Advances in Business Research
2010, Vol. 1, No. 1, 62-72
Stimpert and Duhaime
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Irene Duhaime, Georgia State University
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pursued new approaches advocated by these reviews.
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development efforts, and research and development spending.
Background
Research in managerial cognition examines how mental models determine what stimuli are noticed and how they
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and that in doing so, they would develop knowledge structures - mental models or, in their words, dominant logics &6!&$7-5&!'5$*=*71&'2*4S$:*.'*84$!5/$15/*"4&!5/'504$!:-1&$&6*$(!5!0*(*5&$-8$/'2*"4'97!&'-5K
Building on the work of Prahalad and Bettis, a few studies have explored how management beliefs shape
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around a company’s technological competencies is associated with enhanced performance.
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62
Advances in Business Research
2010, Vol. 1, No. 1, 62-72
Stimpert and Duhaime
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These studies suggest that some progress has been made in understanding the linkage between managerial
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on only a very limited set of strategic choice variables. Finally, much of the research has been conceptual, and too
few studies have tested research propositions with empirical data. A decade ago, Hoskisson and Hitt noted that in
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have made some good progress toward addressing this shortcoming, but many important and interesting research
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Research aiming to “get inside the heads” of executives assumes that they carry mental models of phenomena
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models simplify the complexity associated with business environments, and, in the process, they determine which
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vast amounts of information and they face an almost unlimited array of choices. As a result, their mental models play
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On the other hand, researchers have cited a variety of institutional factors to suggest that there may be patterns
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suggested that executives share “a common body of knowledge” that is disseminated through the media and other
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the value of applying a common technology or set of technological capabilities across businesses (Miller et al,
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marketing and differentiation skills that can be applied to all businesses, even though these businesses may lack
common product characteristics (Kazanjian & Drazin, 1987; Mason & Harris, 2005; Porter, 1985, 1987; Tanriverdi
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embodied in close relationships and coordination between businesses and their marketing channels and end users
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63
Advances in Business Research
2010, Vol. 1, No. 1, 62-72
Stimpert and Duhaime
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new products and growth opportunities. Thus, we could expect that a focus on functional skills or technological
capabilities will be associated with more product development (Lamont & Anderson, 1985; Vanhaverbeke & Peeters,
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product development.
Summary and the Research Questions Addressed by This Study
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/'2*"4'9*/$9"(4+$'57.1/'50$/*7'4'-54$!:-1&$/'2*"4'97!&'-5$4&"!&*0#+$!7P1'4'&'-5$!5/$/'2*4&(*5&+$)"-/17&$/*2*.-)(*5&+$
!5/$FD?U
D9C9ED ?&-94?F)FGFHI
The Survey Questionnaire and Cognitive Variables
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are especially effective when researchers hope to obtain large numbers of observations in order to perform rigorous
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9"(4K$X6-106$/*2*.-)*/$'5$@AA@+$!5/$!."*!/#$14*/$'5$)"*2'-14$4&1/'*4+$'&$'4$'/*!..#$!))"-)"'!&*$8-"$!//"*44'50$&6'4$
4&1/#S4$"*4*!"76$P1*4&'-54K$_-"$/-$3*$:*.'*2*$&6!&$'&4$"*.*2!57*$-"$14*81.5*44$6!4$:**5$/'('5'46*/$:#$&'(*K$g..$-&6*"$
measures used in this study have been gathered for time periods appropriately matched to this primary dataset.
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skills or technological capabilities across businesses (Goold & Luchs, 1993; Kazanjian & Drazin, 1987; Porter, 1985,
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64
Advances in Business Research
2010, Vol. 1, No. 1, 62-72
Stimpert and Duhaime
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Ultimately, the literature review and the interviews produced a list of 24 survey items to assess executive beliefs
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development, and R&D efforts as the key decisions that managers must make. All of these decisions are included in
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-8$*!76$4*0(*5&$G+$4-$&6!&$6'06*"$2!.1*4$'5/'7!&*$0"*!&*"$/'2*"4'97!&'-5K$N*$-:&!'5$&6*$5*7*44!"#$/!&!$8"-($R*"0*5&$
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X-$ (*!41"*$ !7P1'4'&'-5+$ /'2*4&(*5&+$ !5/$ 5*3$ )"-/17&$ /*2*.-)(*5&$ !7&'2'&#+$ 3*$ -:&!'5*/$ &6*$ 51(:*"$ -8$
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Moody’s Industrial Manuals and The Wall Street Journal Index. Any shorter time frame seemed to be too narrow
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from Mergent Online.
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1991.
