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Cognitive factors and the dynamics of strategic fit: linking choice and incentives to resource allocation decisions

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Although research in the dynamics of strategic fit has gone far to combine environmental determinism and agency into a coherent framework for understanding strategic behavior, it has largely ignored the cognitive factors that Child (1997) identified as equally important in determining which strategic choices are made. This study uses data on 959 Chinese manufacturing firms to show that a cognitive factor - technological ambition - links environmental and firm-level factors with strategic action, namely, the allocation of RandD personnel. Not only do we identify specific environmental and firm-level factors that drive ambition and, in turn, technology resource allocation decisions, but we also show the importance of incorporating such cognitive elements explicitly into models describing the dynamics of strategic fit.

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application/pdf

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http://flora.insead.edu/fichiersti_wp/inseadwp2006/2006-02.pdf