Cognitive profiles of strategic decision‐makers: Implications for exploration–exploitation strategies

Abstract

AbstractOrganizational ambidexterity has long been in the focus of understanding how organizations address tensions between exploitation, which implies building new competencies in order to drive radical change, and exploitation, which implies building on top of existing competencies in order to deliver persistent incremental improvements. Research has shown that, at the organizational level, established incumbent organizations tend to avoid exploration. In this paper, we focus on understanding which cognitive profiles tend to get promoted to the highest management positions in established incumbent organizations. To address this research question, we used a data set on 176 key decision‐makers at five multinational organizations. Results indicate that inherent biases in promotion decisions at the highest levels of the established incumbent organizations favor pattern‐recognition cognitive profiles of managers, thus influencing organizational preference for exploitation over exploration. Results have implications for theory, explaining neurocognitive underpinnings of preference for exploitation in case of established incumbent organizations which arise from biases in promotional decisions; and for practice, implying the importance of debiasing promotion decisions to ensure organizational ability to deliver on explorative strategies, favoring innovations and new market creation.