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Strategic Management Journal
Strat. Mgmt. J.,31: 689–710 (2010)
Published online EarlyView in Wiley InterScience (www.interscience.wiley.com) DOI: 10.1002/smj.835
Received 9 July 2008;Final revision received 30 November 2009
WHEN THE GLASS IS HALF FULL AND HALF EMPTY:
CEOs’ AMBIVALENT INTERPRETATIONS
OF STRATEGIC ISSUES
NILS PLAMBECK1* and KLAUS WEBER2
1
HEC School of Management, Paris, Department of Strategy and Business Policy,
Jouy-en-Josas, France
2
Northwestern University, Kellogg School of Management, Evanston, Illinois, U.S.A.
Organizational scholars have highlighted the importance of interpretive ambivalence for mindful-
ness, creativity, and strategic change. Ambivalence occurs when an issue is seen simultaneously
as positive and negative. We examine organizational factors that influence the propensity of orga-
nizational leaders to evaluate a new strategic issue ambivalently. Data come from a survey of
220 German CEOs confronted with the enlargement of the European Union. We find that CEOs
of firms with a more ambidextrous strategic orientation and a moderate sense of organizational
control over their environment are most likely to be ambivalent about this issue. Our findings
affirm the prevalence of interpretive ambivalence at the executive level and suggest ways for
organizations to promote or prevent ambivalence in strategic sensemaking. Copyright 2010
John Wiley & Sons, Ltd.
INTRODUCTION
Organizational and strategy scholars are increas-
ingly interested in the phenomenon of interpretive
ambivalence in organizations (Fong, 2006; Gilbert,
2006; Piderit, 2000; Weick, Sutcliffe, and Obstfeld,
1999). Ambivalence refers to holding competing
evaluations of an issue (Kaplan, 1972). For exam-
ple, a chief executive officer (CEO) may see a
change in the firm’s environment as both positive
and negative for the firm. Such ambivalent issue
evaluations affect strategy processes and organi-
zational outcomes. Some scholars have suggested
that ambivalence may prevent oversimplifications,
enhance mindfulness (Fiol and O’Connor, 2003;
Keywords: ambivalence; sensemaking; strategic issue
diagnosis; organizational mindfulness; managerial cogni-
tion; organizational context
*Correspondence to: Nils Plambeck, HEC School of Manage-
ment, Paris, Department of Strategy and Business Policy, Jouy-
en-Josas Cedex, France 78351. E-mail: plambeck@hec.fr
Weick et al., 1999), and encourage wider participa-
tion in problem solving (Piderit, 2000). In addition,
Fong (2006) found that the experience of ambiva-
lence triggers an increased sensitivity to associa-
tions, which is an important aspect of creativity.
Others have cautioned, however, that the mind-
fulness and cognitive complexity associated with
ambivalence can get in the way of swift responses
to an event (Levinthal and Rerup, 2006; Porac and
Rosa, 1996).
Ambivalent understandings of strategic issues
are particularly central for top executives, who
play a key role in shaping collective interpre-
tations and strategic responses in organizations
(Barr, 1998; Gioia and Chittipeddi, 1991; Ham-
brick and Mason, 1984; Pratt and Doucet, 2000).
Gilbert (2006), for example, found in a case
study of a publishing company that the CEO saw
the emergence of online publishing as simulta-
neously a threat and an opportunity. The exec-
utive’s ambivalent interpretation of this environ-
mental shift allowed for experimentation and wider
Copyright 2010 John Wiley & Sons, Ltd.
690 N. Plambeck and K. Weber
participation, which enabled the firm to identify
successful responses to the drastic change.
These studies suggest that leaders’ ambiva-
lence is more common and more important than
previously assumed. But the conditions under
which executives develop ambivalent evaluations
of strategic issues have rarely been studied
(Gilbert, 2006). Previous work on strategic issue
interpretation has, instead, examined why execu-
tives interpret an issue as either positive or nega-
tive (Denison et al., 1996; Thomas and McDaniel,
1990). One key factor in evaluative ambivalence
is the organizational context of executive sense-
making. Organizational structures and belief sys-
tems expose executives to information, ready-
made framings, and social role expectations (Daft
and Weick, 1984; Dutton and Duncan, 1987)
that act as perceptual filters and influence which
aspects of an issue CEOs attend to (Ocasio,
1997). These filters and framings, in turn, influence
whether top managers evaluate an issue ambiva-
lently.
Organizational sources of executive sensemak-
ing are of particular interest to strategy schol-
ars because they may help explain firm differ-
ences in competitive behavior. However, stud-
ies that unpack how organizational factors trigger
executive ambivalence are decidedly scarce. Our
study begins to fill this gap. We embed the con-
cept of ambivalence in the literature on strategic
issue interpretation and sensemaking (e.g., Dut-
ton and Jackson, 1987; Julian and Ofori-Dankwa,
2008), and lay out basic organizational and cog-
nitive mechanisms that prompt top executives to
see issues ambivalently. We use survey data on
how CEOs of German firms evaluated a salient
strategic issue— the 2004 European Union (EU)
enlargement.
