Not All Responses Are the Same: How CEO Cognitions Impact Strategy When Performance Falls Below Aspirations

Authors

David B. Wangrow, Marquette UniversityFollow
Kalin Kolev, Marquette UniversityFollow
Margaret Hughes-Morgan, Marquette UniversityFollow

Document Type

Article

Language

eng

Publication Date

1-1-2019

Publisher

SAGE Publications

Source Publication

Journal of General Management

Source ISSN

0306-3070

Abstract

This study integrates research on managerial discretion within the behavioral theory of the firm to examine how four CEO psychological traits serving as antecedents of managerial discretion—ambiguity tolerance, cognitive complexity, locus of control, and commitment to the status quo—moderate firm responses to poor performance. Using CEOs’ responses to questionnaires, CEO ambiguity tolerance is found to positively moderate the relationship between negative attainment discrepancy and strategic change when performance is slightly below aspirations, defined as average market return for the firm’s industry. Further, CEOs with greater cognitive complexity are found to engage in more strategic change when performance is farther below aspirations. Thus, this study begins to unpack the role of CEOs’ cognitive makeup on firm responses to performance shortfalls.

Comments

Accepted version. Journal of General Management, Vol. 44, No. 2 (January 1, 2019): 73-86. DOI. © 2019 SAGE Publications. Used with permission.

Recommended Citation

Wangrow, David B.; Kolev, Kalin; and Hughes-Morgan, Margaret, "Not All Responses Are the Same: How CEO Cognitions Impact Strategy When Performance Falls Below Aspirations" (2019). Management Faculty Research and Publications. 325.
https://epublications.marquette.edu/mgmt_fac/325