RESPONSE - Insead

Findings: Internal factors and cognitive alignment (Objective 3) General Firm Factors
Table 22. Impact of corporate strategy on cognitive alignment
40%
30%
20%
10%
0%
Gap 1 Gap 2 Gap 3 Gap 4
Differentiation 25% 26% 27% 3%
Cost efficiency 25% 33% 32% 9%
Table 22 above shows support for the hypothesis in three of the four gaps, with only gap 1,
Sequentiality, showing no difference between the two groups of companies. The data therefore
provide evidence for our hypothesis of a positive correlation between differentiation strategies and
cognitive alignment.
Although the energy industry is commonly associated with the provision of commodity products and
services, one of the participating energy companies has set an objective to be a global leader in
sustainability and renewable energies. Interestingly, this renewable energy focus has had a concrete
impact on the firm’s strategic content, especially its recent M&A activity. Why, however, does this
lead to greater cognitive alignment? Its strategy has encouraged the firm to detect the needs of
various stakeholders and set targets towards achieving progress. The very act of detecting needs and
working towards fulfilling them results in a greater appreciation of stakeholder interests.
6.2.3 The impact of knowledge management
One part of the organisational response to this problem of correctly interpreting social demands might
lie in the correct use of knowledge management systems directed towards capturing and analysing
external events. The quality of the "sensors", organisations have, to understand environmental
changes has not been studied as an antecedent of strategic response behaviour, and, even less so,
of responses to societal pressures. We propose that the existence of advanced learning processes 13
within the organisation could be important to explain the magnitude of cognitive gaps because it
should facilitate the development of capabilities specific to the management of stakeholder
interactions, including an improved understanding of stakeholder interests and a better scanning of
the environment for emerging issues.
The hypothesis is therefore:
More developed knowledge management practices correlate with enhanced
cognitive alignment (narrower cognitive gaps).
Table 23 below shows the magnitude of average cognitive gaps for firms with high levels of ability in
knowledge management compared with those with low levels (split around the approximate median).
13 established procedures to facilitate the generation of novel ideas, and the improvement of existing
practices, e.g. suggestion boxes, brainstorming, debriefing practices, etc.
RESPONSE: understanding and responding to societal demands on corporate responsibility
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