Helfat & Peteraf (2015) – Managerial cognitive capabilities and the
microfoundations of dynamic capabilities
This study:
Topic: What are factors that contribute to the dynamic capabilities of the individual manager to
facilitate strategic change?
Introduces the concept of managerial cognitive capabilities
Identifies specific types of cognitive capabilities that likely underpin dynamic managerial
capabilities for 1) sensing, 2) seizing and 3) reconfiguring
Explains the potential impact of these capabilities on strategic change in organizations
Discusses how heterogeneity of these cognitive capabilities may produce heterogeneity of
dynamic managerial capabilities among top executives – which may contribute to differential
performance of organizations under conditions of change
Cognitive underpinnings of the dynamic capabilities of managers:
Cognition matters in 3 important components of dynamic managerial capabilities:
1. Sensing
2. Seizing
3. Reconfiguring
Role of the CEO
Multiple studies show that the CEO / top executives have an impact on performance and a
company’s way of dealing with strategic change
Heterogeneity of top management congnition is associated with heterogeneity of strategic
change efforts and outcomes
In other words: since each manager thinks differently, each company reacts differently to
change
Meaning of cognition
1) Mental activities
2) Mental structures
In making decisions, these two interact
Cognitive capabilities of managers
Capability = the capacity to perform a function or activity in a generally reliable manner
Capabilities develop in part through practice
Managerial cognitive capability:
“Managerial cognitive capability is the capacity of an individual manager to perform one or more of
the mental activities that comprise cognition
, E.g. mental activities involving attention, perception, and problem-solving
There are 2 modes of mental processing of information:
Automatic mental processing (System 1) Controlled / Deliberate mental processing, aka
Executive Function (System 2)
Automatic mental activities enable quick These mental activities are slower and support
responses to external stimuli and data a more deliberate response to circumstances
Path dependency of cognitive capabilities:
Cognitive capabilities improve through practice
Practice may change the size or number of brain areas involved and alter pathways used
That means: if one practices particular mental activity more of ten than other individuals,
one is likely to develop better cognitive capabilities of this sort
Therefore, path dependence in the development of cognitive capabilities can contribute to
heterogeneity in the performance of mental activities
Context + Domain
Capabilities are also specific to contexts and /or domains
Thus, differences in context and/or domain in which practice occurs, are likely to lead to
heterogeneity of cognitive capabilities as well
This is true for both controlled and automatic mental processes
Dynamic managerial capabilities
Managers need certain dynamic capabilities to manage and facilitate strategic change. These
include Sensing, Seizing & Reconfiguring.
Each of these dynamic capabilities is driven by some cognitive capabilities
In the end, the more or less ausgeprägt certain cognitive capabilities (and thus dynamic
managerial capabilities are), the more or less the manager is able to adequately respond to &
facilitate strategic change – which in the end will impact the firm performance
microfoundations of dynamic capabilities
This study:
Topic: What are factors that contribute to the dynamic capabilities of the individual manager to
facilitate strategic change?
Introduces the concept of managerial cognitive capabilities
Identifies specific types of cognitive capabilities that likely underpin dynamic managerial
capabilities for 1) sensing, 2) seizing and 3) reconfiguring
Explains the potential impact of these capabilities on strategic change in organizations
Discusses how heterogeneity of these cognitive capabilities may produce heterogeneity of
dynamic managerial capabilities among top executives – which may contribute to differential
performance of organizations under conditions of change
Cognitive underpinnings of the dynamic capabilities of managers:
Cognition matters in 3 important components of dynamic managerial capabilities:
1. Sensing
2. Seizing
3. Reconfiguring
Role of the CEO
Multiple studies show that the CEO / top executives have an impact on performance and a
company’s way of dealing with strategic change
Heterogeneity of top management congnition is associated with heterogeneity of strategic
change efforts and outcomes
In other words: since each manager thinks differently, each company reacts differently to
change
Meaning of cognition
1) Mental activities
2) Mental structures
In making decisions, these two interact
Cognitive capabilities of managers
Capability = the capacity to perform a function or activity in a generally reliable manner
Capabilities develop in part through practice
Managerial cognitive capability:
“Managerial cognitive capability is the capacity of an individual manager to perform one or more of
the mental activities that comprise cognition
, E.g. mental activities involving attention, perception, and problem-solving
There are 2 modes of mental processing of information:
Automatic mental processing (System 1) Controlled / Deliberate mental processing, aka
Executive Function (System 2)
Automatic mental activities enable quick These mental activities are slower and support
responses to external stimuli and data a more deliberate response to circumstances
Path dependency of cognitive capabilities:
Cognitive capabilities improve through practice
Practice may change the size or number of brain areas involved and alter pathways used
That means: if one practices particular mental activity more of ten than other individuals,
one is likely to develop better cognitive capabilities of this sort
Therefore, path dependence in the development of cognitive capabilities can contribute to
heterogeneity in the performance of mental activities
Context + Domain
Capabilities are also specific to contexts and /or domains
Thus, differences in context and/or domain in which practice occurs, are likely to lead to
heterogeneity of cognitive capabilities as well
This is true for both controlled and automatic mental processes
Dynamic managerial capabilities
Managers need certain dynamic capabilities to manage and facilitate strategic change. These
include Sensing, Seizing & Reconfiguring.
Each of these dynamic capabilities is driven by some cognitive capabilities
In the end, the more or less ausgeprägt certain cognitive capabilities (and thus dynamic
managerial capabilities are), the more or less the manager is able to adequately respond to &
facilitate strategic change – which in the end will impact the firm performance
