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Book part
Publication date: 21 September 2018

James D. Westphal

In this chapter, I draw from theory and research on intergroup relations and decoupling to critique prevailing conceptions of behavioral strategy, and then propose a…

Abstract

In this chapter, I draw from theory and research on intergroup relations and decoupling to critique prevailing conceptions of behavioral strategy, and then propose a viable alternative. I suggest that prevailing definitions of behavioral strategy exclude or marginalize theoretical perspectives that should logically be included, which has (1) created undesirable ingroup/outgroup dynamics in the strategy field and (2) resulted in decoupling between behavioral strategy as defined by category leaders and the actual content of research conducted by category members. I contend that this state of affairs has likely reduced the impact of behavioral strategy on other disciplines, and also likely constrained its impact on non-academic audiences. As an alternative, I propose a more interdisciplinary approach that involves identifying behavioral mechanisms that explain how social and psychological processes at different levels of analysis interact and interrelate to affect strategy and performance.

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Behavioral Strategy in Perspective
Type: Book
ISBN: 978-1-78756-348-3

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Book part
Publication date: 21 September 2018

Thomas C. Powell

Behavioral decision research focuses on cognitive biases and other barriers to economic rationality. However, if cognitive biases are costly to eliminate, the second-best…

Abstract

Behavioral decision research focuses on cognitive biases and other barriers to economic rationality. However, if cognitive biases are costly to eliminate, the second-best solution to bounded rationality may be less rationality rather than more. I define the concept of behavioral rationality and discuss two extreme forms of strategizing, which I call Romantic and Mercenary. Using twentieth century humanitarian Albert Schweitzer as a case study, I discuss the optimization of economic and behavioral rationality. I argue that the success of behavioral strategy as a field does not depend on removing cognitive biases but on helping people deliver more effective strategic actions.

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Behavioral Strategy in Perspective
Type: Book
ISBN: 978-1-78756-348-3

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Book part
Publication date: 21 September 2018

Donald C. Hambrick and Craig Crossland

Despite widespread interest in “behavioral strategy,” it is not clear what this term, or its associated academic subfield, is all about. Unless a critical mass of scholars…

Abstract

Despite widespread interest in “behavioral strategy,” it is not clear what this term, or its associated academic subfield, is all about. Unless a critical mass of scholars can agree on the meaning of behavioral strategy, and professionally identify with it, this embryonic community may face a marginal existence. We describe three alternative conceptions for the academic subfield of behavioral strategy, along with assessments of the pros and cons of each. The “small tent” version amounts to a direct transposition of the logic of behavioral economics to the field of strategic management, specifically in the style of behavioral decision research. The “midsize tent” view is that behavioral strategy is a commitment to understanding the psychology of strategists. And the “large tent’ view includes consideration of any and all psychological, sociological, and political factors that influence strategic outcomes. We conclude that the midsize tent represents the best path forward, not too narrow and not too broad, allowing rich scope but with coherence. The large tent conception of behavioral strategy, however, is not out of the question and warrants serious consideration.

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Book part
Publication date: 21 September 2018

Mie Augier and Nicholas Dew

This paper reflects on the evolution of implicit and explicit behavioral ideas in the field of strategic management using Herbert Simon’s scholarship as a starting point…

Abstract

This paper reflects on the evolution of implicit and explicit behavioral ideas in the field of strategic management using Herbert Simon’s scholarship as a starting point, that is, his emphasis on empirically driven; interdisciplinary theorizing allowing and enabling two-way street learning. We argue that historically, there were plenty of behavioral ideas embedded in the field and, together with the recent movement towards explicit “behavioral strategy,” these provide several possible paths for future developments in strategic management research. In the spirit of broadening the tent for behavioral strategy in the future (Hambrick & Crossland, 2018), we suggest some topics and approaches for behavioral strategy in empirically driven, interdisciplinary directions which allows also for two-way street learning between concepts and real-world strategic phenomena.

