Rational Strategic Reasoning: An Unnatural Act? Author(s): Joel E. Urbany and David B.

Montgomery Reviewed work(s): Source: Marketing Letters, Vol. 9, No. 3, Competitive Decision Making (Aug., 1998), pp. 285299 Published by: Springer Stable URL: http://www.jstor.org/stable/40216170 . Accessed: 14/02/2013 09:32
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Letters 9:3 (1998):285-299 Marketing & rV 1998Kluwer Academic Manufactured inTheNetherlands Publishers,

RationalStrategic An Unnatural Act? Reasoning:

E. URBANY JOEL Notre Dame, Administration, Dame, Dame, IN, University College ofBusiness ofNotre University ofNotre 46617 joe.urbany.l@nd.edu. DAVIDB. MONTGOMERY University Stanford

Abstract
recent literature on competitive reactions andstrategic andoffer several We review observations. thinking difficult that is anunnatural made individual biases and is mounting Evidence act, strategic bynatural thinking itispossible that Inaddition, about behavior is caused and roadblocks. uncertainty by competitive organizational Wepropose a simple toinformal andincomplete model which a contributes competitive intelligence. suggests a firm's inertia of its in driven the intelligence gathering, by past decision-making. potential path dependency canbebroken, as evidenced offirms who a path have overcome Such however, byseveral examples dependency increative there arecircumstances inwhich tostrategic barriers Paradoxically, ways. though, compethinking arediscussed. Research is overemphasized indecision-making. tition priorities reactions, conjecture, strategic thinking Competitive Keywords:

An unnaturalact? Rational strategic reasoning: modelshave been criticized overtheyearsfortheir game theory simplistic Although of strategy haveemerged from thegametheory several important principles assumptions, framework 1991; Ho and Weigelt1997; Porter1980). Two such (Dixit and Nalebuff are back,and (P2) i.e., look aheadandreason foresight; principles (PI) Strategic general their These havebecome mindset to behavior. the principles predict Adopt competitor's to the the of has accelerated as pointthat pace competition increasingly compelling of sustainable is D'Aveni (1994), forone, arguesthattheconcept advantage no longer to be also Peters relevant 1994, 1997). Managers up theemerging snapping appear (see Dixit and and Nalebuff Nalebuff literature 1996; (Brandenburger populargame theory the economists' conventional wisdom in of which is ironic Poundstone 1991; 1992), light in PI and endowed: reflected P2 are skills that thestrategic naturally thinking orpricewillremain constant hisrival'soutput either that assumes ". . . no businessman will his not interfere with that his assumes more than a chess player opponent any what move is to forecast hiswholethought On thecontrary, a knight. effort to capture to his own." therivalwill makein response

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Fisheroffered thiscritique of the classic Cournot modelin 1898. Cournot' s brandof does seema bitnaive:he assumed that a firm wouldsimply competitive conjecture expect its rivalto continue withits mostrecent decisionsintothefuture. Yet,evenif Cournot wasn'texactly we know onehundred that later Fisher was wrong. Whilenot correct, years thecurrent stars ofhypercompetitive Microsoft, taking anything awayfrom (Intel, strategy often consideration to thefuture of competitors behavior etc.),firms appearto givelittle intheir Rational defined PI andP2 decision-making. (as strategic reasoning byprinciples is a number of individual and barriers above) discouraged by organizational (e.g., Deshand and Banks Moore and 1994; 1997; 1994; Zajac and pande Gatignon Meyer Urbany Bazerman1991),which lead to a natural of these We propose may devaluing principles. a simple modelto explain thisandthen consider howsomefirms haveimproved decisiona focuson competitive moves.We also discussrecent making by creatively motivating workwhichleads to thecontrary in which conclusion that there are also circumstances firm is superior whenthefirm focuses less on thecompetition. performance

Observation 1: Much competitive doesn't appear to be decision-making "strategic" An increasing amount ofanecdotal evidence that is suggests managerial decision-making oriented neither toward ahead" nor the toward "looking (PI) "adopting competitor's mindset" (P2): one movein advance, if that." and Chussil "Usually, managers onlythink (Reibstein 1997) "... manymovesto increase shareor sales/profit neverwouldbe made if one were awareof theimmediate countermove." and Reibstein (Ramaswamy, 1994) Gatignon, "In general ... there is a tendency forcompetitors to ignore or insufficiently consider thedecisions of competitive others." (Zajac and Bazerman1991) In fact, Porter was one of thefirst to observe that firms this, (1980) himself noting very often seemto neglect theprobable of existing reactions firms to entry decisions. Other areprovided in Camerer examples (1991) and Mooreand Urbany (1994).

