How Does Top Managers' Cognition about Corporate Resources Influence Firm Growth?

Recent research has highlighted the concept of managerial resource cognition, which refers to the extent to which managers know and understand corporate resources, as a fruitful element in understanding the micro-processes underlying a firm’s resource transformation. However, a more detailed conceptualization is lacking and it remains unclear under what conditions resource cognition leads to superior firm performance. Drawing on the Penrosian view and the dynamic managerial capabilities perspective, this study further develops resource cognition in terms of top managers’ cognitions about the firm’s technology- and market-related resources. Using multi-source data of firms operating in a dynamic industry, we investigate how resource cognition affects firm growth. We also explore the contingent role of decentralization and top management team size as important structural elements determining the information flow within a firm and the context in which top managers make strategic decisions. The findings help to advance the concept of resource cognition and have interesting implications for research into dynamic managerial capabilities and the role of organizational design in the microfoundations of competitive advantage.