External Representations in Strategic Decision-Making: Understanding Strategy’s Reliance on Visuals

Abstract

External representations, particularly visuals, are important in strategic decision-making. However, their pervasiveness and impact are not well understood in the strategy literature. Based on cognitive science research, we identify four cognitive functions crucial to strategic decision-making that benefit from using external representations. We also propose a conceptual model and propositions that explain how the quality of strategic decision-making depends on the interactions among task environment, external representations, and managers. We show that external representations influence in predictable ways the boundedly-rational process of searching for new strategies. Key determinants include the manager’s representational capability and the usability and malleability of the external representation. We discuss implications for users, designers, and teachers of external representations in strategy, as well as suggest avenues for future research.

Keywords: external representation, boundedly rational search, strategic decision-making, problem space, visuals

JEL Classification: D83, D80, D91