Top Manager Heuristics Under Knightian Uncertainty: Control Versus Prediction and the Moderating Impact of Framing

Abstract

AbstractIn line with recent conceptual developments that take Knightian uncertainty seriously in the management literature, we investigate the heuristics employed by top managers confronted with an influx of uncertainty. Using an instrument specifically designed to examine heuristic transition from prediction to control in response to uncertainty, we gather data from 147 executive managers and obtain a counterintuitive result. Top managers persist in, and even increase the use of predictive heuristics as uncertainty mounts. But the effect is moderated. Framing uncertainty as a threat enhances the preference for prediction, while framing uncertainty as an opportunity enables managers to shift to control. Post‐hoc analyses indicate that experience may offer managers a stock of control heuristics that also facilitate a shift as they face uncertainty. Our research offers new insights into attribute substitution related to environmental framing and thereby aims to advance the conversation regarding top manager heuristics and biases and the management of uncertainty.