Observation 2: Strategic is an unnaturalact thinking While simplein the abstract, of strategic in competitive applying principles thinking is a number of natural which are inthe summarized barriers, decision-makingimpeded by subsections. following

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discussion of empirical Myopia. Meyerand Banks (1997) providea veryinteresting in strategic ournatural naiveinclinations thinkevidence (i.e.,biases,shortcuts) regarding PI individuals to is the that tend most direct interest to be Of finding near-sighted ing. than term whenitcomesto valuing to focuson theshort-term that is,morelikely longer intime. at different Hutchinson andMeyer which areexperienced choiceoutcomes points in shortover the on the that long-term decision-making may (1994) suggest emphasis the natural to place moreweight on tendencies have multiple including explanations, to than more abstract short-term concrete outcomes), longer-term (rather consequences be intuitive arithand to rather than"end-game "thisperiodforward" think back," poor Moore and Urbany overseveral whensumming meticians (1994) up outcomes periods. which a focuson illusions needs-based also discussseveral might explain self-enhancing, at all). notconjecturing short-term outcomes (and,possibly, in competitive deciintothe rival's shoes. Twotendencies strategy Difficulty stepping think we or we maynever sionsare that maymistakenly stepintotheshoesof therival, decision and behavioral intotherival'sshoes. Researchin negotiations we've stepped lack sufficient that "mostindividuals (Bazerability" perspective-taking theory suggests of commitment and escalation ofthewinner's man 1994). Studies overconfidence, curse, to howtherivalmakes limited aremadewith or no attention decisions that often suggest and/or is influenced decisions (Zajac and Bazerman1991).The by ourdecision-making shoes"bias (MooreandUrbany to as the"wrong hasbeenreferred secondproblem 1994), errors of to shoes is into another's that and suggests difficult, prone cognitively stepping To the extent and and "introspective falseconsensus 1983). (Kadane Larkey theorizing" decision-makers on newshoesis cognitively that maynoteventry. taxing, trying thedecisionovermanyrepetitions, It is commonly that, argued Learninglimitations. and Kahthe rival's shoes. into how to effectively will learnbetter maker Tversky step that with this neman(1986) pointout thepotential (a) outnoting argument, problems in to a attributable not and be comesmay delayed action, (b) variability particular easily decisions feedback make can the environment unreliable, (e.g., strategic (c) important and (d) forlearning, less opportunity and mayprovide decisions)are madeinfrequently that of decisions outcomes to view the have a chance never decision-makers "might really in a turseem especially These points feedback. havebeen made"to provide important are actionsand reactions wherecompetitors' environment bulent, complexcompetitive not are decisions and visible(ClarkandMontgomery notalways repeated 1996) strategic forthemarket tendencies aboutcompetitors' firms maylearnenough Finally, veryoften. - enough time takes time butsuchlearning inthelongrun, state downto a steady to settle has been mostof theindustry's thatequilibrium competed profit mayoccuronlyafter and Russo 1997). away(Johnson aboutcompetitors barriers.Although maymakeconjectures managers Organizational we in memory, stored functions" "reaction based and upon subjective spontaneously the about when information to are more that such likely emerge conjectures expect that such Recentevidence and analyzed is gathered suggests systematically. competition

