Discontinuities and senior management: assessing the role of recognition in pharmaceutical firm response to biotechnology

Abstract

Despite an increasing emphasis on the role of senior management cognition in shaping organizational action, there have been few attempts to link top management mental models to strategic choice in the face of discontinuous innovation. This paper uses 23 years of data covering 15 major pharmaceutical firms to explore the degree to which each firm's response to the revolution in biotechnology was shaped by the senior team's recognition of biotechnology's importance. Controlling for a number of important alternative explanations, we show that recognition may be an important predictor of action, suggesting that cognition at the most senior level can play a critical role in shaping established firms' response to discontinuities.