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Resource cognition – identifying valuable resources and capabilities and assessing their potential for redeployment – is a pivotal management capability for strategic renewal. This study explores how managerial cognition in this activity may be biased, leading to erroneous results.

This study employs an action research approach: A full resource cognition project was conducted together with the top management of a case firm, including the CEO and members of the supervisory board.

Resource cognition may be distorted by four cognitive biases: The insulation bias – tending to keep one's perspective insularly to the current business; the novelty bias – tending to exclusively focus on innovation and recent achievements; the status quo bias – tending to view opportunities from the current situation and structural set-up; and the scaffolding bias – tending to adopt concepts and examples indiscriminately to the firm.

Active participation in a resource cognition project provided first-hand and insightful practice-based evidence on resource cognition. Aware practitioners can take preventive steps to avoid cognitive biases. This study sheds light on the under researched issue of resource cognition.