The paper’s contribution is theoretical and
empirical. Theoretically, we elaborate the mech-
anisms through which organizational context trig-
gers CEOs’ ambivalent evaluations. Previous
research suggests that top decision makers’
ambivalence is consequential, but has paid little
attention to antecedents (Fiol and O’Connor, 2003;
Fong, 2006; Gilbert, 2006). Our study puts this
inquiry on firmer ground by drawing on expan-
sive social psychological literature on attitudi-
nal ambivalence. Empirically, we test hypotheses
about the relationship between organizational char-
acteristics and CEO ambivalence in what is, to
the best of our knowledge, the first larger sam-
ple study. Our analyses suggest that top managers
in firms with a more ambidextrous strategic orien-
tation and a moderate sense of organizational con-
trol are more likely to evaluate the issue ambiva-
lently.
THEORETICAL FRAMEWORK
Evaluating a strategic issue as positive, negative,
or both is an act of interpretation. Interpretation
answers the basic question, what type of situation is
this? (Weick, Sutcliffe, and Obstfeld, 2005: 409),
which is achieved by ‘the fitting of information
into some kind of [cognitive] structure’ (Thomas,
Clark, and Gioia, 1993: 241). Issues and events
become meaningful in relation to the firm’s exist-
ing knowledge and identity (Lyles, 1981). Inter-
pretation results in framings of information along
more generic dimensions, so that unique issues
become comparable. Managers commonly employ
the dimensions of valence (positive or negative for
the firm) and agency (controllable or uncontrol-
lable) in interpreting issues (Dutton and Jackson,
1987). The familiar labels of ‘threat’ and ‘oppor-
tunity’ arise from these assessments (Jackson and
Dutton, 1988). Positive evaluations include an
assessment that the organization is likely to gain
from the issue, while negative evaluations includes
the expectation that the current issue will lead to
losses (Thomas and McDaniel, 1990).
Research in social psychology has found that
individuals attach such positive and negative eval-
uations to issues, objects, and persons (Fazio,
Eiser, and Shook, 2004), and that evaluations not
only consist of cold analytic assessments but also
of hot affective reactions (Fazio, 2007). Individ-
uals assess the overall valence of an issue based
on attending to its multiple aspects (Petty et al.,
2007). They relate perceived attributes of the issue
to repertoires of analogous attributes and evalu-
ations stored in memory. The overall evaluation
of the present issue is a product of the evalua-
tions accessed though the different aspects (Fazio,
2007). The valences of attended attributes thus
help individuals put a novel, complex issue onto
simpler dimensions (Petty, Bri˜
nol, and DeMar-
ree, 2007), understand the overall implications
of the issue, and activate corresponding response
schemas (Cacioppo, Gardner, and Berntson, 1999;
Higgins, 1997).
Copyright 2010 John Wiley & Sons, Ltd. Strat. Mgmt. J.,31: 689– 710 (2010)
DOI: 10.1002/smj
CEOs’ Ambivalent Interpretations of Strategic Issues 691
Previous work on strategic issue diagnosis often
implies that executives habitually classify issues as
either positive or negative (e.g., Chattopadhyay,
Glick, and Huber, 2001; Thomas et al., 1993).
Yet both positive and negative evaluations can
become associated with an issue, so that the per-
son evaluates the issue as positive and negative
at the same time (de Liver, van der Pligta, and
Wigboldus, 2007; Petty et al., 2007). The simul-
taneous presence of positive and negative evalua-
tions associated with the same issue is referred to
as attitudinal ambivalence (Kaplan, 1972; Thomp-
son, Zanna, and Griffin, 1995).1This notion builds
on the conclusion that a bipolar conceptualiza-
tion of evaluations as ranging from positive to
negative is insufficient to capture the actual cog-
nitive processes involved in evaluation (Cacioppo,
Gardner, and Berntson 1997: 6). Several studies
have demonstrated that positive and negative atti-
tudes are separate dimensions (e.g., Costarelli and
Colloca, 2004; de Liver et al., 2007; Eagly and
Chaiken, 1998). In contrast to the measurement
of temperature, where warmer means less cold,
a more positive evaluation does not automatically
lead to a less negative evaluation. Holding evalu-
ations of competing valence is possible, for exam-
ple, when a person faces an issue with positive and
negative facets (de Liver et al., 2007; Petty et al.,
2007). In developing a holistic view of the issue,
the person will not form a univalent or neutral
but rather an ambivalent evaluation (Petty et al.,
2007).
What are general sources of ambivalence? Stud-
ies by Linville (1982), Judd and Lusk (1984),
and Rudolph and Popp (2007) suggest that when
individuals consider a greater number of aspects,
they are less likely to perceive an issue as simply
good or bad. However, if the aspects considered
are closely related, a more univalent evaluation is
likely despite the analyzing of much information
(Eagly and Chaiken, 1998; Judd and Lusk, 1984).
Thus, it is primarily when individuals apply dif-
ferent perspectives and knowledge structures to an
issue that looking at more aspects leads to greater
1Ambivalence stands in contrast to the more general notion of
ambiguity, which also subsumes vagueness and uncertainty of
evaluations and other framings. An ambivalent evaluation does
not indicate that the valence of an issue is vague or unknown,
which would imply that no specific cognitive structures are acti-
vated. Rather, ambivalence refers to the application of distinct
and competing evaluations of an issue, so that cognitive struc-
tures associated with both evaluations are activated.
ambivalence in the overall evaluation (Rudolph
and Popp, 2007).
