EL ABANDONO TEMPRANO DE LA EDUCACIÓN Y FORMACIÓN SITUANDO EL PROBLEMA FORMACIÓN SITUANDO EL PROBLEMA.

The purpose of this section is to examine what is currently known about strategy practitioners. Who are these individuals and what is known about them and, importantly

‘If we want to understand strategy, we must understand strategists.’ Finkelstein, Hambrick, and Cannella (2009, p. 5)

for the focus of this research, how do they develop their strategy practices? The section builds from the previous section of the literature review. First the literature within mainstream strategic management research will be reviewed in relation to what it reveals about strategy practitioners. Whilst some authors (e.g., Jarzabkowski & Spee, 2009; Cunningham & Harney, 2012) have noted that strategy practitioners, as individuals, are all but absent within the mainstream strategic management literature, it is important to examine this extensive body of literature for further clues to their whereabouts. Secondly, the SAP literature will be examined to determine how close the SAP perspective has got to its stated aim of getting close to the world of the strategy practitioner. Third, the role that business schools play in the development of strategy practitioners will be investigated. As the main providers of management education it is expected that they ought to have a significant impact on development. The chapter will close with a summary of what has been learnt from the literature review, creating a foundation and logical point of departure for the continuation of the research.

2.2.1 MAINSTREAM STRATEGY RESEARCH

This section examines strategy practitioners within mainstream strategy research. For clarity, as there are no clear cut boundaries, this research has been conducted within the generally accepted areas of strategy content and process research (Rajagopalan et al., 1993; Mellahi & Sminia, 2009). Strategy content research is typically focused on the ‘what’ part of strategic management with a focus on the goals, scope and/or competitive strategies of organisations (Fahey & Christensen, 1986). Strategy process research focuses on ‘how’ strategies are developed or emerge within organisations (Mellahi & Sminia, 2009). The focus of the content stream of research has meant that strategy practitioners, as individuals, are not of significant interest and they have, therefore, been absent from the vast majority of research within this arm of strategic management. It is within strategic management process research that strategy practitioners first became a key focus of the more modern research agenda.

Mellahi and Sminia (2009) argue that process research has its origins in the idea that rational decision making is not backed up by empirical reality. They believe that this discovery can be traced back to the works of March and Simon (1958) and Cyert and March (1963) who were prominent in the influential Carnegie School tradition. Research into the processes that developed strategy revealed a far more confused picture of strategy development that included, for example, internal politics, organisational culture and management cognition (Mellahi & Sminia, 2009). The identification of management

cognition as an influence on strategy formulation meant that individuals, strategy practitioners, became of significant interest to streams of thought within strategy process research.

Initially process research too was relatively uninterested in the role of individual strategy practitioners. Rajagopalan et al. (1993) reviewed the strategy process literature noting that, while there was an increasingly wide range of approaches taken, the majority of the studies adopted theoretical models at a macro or organisational level as opposed to a micro or an individual perspective. This is reflected in the absence of strategy practitioners per se from the framework developed by Rajagopalan et al. (1993) and by the inclusion of macro-level criteria related to individuals who, it can be inferred, are strategy practitioners. Examples include Top Management Team (TMT) characteristics, level of political activity and participation/involvement. Process research in the period of the review tended to view strategy practitioners through a collective lens as a group or type rather than as idiosyncratic individual practitioners. Indeed the words ‘strategist’ and ‘strategy practitioner’ are not even mentioned in the body of the review authored by Rajagopalan et al. (1993).

Two related streams of research within mainstream strategic management process research in particular took a greater interest in strategy practitioners. The first stream was the research into managerial cognition that sought to understand the role that mental models of managers had on the strategy formulation and implementation processes (Narayanan et al., 2011). Second was the stream identifying the characteristics of senior executives and top managers and their influence on strategy and organisational outcomes. This research employed the terms ‘upper echelons’ or, as it became commonly referred to as, TMTs (Finkelstein et al., 2009). These two streams of research sought to explain firm performance in terms of individuals or groups of individuals involved in strategic management.

