I Think, Therefore You Act

Topic: Decision MakingJudgement
Publication: Academy of Management Journal
Article: Cognition, capabilities, and incentives: Assessing firm response to the fiber-optic revolution.
Blogger: Katie Bachman

Well, it’s sometimes good to confirm what we already know (lucky for this article).  In this case the learning is that he (or she) who is in charge makes the rules.  Looking at CEOs from 71 communications firms, Kaplan makes a link between the interest of these CEOs in new technology, and the likelihood of putting the new technology into place. Add to that a couple of mundane (and as one I/O AT WORK reviewer commented, obvious) hypotheses that firms with experience in the new technology will be more likely to adopt it and that positive incentives are important.  Any kid who has ever sold lemonade knows that to be successful you need a willing market and the ability to actually make lemonade (or at least know where to buy it).  The force that could keep this article from collapsing in on itself is around the interactions between CEOs and investment moderated by incentives and experience, but instead the author flopped around a little before proposing competing hypotheses.  Don’t get me wrong, I’m all for exploration, but saying that it could be a positive or negative relationship is about as useful a hypothesis as saying it might rain or it might be sunny today.

We get all the information available, but not in a way that we can plan on.  It’s just a really nice and easy way of hedging your bets so that if you get results, you’ll be right!  In the end the author was indeed correct; CEO attention to technology did shape the likelihood of adopting the technology along with experience and incentive to adopt the technology.  At the risk of sounding as trite as some aspects of this article, the take- home message is to look at all aspects of the organization when it comes to interpreting business moves.  Buy-in from a top-level manager will have an effect on investment independent of market forces and organizational experience.

Kaplan, A. (2008). Cognition, capabilities, and incentives: Assessing firm response to the fiber-optic revolution. Academy of Management Journal, 51(4), 672-695.