Dynamic modeling of strategic thinking for top management teams and its impact on firm performance: a system dynamics approach

Abstract

PurposeThe purpose of this study is to model the strategic thinking process, considering the different psychological traits of TMTs (top management teams) and how the technological dynamism affects the strategies framed together impacting the performance of the firm.Design/methodology/approachModeling and simulation are done in this study using the system dynamics (SD) tool. The data are extracted using social media analytics, and the same is given as an input for the SDmodel, which is used for modeling and simulation of the interdependencies between the psychological factors, technological dynamism and firm performance. The analysis decodes how a change in the thinking process of a TMT has an impact on the performance of the company in an automobile market.FindingsThe study has explained how different psychological traits affect the thinking process of a TMT and how the strategies framed with this thinking behavior have an impact on firm performance.Research limitations/implicationsThe study is limited only to the automobile industry in India, and only partial psychological constructs were considered to examine their impact on firm performance. This study can be further extended by analyzing the same to various other industries along with many other psychological constructs.Practical implicationsThe findings identify the change in behavior of the performance due to the thinking process and technological dynamism. This helps the top management to take into consideration different factors that affect the strategies framed for the company and what are the threshold points in the system that are to be focused on during the framing of a strategy.Originality/valueThe study fills the unattended gaps in the literature regarding how the psychological traits are interdependent and how their relationship is affecting the thinking process, which is going to have an impact on the behavior of the firm performance. It also adds to the literature of systems thinking.