Incumbent response to disruption, a cognitive perspective

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Even though the cognitive processes of managers are highly relevant in defining the response to a disruption, disruptive innovation theory has mostly disregarded the role of managerial cognition for a long time. Cognition refers to both the way in which decision-related information is represented in the human cognitive system, and to the way in which these representations are transformed (Vermeulen & Curseuurseu, 2010). Though, in the last decennium scholars have paid more attention to this phenome, the role of managerial cognition has not been linked with the Attention-Based View theory until now. This thesis aims to fill this gap, by means of the research question, “How does managerial cognition affect incumbent response to disruptive innovation?” Answering this research question is relevant because it contributes to a better understanding of factors that govern firms’ strategic decisions (Bailey & Peck, 2013). By drawing from theories in managerial cognition, organizational attention, and behavioral strategy, I examine how ‘mental structures’ of middle managers can influence an incumbents response strategy, as a subsequent response to disruptive innovation in the market. The research uses a qualitative case study focused on the incumbents in the at home delivery supermarket industry to provide more understanding how firms compete and interact with each other while dealing with challenges posed by the environment. The results suggest that the middle manager’s role is highlighted as an information processing entity that makes “mediocre” decisions when faced with disruptive innovation. As a result of that, incumbent’s response strategies are generally tending to exploit, rather than the exploration of new business ventures until there are no other options available but to change these strategies.
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