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Advances in Business Research

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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 - 

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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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2010, Vol. 1, No. 1, 62-72

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Advances in Business Research

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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 

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embodied in close relationships and coordination between businesses and their marketing channels and end users 

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2010, Vol. 1, No. 1, 62-72

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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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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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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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2010, Vol. 1, No. 1, 62-72

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65

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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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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.

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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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2010, Vol. 1, No. 1, 62-72

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Advances in Business Research

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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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 

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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 

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set of marketing and product development skills to all businesses (Farjoun, 1998; Kazanjian & Drazin, 1987; Porter, 

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may not share product or process similarities. This factor is labeled marketing orientation.

VARIABLE          FACTOR 1 FACTOR 2 FACTOR 3 

Businesses should use the same marketing methods .8222 -.0569 .0399 

Businesses should use the same distribution channels .7953 .1136 .0850 

Marketing should be coordinated at the corporate level .7126 .1435 -.0982 

Businesses should sell to the same customer groups .7098 -.0098 -.0751 

Businesses should use the same manufacturing processes .6902 -.1441 .0258 

Manufacturing should be coordinated at the corporate level .6415 .1794 -.1006 

All businesses should be in the same industry .4676 .2743 -.0003 

Products and services should have strong brand name recognition .1767 .6335 -.0265 

Businesses should develop totally new products .0425 .6132 .1133 

Businesses should be market share leaders -.0017 .6053 .0321 

Businesses should emphasize research and development .1986 .5774 -.0824 

Businesses should be in different stages of the life cycle .0914 .5134 .0871 

Businesses should develop extensions of existing products -.0744 .4982 -.0716 

Cash should be reallocated to support new product development -.0004 .4894 .0054 

Acquisitions should offer opportunities to redirect the firm  .0394 .3372 .2219 

Businesses should always meet financial goals       .0413 .1551 .7629 

Businesses should be evaluated primarily by financial criteria  -.0167 .0722 .6197 

Acquisitions should be some minimum size        -.0173 .0800 .2939 

Acquisitions should be in the same industry          .2634    .1582 -.3115 

Acquisitions should strengthen the firm’s existing businesses    .1074 .1674 .3187 

Businesses can miss financial goals if other objectives are met  -.0858 -.0071   -.7346 

EIGENVALUES                        3.60 2.60 1.91 

FACTOR NAME Core Business  

Orientation 

Marketing  

Orientation 

Financial Control 

Orientation 

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orientation.

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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. 
 

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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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)AC MCCAF6

Contributions

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Dependent Variables: 

Independent  

Variables:           

Extent of  

Diversification 

Number of  

Acquisitions 

Number of  

Divestments 

Number of  

New Products 

R&D  

Spending 

Tenure                  .078  (.99) -.096  (-1.15) -.015  (-.19) -.103  (-1.22) -.117  (-1.24) 

Return on Assets -.211**  (-2.74) .062  (.76) -.159*  (-2.01) .169*  (2.04) .305**  (3.06) 

Log(Sales) .347***  (4.41) .281**  (3.30) .344***  (4.21) .033  (.38)  
Core Business Orientation -.302***  (-3.97) -.115  (-1.44) -.189*  (-2.44) -.177*  (-2.18) .028  (.29) 

Marketing Orientation -.052  (-.70) -.050  (-.63) .074  (.98) .167*  (2.09) .245*  (2.59) 

Financial Control Orientation -.179*  (-2.37) -.090  (-1.13) -.079  (-1.03) -.060  (-.75) .004  (.04) 

F 6.94***
 2.49*

 4.12***
 2.25*

 3.76**
 

Adjusted R2             .26 .07 .14 .06 .16 
* p < .05      ** p < .01      *** p < .001 

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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. 

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