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362 Decision framing and cognitive inertia
knitwear industry. Although the Scottish knitwear producers account
for less than 5% of world production, when the managers were asked to
define their competitors, the serious competitors were almost exclusively
nominated as Scottish. In our perceptual analogy, this is equivalent to
a single, familiar, viewpoint giving a restricted view of the world. In
addition, if the observer has little experience beyond that gained through
the familiar viewpoint then newly emerging events in the world can
only be interpreted from within this perspective. Barr et al. arguethat
munificent environments may confirm outdated mental models in that
organizational weaknesses, even if perceived, may go unaddressed if
firms enjoy profitability.
Johnson 9 used a single longitudinal case study of the UK retail clothing
industry to study decision-making processes. His focus was on the
(mis)match between changes in the firm’s strategy as it sought to succeed
in a changing environment. He sought to identify whether incremental
(i.e. small, step-by-step) changes in strategy were beneficial or harmful
to overall survival and success. He concluded that market signals of
a failing strategy were not interpreted as such and that managers,
in a previously successful business, sought to reduce the perceived
importance of such dissonant information – such that the prevailing
strategy did not keep pace with environmental change. He concluded
that the sensing of external signals is muted because the signals are
not meaningful in themselves but take on relevance from the viewpoint
of the managers’ model. Political pressures within the organization
acted to quell dissonant or ‘deviant’ opinion which recognized the true
importance of the information.
In summary, the literature on cognitive inertia argues that as the
external world changes then mental models that managers use to interpret
events also change. But changes in mental models are likely to be
incremental and thus not well matched if the environmental change
is discontinuous. Additionally, if individual members of management
teams do express dissenting opinion about the (in)appropriateness of
current strategy then such dissent is likely to be stifled by the majority
favoring incremental change. Recognition of any mismatch between
strategy and environment is thus likely to be belated rather than timely.
The empirical work on cognitive inertia has tended to be in-depth
analysis of case histories rather than systematic study of the generality of
the phenomena illustrated (often very persuasively) in the case studies. 10
However, in the psychological laboratory, similar behavior has been intensively
studied and the question of the validity of judgment has been a major research
focus. It is to this research that we now turn. Our focus will be on drawing