Tuesday, May 15, 2012

Emotions in Strategic Organization: Opportunities for Impactful Research
INSEAD Working Paper 2012/51/ST

Following the emergence of the behavioral movement in economics and finance, there have been mounting calls for strategy scholars to expand and deepen what is called as the field of behavioral strategy, in which cognitive and social psychology will be merged with strategic management theory and practice (Powell, Lovallo, & Fox, 2011). The goal is to bring realistic assumptions about human cognition, emotion, and social behavior to the strategic management of organizations and thus to enrich strategy theory, empirical research, and real world practice. Thanks to advancing research in social psychology and neuroscience, there has been a resurgence of scholarly interest in connecting micro psychological phenomena to strategic outcomes (e.g., Hodgkinson & Healey, 2011; Huy, 2011; Powell et al., 2011). Levinthal (2011) noted that many strategic management challenges involve ill-specified alternatives and coarse-grained representations of strategic issues with a high level of uncertainty and ambiguity. Dealing adequately with these issues escapes neat optimizing algorithms, which has been the focus of the literature on judgment and decision making. One type of psychological phenomenon, human emotion, has barely been integrated to strategy research, although mushrooming research on emotion has shown that emotion can have a potent influence on cognition and behavior, especially under conditions of uncertainty and ambiguity (see Elfenbein, 2007).