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Book part
Publication date: 21 September 2018

Abstract

Details

Behavioral Strategy in Perspective
Type: Book
ISBN: 978-1-78756-348-3

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Book part
Publication date: 21 September 2018

James G. March

The earliest contributors to discussions of strategy were advisors to military leaders, and that model was carried into early business schools, where the teachers of…

Abstract

The earliest contributors to discussions of strategy were advisors to military leaders, and that model was carried into early business schools, where the teachers of strategy were, for the most part, people with extensive experience as executives or advisors to them. The key course materials were anecdotes and cases, and the standard intellectual discourse was organized around recollected episodes in organizational history. The central contributions of the early teaching of strategy were consciousness of the complications introduced by complexity, competition, and attention to the second-order surprises of intentional action. There was neither a pretense of theory nor a significant involvement in research.

Although it shared in the onus of a general academic skepticism about the academic legitimacy of research on business, the “discipline” of strategy sought to emulate the attributes of more established disciplines. The new field was typified by an early open interdisciplinary flavor that facilitated the differentiation of a new field, and a subsequent refinement that restricted access. By the start of the twenty-first century, this process had run much of its course, and the field of strategy had taken its place as a reasonably respectable academic specialty. The history of an emphasis on real organizations in real situations led to an openness to anchors drawn from sources other than conventional economics. These included particularly the theory of games, the evolutionary theory of the firm, and the behavioral theory of organizations.

The struggle for respectability in economics was repeatedly frustrated by the difficulty of discovering a formulation that honored the litany of economics while fitting the observations of real strategy making. The future seems likely to be more of the same, a combination of efforts to secure recognition through emulation of the standards and barriers to entry that characterize established disciplines, and of exploratory gambits that are mostly destined to be forgotten. The optimal balance is likely to be as elusive as it is in other domains.

Details

Behavioral Strategy in Perspective
Type: Book
ISBN: 978-1-78756-348-3

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Article
Publication date: 7 August 2017

Zamri Ahmad, Haslindar Ibrahim and Jasman Tuyon

This paper aims to explore the relevance of bounded rationality to the practice of institutional investors in Malaysia. Understanding institutional investor behavior is…

Abstract

Purpose

This paper aims to explore the relevance of bounded rationality to the practice of institutional investors in Malaysia. Understanding institutional investor behavior is important, as it can determine the asset prices and consequently the market behavior.

Design/methodology/approach

A set of questionnaires is used to solicit information regarding the understanding and practical application of behavioral finance theories and strategies among fund managers in the Malaysian investment management practice. In the process, bounded rational theory is aimed to be validated. Fund managers’ possible bounded rational behavior is assessed with reference to their investment management approaches and strategies right from individual beliefs and acquisition of information, as well as investment management and strategies used.

Findings

The findings lend support to the notion that institutional investors too, being normal human beings, are expected to think and behave in a boundedly rational manner as postulated in bounded rational theory. The sources of bounded rationality are individual, institutional and social forces. Thus, portfolio trading and investment management strategies are exposed to wide varieties of behavioral risks. Despite the notions that behavioral risks are real and the impact on fund performance could be pervasive, fund managers’ self-awareness regarding control and institutional readiness to govern behavioral risks in investment practices is still low.

Research limitations/implications

Empirical evidence drawn in the current paper is subjected to small sample size and specific focus on Malaysian context. Despite this limitation, the sample is statistically sufficient and provides a fair representation, as well as quality opinions, of fund manager’s investment management behavior in Malaysia. This research provides valuable implications to practitioners (fund managers) and regulators (investment management and capital market policymakers). In practice, the current study draws some practical ideas, especially for buy-side institutional investors, on the source and impact of behavioral biases on fund management practices and performance. For regulators, this research highlighted the needs and possible ways to regulate these behavioral risks.

