Differences in Strategic Issue Interpretation across Cultures – A Socio‐Cognitive Perspective

• Author: Philip Meissner,Sophie Florian,Torsten Wulf
• DOI: http://doi.org/10.1111/emre.12361
• Date: 01 March 2020
• Published date: 01 March 2020

Differences in Strategic Issue Interpretation

across Cultures –ASocio-

Cognitive Perspective

TORSTEN WULF,

1

SOPHIE FLORIAN

1

and PHILIP MEISSNER

2

1

Philipps-University Marburg, Universitätsstraße 24, 35037, Marburg, Germany

2

ESCP Europe, Heubnerweg 8-10, 14059, Berlin, Germany

The framing ofstrategic issues as opportunitiesor threats has been shownto significantly affect strategic behavior

in organizations. However, whether and how this framing effect differs among executives from different national

cultures remains unclear. Building on psychological research on culture and decision-making, we introduce a

socio-cognitive approach to culture that offers a more differentiated explanation for the effect of culture on issue

interpretation than the traditional values-basedapproach. We argue that culturaldifferences in cognitivestyle affect

strategic issue interpretation. However, this impact depends on the framing of the issue. We use a vignette-based

decision experiment involving 65 German and 63 Chinese executives to show that cultural differences occur if an

issue is framed as a threat but not if it is framed as an opportunity. The socio-cognitive approach to culture opens

new avenues for cross-cultural research on strategic issue interpretation in particular and strategic decision-

making in general.

Keywords: Strategic issue interpretation; cross-cultural analysis; opportunity framing; threat framing

Introduction

Following Jackson and Dutton’s (1988) seminal study,

research in the strategic decision-making field has

consistently shown that the interpretation of a strategic

issue asan opportunity or a threat criticallyaffects strategic

behavior in organizations (Julian and Ofori-Dankwa,

2008; Plambeck andWeber, 2010; Barreto, 2012). In this

context, strategic issues are defined as environmental

events or developments that might have important

implications for an organization’s performance (Ansoff,

1980; Thomas et al., 1993). These issues are often

ambiguous and their consequences are uncertain. Thus,

executives perceive and interpret them in different ways.

Based on research by Daft and Weick (1984), Staw et al.

(1981), Mintzberg et al. (1976), and others, Dutton and

Jackson (1987) as well as Jackson and Dutton (1988)

establishedthreat and opportunity framingas two relevant

schemes for interpreting strategicissues. In this context, a

threat is characterized as negative, uncontrollable, and

entailing potential losses, while an opportunity is viewed

as positive, controllable, and offering potential gains

(Jackson and Dutton, 1988). Research has shown that the

framing of strategic issues as opportunities is associated

with strongerorganizational change(Thomas et al., 1993),

voluntary environmental strategies (Sharma, 2000), and

externally oriented actions, while threat framing fosters

response actions that are internally oriented

(Chattopadhyay et al., 2001).

However, the antecedents of differences in the

interpretation of strategic issues have received less

attention. Research has thus far identified individual-level

factors, suchas self-efficacy and positive mood,as drivers

of opportunity framing (Mittal and Ross, 1998;

Mohammed and Billings, 2002) as well as

organizational-level factors, such as time spent on

information search and the diversity of available

information, as drivers of threat perceptions (Anderson

and Nichols, 2007). A few studies have examined the

effect of national cultures on the interpretationof strategic

issues (Sallivan and Nonaka, 1988; Schneider and de

Meyer, 1991; Barr and Glynn, 2004). These studies are

rooted in the values-based approach to culture, which

distinguishes cultures based on the value dimensions

developed by Hofstede (1980). However, this approach

has been subject to criticism (Earley, 2006; Kirkman

Correspondence: Torsten Wulf, Philipps-University Marburg,

Universitätsstraße 24, 35037 Marburg, Germany, Tel: +49 6421 28

22841. E-mailtorsten.wulf@uni-marburg.de

DOI: 10.1111/emre.12361

©2019 European Academy of Management

European Management Review, Vol. 17, –(2020)

19 5

–20,

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