A familiar theme that has been identified throughout the strategic management literature is that strategic decision making is complex and often involves a great deal of uncertainty and ambiguity (e.g., Schwenk, 1984, 1985; Lyles & Thomas, 1988; Rajagopalan et al., 1993). At the individual level, the managerial/strategic cognition perspective considers that managers spend their time absorbing, processing, and disseminating information (Walsh, 1995). But as many authors have observed (e.g., Starbuck & Milliken, 1988; Walsh, 1995; Weick, Sutcliffe, & Obstfeld, 2005), they face complexity, ambiguity,

imperfect information, misinformation and a sheer volume of information. Due to this, some strategic problems have been called ‘wicked problems’ distinguished by interconnectedness, complexity, uncertainty within a dynamic environment, ambiguity, conflicting trade-offs and societal constraints (Mason & Mitroff, 1973). Compounding this, the strategic decision process itself is influenced by contextual factors such as environmental, organisational, and decision-specific aspects that significantly influence the strategic decision making process (Rajagopalan et al., 1993). Due to these factors, and given that managers are rational within the limits of their cognitive capacities (Hodgkinson & Healey, 2008), which is a condition now commonly referred to as ‘bounded rationality’ (p. 290), research into managerial cognition demonstrated that strategy practitioners develop and employ knowledge structures when meeting these challenges (Walsh, 1995). These structures consist of organised knowledge about an information domain and represent the world as the strategy practitioner sees it, facilitating information processing and decision making (Walsh, 1995).

Knowledge structures in a business or management context are simplified representations about how the business environment operates (Gary & Wood, 2011). Logically they develop over time through activities such as education and experience, and act as information filters, directing individuals’ attention toward information which is considered important (de Wit & Meyer, 2010). Allison (1969), in his analysis of the Cuban missile crisis, observed that an analyst’s basic frame of reference determined not only which questions to answer but which ones to ask. In this regard, knowledge structures can be a two-edged sword, allowing individuals to act quickly but, on the other hand, they can also be dangerous because blind spots and bias can easily develop (Gioia, 1986; Walsh, 1995). Knowledge structures are, therefore, employed as a means of understanding, interpreting and framing problems in a way that makes sense to the individual strategy practitioner (Kaplan, 2008). Walsh (1995), in his comprehensive review of the managerial and organisational cognition domain, developed a high-level model, displayed in Figure 2.7, to encapsulate the fluid nature of the relationship between the origins of knowledge structures and the feedback loop from experiencing and observing the consequences of using these knowledge structures in practice.

Figure 2.7 – Knowledge structure research: An organising framework.

Source: Walsh (1995, p. 282).

Whilst it seems logical that an individual’s knowledge structure is the culmination of events and experiences that relate to a particular knowledge domain, Walsh (1995) observed that few knowledge structure theorists understand how such structures are formed. He added that scholars interested in the topic such as Brewer and Treyens (1981) Neisser (1976), and Rumelhart (1980), all note that researchers’ understanding has been limited mainly to the simple assertion that knowledge structures are formed by experience. Furthermore, it is generally accepted that knowledge structures develop imperfectly and, crucially, are an individual’s idiosyncratic representation of the area rather than an authentic or correct representation (Walsh, 1995). This is an important point as it means that the knowledge structures of two individuals involved in a strategic planning initiative or attending a strategic management course will be different, in all likelihood substantially different. While each participant may receive a similar physical experience, individuals’ interpretation of the experience will be dissimilar. This highlights a danger of using broad demographic variables to group individuals together. It logically follows that not all individuals with, for example, an MBA, an economics degree or ten years’ experience in management will have the same, or potentially even similar, knowledge structures concerning strategic management. The importance of this point will be returned to when the literature on TMTs is examined later in this section.

An important contribution towards acknowledging the role of managerial cognition in shaping strategic outcomes was Porac, Thomas, and Baden-Fuller’s (1989) research into the Scottish Knitwear firms (Kaplan, 2011). They were able to demonstrate that the structure of an industry is a cognitive construction based on managerial perceptions

(Porac et al., 1989). Kaplan (2011) noted that the article played a key part in bringing the focus back to individuals and managers rather than the economic, organisational or industry level analysis which was dominating strategy research during the 1980s and 1990s. In a similar vein, Stubbart (1989) called for cognition to be taken seriously, arguing that strategic cognition (strategic thinking) was a crucial ‘missing link‘ in strategy.

In building on Walsh’s (1995) review of managerial cognition, Narayanan et al. (2011) conducted an in-depth review on the strategic cognition perspective focusing specifically on cognition and the decision processes in strategy formulation and implementation. They noted that strategic cognition was now a distinct stream within the strategic management field that highlighted the role of human agency in strategic management. In this regard they observed that the strategic cognition field had strong linkages with the SAP perspective (Narayanan et al., 2011).

