Managerial cognitions of competitive environments: a strategic group analysis

Abstract

Purpose In the field of strategic management, the majority of studies analyse competitive environments from an economic standpoint, based on the implicit notion that business environments are formal and objective. As such, the human element is assumed and the role that managers play in creating and changing competitive environments is neglected. However, given that people take business decisions and drive organisations, to ignore such an important dimension of the competitive landscape is a considerable limitation to developing more holistic understandings about competitive landscapes. This study examines how managers perceive competitive terrains and discusses the impact of managerial cognitions on decision‐making, competitive strategies and industry dynamics. Design/methodology/approach The research is cross‐sectional and based on primary research. It involves semi‐structured face‐to‐face interviews with the sample size near to the sampling frame of the research. The industry examined is the mainstream UK foreign package holidays industry and the investigation occurred between March and August 2003. Findings It was found that managers view industries and competitors subjectively and that the social construction of competitive environments as well as the process of competitive enactment both influence managerial perceptions of competition. Consequently, similarities about competitive challenges are formed. Subsequently, such perceptions affect strategic decisions on competitive strategies and resource allocation. As a result, these actions affect industry dynamics and contribute to the evolution of the industry. Originality/value The study investigates an industry that has not been previously examined in the context of either strategic groups or from a cognitive perspective. Consequently, it provides fresh findings in the field to enable greater generalisation of results since cognition represents only a minor portion of the body of literature in the wider area of strategic management.

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