Interactions during strategic issue diagnosis: How uncertainty, threat, and opportunity impact response

Abstract

Recent research attention has been increasingly directed at uncertainty in and around organizations. In strategic issue diagnosis research addressing this topic, dimensions of perceived uncertainty (effect and response) have been linked with elements of environmental interpretation (threat and opportunity) and each cognitive assessment has been proposed to impact managers’ response. However, even though good reason exists to expect their presence, research examining the implied interactions between these evaluations has lagged. We theorized and tested for these interactions using a scenario-based vignette study where participants were asked to diagnose and respond to the strategic issue of NAFTA renegotiations. Consistent with our predictions, the relationship between uncertainty and response was contingent on interpretation of opportunity and threat, providing robust evidence for the presence of interactions across hypotheses. Our findings lend empirical support for conceptual frameworks suggesting the existence of links between uncertainty, interpretation, and response during strategic issue diagnosis.