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research is rare.The Conference Board (Sutton1990) found thatonlyabout systematic half of 205 respondents thattheyincludedcompetitive in their reported intelligence of service marketing 1997), only27 percent plans. In a morerecent survey (Murphy marketers Jasampledreported conducting competitive analysisin evaluating strategy. worski andWee (1993) concluded that "Less thanone third of theSBUs indicate either a lot of timecollecting CI (Competitor or engaging in a lot of spending Intelligence) research." The dominant form of accompetitor organizational competitive intelligence found Jaworski and Wee in was which ad-hoc, tivity by (1993) competitive intelligence flow was described as "incomplete and irregular." several describes Day (1991) similarly disabilities which inhibit while and organizational learning, Montgomery Weinberg a processformoreformal (1979) suggest analysis. Decision weights.To the extent thatconcerns aboutinternal constraints and demand dominate of anynew strategic discussion thebehavior of competitors move, maybe less influential in the decision-making process.For example,the decisionto entera new market in largepartby an evaluation of whether the firm'sexisting may be driven a match tothenewmarket andwhether themovecanbe implemented capabilities provide and low costs). profitably (e.g., withsufficiently highdemand An evolutionary bias Fromtheperspective of game theory, the observation thatfewfirms engagein active is hard to since it seems like an untenable understand, strategic reasoning equilibrium. One might whilefirms start offfailing to reasonstrategically becauseofthe supposethat and organizational barriers noted that above,in timefirms psychological engagein active will be rewarded at the of those who do not, strategic planning expense eventually leading to a norm all firms where do so. However, we argue that forces evolutionary mayactually - that theopposite work in which is, there way maybe an equilibrium strategic reasoning is limited. The modelin Figure1 helpsexplainhow suchan equilibrium couldoccur, driven in inertial tendencies indecision-making andZeckhauser part bywell-known (cf.Samuelson reflects thefirm's 1988; Schneier1997). In the model,the value of strategic thinking assessment oftheutility ofmaking decisions baseduponprinciples ofstrategic reasoning value on decision-making based upon suchprin(e.g., PI, P2). Firmsplacinga higher likelihood of conducting since an undercipleshave a greater competitive intelligence, ofcompetitor behavior is an essential More effort allocated to competitive standing input. will reduce about rivals' current and future intelligence generally behavior, uncertainty thefirm's of rivalsand improve itsability to forecast future i.e., improve understanding moves. All else equal,thecapability to predict rivalbehavior thefirm's shouldreinforce ofapplying ofstrategic in itsdecision-making. The modelis practice principles reasoning consistent with therecent work ofCohenandLevinthal who contend that a firm's (1990), in "absorptive investments to search and use informafor, capacity" (itsability interpret, tion in decision-making) enables and encouragesfuture information and gathering

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/'Value ofStrategicX - ( Decision-Making )-^^

Uncertainty N\ aboutRival's ^J ^ ^S, \^ Current/Future f Behavior ^^_y \

^ I

-^^ > >

^^^_

Competitive Intelligence ^^y

* PI = Strategic think ahead andreason back. foresight; their ofcompetitors; actions andreactions. mindset the P2 = Adopt predict 1. Uncertainty andStrategic Decision-Making Figure

uses that information. Ourmodeladdsthenotion that thevalueof which decision-making the firm its a function of the which decisions. external is makes by principles intelligence to strategic earlier a or path thebarriers reviewed However, thinking suggest spiral, in the direction. consider uncerDickson First, 1996) working (cf. opposite dependency seen that there are reasons to that firms are We have above about rivals. many expect tainty in lightof the difficulty of competitors, of uncertain aboutthe likelybehavior often the of and in environinto rivals' shoes, difficulty observing learning complex stepping to competitive barriers Giventhis,the and possibleorganizational ments, intelligence. lowersthe about rivals as follows: uncertainty may develop higher path dependency in will used that of be decision-making reasoning (simply probability principles strategic to integrate comof thecompetitor makesit moredifficult becausetheunpredictability to conduct creates less motivation behavior intodecisions). This,then, competipetitors' Fromthis aboutrivals. in turn, further to uncertainty contributes tiveintelligence which, in devaluation of strategic a spiralintoa self-reinforcing reasoning sequenceemerges in a similar Cohen and Levinthal (1990) describe pathdependency decision-making.1 in absorptive locks itself failedto makepastinvestments whicha firm, capacity, having andMarch discussed outoffuture byLevitt (also,see the"competency trap" opportunities 1988). from thisdiscussion: of research A number emerge questions in to reason aboutcompetitors To what do managers A. Decision-making: degree attempt are For of this What the features are decisions? their reasoning process? example, strategic orpredictwhich aremoreobservable of competitors' dimensions there certain strategies what extent in In to are for decisions? able and morelikelyto be accounted general,

