Aspects of Cognitive Competence and Managerial Behaviour

Abstract

This paper presents arguments for viewing decision making by managers in the context of both cognitive psychology and neuropsychology of planning. Individual differences in managerial decision making are explained within the framework of a model of cognitive processes that has as its components planning, attention, information coding and knowledge base. But all decision making, according to the authors, is also influenced by irrational factors contained in motivation and emotions and the failures of logic. The authors discuss the conditions under which such failures occur and recommend inductive, rather than deductive, rule-learning procedures for good planning strategies. The Appendix provides a list of strategies that can be taught inductively through structuring the manager’s experiences. Although the authors’ focus is on managers, their observations and prescriptions may be equally relevant for entrepreneurs as well.