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Introduction
Upper echelon theory (UET) was introduced in 1984 by Hambrick and Mason and posits that the characteristics of top executives, such as the chief executive officer, impact strategic decisions and organizational performance. These characteristics, including psychological factors (cognitive style and personality) and observable experiences (age, tenure, education and functional background), shape the executive's decision-making process (Chiaburu, 2010). UET suggests that strategic decisions are not entirely rational, due to bounded rationality (i.e., limitations in accessing, processing and using information; Hambrick, 2007).
UET provides insight into how executive characteristics, such as their cognitions, values and personalities, impact their decision-making processes and, in turn, organizational behavior and performance (Hambrick, 2007; Hambrick and Mason, 1984). However, as noted by Hambrick (2007), UET has a “black box problem,” lacking an understanding of the psychological processes behind chief executive officer (CEO) decision-making. Neely et al. (2020) emphasize the need to focus on the cognitive processes in the “cognitive black box.” Previous studies have primarily examined observable CEO characteristics (e.g. experience, tenure, origin, gender) or underlying traits (e.g. Big-5 personality, narcissism, overconfidence, core self-evaluations, charisma, values) as proxies for cognitive processes (Bromiley and Rau, 2016). For instance, Wally and Baum (1994) suggested that CEO education is a proxy for cognitive ability, allowing CEOs to process information faster and make decisions more effectively. However, few studies have delved into cognitive abilities in detail. Helfat and Peteraf (2015) introduced the concept of managerial cognitive capability, which refers to an executive's ability to generate, retrieve and modify knowledge. Despite this, Neely et al. (2020) argue that progress in uncovering the cognitive black box is limited.
Neely et al. (2020) suggest that to more fully unpack the cognitive blackbox, UET researchers need to “integrate conceptual approaches from related research streams” (p. 1036). Strategic thinking is a critical cognitive ability that refers to a specific mode of thinking with unique characteristics (Liedka, 1998; Nuntamanop et al., 2013). These characteristics or dimensions are often described as different types of thinking or cognitive abilities, such as creative thinking. The literature suggests that strategic thinking is a multidimensional construct, but there is no universal definition or agreement on its specific dimensions (Adzeh, 2017). Nuntamanop et al. (2013) found 16 different dimensions identified...