Sample
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and two follow-up mailings, 174 completed and usable responses were received, for a response rate of just under 20
percent. This compares favorably with most mail surveys reported in the strategy literature that have been addressed
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nature of the study, principal components analysis was employed to factor analyze the data and identify patterns of
beliefs. The resulting factors were rotated using the varimax transformation, since orthogonal transformations tend
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composites representing each of the factors that were used in regression analyses to assess relationships between
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65
Advances in Business Research
2010, Vol. 1, No. 1, 62-72
Stimpert and Duhaime
D9CMG4C
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analyses suggested that a three-factor solution offered the most explanatory power and produced the fewest number
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4'>=*&NO&9:*+7%$/*&F0$*#%'%$!#,&!0&<*=$*8,&'>!7%&%5*&-'#'"*3*#%&!8&)$/*0,$1+'%$!#
VARIABLE
Businesses should use the same marketing methods
Businesses should use the same distribution channels
Marketing should be coordinated at the corporate level
Businesses should sell to the same customer groups
Businesses should use the same manufacturing processes
Manufacturing should be coordinated at the corporate level
All businesses should be in the same industry
Products and services should have strong brand name recognition
Businesses should develop totally new products
Businesses should be market share leaders
Businesses should emphasize research and development
Businesses should be in different stages of the life cycle
Businesses should develop extensions of existing products
Cash should be reallocated to support new product development
Acquisitions should offer opportunities to redirect the firm
Businesses should always meet financial goals
Businesses should be evaluated primarily by financial criteria
Acquisitions should be some minimum size
Acquisitions should be in the same industry
Acquisitions should strengthen the firm’s existing businesses
Businesses can miss financial goals if other objectives are met
EIGENVALUES
FACTOR NAME
FACTOR 1
.8222
.7953
.7126
.7098
.6902
.6415
.4676
.1767
.0425
-.0017
.1986
.0914
-.0744
-.0004
.0394
.0413
-.0167
-.0173
.2634
.1074
-.0858
3.60
Core Business
Orientation
FACTOR 2
-.0569
.1136
.1435
-.0098
-.1441
.1794
.2743
.6335
.6132
.6053
.5774
.5134
.4982
.4894
.3372
.1551
.0722
.0800
.1582
.1674
-.0071
2.60
Marketing
Orientation
FACTOR 3
.0399
.0850
-.0982
-.0751
.0258
-.1006
-.0003
-.0265
.1133
.0321
-.0824
.0871
-.0716
.0054
.2219
.7629
.6197
.2939
-.3115
.3187
-.7346
1.91
Financial Control
Orientation
-!/'50$ 4'05'97!5&.#$ -5$ &6*$ 9"4&$ 8!7&-"$ 3*"*$ :*.'*84$ &6!&$ :14'5*44*4$ 46-1./$ 14*$ &6*$ 4!(*$ (!518!7&1"'50$
processes, distribution channels, and marketing methods; that businesses should sell to the same customer groups;
that manufacturing and marketing should be coordinated at the corporate level; and that businesses should be in
the same industry. These beliefs are consistent with the view that executives should try to capture synergies by
7--"/'5!&'50$!7&'2'&'*4$!7"-44$&6*'"$9"(4S$:14'5*44*4$>f-5*4$D$C'..+$@AIIB$Y-"&*"+$@AIMB$F1(*.&+$@AaT+$@AIWJK$$g5/+$
&6'4$8!7&-"$'4$!.4-$4'('.!"$&-$&6*$4&"!&*0'7$).!55'50$(!5!0*(*5&$4&#.*$'/*5&'9*/$:#$V--./$!5/$,!():*..$>@AIaJK$$X6'4$
factor is labeled core business orientation.
Loading on the second factor are principles that products and services should have strong brand name recognition
and that businesses should be market share leaders; that businesses should emphasize R&D, product line extensions,
the development of new products, and the reallocation of cash to support product development; that businesses should
:*$'5$/'88*"*5&$.'8*$7#7.*$4&!0*4B$!5/$&6!&$!7P1'4'&'-54$46-1./$"*/'"*7&$&6*$9"($'5&-$5*3$!"*!4$-8$-))-"&15'&#K$X6*4*$
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set of marketing and product development skills to all businesses (Farjoun, 1998; Kazanjian & Drazin, 1987; Porter,
@AIM+$@AIaB$Y"!6!.!/$D$O*&&'4+$@AIZJK$e&6*"$41))-"&$8-"$&6*$*='4&*57*$-8$!$(!";*&'50$-"'*5&!&'-5$7-(*4$8"-($!$4&1/#$
:#$%&'()*"&$!5/$?16!'(*$>@AAaJ+$36'76$8-15/$&6!&$(!5#$*=*71&'2*4$7-54'/*"*/$&6*'"$9"(4$&-$:*$)1"41'50$"*.!&*/$
/'2*"4'97!&'-5$4&"!&*0'*4$:*7!14*$&6*#$3*"*$!)).#'50$!$7-((-5$4*&$-8$(!";*&'50$!5/$/'88*"*5&'!&'-5$4;'..4$>'K*K+$5*3$
)"-/17&+$!/2*"&'4'50+$!5/$:"!5/$*P1'&#$/*2*.-)(*5&J$!7"-44$&6*'"$9"(4S$:14'5*44*4+$*2*5$&6-106$&6*4*$:14'5*44*4$
may not share product or process similarities. This factor is labeled marketing orientation.