When would executives entertain more diverse
framings and identify more diverse attributes of
strategic issues? Research on managerial cogni-
tion suggests that top executives’ interpretive pro-
cessing is shaped by their organizations (Daft and
Weick, 1984; Dutton and Duncan, 1987). Organi-
zations provide a relatively strong context that pro-
vides collective, structurally embedded beliefs and
frameworks through which executives perceive the
issues the firm is confronted with (Dutton and
Duncan, 1987). Organizations also filter the infor-
mation and framings to which a CEO is exposed,
because sensemaking activities are distributed and
relayed to top executives through channels and
routines (Ocasio, 1997; Starbuck and Milliken,
1988). Accordingly, previous research has found
organization-level differences in what attributes
executives attend to and in the framings they apply
(e.g., Dutton and Dukerich, 1991; Thomas and
McDaniel, 1990). Hence, whether CEOs consider
a diverse or narrow set of issue aspects depends
in part on the organizational context that they find
themselves in.
Previous research identifies several organiza-
tional factors that narrow or broaden issue inter-
pretation: core beliefs and identities that relate the
organization to its environment (Bettis and Praha-
lad, 1995; Prahalad and Bettis, 1986), accumulated
experiences in a domain of activity (Miller, 1993),
and the coherence of executives’ social role expec-
tations (Merton, 1976). Collective representations
of an organization’s environment and beliefs about
what the organization is and how it should act filter
and frame information, and thereby influence how
executives evaluate an issue (Dutton and Dukerich,
1991; Kiesler and Sproull, 1982; Nystrom and
Starbuck, 1984). For example, when executives
look at an issue through the lens of a single-minded
strategic direction or a very homogeneous iden-
tity, they deem a narrower set of issue attributes
relevant. More heterogeneous strategy logics and
identities make more ambivalent evaluations likely
by admitting more diverse aspects for evaluation.
Similarly, beliefs about how much the orga-
nization can shape the outcomes of an event in
its environment affect the effort to seek infor-
mation and the diversity of perspectives enter-
tained. CEOs with a greater sense of organizational
controllability increase their sensemaking efforts
because they believe that the effect of the issue
Copyright 2010 John Wiley & Sons, Ltd. Strat. Mgmt. J.,31: 689– 710 (2010)
DOI: 10.1002/smj
692 N. Plambeck and K. Weber
depends on their firm’s decisions and actions. They
seek more detailed information and arrive at more
nuanced and ambivalent assessments (Bandura,
1997; Weick, 1998). However, as CEOs become
more confident in their firm’s ability to master the
issue regardless of other factors, effort declines
and more narrow routine perceptions result (Miller,
1993). Hence, leaders with very low and very high
levels of controllability can be expected to con-
sider a narrow set of frames and attributes, and less
likely to develop ambivalent issue evaluations.
An organization’s accumulated experience in the
issue domain has also been frequently identified
as an antecedent of executives’ interpretations of
events (e.g., Denison et al., 1996; Starbuck and
Milliken, 1988). Cumulative experience leads to
the formation of more fine-grained schemas and
a larger pool of knowledge structures embodied
in organizational routines, structures, and members
(Weick, 1995). This diversity prompts executives
to examine strategic issues from different and more
nuanced angles, consider a greater number and
more diverse aspects, and form more ambivalent
evaluations.
Lastly, top executives act not only as individ-
uals, but also as occupants of a formal role in
their firm that comes with a set of social expecta-
tions (Barnard, 1938; Merton, 1957). The social-
structural context of executives’ work in the form
of organizational roles primes and triggers fram-
ings and information consistent with role expec-
tations (Bechky, 2006; Weber and Glynn, 2006).
CEOs’ attitudinal ambivalence is partly induced by
what Merton (1976) termed ‘sociological ambiva-
lence:’ competing normative expectations induced
by different role partners. For example, managers
in different functional areas are likely to view
a strategic issue the organization is facing from
their local perspective (Dearborn and Simon, 1958;
Waller, Huber, and Glick, 1995) and relay corre-
sponding expectations to the top executive (Gioia
and Chittipeddi, 1991). Top corporate executives
often face these situations because they need to
integrate their leadership roles of different busi-
ness units and functions (Gilbert, 2006). At least
for broad strategic issues, top executives therefore
are exposed to more diverse framings and differ-
ent information. Greater structural diversity in the
organization prompts CEOs to look at issues from
different perspectives and entertain more ambiva-
lent evaluations.
In sum, ambivalent evaluations are likely to arise
when executives examine more diverse aspects
of an issue, which itself is in part driven by
the frameworks employed in the process. Orga-
nizations exert a strong influence over execu-
tives’ interpretations by triggering the frames in
use. The general contextual antecedents identified
above—organizational beliefs, experiences, and
role structures—affect executives’ propensity to
evaluate issues ambivalently. However, this does
not mean that executives evaluate all issues alike.
In addition to variation between firms, there is
also likely variation across issues within firms.
On the one hand, this is because organizational
beliefs and experiences often pertain to specific
domains, and it is the more proximate antecedents
relevant to an issue’s domain that are most strongly
linked to ambivalence about a specific issue. For
example, the same organization may hold narrow
beliefs, perceive very little control over, and have
little experience in the domain of employment
issues, but pursue more varied strategies, perceive
more control over, and have extensive experience
with technological shifts. Accordingly, executives
of this firm are less likely to interpret ambiva-
lently employment issues than technology issues
provided that both issues offer the same potential
for ambivalent interpretations.