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decisionsprimarily reactive or proactive to the firm'sintelligence and is thisrelated activities? are decisions made (cf.CohenandLevinthal 1990).To whatdegree gathering of competitor behavior? independently B. Information acquisition:How do firms gather competitive intelligence? Specifically, what information is gathered andbywhom? How much variance is there (i.e.,uncertainty) in beliefsabout competitors across managers within teams?To what cross-ftmctional reducetheperceived aboutrivals'behavior value of strategic degreedoes uncertainty inand increase the to conduct vs. motivation decision-making competitive intelligence and telligence improve decision-making? C. Dissemination, sharedinterpretation: behavHow is information aboutcompetitive iordisseminated within and on information? For how is the organizations meaning placed what extent obtain a to do teamsconfront to differences of interpretation/fact example, or does substantial variance in beliefs Whatdetermines whosevision consensus, linger? of thecompetition prevails? D. Learning:To what extent do managers havetheopportunity toobserve andlearn about in competitors' in theenvironand reactions of competitors to events changes strategies ment in thosebehaviors andpatterns overtime?

Observation 3: Outcomesoften can be improved to by payingmoreattention behavior and reactions competitive Thebarriers to strategic described there abovesuggest that exist for thinking opportunities There have been a number of strides in both made, improving decision-making. already research on competitive reactions to ourability to predict howcompetitors (to contribute will react)and in theuse of simulations which force a longer term andplace perspective intocompetitors' shoes. managers directly

"drivers:" research on competitive reactions Understanding insights from Some lessonswhich extract from theliterature on competitive reactions2 managers might include: Stealthis good (Chen and Miller1994; MacMillan, andVan Wijk 1985; McCaffery, and MacMillan Moves which are not observed cannot be Venkataraman, Chen, 1997). reacted to. Whilepricemovesare quitevisible, actions like service nonprice improvementsor new deals withdistributors are less visibleand, therefore, less likelyto reactions. produce

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Don't hit rivalswheretheylive (Robinson1988; Chen,Smith, and Grimm1992). will surely hitrivalsin strategically markets a reacAttacks which important provoke tion. Moves whichare costlyforthe rivalto follow provokeweakerreactions(at least Miller et al. and Wittink and Chen 1994; 1992, 1992; Mac(Chen Leeflang initially) a back to the of firm's Millanet al. 1985).Competitors observe success move, maylay and in for a decision about market both about response technology preparation learning investments are involved. where to react, whether heavyupfront particularly whichmight in thisliterature usefuladvice captured Thereis generally help managers avoidthem. In fact, evidence to reactions for steelthemselves or,alternatively, competitive with are associated better which are less moves that performance provocative suggests the value of illustrate (Chen and Miller 1994). The case studieswhichfollowfurther reactions. aboutcompetitor thinking systematically Methods thinking foraidingstrategic at leastsomeof haveovercome in which firms can be found of successstories A variety include: earlier. Some examples described to strategic thebarriers thinking of Adtheexperience and Chussil(1997) describe Forcinga "look ahead." Reibstein the into "see several in vancedCompetitive future" companies (ACS) helping Strategies exerciseforShell Oil helpedthe company For example,a simulation via simulation. butalso that sureto copyan innovation, wouldbe almost that realizenotonly competitors fiveyears, million over lower $133 would reactions by expectations profit competitive the without to obtain could which that below a implementing expect they producing profit new concept. often soccerscorer, Brazilian on new shoes.It is said that Pele,thegreat played TVying to rival of an he could in so goalies' reactions develop understanding goalie practice freMichael back of Fame defensive Hall moves. offensive different Haynes Similarly, there is a similar As we havediscussed, withwide receivers. sat in on meetings quently in the as reflected the to step intothe shoes of value forbusinesspeople competition, following examples: abouthow a largecompetitor concerned manager, high-tech (a) One forward-thinking on his staff a trick to his firm, wouldreactto theloss of a majorcustomer by played After a had takenon one of their thecompetitor that majorcustomers. announcing to the of a number in which seriesofmeetings competitor's responses panic-stricken knowabout leteveryone themanager and evaluated, weredeveloped finally conquest was nearly we would recommend notan approach theruse.Although (themanager be and him to exercise enabled this that themanager prepared identify reported fired!), made. thecompetition forall thecountermoves

