Competence and incompetence training, impact on executive decision-making capability: advancing theory and testing

“Two-level theories explain outcomes with causal variables at two levels of analysis that are systematically related to one another” (Goertz & Mahoney, 2005, p. 497). This thesis analyses the systematic relationship between level one, the environment of dynamic complexity theory, and level two, cognitive decision-making theory. The second-level literature on competence theory suggests that we train executives to make incompetent, rather than competent, decisions. One of several problematic decision-making tools often taught in business schools is the Boston Consulting Group (BCG) market-share/growth matrix. This device causes practitioners to focus on competitor-oriented objectives and neglect profit objectives. Ultimately, competitor-oriented objectives harm performance. First-level literature adds the culpability of environmental context theory to this problem. Simon (1956) posits that competency is dependent upon cognition together with – and often superseded by – the context. Dynamic complexity permeates the context of managerial decisions. With the proposition that incompetency derives from the systematic relationship between cognition and environment, this thesis pursues knowledge about the impact of incompetency training, and counter-incompetency training, in an environment of dynamic complexity. Experiments were conducted to test 13 hypotheses, working with 541 executives-in-training and experienced practitioners in North America and New Zealand. The research in this thesis extends research to date on the BCG device with two key differences. Armstrong and colleagues (1994, 1996, 2007) identify incompetence but do not test the effects of training or solutions for incompetence, and earlier treatments rely upon competitor profit levels that are, in reality, indeterminable. The research reported here first confirms the general level of incompetent decision-making found in earlier work, then tests various tools for their efficacy in improving executive decisions. Tools considered include the open system non-deterministic strategy formulation metaphors of Weick’s (2007) sensemaking/tool-dropping, and Gigerenzer’s (2006) heuristics. Additionally, the elimination of competitor profit information from the ten treatments of this thesis research provides realistic information for a decision maker in this context. Keywords: sensemaking, tool-dropping, heuristics, competence, decision-making, ecological rationality, emergent strategy, non-deterministic metaphor, dynamic complexity, executive training