On the other hand, issues themselves allow
for different degrees of ambivalence in interpre-
tations. It is especially strategic issues – defined as
potentially affecting a firm as a whole (Ansoff,
1965; Egelhoff, 1982)—that allow more ambiva-
lent evaluations. Strategic issues are typically ill-
structured and nonroutine (Lyles, 1981). The com-
plex nature of these issues invites executives to
apply different perspectives and arrive at more
ambivalent evaluations, provided the organiza-
tional context encourages such ambivalence. In
contrast, ‘issues that are relatively pre-packaged’
(Julian and Ofori-Dankwa, 2008: 101) make
ambivalence less likely.
Predictions about ambivalent issue evaluations
must thus be understood in the context of an
issue’s capacity for more ambivalent interpreta-
tions and of organizational antecedents in proxi-
mate domains. In this study, we focus on organiza-
tional antecedents of German CEOs’ ambivalence
about the 2004 EU enlargement. Before devel-
oping these hypotheses, we describe this empir-
ical setting to assess the issue’s potential for
the development of ambivalent evaluations and
Copyright 2010 John Wiley & Sons, Ltd. Strat. Mgmt. J.,31: 689– 710 (2010)
DOI: 10.1002/smj
CEOs’ Ambivalent Interpretations of Strategic Issues 693
to identify the relevant proximate organizational
domains.
EMPIRICAL SETTING: EUROPEAN
UNION ENLARGEMENT
In May 2004, Cyprus and Malta, along with the
Central European countries Hungary, the Czech
Republic, Slovakia, Poland, Slovenia, Estonia,
Latvia, and Lithuania, became members of the
EU. In joining the EU, the 10 new member states
accepted the binding acquis communautaire,which
consists of the treaties and regulations passed by
the European institutions, as well as all judgments
defined by the Court of Justice. As a consequence,
most restrictions between new and old member
states were eliminated. Goods and capital mar-
kets were liberalized, and barriers to foreign direct
investment and the free flow of goods and ser-
vices across borders abolished. Firms from both
old and new member states could, from May 2004
on, invest in, import, or export to all 25 member
states without limitations.
The EU enlargement was an important strategic
issue for German firms. It received extensive atten-
tion in the media and was discussed long before it
took place. The high growth and liberalized mar-
kets in the acceding states was seen as stimulating
demand and increasing export opportunities for
firms in Germany. But market liberalization was
also seen to intensify competition between firms
of the old and new member states. German firms,
in particular, faced competition due to lower wages
at firms in the geographically close new member
countries.
We chose this issue for several reasons. First,
whatever the cumulative effect for a specific firm,
the 2004 EU enlargement was a salient, equivocal,
and complex issue with strategic implications for
German firms, which is consistent with the defi-
nition of strategic issues (e.g., Dutton, Fahey, and
Narayanan, 1983: Dutton, Walton, and Abraham-
son, 1989; Thomas and McDaniel, 1990). Julian
and Ofori-Dankwa (2008) called on researchers
to study the interpretation of such broader strate-
gic issues because of their importance for organi-
zational environments. The issue of EU enlarge-
ment offered a potential multitude of facets and
angles and thus matches the issue-level condi-
tions for ambivalent evaluations outlined above.
The enlargement impinged on several business
domains, and we therefore expect organizational
beliefs, identities, and experience in these domains
to be most relevant for sensemaking processes and
resulting differences in CEOs’ ambivalence about
the event. A first domain is a firm’s competitive
strategy, as the event opened a sizeable new mar-
ket with diverse demand characteristics, changed
the set of competitors, and heightened cost-based
competition.
Second, entry into foreign markets and poten-
tial regional strategies and structures are centrally
implied by the enlargement project, so that experi-
ence with internationalization of sales and produc-
tion is especially salient. Third, with the unique
nature of this event, attributions of agency over
the consequences of EU enlargement by virtue
of relevant organizational resources are likely to
affect sensemaking efforts more than the firm’s
general perceived efficacy. More general organi-
zational characteristics, such as the diversity of
business units and executive teams, are also likely
to affect sensemaking processes.
HYPOTHESES
Strategic orientation
A firm’s strategic orientation — the belief of how
the firm should generally position itself and
respond to developments in its environment— is
an important filter of information that is embedded
in the firm’s culture, structure, and routines (Daft
and Weick, 1984; Thomas and McDaniel, 1990).
A single-minded focus on one strategic orienta-
tion primes executives with programmatic ideolo-
gies, paradigms, and traditions (Prahalad and Bet-
tis, 1986). Thus, executives are likely to consider
only a limited variety of issue aspects. When con-
structing a holistic evaluation of the issue, CEOs
who use the lens of a single strategic orientation
examine fewer and more similar attributes. As a
result, these executives are less likely to evaluate
the issue ambivalently.
Domain-offensive or domain-defensive strategic
orientations as identified by Miles (1982) pro-
vide such coherent frameworks for strategic issues
(Daft and Weick, 1984; Thomas and McDaniel,
1990). Domain-offensive strategies are associated
with exploring and capitalizing on new opportu-
nities, while domain-defensive strategies lead to a
bias toward exploiting existing capabilities (Gioia
Copyright 2010 John Wiley & Sons, Ltd. Strat. Mgmt. J.,31: 689– 710 (2010)
DOI: 10.1002/smj
694 N. Plambeck and K. Weber
and Thomas, 1996). Thomas and McDaniel (1990)
emphasize that members of firms with an offen-
sive strategic orientation concentrate their search
efforts on opportunity-related issue information.
