Abstract
PurposeThe purpose of this paper is to understand how illusion of control (IOC) can affect the implementation of formal processes of environmental scanning in organizations.Design/methodology/approachBased on the proposed research question, an exploratory study was chosen, which could collaborate with future studies. There were conducted three semi-structured interviews with CEOs working in medium/large technology companies.FindingsBehavioral traits were identified—such as overconfidence and underestimation of risks—which are directly related to the IOC’s theory. The belief that there is no added value to the company in adopting organizational strategic processes—such as environmental scanning—answers the research question and contributes to the development of new studies.Research limitations/implicationsThis study has as limitation the fact that it proposed the interviews to an inexpressive number of respondents, exclusively with the intention to explore better the relation between the IOC and the formal processes of environmental scanning.Practical implicationsThis research advances the understanding of the difficulty in adopting formal environmental scanning practices in organizations. It can also help understand the motivations of executives for adopting (or not adopting) such practices. Finally, it is possible to know and understand the individual approach to environmental scanning, as well as its limitations.Originality/valueThis research discusses the themes of IOC and environmental scanning, demonstrating how cognitive factors can affect strategic decision making in an organization. Although the IOC is well-developed in the field of psychology, it can be very helpful in understanding business management and executive behavior.
Highlights
Information is one of the most important assets of organizations
This research was carried out to explore how the illusion of control (IOC) can become a barrier to the establishment of formal processes of environmental scanning in organizations
Do you believe that you might be surprised by an event occurring in the external environment of your organization?
Summary
Information is one of the most important assets of organizations. Companies are enhancing their processes to access and interpret data, turning them into strategic advantage. If in the past years, analytics was an IT issue, currently it is considered as a part of the core business of companies (Davenport et al, 2012). Despite the importance of managing the quality of internal information in organizations, information from the external environment is relevant for strategic management, and it comprises data from all institutions that originate or operate outside the firm. Organizations need to manage information from the external environment in order to stay competitive (Kumar et al, 2001). Environmental scanning is the “collection and use of information about events, trends, and relationships in an organization’s external
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