Cognitive complexity of top managers gains increasing attention in the management field. Performance implication of cognitive complexity is an important one. This article clarifies several of the original points to reply to Huang's commentary. In particular, we comment on some issues of testability and measurement of cognitive complexity and internal/external related dimensions.
We welcome Huang's response (Huang, 2009) to Cheng and Chang (2009). The intent in the article is to spur discussion about which specific forms of cognitive structures in cognitive strategic groups can help firms to sustain competitive advantage. We are pleased to have the opportunity to clarify several of the original points.
We first build on some important areas in the original article. These areas may provide the basis for improved understanding of the arguments between Huang's and the original articles. Next, we readdress the issues of the performance implications of cognitive complexity and perceived internal/external dimensions in light of Huang's comments. We clarify and extend the original remarks responding to his queries. Finally, we suggest some future research directions. Space limitations preclude the responding to each of Huang's queries. We therefore focus on those queries we deem most salient.
We appreciate Huang's commentary, and hope that the remarks may in some way contribute to clarifying the issues of testability and measurement of cognitive complexity and perceived internal/external related dimensions. Further empirical investigation is necessary to enrich understanding of cognitive complexity and its performance implication.
Managerial cognition, representing a driving force of the organizational strategic actions, and the competitive environment, representing what must be done to compete effectively, are both essential in the strategy-making process. The original article could be a first step to explore the managerial cognition with the computer-aided content analysis and attempt to explain the performance differences among competing firms based on the concept of cognitive strategic groups. We agree with Professor Huang's suggestion that our work may be elaborated if we integrate with competitive dynamics studies (Miller and Chen, 1996). By examining the response patterns, we can capture a more complete picture of how managers of firms think, how they react to competition, and how they perform.
We also agree with Professor Huang's suggestion to investigate environmental conditions, cognitive complexity, perceived internal/external dimensions, and performance together to test their relationship. Calori et al. (1994) note that the relationship between cognitive complexity and performance should be moderated by the degree of environmental complexity. They argue that the complexity level of top managers should match the complexity level of the environment. This line of research considers the moderating role of environment on the relationship between cognitive complexity and performance, as describe in Fig. 1 of Huang's article. However, several studies include environment as an independent variables based on the proposition that it has an independent effect on managerial cognition (Cho and Hambrick, 2006 and Nadkarni and Barr, 2008). An interesting future study is, firstly, to examine the effect of environmental conditions on managerial cognitive complexity and perceived multitude of external/internal dimensions, and then to integrate investigate the linkages among environment, cognitive complexity and perceived multitude of external/internal dimensions, and performance, as Fig. 1 shows.The original study shows the positive relationship between the cognitive complexity and performance while McNamara et al. (2002) show the negative relationship between them based on one out of the three measures. The reason may be that top managers may utilize fewer dimensions, but they may be the most critical ones to make effective decision, leading to performance enhancement. Decision making in the strategy processes demands sound judgment. Attention to factors that are directly related to performance enhancement could prove fruitful for researchers. Nevertheless, we also look forward to seeing the work applied to more new conditions and learning more about how firms to sustain competitive advantage.