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with thecompetitive a simulation firm, (b) Another struggling bidding process, developed which to consider in detailhow competitors be evaluating managers required might the biddingdecisions.After the simulation, the firm's were managers developing successful on 12 of thenext14 bids (Montgomery andWeinberg 1973). "WarGames"place different teamsofmanagers thesamecompany) (c) Similarly, (from - somefor indifferent roles thefirm, thecompetition. A warcollegeheldfor somefor HealthLatinaproduced a pre-emptive a thateffectively thwarted Sterling strategy newstrategy. The strategy dreamed teams competitor's up by one of thecompetitive in thesimulation turned tobe exactly theone thecompetitor was actually to planning use (Carbona1997; Reibstein and Chussil1997). attention to competitive It appearsthatorganizaUppingorganizational intelligence. tional for indetermining how support competitive intelligence (CI) is extremely important the firm in is either CI. comes aggressive conducting Organizational support generally from or from theemergence of a CI "champion" and Wee top management (Jaworski A structured and shared are to enhance 1993). process experiences ways competitive attention its perceived value and hopefully its perintelligence by enhancing lowering ceivedcost (Montgomery and Weinberg More 1979). proactive companies adoptcomIBM much as Hewlett and Packard have This customers. petitors historically adopted meansthat a teamof executives is assigned to attend to and knowa given(or potential) and to assist the firm in understanding the threats and opportunities that competitor offer. Wherever theseexecutives are promoted in the company, competitor may they continue to serveon theadoption committee of thatcompetitor, conthereby providing tinual and dynamic intothecompetitor's behavior. Some companies have insights likely found that a tangible effort from thansomeintangible enemy inspires greater employees call to maximize shareholder Forexample, themotto Komatsu profits. posted throughout in Osaka is "CAT MARU" (encircle Cat). Thesecase studies anecdotal whichillustrates evidence that strapresent encouraging aboutcompetitors often remove measures which tegicreasoning requires extraordinary decision-makers from theusual managerial routines. Yet,we are a longway from fully reaction and how and other simulations understanding competitive patterns techniques decisionperformance. Researchquestions whichemerge from thisdiscussion improve include: A. Issues in competitive A morecomplete reactions. review of theliterature suggests several controversies thefactors interesting (i.e., opposing hypotheses/findings) regarding reactions. Forexample, a leading market sharefirm whomakesan affecting competitive movemayeither evokeswift reactions from rivals(because theyfeargreat aggressive losses or because theleader'smovesare highly visible;Clarkand Montgomery 1997; Venkataraman et al. 1997) or maydiscourage reactions rivals fear retaliation; (because Bowmanand Gatignon research is inconclusive on whether 1995). Similarly, industry increases and Reibstein growth 1994; Robinson1988) or deGatignon, (Ramaswamy, creases(Porter of competitive reactions. 1980) theprobability

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B. Improving Whatare different methods forencourdecision-making performance: to conceptualize future outcomes andthedynamic behavior ofothers? In agingmanagers thefocusbe on training should or developing and (e.g.,seminars, simulations) particular, anddecision-making routines planning strategic principle-based implementing throughout Whatmethods theorganization? to stepintotherival'sshoes?(e.g.,What helpmanagers theliterature on negotiator cf.Pruitt "role-reversal?" can we learnfrom are 1981) Finally, skills and to to measure individuals there reasoning empathy helpidentify ways strategic effective thinkers? who are intuitively strategic Whataretheboundary conditions on learning from simulations? C. Value ofsimulations. in in situations which there is no obvious best move for the are helpful Specifically, they can be with unfunctions estimated substantial and where different only payoff players in preciseforecasts value captured of comTo whatdegreeis a simulation's certainty? their own and weaknesses in learnabout vs. whatmanagers behavior strengths petitive decision-making? to firms shouldpay less attention 4: In some circumstances, Observation behaviorand reactions competitive in their decisionoften is thatfirms A contrasting competition overemphasize position be three basic dimensions of There to and 1994). Gatignon appear (cf. Deshpande making thisargument. comthat To theextent on incremental existing productimprovement. Overemphasis is a there in are used as benchmarks strong posdevelopment, product products petitive Ohmae(1988) madea compelling which can limit effects of anchoring creativity. sibility focus on incrementally oftensuffers when firms thatproduct development argument of value than new sources rather seeking existing products uponcompetitors' improving this have echoed Kim and Mauborgne forcustomers. sentiment, finding recently (1997) irrelevant" who "seek to maketheir is strongest thatgrowth competitors amongfirms but "monitor Valueinnovators call valueinnovation. a strategy competitors, they through can ... because(they)do notfocuson competing, as benchmarks do notuse them they The emphasis factors." all (other) valuefrom deliver that thefactors superior distinguish ofvaluefor customers newsources creative is developing in thevalueinnovation strategy wisdom or the conventional unconstrained with competiexisting industry's by big ideas andXuereb ofinnovation In an interesting tivecapabilities. Gatignon study performance, when a competitor-, which influence factors several customer-, moderating (1997) identify or technology-orientation They conclude,forexample,thata may be mosteffective. whilea aboutdemand, with less uncertainty in markets is superior competitor-orientation is more uncertain. when demand effective more becomes customer-orientation aboutcompetiinformation In someindustries, on relative performance. Overemphasis in thepast, than available more become has torperformance widely share) (e.g.,market