Three important points in regard to this research are developed in the Narayanan et al. (2011) review regarding strategy practitioners. Firstly, they concluded that during decision-making, cognition has a significant influence on the framing of decisions before a strategic decision is reached. In other words, strategy practitioners, their knowledge structures and how they ‘see’ the world are an important factor in strategic decision making. Second, Narayananet al. (2011) noted that strategy cognition researchers view implementation as an important part of strategic management, highlighting the importance of Weickian (1995) sensemaking (the way individuals create sense for themselves based on the information available) and sensegiving (concerned with attempts to influence outcomes and communicate their thoughts) in strategy implementation and strategic change (Gioia & Chittipeddi, 1991; Rouleau, 2005; Weick et al., 2005). Third, Narayanan et al. (2011) concluded that demographic variables do not explain strategic cognition satisfactorily, leaving an incomplete picture regarding development of the knowledge structures of strategy practitioners. Kaplan (2011) echoed this last point, noting that research into managerial cognition suggests that demographic variables were weak approximations of cognition. This third point appears a valid criticism of the use of demographic variables as proxies for cognition in the TMT tradition, which will be examined shortly.

The strategic cognition field recognised that managers, the field’s apparent surrogate for strategy practitioners, are vital in terms of their impact on strategy formulation,

formation and implementation. Therefore, understanding how strategy practitioners develop their knowledge structures is an important factor, or should be. Walsh (1995) wrote:

Researchers must uncover the developmental origins of the knowledge structure if it is shown to have an impact of some consequence. Development, of course, implies a recursive relationship with use. Researchers need to understand how knowledge structures develop so they can guide training or remedial change efforts if the use of a particular knowledge structure is found to promote either beneficial or deleterious organizational consequences. (p. 282)

Narayan et al. (2011) adapted and extended the framework developed by Rajagopalan et al. (1993) and included an additional antecedent factor, a factor that exists prior to the episode of strategic management that impacts the process and/or outcomes. They labelled this factor ‘individual factors’ giving the examples of educational background, experience, decision style, and personality factors. Although this factor bears a striking resemblance to simple demographic variables, it appears to be a research area that has gained significant momentum within strategic cognition research. Narayan et al. (2011) concluded that an incomplete picture remains of the development of practitioner knowledge structures.

In summary, there has been extensive research on managerial and strategic cognition, establishing these as critical aspects in the formulation and implementation of strategic management. The area that remains under-researched involves the antecedents, or determinants, of managers’ knowledge structures (Finkelstein et al., 2009, p. 69; Narayanan et al., 2011). This refers to how strategy practitioners develop their idiosyncratic view of strategy, including the practices they employ.

The second major stream of research that focused on strategy practitioners was research into Top Management Teams (TMTs). This stream is often included within the strategy cognition literature but it established itself as a separate theoretical perspective from the mid-1980s through works such as The General Managers (Kotter, 1982) and Hambrick and Mason’s (1984) seminal article on ‘upper echelons’ (Finkelstein et al., 2009).

Strategy cognition researchers in the 1970s and early 1980s viewed strategic decision making as an activity influenced by individuals and, therefore, started studying high-

ranking managers, namely CEOs, as the ‘primary shapers of strategic direction’ (Finkelstein et al., 2009, p. 8). Finkelstein et al. (2009) noted that the 1980s then saw a progressive interest in TMTs, as opposed to individuals, as researchers realised that strategic decision making is often a shared activity rather than the domain of the lone CEO. Researchers, therefore, moved beyond a focus on CEOs and focused on the top leadership group within an organisation. A core assumption of TMT research is that executives and TMTs are important in determining strategic direction (Hambrick & Mason, 1984; Hambrick, 2007) and the TMT approach viewed strategic management (sometimes termed strategic choice or strategic leadership) as a function of the demographic and psychological composition of the TMT (Hodgkinson & Healey, 2008). In other words, it viewed the experiences, values, and personalities of executives as important in determining how they made strategic decisions (Hambrick, 2007) and employed demographic variables to capture these characteristics.