66
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2010, Vol. 1, No. 1, 62-72
Stimpert and Duhaime
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orientation.
D*='%$!#,5$J,&>*%@**#&9:*+7%$/*,;&<*=$*8,&'#(&C%0'%*"$+&)*+$,$!#&-'.$#"
Due to space limitations, means, standard deviations, and correlations among the variables are not shown here,
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analysis was used to evaluate the existence of relationships between the independent management belief variables
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then included. For all of the dependent variables except the number of new products, the control variables produced
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that the cognitive variables are associated with many key strategic choices.
4'>=*&PO&D*='%$!#,5$J,&'3!#"&9:*+7%$/*&<*=$*8,&'>!7%&%5*&-'#'"*3*#%&!8&)$/*0,$1+'%$!#&'#(&45*$0&2$03,;&
C%0'%*"$+&)*+$,$!#,&QC%'#('0($R*(&>*%'&*,%$3'%*,&'0*&0*J!0%*(S&%T,%'%$,%$+,&'0*&,5!@#&$#&J'0*#%5*,*,U
Independent
Extent of
Variables:
Diversification
Tenure
.078 (.99)
Return on Assets
-.211** (-2.74)
Log(Sales)
.347*** (4.41)
Core Business Orientation
-.302*** (-3.97)
Marketing Orientation
-.052 (-.70)
Financial Control Orientation
-.179* (-2.37)
F
6.94***
2
Adjusted R
.26
*
**
***
p < .05
p < .01
p < .001
Dependent Variables:
Number of
Number of
Number of
Acquisitions
Divestments
New Products
-.096 (-1.15)
-.015 (-.19)
-.103 (-1.22)
.062 (.76)
-.159* (-2.01)
.169* (2.04)
.281** (3.30)
.344*** (4.21)
.033 (.38)
-.115 (-1.44) -.189* (-2.44)
-.177* (-2.18)
-.050 (-.63)
.074 (.98)
.167* (2.09)
-.090 (-1.13)
-.079 (-1.03)
-.060 (-.75)
2.49*
4.12***
2.25*
.07
.14
.06
R&D
Spending
-.117 (-1.24)
.305** (3.06)
.028 (.29)
.245* (2.59)
.004 (.04)
3.76**
.16
As summarized in Table 2, regression analyses found that the cognitive factors are associated with four of the
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product introductions, and the level of R&D spending. The core business orientation is negatively associated with the
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and the number of new product introductions. The marketing orientation factor is positively associated with the
number of new product introductions and the level of R&D spending. (Log of sales, was not included in the model
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67
Advances in Business Research
2010, Vol. 1, No. 1, 62-72
Stimpert and Duhaime
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strategies, the number of divestments, and the number of new products introduced. The marketing orientation is
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could be viewed as deleterious such as less product development and lower R&D spending. It is also worth pondering
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Given the exploratory nature of this research study, we cannot presume that the three orientations described in
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possibility that executives might combine various elements from these three orientations and other sources to create
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For example, it would be worthwhile to examine how a wide variety of personality and organizational factors
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attitudes toward risk taking and focus on short-term versus long-term results moderate the relationship between their
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communication and coordination challenges.
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companies, and they offer a plausible explanation for the considerable performance variation across samples of large
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Advances in Business Research
2010, Vol. 1, No. 1, 62-72
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in the Academy of Management Journal, the Journal of Management, and the Strategic Management Journal.
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Administration at Georgia State University, where she also serves as the associate dean for administration. She received
her Ph.D. from the University of Pittsburgh. Her research interests include corporate strategy, entrepreneurship, and
family business. She has published in the Academy of Management Journal, the Academy of Management Review,
the Strategic Management Journal, and the Journal of Management.
72