Bounded Rationality, Sunk Costs and Industry Structure

David Hoopes and Douglas R. Johnson

Chapter 63 in Handbook of Top Management Teams, 2010, pp 540-546 from Palgrave Macmillan

Abstract: Abstract Managerial cognition is an important topic in strategy; variation in beliefs across an industry might help explain sustained competitive differences between close competitors (competitive heterogeneity). Most work in the area of managerial cognition and industry structure examines cognitive strategic groups (e.g., Grønhaug and Falkenberg, 1989; Hodgkinson and Johnson, 1994; Porac et al., 1989; Reger et al., 1993). Often, writers like Porac and his colleagues argue that industries are socially constructed by industry members. Managers across the industry have similar cognitive schemata that delineate the industry and market. We too believe that managerial cognition will influence industry structure. However, we also believe that the underlying economics of an industry can force industry members to accept a reality they might not have enacted on their own.

Keywords: Managerial Cognition; Strategic Choice; Strategic Management Journal; Bounded Rationality; Industry Structure (search for similar items in EconPapers)
Date: 2010
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Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-0-230-30533-5_64

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DOI: 10.1057/9780230305335_64

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