processes, I study the knowledge structure content of managerial
cognition, which is perceived as very important for this proposed research because the
identification and isolation of content is typically the first step in the analysis of managerial
cognition. Cognitive content basically consists of the things one knows, assumes and believes,
e.g. how to identify the information knowledge structure represents [Stubbart, 1989, Walsh,
1995, Porac and Thomas, 2002].
Narrative methods to interview managers seem to be the most reliable instrument to collect data
to analyse cognitive content. Next I will try to elaborate on the relation between cognitive
content and cognitive processes. For example, [Stubbart, 1989] has convincingly shown that
managerial cognitions play a key role in the strategic decision-making processes (such as goal
formulation, environmental analyses, strategy formulation, evaluation and
implementation). In addition, [Barnes, 1984] concluded in a study that cognitive biases affect
strategic decision making. Further, [Duhaime and Schwenk, 1985] argued that escalating
commitment affects strategic decisions in important ways that have to be considered and they
have shown that escalating commitment is a tendency to increase commitment to a failing course
of action.
Therefore, I explicitly elaborate my general propositions, hypothesis and major research
questions based on the early insights of the Uppsala school and the promising links that can be
drawn to the managerial and organisational cognition approach in order to analyse the
internationalisation processes of European Telecom MNCs.
2.2 Missing link between managerial cognition and the internationalisation process
Despite increasing emphasis on managerial and organizational cognition in the research
literature, there have been limited attempts to explore the pivotal role of decision makers and
the importance of their perceptions and influences (cognitions) on the internationalisation
process. Cultural Management assumes that success or failure of internationalization processes
are determined by an understanding (or lack thereof) of host country cultures. Although I do not
deny this aspect, I propose that this is a too naïve an approach to answer how mental construct,
the construction of meaning and the perception of environmental reality frame and are framed by
the internationalization process.
Much of the research in International Management is done under the umbrella term “culture” to
explain what some call “soft factors” in International Management that influence
the processes of internationalization. But the main objective in this field is rather restricted if we
remain locked into the analysis of explaining the foreign cultural factors that constrain the
internationalization of firms (An overview of the major research questions has recently been
given by [Meyer, 2005; Leung, 2005].
Further, a large part of internationalisation literature concentrates mostly on firm, industry and
other environmental factors that pertain to the host country and which may be decisive in the
internationalisation process [Buckley and Lessard, 2005]. Although I rely on much of the current
research in International Management, I strongly believe that a somewhat different approach – to
a certain extent going back to Johansson and Vahlne – is necessary to open the “black box” of
managerial and organisational decision-making processes in the course of the internationalisation
of the MNCs.
Furthermore, I believe it is not only a question of how internationalisation can be perceived as a
part of the ongoing strategy process of most business firms [Melin, 1992], but we strongly
propose that the ongoing research effort must concentrate on how the process of
internationalization is related to managerial cognition [Prahalad and Bettis, 1986; Calori,
Johnson and Sarnin, 1994] suggest that CEO and executive cognitive maps are more complex if
they have to manage diverse international businesses with a greater geographic scope rather
than only national scope).
The internationalization process of firms as analyzed by [Aharoni, 1966], [Vernon, 1966],
[Johansson and Vahlne, 1977], and [Johansson and Mattson, 1988] illustrates that
much of the past research has dealt with the question of how information is processed within the
internationalizing firm.
In general, ]Aharoni, 1966] analysed foreign investment decisions as complex social processes
which are influenced by social relationships both within and outside the firm and between home
and host countries. But he did not focus explicitly on cognitive aspects. Looking back at nearly
four decades of research in International Management, he very early offered a rich description of
individual and organizational behaviour– as we would call it today – that has evolved over time
and is basically grounded in the idiosyncratic perception and accentuation of uncertainty in the
course of the internationalisation of the firm [Buckley and Ghauri, 1999 p. X]. In a similar
fashion, [Vernon, 1966] has argued that a firm is highly stimulated by its local environment and
more likely to innovate when its immediate surroundings are more conducive to the creation of
new techniques or products (in his case the US MNC with its large domestic markets and its
early professionalized market research departments). But Vernon himself never found it
necessary to look in more detail at that issue.
It was in the late 80s that Johansson and Vahlne modelled the process of internationalization as
a complex and dynamic relationship between the current stocks of knowledge a firm relies on.