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a focuson relative sharein decision-making, which potentially creating mayharm profit andCollopy(1996) review studies which find performance. Armstrong early gametheory decisions to maximize thedifference between their subjects predominantly making performance and their rival'sperformance, their evenwhenit meant overall hurting performance(i.e., theclassic"pyrrhic victory"). Whilecareful can improve theoutcomes of comOverstrategizing. strategic reasoning as we discussed which is a danger rests on thefact above,there petitive decision-making that a rivalwho is notof thesame mindset. that the To theextent you maybe playing be the a rational (which opponent playsin naivefashion norm!) perform may player may successdependslargely to read signalsand on thatrival'sability poorlysincehis/her follow thegame(Meyer andBanks1997).Beingoverly canbe detrimental when strategic theother is a different setof rules.Coincidentally, Axelrod (1984) notes party following that theproblem of someof themoresophisticated in his classic decisionrulesentered dilemma in attempting tournaments was that, to senseandadaptto theplayof prisoner's therival, often a confusing ofprices which other for they provided pattern players looking could not recognize. In fact,thereare situations in whichnaive cooperative patterns to produce 3 results. Observations decision-making appears (if notsuperior) satisfactory and 4 seem to be in complete but maybe reconciled that conflict, by the possibility current behavior themost visible managers overemphasize competitors' (again,especially likepriceandproduct), or ignore in strategic future behavior aspects yetunderemphasize It does seem a mistake to achievesome margin of victory overthe decision-making. if that not is somehow directed at value forcuscompetition victory creating superior tomers in a way thatwill contribute to larger market sharein thefuture (cf. Day and Several research directions follow from this discussion: 1988). Wensley A. Competitorvs. customer-orientation: Is there a wayto conceptualize an "optimal" balance of customerand competitor-orientation? thisquestion Addressing empirically first metrics fordetermining vs. customer-orientation, and identifyrequires competitorand environmental factors whichmake some firms ing the individual, organizational, more/less and moderate theeffect of such"orientation" on perforcompetitor-oriented mance.Giventhese to identify which conditions under firms tend data,itmaybe possible to overorunder-emphasize andXuereb competition. Gatignon (1997) makean excellent initial intothisdomain, butmanyquestions remain. Forexample, find that a foray they is superior whendemandis less uncertain, competitor-orientation yet is worsewhen market rateis low. Giventhesepotentially to whatdegree growth results, conflicting shoulda firm be competitor-oriented in a mature market? B. Competitor Underwhatconditions benchmarking: (and how) does benchmarking and harm the firm's competitors' strategy performance actually (cf.Ohmae performance? Are firms less innovative in industries in which is more common? 1988) benchmarking C. Simplervs. more complexconjectures:If it is observed that do tendto managers makesimpleassumptions aboutcompetitors' behavior the alto(or ignore competitors

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costsof moresophisticated is it because of the cognitive/effort or conjectures gether), are "good enough?" Underwhatconditions becausethesimpler conjectures (e.g.,under or naive whatgame or institution characteristics; Kreps 1990) do simpler conjectures "work?" strategies

