Simply Clever – The Impact of Cognitive Simplicity on Organizational Digital Strategy Orientation

Lohmar, David; Jung, Christopher; Nüesch Stephan

Abstract

This paper examines how Chief Executive Officers’ (CEOs’) cognition can shape firms’ digital strategy orientation. Drawing on Ott and Eisenhardt’s (2020) theoretical framework of decision weaving, we argue that CEOs’ cognitive simplicity can be an integral factor in strategy shaping when opportunities around an organization are abundant and fleeting. Our findings show that CEOs who think persistently and coherently – in other words, simply – positively affect a focal firm’s digital strategy orientation. We theorize that cognitive processes are influenced by cognitive biases such as CEO overconfidence, which positively moderates the relationship between cognitive simplicity and digital strategy orientation. Our results support the counterintuitive finding that cognitive simplicity contributes to greater digital strategy orientation and is reinforced by managerial overconfidence.