Cognition, Resources, and Opportunities: Managerial Judgment, Theories of Success and the Origin of Novel Strategies

To explain the origin of novel strategies I elaborate the managerial judgment perspective as an alternative to the serendipity and managerial foresight views on the origin of novel strategies proposed in the earlier literature. The managerial judgment perspective closely integrates resource-based theories and theories of managerial cognition. It builds centrally on the construct of “management’s theory of success” as a representation of managers’ beliefs and expectations concerning the factors that lead to desired outcomes in the light of Knightean uncertainty and that is formed through learning from small samples over time. The managerial judgment perspective may be seen as a theory that explains the formation of strategies independently from their eventual performance, but may also shed light on the cognitive antecedents of superior performance. It also argues for a conception of strategic agency in terms of ecological rationality.