Industry Structures and Knowledge Structures

This chapter builds on Kabanoff and Brown (2008) who found evidence of underlying knowledge structures in managers' patterns of strategic cognition. Walsh (1995: 281) defined knowledge structures as 'a mental template that individuals impose on an informational environment to give it form and meaning.' Knowledge structures order an information environment in a way that enables subsequent interpretation and action, are built on past experience, and represent organized knowledge about a given concept or type of stimulus. In other words, managers' knowledge structures are the essential lens through which they interact with their often complex and dynamic strategic environments. Kabanoff and Brown (2008) developed a computer aided text analysis (CATA) approach based on machine learning that allowed them to measure latent features of managerial knowledge structures in a large multi-industry sample of Australian firms. They demonstrated that managers' strategic knowledge structures could be usefully described in terms of the main strategic themes and types described in the well known and still influential model of generic strategies developed by Miles and Snow (1974). This chapter explores the idea that knowledge structures do not just shape managers’ cognitions about their environment but that those cognitions can be seen as shaping the very environment they are meant to represent, in this case the industry environment within which firms operate.