Speaker：Prof. CUI Haitao (Carlson School of Management, University of Minnesota)

Time：9:30-10:30 May 26,2017(Friday)

Site：B228

Abstract：Research has suggested that managers may have different levels of strategic-reasoning capabilities. Some firms are able to make more strategic decisions and obtain higher profits; others make less strategic decisions and earn lower profits. By incorporating hierarchical strategic capabilities into a duopoly model, we find that a less strategic firm may benefit from its limited strategic capability when competing with a more strategic firm. The less strategic firm may earn a higher expected profit even though its opponent, the strategic firm, has a better strategic-reasoning capability. We also find that a strategic firm competing with a less strategic firm may get a lower profit than when competing with a strategic rival. Finally, in an innovative comparison, we find that the less strategic firm can earn a higher profit than a strategic counterpart with the same loyal share. A lab experiment provides empirical support for key theoretical predictions.