Directions in sequential choiceprobof decision-making and Meyer's(1994) analysis Hutchinson actual decisionexamines how for research which an important lemsprovides impetus with normative that consistent differs from contexts in Here,we theory. making dynamic which makerational biasesandproblems ofother consideration work addtotheir strategic and organizational barriers. biases in perspective-taking in particular, difficult; reasoning on and based We believethesebarriers strategic reasoning decision-making discourage of the which reduces a path cancreate thinking strategic probability following dependency evidence of potential at least anecdotal we provide In addition, in thefuture. principles thefieldis a long to theseproblems solutions although role-playing), (e.g., simulation, when arelikely work more solutions how those and, significantly, they knowing wayfrom to work.

Field research a positive and Meyer(1994) thatbuilding the suggestion We support by Hutchinson knowlto extend in the field studies of existing decision-making requires theory strategic in involve This evidence. anecdotal and to confirm work from may part laboratory edge in studies trend The fieldhas seen a recent of managers. studies moretraditional survey theoretical conwhich scenarios case to reactions key manipulate managers' obtaining and Walker and Mullins and Staelin structs 1996; Urbany 1997; Morgan, (Boulding, it difficult to that is is of this downside Dickson1994).The however, capture methodology, in in laboratory examined whichcan be morereadily in learning experiments dynamics Moore and and Banks overmanyperiods(Meyer whichdecisionsare repeated 1997; simulations ofteamcompetitive 1996, Moore1989)orin studies (ClarkandMontgomery of seriousconsideration merit and Winer1990). These concerns 1998; Glazer,Steckel, Huberman Miles and field in the 1994), (Bonoma 1985; methodologies usingqualitative inintomanagerial morein-depth whichcan provide insight longitudinal) (and perhaps a research More and formation promises search, reasoning, decision-making. qualitative and the environmental and decision-maker the individual ofboth richer orgadescription lives. in whichs/he context nizational

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and explaining Exploring heterogeneity We also believethat an important whether there exists research direction is to determine in strategic skillacrossindividuals andorganizations. significant heterogeneity reasoning tobe an unnatural actfor most Although strategic people,itis clearthat reasoning appears Forexample, somefirms and individuals arebetter thinkers" than others. some "strategic concernforfuture thando others subjectsshow a systematically higher consquences in decision noninet al. 1994). Similarly, whichrequire somewhat (Strathman problems tuitive there is a certain of subjects inferences aboutanother proportion party's payoffs, answer(Bazerman1994). At the same time,an small),who gets the correct (though in perceived alternative view is thatdifferences decisionwisdom/skill maybe spurious and A in is to explore Madow relevant direction of research this area (Deutsch 1961). whether there exist reliable differences decision-makers in skills among strategic thinking themorefrom theless strategic. and,if so, whatseparates We discusshereboththemounting evidence individual and organizational regarding barriers to strategic in and thefactthat thosebarriers can be overcome decision-making somesituations. In other to firms situations, however, apparently paytoo muchattention thecompetition. The challenge in is notonlyto helpimprove to think managers' ability terms andto think with a viewfrom another's butalso to determine dynamic perspective; how to designtraining and information structures, programs, organizational processes, which can or accommodate us natural Thereis our inclinations. systems push beyond value in theprinciples of strategic the issue is when and how today reasoning; primary should to extract it. firms/managers try

Acknowledgment Theauthors wouldliketothank Bob Meyer for hisexcellent andtheparticipants guidance at the Charlston conference fortheir Kim Corftnan and Marian comments, especially Moore.

Notes
1. Although we arenotawareofanyliterature on thispointin theliterature on competitive decision-making, an analogousissue is whether uncertain beliefsaboutconsumer behavior influence decisions. managers' Dicksonet al. (1997) report substantial within-firm variation executives (uncertainty) amongretail grocery beliefsaboutconsumer In related it was found thatinformation regarding studies, pricesearchbehavior. about consumer searchbehavior had a relatively low impacton the pricing of retailgrocery behavior in their executives to a pricing case study et al. 1998). responses (Urbany 2. A larger versionof the paper is availablefrom the authors whichcontains tablessummarizing recent research on competitive reactions. empirical

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