In contrast, executives of companies following
a defensive strategic orientation focus on threat-
related issue aspects. Recent research suggests that
some firms consider defensive and offensive strate-
gic orientations at the same time, a state referred
to as strategic ambidexterity (e.g., Gibson and
Birkinshaw, 2004; He and Wong, 2004; Rothaer-
mel and Alexandre, 2009). Considering a domain-
offensive as well as a domain-defensive approach
provides executives with more tentative interpre-
tive guidance and allows them to apply more
competing frames to the issue. A more ambidex-
trous orientation at the group and organizational
level enables CEOs to see a wider spectrum of
attributes and examine the issue from different
angles.
Strategic ambidexterity at the firm level, there-
fore, makes executives more likely to evaluate
strategic issues ambivalently. For example, the
CEO of a firm with a singular focus on a domain-
offensive strategy may examine EU enlargement
primarily in terms of access to new markets, tech-
nologies, and products, while the CEO of a firm
with a more ambidextrous orientation is more
prone to consider additional information and cri-
teria such as threats to the firm’s home mar-
kets in his summary evaluation. The simultaneous
presence of different frames and filters associ-
ated with ambidexterity leads us to hypothesize
that:
Hypothesis 1: The less a firm’s strategic orien-
tation is focused on either domain defense or on
domain offense, the more ambivalently the CEO
will evaluate the issue.
Related experience
Experience in a related domain generally guides
issue interpretation (Denison et al., 1996; Weick,
1995) and influences a person’s ability to elaborate
on an issue (Eagly and Chaiken, 1998). Through
prior engagement with similar issues, organizations
develop routines and collective beliefs that shape
how managers view information in similar situa-
tions (Nystrom and Starbuck, 1984).
Greater related experience increases the com-
plexity of knowledge structures in the issue’s
domain, which prompts executives to examine the
new issue from diverse angles and arrive at more
ambivalent evaluations. For example, greater job
specialization in the wake of continued experience
may lead members of the organization to apply dif-
ferent frames, collect different information about
the issue, and form dissenting views regarding the
issue. When the information is channeled to the
top, CEOs are exposed to a diverse set of aspects
and divergent evaluations of the issue. In contrast,
executives of a firm that lacks experience with the
issue at hand are likely to fall back on fewer,
more generic frames and find it harder to iden-
tify contingencies. These managers’ assessments
are likely to lack nuance, making more univalent
evaluations likely. Psychological research supports
this link empirically. Hertwig et al. (2004) accord-
ingly found that lack of experience may prompt
perceptions of the world as less variable and more
clear-cut.
The relevant experience domain in our study is
a firm’s past activities in foreign markets. The EU
enlargement in 2004 primarily extends the geo-
graphic scope of competition for the firm. We
expect executives in an organization with very lit-
tle experience in international markets to attend
to and consider fewer and less diverse aspects of
the EU enlargement, thus framing the issue unam-
bivalently as either positive or negative. Man-
agers of firms with more international expertise
are more likely to be exposed to a variety of issue
aspects and divergent evaluations. Consequently,
we hypothesize that:
Hypothesis 2: The greater an organization’s
international experience, the more ambivalently
will the CEO evaluate the issue.
Diversity
Daft and Weick (1984: 285) emphasize that ‘upper
managers bring together and interpret information
for the system as a whole.’ What ‘the system as
a whole’ consists of influences the perspectives
from which executives examine a strategic issue
and the information they will take into account.
For example, the heterogeneity of a top man-
agement team (TMT) influences a CEO’s sense-
making about strategic issues because members
of the TMT communicate and act on their dif-
ferent beliefs and understandings (Chattopadhyay
Copyright 2010 John Wiley & Sons, Ltd. Strat. Mgmt. J.,31: 689– 710 (2010)
DOI: 10.1002/smj
CEOs’ Ambivalent Interpretations of Strategic Issues 695
et al., 1999). In previous research, increased demo-
graphic diversity in teams has been associated with
more diverse interpretations (Dearborn and Simon,
1958). Strategy scholars have similarly argued that
top managers with different functional specializa-
tions have different schemas or frames of reference
(e.g., Michel and Hambrick, 1992).
Top managers from different areas notice differ-
ent information (Starbuck, 1975) and examine a
strategic issue from different perspectives (Dear-
born and Simon, 1958; Waller et al., 1995). A
TMT members’ discussion of their more or less
heterogeneous understandings of strategic issues
such as the EU enlargement influences the CEO’s
overall evaluation. Different functional responsi-
bilities lead managers to look at the EU enlarge-
ment from different angles and a heterogeneous
team is expected to attend to a wider spectrum
of attributes. The different views and informa-
tion present in a more functional diverse TMT,
increases the likelihood that the CEO develops a
more ambivalent evaluation of the EU enlarge-
ment.
Hypothesis 3a: The greater the top management
team’s functional diversity, the more ambiva-
lently the CEO will evaluate the issue.
The presented reasoning concerning the relation-
ship between functional heterogeneity of the TMT
and a CEO’s ambivalence also applies to the rela-
tionship between TMT size and CEO’s ambiva-
lence because the size of the team is an important
covariate of TMT heterogeneity not tied to func-
tional responsibilities (Carpenter and Fredrickson,
2001). Larger teams tend to be more diverse (Ama-
son and Sapienza, 1997). We therefore hypothesize
that:
Hypothesis 3b: The larger the top management
team, the more ambivalently the CEO will eval-
uate the issue.
