Handbook of Organizational Learning and Knowledge Management, Second Edition

The Nature of Dominant Logic

The theory of a general management dominant logic is one conceptual framework for thinking about the process and results of cognitive simplification in top management teams. As Schwenk (1984) suggests, strategic decision making in top management teams is subject to cognitive simplification. Top management, as with all humans, employ simplifying decision-making heuristics, such as prior hypothesis bias, adjustment and anchoring, illusion of control, and representativeness, that decrease their ability to appreciate the true complexity of problems and select the best solution.

The dominant logic represents the shared cognitive map (Prahalad and Bettis, 1986) and strategic mindset of the top management team or the dominant coalition, and is closely associated with the processes and tools used by top management. There may be minor variations in the details of the individual cognitive maps among top management team members, but the major features conform. From a managerial viewpoint, the congruence in cognition among top management team members offers advantages of efficiencies, but inevitably, it also introduces the disadvantages of rigidity. For example, the dominant logic may be inappropriately applied in diversification moves or when there are changes in the core industry. As Sull (1999) has observed, good companies go bad because they insist only on doing what worked in the past.

As shown in Figure 17.1, the dominant logic develops and evolves due to ...