Confirmation Bias: A Boundary Condition for Dynamic Managerial Capabilities in the Context of Strategic Change

In today’s fast-changing environment, achieving sustainable competitive advantage constitutes a major challenge for managers. Research suggests that dynamic managerial capabilities (DMCs) enable managers to overcome this challenge by building, integrating, and reconfiguring organizational resources and competences. While prior studies in this tradition have largely contributed to our understanding of the effectiveness of the DMCs, there is a dearth of research on the implications of managerial cognition, a core factor of DMCs, for such effectiveness. In this chapter, we review evidence from DMC research documenting the impact of managerial cognition, namely confirmation bias, on strategic change. We, then, derive propositions on how confirmation bias can negatively impact sensing, seizing, and reconfiguring that, in turn, may lead to ineffective strategic change. Drawing on these propositions, the current chapter proposes an agenda for further research on the effectiveness of the DMCs.