Executives also occupy structural positions in
subunits that come with diverse role expectations
(Merton, 1976). For example, their organization
may consist of multiple business units that compete
in different industries. Accordingly, top managers
in a diversified firm who are faced with market
changes are likely to see greater complexity in
the situation (Prahalad and Bettis, 1986). They are
expected to understand what the issue means for
each of their firm’s businesses and examine the
issue from the perspective of each business unit
(Gilbert, 2006). The diversity of perspectives and
the number of aspects that corporate executives
examine hinges on the heterogeneity of industries
in which the firm operates. Executives of more
diversified companies hold more complex mental
models, seek information about diverse aspects,
and are exposed to business-unit managers who
frame the issue from their industry’s standpoint
(Gilbert, 2006). As a result, we can expect exec-
utives of a single-industry firm only to examine
the EU enlargement from their primary industry’s
position, while top managers of diversified firms
will scrutinize it for each industry in which their
company competes. Accumulating diverse fram-
ings and information associated with EU enlarge-
ment is then likely to lead to a more ambiva-
lent evaluation overall. We therefore hypothesize
that:
Hypothesis 3c: The more diversified the orga-
nization, the more ambivalently the CEO will
evaluate the issue.
Sense of organizational controllability
Sense of organizational controllability refers to
the perception of how much control the organi-
zation has over the environment (Wood and Ban-
dura, 1989). Previous research has conceptualized
perceptions of organizational controllability and
issue valence as two dimensions underlying the
labels of threat and opportunity (e.g., Sharma,
2000; Thomas et al., 1993). However, conceptu-
ally, the belief that a firm has the necessary capa-
bilities and resources to control an issue affects
managers’ cognitive processes independent of the
issue’s valence (Denison et al., 1996; Durand,
2003). Wood and Bandura (1989) found, for exam-
ple, that perceptions of organizational control often
lead executives to develop a sense of personal effi-
cacy and discretion. A sense of organizational con-
trol shapes executives’ approaches to interpreting
issues (Litt, 1988) and the effort exerted to resolve
them (Bandura, 1997). It is important to note that
control, in this context, refers to the perceived abil-
ity of the firm to control an issue, not to the CEO
being personally in control. For example, a CEO
may simply trust the ability of his or her firm to
find effective responses. The effect of organiza-
tional control on a CEO’s interpretive processing
Copyright 2010 John Wiley & Sons, Ltd. Strat. Mgmt. J.,31: 689– 710 (2010)
DOI: 10.1002/smj
696 N. Plambeck and K. Weber
is thus indirect, via perceptions of collective capa-
bilities.
A sense of organizational controllability affects
executives’ ambivalence primarily through the
effort to seek and frame information. CEOs with
a very low sense of organizational controllabil-
ity limit their efforts to seek detailed information
about an issue because they see the outcome as
determined by forces beyond their firms’ actions.
Such executives settle for simpler nonambivalent
assessments. This effect of a perceived lack of
control in sensemaking is supported by research
on decision making (e.g., Friedrich, 1987) and
social learning (e.g., Rotter, Chance, and Phares,
1972). As perceived controllability increases, so
does the likelihood that the CEO will search
widely for information. Work by Hashimoto and
Fukuhara (2004) shows, for example, that higher
perceived control is related to active information
seeking.
However, as an executive’s sense of organiza-
tional control increases, he or she becomes more
confident in the organization’s ability to master
the issue regardless of other factors. Very high
levels of perceived organizational control may
lead to overconfidence and disengagement (Stotz
and von Nitzsch, 2005). As confidence rises, it
begins to impede more contingent understanding
of the issue and lead to greater reliance on over-
learned information sources, channels, and rou-
tines (Miller, 1993). As a result, leaders with
very high perceptions of controllability consider
only a narrow set of frames and attributes and
therefore develop less ambivalent issue evalua-
tions.
We thus expect executives with a very low sense
of organizational control over the effects of the
EU enlargement to arrive at nonambivalent eval-
uations. Those with a stronger sense that their
firm can control the implications of EU enlarge-
ment hold more ambivalent evaluations as they
engage with the issue to exercise their limited con-
trol. However, at very high levels of perceived
controllability, executives increasingly ignore con-
tingencies and employ narrow information search
processes. As a result of these countervailing pro-
cesses, we hypothesize that:
Hypothesis 4: The relationship between the
sense of organizational controllability and the
ambivalence with which the CEO evaluates the
issue is inverse U-shaped.
METHOD
Data and sample
We tested the hypotheses with survey data and sec-
ondary data. With the use of a random-factor gen-
erator, we selected 800 firms from the Hoppenstedt
database.2Consistent with prior research (Chat-
topadhyay et al., 2001; Thomas and McDaniel,
1990), we focused on the CEO who is most respon-
sible for initiating actions in response to strategic
issues (Hambrick and Mason, 1984). We contacted
each executive by telephone and asked for his or
her participation; 578 managers agreed to partici-
pate and, therefore, received the survey instrument
by mail. Based on a two-wave mailing process,
we received 256 completed questionnaires. Twenty
of the received surveys were excluded because
they were not filled out by the CEO or were
incomplete. Another 16 were excluded because
information about the TMT was not available. All
in all, the sample of this study consists of 220
questionnaires, representing a 30 percent response
rate.
Participating firms had, on average, 217 employ-
ees, and ranged from 25 to 10,000 employees.
