A psychometric validation of measures of strategic cognition derived by content analysis

Using seven years of data from Australian firms, we test convergent, discriminant and predictive validity of three content analysis derived measures of the level of top management attention to key strategic dimensions based on Miles and Snow’s (1978) strategy framework. We do this by relating the level of top-team focus on innovation, capacity building and operational efficiency with economic or accounting indicators of related firm resource allocations. We also compare the temporal stability of the cognitive and economic variables. We then demonstrate some of the potential extra explanatory power contained in cognitive measures by using structural equation modelling to examine the joint and lagged effects of innovation cognition and R&D spending on three performance indicators (ROA, ROE, Tobin’s q). The findings provide solid evidence for the convergent, discriminant and predictive validity of the measures of strategic cognition as well as their temporal stability. Methodological and substantive implications for the study of strategic cognition are considered.