DEBIASING MECHANISMS: TOP MANAGEMENT TURNOVER AND CORPORATE RESOURCES REALLOCATION - ESCAPING INERTIA TRAP
Keywords:
team management turnover, resource reallocation, decision making bias, inertia trapAbstract
Resource allocation decisions have a profound impact on organizational performance. This study examines the close relationship between debiasing mechanisms and inertia in operating companies. It seeks to understand whether resource reallocation leads to development through fresh leadership perspectives or stays unchanged. By examining the connection of cognitive biases, inertia, and debiasing mechanisms, this research offers a comprehensive framework for comprehending the key factors influencing resource reallocation during managerial transformation. Research employs dynamic threshold method using S&P 500 data over 2000 companies. From the perspective of organizational tenure, our findings reveal that teams with an average tenure of 8.8 years in the dynamic model and 5.3 years in the dynamic threshold model witness substantial changes in capital allocation. These findings emphasis the significance of team members' tenure length in triggering significant shifts in resource allocation patterns. This research enriches strategic decision-making practices, thereby contributing to both organizational theory and practical applications. The paper concludes with a policy recommendation that aims to guide organizations in navigating these dynamics effectively.
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