What Makes a Decision Strategic? Strategic Representations

Abstract

This paper delves into the effects that strategic representations have on firm performance. It does so in four ways. First, it describes different types of representations—internal, external, and distributed—and it points to their pervasiveness in strategy. Second, it presents a framework to study the effects of these representations on firm performance and shows how several strategy theories can be mapped into this framework. Third, it provides three detailed illustrations of how this framework can be used to address important questions in strategy; namely, what are the antecedents of strategic foresight, how the simplicity or complexity of representations affects firm performance, and how to incorporate the role of managerial cognition into the resource-based view. Fourth, it proposes a research agenda to further the study of the representation–performance link. Overall, this paper proposes that studying strategic representations is paramount since the success of strategies—and the realism of the strategy field—hinges on understanding how representations affect performance. Strategic representations, thus, are a central element of “what makes a decision strategic.”

Keywords: representation, managerial cognition, Carnegie tradition, aggregation

JEL Classification: D21, D23, D81, D83, M13, O31, O32