And, although not explicitly, they make the most clear concession to the dynamic processes
between given stocks of knowledge and the relation to managerial commitment to foreign
markets. In their research they found much evidence that supported the fact that the actual
process of internationalization is fundamentally influenced by the dynamic evolution of managerial
decisions as to what extent further market commitment is necessary and to what extent further
market commitment is invested to support ongoing processes of internationalization. From this
crucial insight they both were convinced that the whole complex interrelated process is to be
investigated as a dynamic relation between the development of knowledge during the actual
internationalization process and the emerging level of commitment within the internationalized
firm. This early insight is a major part of my research focus.
Internationalization is perceived by Johansson and Vahlne as a complex process that is driven by
the existing managerial and organisational cognition (as we would like to term it now) and the
mutual influence and impact that the incremental steps in the internationalization process have.
For the proposed conceptualization it is important to note that Johansson and Vahlne
emphasised the influence of a de- or increasing commitment in the internationalizing process
that is understood as the product of a series of incremental decisions and – as I hypothesize – is
a product of the evolving cognitive map that is employed in the process of managerial decision
making. Johansson and Vahlne differentiated specific stages in the internationalizing process of
the firm which gradually increases foreign involvement, evolving as the firm internationalises
[Johansson and Vahlne, 1977; 1990].
Considering this research tradition in International Management I propose that after each
successful incremental step, the managerial cognition and
the decision-making processes change. Although Johansson and Valhne do not use the
perspective of cognition, the “Uppsala model” focuses on the gradual acquisition, integration
and use of knowledge about foreign markets and operations, and on the incrementally increasing
commitments in foreign markets. One major assumption in the Johansson and Vahlne model that
I suggest has to be analyzed in more detail, is that they proposed that the firm entering new
markets is confronted and must deal with increasing psychic distances (other examples of
“psychic distance” can be found in [Müller and Kornmeier, 2002 p. 544ff.], [Luostarinen, 1989].
Psychic distance is invoked and is originally defined as the sum of the factors preventing or
disturbing the flow of information between firm and market, including factors such as differences
in language, culture, political systems, level of education, or level of industrial development
[Johansson and Vahlne, 1977 p. 24]. I propose that psychic or cultural distance is a major frame
that has to be analyzed, because I hypothesize that cultural/psychic distance frames the
emergence of cognitive maps.
Although [Andersen, 1997] criticized the “Uppsala model” for being too deterministic, thereby
neglecting the important emphasis on learning by Johansson and Vahlne, I propose to pay more
attention exactly to the notion of how different cognitive maps evolve over time and how they
are related to the internationalizing processes.
Yet in today's marketplace – with flatter hierarchies, business unit structures and more flexible
inter-firm relationships – managerial and organisational cognition’s influence is very much
neglected in the current research in International Management and I am strongly convinced that
this dissertation on “Managerial Cognition and International Strategy-making Processes in the
European Telecom MNCs” closes this obvious gap and provides some crucial insights for further
research [Axinn and Matthyssens, 2001 p. 445].
Although I contend that a large amount of research already exists that considers the dynamic
aspects of the internationalization processes, I identify a severe lack in this research domain:
more attention must be paid to the importance of managerial and organizational cognition! For
example, [Johansson and Mattson, 1988] have developed a network model in order to explain
internationalisation of industrial firms and emphasize the dynamic aspects of internationalisation
more. It is obvious that one of the major questions in international management is capturing the
dynamic nature of how firms make location decisions and the incremental stages that the firm
passes through as it internationalizes [Chandra and Newburry, 1997 p. 393].
And although the cultural impact on the internationalization process of exporting firms has been
the subject of widespread empirical research (e.g. the important contribution by [Dichtl et al.,
1984], [Welch and Luostarinen, 1988], only a limited number of studies seem to consider the
managerial cognition in decision-making processes.
For example, [Welch and Luostarinen, 1988] draw more attention to other subjects such as the
impact of individuals and the evolution of communication patterns. They conclude that decisionmaker attitudes and orientation are important factors that influence
the commitment decision as to what extent new knowledge is generated and how altered modes
of involvement in the internationalization process evolve [Dichtl et al., 1984]. In addition,
[Maignan and Lukas, 1997] focus on the role that managers´ cognitive structures play in entry
mode decisions and use the concept of mental models to better understand how managers decide
upon a certain type of entry mode, arguing that the mental models are used to interpret the
environment before decision making occurs [Kyvik, 2005 p. 7]. The management decisionmaking process towards internationalisation analysed by [Reid, 1981], [Cavusgil, 1984] and
[Chetty, 1999] are more related to export strategy and decision-maker characteristics.
