A Distributed Cognition Perspective on Newcomers' Change Processes: The Management of Cognitive Uncertainty in Two Investment Banks

Abstract

This paper examines newcomers' cognitive change processes in two investment banks during their socialization. A two-year ethnographic study examines how the two banks managed the duration of junior bankers' cognitive uncertainty differently, which resulted in distinct forms of individual cognitive change and cognition at the organizational level. Red Bank reduced cognitive uncertainty such that bankers experienced it as transient. It conveyed abstract concepts so that bankers could solve problems independently using deduction. This created an individual-centric organizational cognition. To highlight situational uniqueness, Amp Bank amplified cognitive uncertainty such that bankers experienced it as persistent. This created a collective-centric organizational cognition: because demands exceeded individuals' cognitive capacity, bankers used organizational resources to solve problems inductively. A grounded theory depicts the mutual constitution of individual and organizational cognition, including the relation of these levels over time and how the same individual cognitive process operates differently in a different organizational cognitive context. It uses a distributed cognition framework to contribute to theory development on how cognition becomes diversified and specialized in organizations.