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Conference Proceeding

Behavioral strategy: Turning behavioral theories on their head

Academy of Management Proceedings 2018 (1)
Christina Fang, Chengwei Liu (2018)
Subject(s)
Human resources management/organizational behavior
Keyword(s)
Luck, opportunities, biases
Decades of research in cognitive, organizational and social sciences shows that people do not always behave rationally (Bazerman & Moore, 2009; Kahneman, 2011; March & Heath, 1994). Systematic biases in individual actions and organizational behaviors are documented in various contexts, ranging from everyday decisions to high stake ones such as political forecasts and merger and acquisitions. We argue that these systematic biases in fact illuminate an alternative source of competitive advantage. Systematic biases can imply predictable false expectations and mispricing to such extent that strategic factor or product markets become inefficient (Zuckerman, 2012). Informed strategists could utilize the knowledge about biases to search for systematic over- and under- estimations and to arbitrage these market inefficiencies.
With permission of the Academy of Management
Volume
2018
ISSN (Online)
2151-6561
ISSN (Print)
0065-0668