Originality/value

The current paper provides new insights on the theory and practice of the institutional investor. In theory, this research provides evidence of bounded rationality of institutional investor behavior, practicing in the asset management industry in the emerging markets of Malaysia. This evidence lends support to the validity of the bounded rationality theory in explaining institutional investor behavior. In practice, thisresearch provides new insights on the relevance of behavioral finance perspectives and strategies in the asset management industry practice and policy.

Details

Qualitative Research in Financial Markets, vol. 9 no. 3
Type: Research Article
ISSN: 1755-4179

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Article
Publication date: 30 March 2020

Fiona Edgar

The behavioral framework presents a logic for understanding the relationships between characteristics of the organization and the HRM system. Drawing on this logic to…

Abstract

Purpose

The behavioral framework presents a logic for understanding the relationships between characteristics of the organization and the HRM system. Drawing on this logic to connect the broader management oriented area of strategy with HRM, a micro-level lens is used to examine how competitive strategies and human resource (HR) practice subsystems cohere to influence employees' role behaviors and performance outcomes.

Design/methodology/approach

Online survey data were collected from 301 employees working in the retail trade and hospitality segments of New Zealand's service industry.

Findings

Relationships represented in the behavioral model are supported. Specifically, this study finds identifiable differences between the types of HR practices employed and the competitive strategy followed by an organization. Distinguishable sets of HR practices could also be connected to discernible employee role behaviors, which in turn, were related to strategically-aligned performance outcomes. Some commonality in these relationships were evident however.

Practical implications

HR practitioners need to be cognizant of their organization's competitive strategy and ensure the design and messages sent by their HRM system supports the realization of desirable employee role behaviors that promote organizational success. This alignment is supported with job descriptions that clearly articulate to prospective employees the role behaviors required, along with screening processes that support this assessment.

Originality/value

This descriptive, exploratory study presenting data about the alignment between competitive strategies, HR practices, behavioral and performance outcomes contributes to our understanding of contingency arguments and employees' experiences and reactions to HRM. Moreover, by adopting a particularistic focus, this research is able to highlight the salient role of context in SHRM research.

Details

Personnel Review, vol. 49 no. 9
Type: Research Article
ISSN: 0048-3486

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Article
Publication date: 20 April 2012

Ruhama Goussinsky

The purpose of this research is to investigate the direct and moderating effect of negative affectivity (NA) (Study 1) and self‐efficacy (Study 2) on the relationship…

Abstract

Purpose

The purpose of this research is to investigate the direct and moderating effect of negative affectivity (NA) (Study 1) and self‐efficacy (Study 2) on the relationship between customer verbal aggression and three forms of emotion‐focused coping strategies: behavioral disengagement, seeking emotional support, and venting negative emotions.

Design/methodology/approach

Two samples of service workers were recruited from northern Israel in 2007‐2008 (n=178 and n=516), and data were collected using self‐reported questionnaires. Research hypotheses were tested using hierarchical regression analyses.

Findings

The results show that under high levels of exposure to customer aggression, employees with high NA were more likely to use behavioral disengagement than low‐NA individuals, employees with low NA were less likely to vent negative emotions than high‐NA individuals, and employees with high self‐efficacy were less likely to use venting and emotional support than employees with low self‐efficacy. In addition, self‐efficacy was found to reduce the negative impact of customer aggression on emotional exhaustion.

Practical implications

Through appropriate training programs, service organizations can foster their employees' sense of trust in their own ability to cope with customer misbehavior and consequently reduce reliance on dysfunctional coping strategies.

Originality/value

While it has been established that verbal abuse from customers constitutes a common experience for many service workers, little is known about the manner in which workers cope with this particular job stressor and even less about the individual differences that may explain coping behaviors in this context. The present paper begins to bridge this gap and contributes to existing literature by showing that in addition to being predictors of dysfunctional coping strategies, both NA and self‐efficacy may play a moderating role in the relationship between customer aggression and coping behaviors.

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