The link between an MNC's internationalisation and its top managers´ international business
experiences and their roles in the top management team decision process is examined by [Daily,
Certo and Dalton, 2000}, [Reuber and Fischer, 1997] and [Athanassiou and Nigh, 2002], but
they ignore the relationship between cognitive structures of managers and internationalisation
process. [Kyvik, 2005] claims it as a paradox that the existing internationalisation models
neglect the role of individuals while implicitly assuming individuals´ motivation and propensity to
internationalise, thus indicating a subtle ignorance of the relationship between cognitive
processes and internationalisation process.
Managerial characteristics and the international entrepreneurial orientation of the manager
focuses on the behavioural elements of global orientation, including several basic dimensions of
entrepreneurship in general: risk taking, innovativeness
and pro activeness [Knight, 2000], [Harveston, Kedia and Davis, 2000].
In this study I conceive of internationalisation as the process of adapting firms´ operations to
international environments. Moreover I further propose that this process of internationalization
depends on the overall firm structure, to what extent firm resources are invested into the
process of internationalization and to what degree the strategy-making process is considered as
international. I further hypothesize that the managerial cognition frames to what extent
resources are committed to the internationalization process and second, how this in turn is
enacted by an evolving strategy-making process within the firm. I accept such a definition as
useful, because it first perceives internationalisation as an ongoing adaptive dynamic process
with changes occurring over time, and second, that internationalisation can be thought of an
evolutionary process, where internationalisation can also take the form of de- investment.
Moreover, I hypothesize that the idiosyncratic cognitive structures of managers have to be
adapted in such a dynamic environment as in the telecommunication industry. With a somewhat
similar perspective [Calof and Beamish, 1995] model internationalisation patterns through a
combination of executives´ perceptions (past experience of the executives) toward market
potential and modes´ costs and benefits as well as environmental, organisational, strategy and
resource change. It appears that managerial attitudes influence perceptions of benefits, costs,
risks and that these attitudes are the major determinant of the internationalisation path.
This study
is aiming to provide direct evidence that attitudes of executives and not necessarily objective
environmental factors drive internationalisation (cf. Calof and Beamish 1995, p. 129).
In International Management the cognitive perspective is only applied to a limited extent to
study exactly how firms´ decision makers perceive and interpret the global social and economic
environment, the current competitive environment and how they estimate the risks and
challenges of internationalization in culturally distant host countries. I argue that within the
domain of international management, managerial and organisational cognition has not yet been
acknowledged as an important focus that contributes to the understanding of internationalization
processes.
Further I contend that to a far lesser extent, it is not yet questioned how managers make sense
of the environment in which they interact and how this impacts decision making [Lyles and
Schwenk, 1992], [Gupta and Govindarajan, 2002].
It is important to note that strategies of internationalization have to be implemented in different
complex environments, not only in different host countries, but in various cultural institutional
contexts. In addition I argue that within the MNC, different contexts and competing mental
models frame the internationalisation and influence the success of the internationalized firm.
As mentioned before, mind-sets play a crucial role in shaping individual, organisational and
inter-organisational behaviour which, in turn, act upon already enacted mind sets that operate
within the internationalized firm. Although it is argued that it matters how managers perceive
and interpret
the global social and economic environment, and it is contended in general that this complex
cognitive process has a major impact on the implemented strategies and the firms´ success
[Gupta and Govindarajan, 2002 p. 116], no explicit study exists that has analysed in more detail
the dynamic relationship between managerial cognition and operating cognitive maps with the
internationalisation process. I therefore finally hypothesize that a particular managerial mind-set
takes over the function of a cognitive filter, because managers need to be selective in what they
absorb and biased in how they interpret phenomena. And although I contend that a mind-set is a
product of idiosyncratic managerial and organisational histories that are evolving over time as an
iterative process, I conceive of these mind-sets as changing. So far, not much research has
taken this proposition into the core of an empirical study in this domain.