Approximately half of the sampled firms were
involved in manufacturing, while the other half
were involved in service activities. In order to
test for nonresponse bias, we compared responding
and nonresponding firms on firm size and age in
2003. The results of a t-test revealed that the two
groups were not significantly different regarding
these characteristics. We therefore assumed that
the data used to test the hypotheses was represen-
tative of the sample of firms that we originally
asked to participate. Using self-report data, we
also sought to address the possibility of common
method variance. We analyzed the data with Har-
man’s one-factor test. The results of the unrotated
factor analysis showed that no single factor was
dominant (Podsakoff and Organ, 1986). Our data,
therefore, do not appear to suffer from common
method bias.
2The Hoppenstedt database includes data sets of approximately
250,000 German firms that have at least twenty employees or
more. The firms included in the database generated more than
85 percent of the value added in Germany in 2008.
Copyright 2010 John Wiley & Sons, Ltd. Strat. Mgmt. J.,31: 689– 710 (2010)
DOI: 10.1002/smj
CEOs’ Ambivalent Interpretations of Strategic Issues 697
Measurement
The research instrument included single ques-
tions and multi-item scales with seven-point Lik-
ert response formats. We adopted or adapted the
scales from previous studies. Originally worded in
English, the scales were translated into German
by native speakers to avoid possible distortions.
The survey instrument was pretested in two steps.
First, we directly presented the survey to 10 CEOs
from seven different industries. We asked them to
examine the face validity of the questions, and
to comment on the clarity of the questions and
the meaningfulness of the language used in the
survey instrument. Based on their feedback, we
made minor changes to the questionnaire. Next, we
selected 100 firms from the Hoppenstedt database
with the use of a random-factor generator. We
sent the questionnaire to 74 executives after ask-
ing them for their participation. These informants
were also asked to comment on the face validity
of the questions and to provide feedback about the
clarity of the language. Based on the feedback we
received from 36 CEOs and the analysis of the
pretest data, we made modifications to the survey
instrument. The measures used in the final survey
instrument and their factor loadings are presented
in the Appendix.
Dependent variable
The most widely used and validated measure of
ambivalence in the literature of attitudinal and
emotional ambivalence is based on the similarity-
intensity model (SIM) (Fong, 2006; Priester and
Petty, 1996; Thompson et al., 1995). This mea-
sure captures the degree to which opposing eval-
uations of an issue are similar in terms of the
amount of opposing reactions (similarity), while
also taking into account how extreme the evalua-
tions are in both dimensions (intensity). The SIM
has been found to correspond well to subjectively
experienced levels of ambivalence under most con-
ditions (Priester and Petty, 1996). Ambivalence is
calculated as A =(D+C)/2 −(D-C), where D
is the dominant evaluation (here: positive or neg-
ative) and C is the competing evaluation (here:
positive or negative). We measured the degree of
positive and negative evaluations with two items
each, adopted from the work of Thomas and
McDaniel (1990). The inter-item reliability (Cron-
bach’s alpha) was 0.90 for the positiveness scale
and 0.79 for the negativeness scale.
Ambivalence, as measured by this formula, is
thus greater when positive and negative evalua-
tions of an issue are about the same and when these
evaluations are stronger. In our study, the intensity
component means that evaluations of EU enlarge-
ment as very positive and as very negative (e.g., 6
or 7 on the positive Likert scale, as well as 6 or 7
on the negative scale) reflect greater ambivalence
than evaluations of EU enlargement as not very
positive but equally not very negative (e.g., 1 or 2
on the positive, and 1 or 2 on the negative scale).
Such ‘low-low’ evaluations reflect less ambiva-
lence and, perhaps, greater indifference. The simi-
larity dimension of the formula implies that scores
such as 4 on the positive and also 4 on the neg-
ative scale reflect higher ambivalence than scores
of 6 on the positive and 2 on the negative scale.
Such ‘high-low’ evaluations reflect less ambiva-
lence and more singular evaluations. Our measure
therefore discriminates between ambivalence and
both univalent and weak or indifferent evaluations.
To correct for different means on the two scales
due to the social desirability of positive evalu-
ations, we standardized the raw scores on each
dimension prior to creating the measure. As a
robustness check, we also calculated ambivalence
variables using the raw scores rather than standard-
ized scores. All the reported substantive results
hold for this alternative variable in terms of signifi-
cance levels and direction of coefficients, although
some effects were slightly weaker.
Independent variables
Strategy
The six items measuring firm strategy were adapted
from the work of Thomas and McDaniel (1990),
based on the strategy framework of Miles (1982).
We reworded the items in order to apply them to
the companies of the various industries in our sam-
ple; originally, the items were framed for hospitals
(Thomas and McDaniel, 1990). Higher scores indi-
cate a more domain-offensive strategy. One item
was eliminated due to its low factor loading. The
scale has a coefficient alpha of 0.88.
International experience
The three items measuring a firm’s international
experience were based on the work of Sullivan
(1994) and Zou and Cavusgil (2002). We coded
Copyright 2010 John Wiley & Sons, Ltd. Strat. Mgmt. J.,31: 689– 710 (2010)
DOI: 10.1002/smj
698 N. Plambeck and K. Weber
the items such that higher scores indicate greater
international experience for the organization. The
scale has a coefficient alpha of 0.88.
Sense of organizational controllability
We used three items to measure the extent to which
CEOs thought the strategic issue was under the
control of their firm. These items were adapted
from the work of Thomas and McDaniel (1990).
The coefficient alpha for the scale is 0.89.