The foundation of the TMT research stream is normally credited to Hambrick and Mason’s (1984) seminal paper (Carpenter, 2011) that looked at decision making in terms of the ‘dominant coalition’ (Thompson, 1967) in organisations, what they originally termed upper echelons. Hambrick and Mason (1984) argued that an organisation’s performance was linked to the ‘values and cognitive bases’ (p. 193) of executives in the organisation. They viewed the characteristics of individuals in TMTs from what they termed ‘cognitive base values with an observable perspective’ (p. 193), for example, the age of the manager or their tenure in the organisation or industry. Michel and Hambrick (1992) cited the advantages of objectivity, parsimony, and possible replication as key advantages for the use of these variables. Hambrick and Mason (1984) developed 21 propositions and called on the research community to take up the challenge of researching this perspective, which they subsequently did with enthusiasm.

The TMT, or upper echelon, theory holds that executives’ experiences, values, and personalities have a significant influence on their interpretation of strategic situations which affects their strategic choices (or thinking and decision-making) (Hambrick, 2007). The goal of TMT research, therefore, appears to be focused on determining the right mix of individuals and backgrounds for effective TMT strategic management. The determination of this will enable effective TMTs to be selected, presumably resulting in superior organisational performance. This amounts to the establishment of a cause-and- effect hypothesis between TMT composition and organisational performance. At the time, Hambrick and Mason (1984) expected, somewhat optimistically, that relatively

straightforward demographic variables may be potent predictors of strategies and performance.

It must be remembered that, three decades ago when Hambrick and Mason (1984) published their paper, the strategic management field was in the process of seeking greater academic legitimacy through the application of science-based research (Grant, 2008; Hambrick & Chen, 2008). The argument for the use of demographic variables was, therefore, set in a period when the use of quantitative variables, such as those employed in the TMT field, was preferred, if not demanded, by academic faculty and publishers (Hambrick & Chen, 2008). The flow-on effect of this conviction can be seen in Molina- Azorín’s (2009) study that in the period 1997–2006, only eight percent of empirical articles in the Strategic Management Journal were purely qualitative studies.

The period following Hambrick and Mason’s (1984) seminal paper saw an increase in research into the relationships between executives’ observable background characteristics and organisational outcomes (Finkelstein et al., 2009). The demographic variables researchers primarily used, which accounted for the majority of the literature (Finkelstein et al., 2009), were tenure (e.g., Gabarro, 1987; McDonald & Westphal, 2003), functional background (e.g., Hayes & Abernathy, 1980; Michel & Hambrick, 1992), formal education (e.g., Grimm & Smith, 1991; Hambrick, Cho, & Chen, 1996) and international experience (e.g., Michel & Hambrick, 1992; Carpenter & Fredrickson, 2001). Experience gained through tenure, functional background and international experience are examples of learning from practice, what executives have learned ‘on- the-job’ or ‘from-the-job’. Formal education, on the other hand, implies gaining knowledge from a tertiary institution, most likely, but not necessarily confined to a business school.

The TMT stream of research uncovered interesting insights into the relationship between TMTs and strategic management and it remains an active field of research today. Books summarising the field’s contribution have been published (Finkelstein et al., 2009; Carpenter & Weikel, 2011) noting that there is ample cumulative evidence from the fields of management, psychology and financial economics that executives have a significant impact on organisational performance. This, on the surface, may seem quite obvious, given the position and power that executives and managers typically have in organisations, but TMT research was in competition with alternate views such as the RBV, population ecology and that of institutional theorists whose studies (e.g., Lieberson

& O'Connor, 1972; Salanick & Pfeffer, 1977) indicated that executives accounted for only a small percentage of performance outcomes (Finkelstein et al., 2009).

One of the main criticisms levelled at TMT research stemmed from the use of demographic variables, which were seen as overly simplistic (Markóczy, 1997; Priem, Lyon, & Dess, 1999). Due to the perceived difficulties involved in studying the mental representations and psychological characteristics of executives (Hambrick & Mason, 1984), the so-called ‘black box’, these indirect methods of cognitive assessment were used as proxies for cognitive variables. As Winner (1993) suggests, the term ‘black box’ refers to a device or system that, for convenience, is described solely in terms of its inputs and outputs. What goes on inside the black box is either unknown, unknowable or deemed irrelevant as long as it performs certain valuable functions. When voicing her doubt that the use of these proxy input variables was adequate, Markóczy (1997, p. 1240) noted that relying on convenient substitute variables is problematic and that they may turn out not to be particularly good substitutes. Priem, Lyon, and Dess (1999) went further in their critique of the methods employed concluding that, when proxy variables are employed without the intervening constructs of TMT processes, attitudes and