3. Research Questions
Considering the above conceptual framework in which this study is grounded, I propose the
following research questions as the most promising focal points to contribute to the advancement
in the field of analyzing the internationalisation process of MNCs:
ongoing internationalization processes in the selected MNCs in the European Telecommunication
industry.
internationalisation processes and their stages. In order to answer this question I will use the
method of cognitive maps, which I elaborate in more detail below
(see section Methodology).
necessary to analyse how the internationalisation process is grounded in the managerial and
organisational mindsets. A kind of sub-question to this third one is whether or not in the
decision-making manager switches between different cognitive maps or whether the same
cognitive map is evolving over time?
s mentioned above engender the need to analyse in more detail the single
categories that different managerial cognitive maps are built from. Or to put the question in a
different way: how do different categories of managerial cognition explain the propensity for
internationalisation processes within the firm?
4. Methodology
While aiming at the development of a conceptual framework that explains the mutually dependent
relation between managerial cognition and the internationalisation process, this dissertation is
basically an empirical research project. I have decided to use narrative interviews with nearly 80
leading managers in European Telecom MNCs. The interviews will be done with a minimum of
intervention from the interviewer. All interviews will be recorded and transcribed to make a
detailed analysis possible. Many of the contacts to the MNCs have already been made or are
being established at the moment. Similar to the methodology of the grounded theory proposed by
[Glaser and Strauss, 1998], I will rely on the technique of cognitive mapping, which is a reliable
tool for eliciting cognitive structures of managers [Tyler, 2001].
Cognitive mapping as a tool has much in common with
the Grounded Theory approach by Strauss. Cognitive mapping was first used as a tool to study
the development of corporate strategy by senior managers [Eden, 1988] and it is now being
applied in numerous other areas [Eden and Ackermann, 1998]. According to Eden, a cognitive
map is “a picture or visual aid in comprehending the mapper's understanding” [Eden, 1992 p.
262. This view is basically shared by [Huff and Jenkins, 2002] who stress that a map is a method
used to visualize a particular “way of thinking”. I use cognitive mapping as a tool to look behind
the scenes of sense-making processes. The popularity of this technique stems from its simplicity
relative to other techniques, such as repertory grids, coupled with the inherent attraction of
using maps to work interactively with managers [Brown, 1992].
I use cognitive mapping because it allows us to start our analysis by observing the unique view of
the interviewee’s world [ Warren, 1995].
The technique of cognitive mapping takes place during an interview between the analyst and the
subject. The starting point for the interviewer is usually in terms of a major aim (or aims) of
company activity. Links are then sought in terms of how the major objectives are achieved, and
what the consequences are if the aims are achieved [Tyler, 2001].
The final product of the analysis is a cognitive map that illustrates the causal beliefs between
factors that have been perceived as relevant in a particular situation. Underlying ‘causes’ will
be analyzed in this research as driving forces of the internationalisation process of the European
Telecommunication industry. Resulting ‘effects’ will include managerial
cognitions and their behaviour or response to the causes. It is important to note that if a
cognitive map is confined to causal relations between its concepts, like in this study, it is called
causal map [Weick and Bougon, 1986].
Moreover, it is important to mention that cognitive mapping techniques for organisational
analysis include simple content analysis of text [Birnhaum-More and Weiss, 1990]; therefore in
addition, company documents, annual reports and strategic memos will be analysed with
quantitative text-analysis software.
I primarily see the advantage of cognitive mapping technique in that it allows me to reconstruct
the stock of knowledge which has been internalised by the interviewee in order to open it up to
critical reflection. Therefore subjective knowledge is to some extent 'objectified' and discussed
in a less manipulating way than direct questioning [Pallant, Timmer and McRae, 1996].
Notwithstanding, I do acknowledge problems that relate to the validity of reconstructed
representations generated by these techniques. The methodological problems associated with the
application of cognitive mapping techniques are usually as follows: e.g. contextual effects - since
similarity judgments are likely to be sensitive to contextual variables, different cognitive maps
may be elicited in different situations. Then there is the problem of choice of representational
model: because different statistical models for representing similarity data are based upon
different assumptions, they tend to reveal different aspects of cognitive structure and may have
'Procrustean properties' which may impose an inappropriate structure upon
similarity data [Fillenbaum and Rapoport, 1971]. And finally there is the problem of objective
interpretation - although elicitation techniques are associated with formal analytic tools which
generate visual representations of similarity data, the process of interpreting cognitive maps
remains largely subjective.
However, if documented in detail as to what interview data the conclusions are drawn on, these
subjective elements of interpretation can be objectified. Despite this problem the method of
cognitive mapping is conceived of as the only useful tool to get information about the processes
associated with the managerial and organisation cognition that provide useful and reliable
knowledge about highly complex and subjective cognitive structures.
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