Cognitive Barriers to External Resource Management – Top Management Perspective

Kari Iloranta

Research output: ThesisDoctoral ThesisMonograph

Abstract

This research addresses a significant unresolved problem, the slowly evolved top management cognition of the strategic opportunities of supply management. It brings a top management perspective to the supply management literature and studies the implications of cognitive processes for supply management-related decision making. The existing supply management literature does not offer frameworks for these issues. The core of the empirical part of this case research consists of interviews with the top management team members in three industrial companies, focusing on five supply management related change processes within those. As theoretical lenses I utilize the established concepts of bounded rationality, managerial cognition, and institutionalization. Referring to the literature on organization theory, I will build on the idea that the barriers to cognition of the increased importance of external resources are barriers to the optimal economic performance of the firm.In this paper I suggest that the general management orientation within industrial firms is based on mental models of a firm that purchases mainly simple goods for production needs, although presently the majority of the resources utilized by an industrial company are external. These historical mental models are implanted into the minds of new generations in the form of education, form the basis of general functional organizational models and concepts of strategy, and influence discussions in the economic media. Through these various forms, the mental models' implications tend to strengthen each other and constitute a vicious circle that effectively creates a barrier to cognition of the strategic opportunities offered by SM and external resources.I argue that two key factors in the slowly evolved cognition of the strategic importance of external resources are: 1) the whole value of the external spend within industrial firms is not regularly reported and is rarely calculated. 2) strategic differentiation opportunities through strategic supply management (SSM) are not recognized as a result of limited education in modern SSM. I suggest a need for paradigmatic change in general managerial thinking, from operational purchasing towards external resource management. This change would have remarkable implications for reporting practices, strategy processes, management teams' agendas, organization, education, and cross-organizational training and it would also bring new insights to economic media in evaluating a firm's performance.
Translated title of the contributionUlkoisten resurssien tunnistamisen esteet – ylimmän johdon näkökulma
Original languageEnglish
QualificationDoctor's degree
Awarding Institution
  • Aalto University
Supervisors/Advisors
  • Tanskanen, Kari, Supervising Professor
  • Tanskanen, Kari, Thesis Advisor
Publisher
Print ISBNs978-952-60-7212-8
Electronic ISBNs978-952-60-7211-1
Publication statusPublished - 2016
MoE publication typeG4 Doctoral dissertation (monograph)

Keywords

  • top management cognition
  • external resource management
  • strategic supply management

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