Handbook of Research on Strategy and Foresight
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Handbook of Research on Strategy and Foresight

Edited by Laura Anna Costanzo and Robert Bradley MacKay

Drawing together a collection of 29 original chapters, the Handbook makes an invaluable contribution to theory and practice by stimulating disciplined, rigorous and imaginative enquiry into the relationship between strategy and foresight. Leading scholars in the field of strategic management are brought together to offer innovative and multi-disciplinary perspectives on the past, present and future of strategy formation and foresight. In so doing, they challenge research in four key areas: strategy and foresight processes; strategy innovation for the future; understanding the future; and strategically responding to the future.
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Chapter 24: (Un) Great Expectations: Effects of Underestimations and Self-perception on Performance

Rodolphe Durand


24 (Un) great expectations: effects of underestimations and self-perception on performance Rodolphe Durand Introduction While foresight permeates everyday strategic activity, it remains quite ignored by strategy research. More than 10 years ago, Starbuck and Mezias pleaded diligently for further research on the relationships between firms’ estimation accuracy and performance: To find out whether [perceptions are accurate or not], researchers need to investigate the larger or smaller errors and different biases. Nevertheless, surprisingly little research focuses on the accuracies of perceptions. Studies comparing subjective with objective data may be rare because it is so difficult to design good questionnaires, to obtain good ‘objective’ data and to obtain enough suitable respondents. (1996: 115). Since then, some studies have assessed the reasons and strategic consequences of an absence of foresight, through the study of the relationships between overconfidence (optimistic errors) and strategic actions (Hayward and Hambrick, 1997; Coff, 1999; Simon and Houghton, 2003). However, scholars know little about how underestimations relate to performance. Underestimations are pessimistic estimates of an actual event, like, for instance, a negative forecast on success odds or a below-average estimated development of a favorable environmental trend. Therefore, this chapter aims at refining our understanding of the impact of underestimations as another manifestation of a lack of organizational foresight. Just as overestimations are associated with overconfidence, underestimations can be associated with underconfidence. Underconfidence results from an excessive value attribution to negative diagnostic cues. A simple assumption is that the higher the level...

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