The Value of Managerial Beliefs in Turbulent Environments: Managerial Orientation and e-Business Advantage
There is a great divide between the degree to which academic research accounts for the role of managerial discretion in firm performance and the weight given by the popular press and financial community to the importance of the management of an organization. In this paper we begin to quantify the way managerial beliefs and discretion influence the quality of firm performance.
An e-business research setting is used that is associated with a situation of environmental turbulence to allow for sufficient variance in managerial beliefs to measure their effect on firm performance. The sample contains 293 firms.
Aggregate level results indicate that managerial beliefs have a positive and significant effect on firm performance. Four distinctive segments were also found to exist. These segments vary in terms of the strength of the position that a manager holds regarding the value of e-business and firm performance.
In this study the effect of e-business on firm performance is not structural in the sense that it does not depend on the firm or industry but is reflective of the strength of the beliefs held by managers. This implies that the “black box” approach that is characteristic of much management research may be problematic as it fails to measure the variables that may matter most to performance.
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