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Training Strategic Thinking: Experimental Evidence

Juan Benito () and Juan A. Sanchis-Llopis
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Juan A. Sanchis-Llopis: Universitat de València and ERICES

Authors registered in the RePEc Author Service: Juan A. Sanchis Llopis ()

No 1323, Working Papers from Department of Applied Economics II, Universidad de Valencia

Abstract: Strategic behavior is crucial for strong firm performance, especially in competitive environments. Thus, designing a good strategy is a key issue for firms. Designing a strategy requires a combination of strategic thinking—which involves analyzing a firm’s strategic environment, defining a vision of its future, and devising new ideas to out-think competitors—and strategic planning—which implies using these ideas to formulate a business plan. Although many firms excel at strategic planning, few devote enough resources to strategic thinking, which results in strategic insanity (i.e., firms repeatedly applying the same strategies with the expectation of different outcomes). To foster a strategic environment within a firm, firm managers and other workers must show willingness for active involvement in a firm’s strategic decisions. Nevertheless, not everybody has the skills to do so, as many firms lack work force training programs. This study shows, experimentally, how training affects firms’ strategic behavior. The starting point is two groups of individuals with initially equal qualifications who play in a sequential game whose rules hinder the calculation of equilibria. The members of only one of the groups previously receive a treatment entailing a process of training and learning that aims at fostering strategic thinking. The results point to a significant increase in the number of strategic decisions in the treatment group in sharp contrast to the control group, confirming the initial hypothesis (i.e., the positive impact of training).

Date: 2013-11
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Journal Article: Training strategic thinking: Experimental evidence (2014) Downloads
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