TMT characteristics
Information about the size and the functional diver-
sity of the TMT was collected for members of the
2004 TMT of each firm as listed in the Hoppenst-
edt 2004 database. The database provides infor-
mation about TMT membership and about the
members’ functional responsibilities as reported by
the companies. To validate the information, we
randomly chose 50 firms from our sample and
contacted the head of each company. Thirty-nine
directors could be reached by phone. All of them
confirmed the information that we collected from
the Hoppenstedt database. Three directors were
succeeded by their sons who had worked for the
firm before and who also confirmed the informa-
tion provided in the Hoppenstedt database. Two
firms had gone out of business. Six directors could
not be reached.
We used categories used in previous research
for classifying the functional background of exec-
utives (Carpenter and Fredrickson, 2001; Michel
and Hambrick, 1992; Wiersema and Bantel, 1992):
marketing, distribution, sales, research and devel-
opment, production, engineering, finance and
accounting, law, or general. Because many firms
also listed purchasing as a primary background, we
also included this category. The top manager was
classified by functional background where possi-
ble, and otherwise as general manager. We cal-
culated the degree of heterogeneity using Blau’s
(1977) index. This index is calculated as,
1−
N
i=1
p2
i,
where piis the proportion of the total team that
each functional category represents. The higher
the resulting score, the greater the TMT’s func-
tional heterogeneity. We measured the size of the
TMT by using the total number of members of
a TMT (Barkema and Shvyrkov, 2007) and used
the logarithmic transformation of TMT size in our
analyses.
Corporate diversification
Our measure of diversification is based on the
number of different industries in which a com-
pany operates. We obtained each company’s indus-
tries from the Hoppenstedt database, which used
the European Classification of Economic Activities
(NACE) system. NACE categories are five-digit
classifications, comparable to the North American
Industry Classification System (NAICS). We cre-
ated a count variable of the number of five-digit
industry groups in which the firm reported activi-
ties. As almost half of the sampled firms operated
in a single industry, we created a binary variable,
taking the value 0 for single industry firms and 1
for diversified firms. The five-digit level provides a
meaningful measure of narrower markets that may
be subject to different environmental dynamics,
such as the publishing of books (NACE 22211)
and sound recordings (NACE 22214). We repli-
cated our analysis with variables created at the
four-, three-, and two-digit level, and found results
weaker as industry classifications broadened.
Control variables
We used two types of controls: variables associated
with the vulnerability of a firm to EU enlargement
and alternative factors that might directly affect
ambivalence. The former variables are important
because CEOs of firms that are more affected by
the event are motivated to investigate the issue
from different angles to gain a better understanding
of it.
Vulnerability related controls
Firm size and resources. Executives of firms with
abundant resources might not engage in increased
information search because they might believe that
their resources will buffer them from possible risks
associated with an issue and allow them to seize
opportunities as they come. Very high levels of
resources might therefore limit these managers’
effortful sensemaking and thus the likelihood of
ambivalent interpretations. We included two vari-
ables that have been associated with the buffering
Copyright 2010 John Wiley & Sons, Ltd. Strat. Mgmt. J.,31: 689– 710 (2010)
DOI: 10.1002/smj
CEOs’ Ambivalent Interpretations of Strategic Issues 699
effect of resources: firm size and slack resources
(Audia and Greve, 2006; Bourgeois, 1981). Using
data from the Hoppenstedt database, we measured
firm size as the number of all full-time employ-
ees. The variable was normalized using the natural
logarithm. We distinguished available and recov-
erable slack resources (Wiseman and Bromiley,
1996). We used a scale developed by Chattopad-
hyay and his colleagues (2001) to measure a firm’s
available slack resources. The coefficient alpha for
this scale was 0.76. We created a new four-item
Likert scale with the use of past research and com-
monly accepted theoretical definitions (Bourgeois,
1981; Singh, 1986) to measure recoverable slack
resources. Higher scores indicate lower levels of
slack resources. This scale had a coefficient alpha
of 0.84.
Industry. We examined controls for the economic
sector of a firm’s primary activity and for its nar-
rower industry membership, both of which may be
associated with the relative impact of EU enlarge-
ment on the firm. For example, manufactured
goods have traditionally had a higher exposure
to international markets than services. Therefore,
we included a dummy variable to indicate whether
the firm was primarily engaged in manufacturing
(0) or service (1). In addition, we tested dummy
variables for each industry represented in the sam-
ple, based on firms’ NACE codes. As our sam-
ple contained NACE classifications with only few
observations, including the full set of dummy vari-
ables would have reduced the degrees of freedom
for detecting substantive effects within those cate-
gories. As a preliminary step, we therefore tested
which industry dummies had significant effects on
ambivalence, net of other included control vari-
ables, and included only those in the main analy-
ses that did. Only non-metallic mineral products
and construction showed significant effects and
included a sufficient number of observations.
Location. We included two variables for the loca-
tion of the firm. Firms in the former German
Democratic Republic (GDR) are geographically
closer and more connected historically to the Cen-
tral European countries that joined the EU in 2004
than companies from the former Federal Republic
of Germany (FRG). We used a dummy variable
that indicated whether the firm was headquartered
in the territory of the former FRG (1) or the terri-
tory of the former GDR (0). We also controlled for
the (logged) size of the town in which the company
was headquartered. Firms located in major popula-
tion centers may serve a comparatively larger local
market and therefore be less exposed to economic
consequences associated with the EU enlargement,
or may alternatively be more connected to inter-
national issues. We collected the population size
of towns from the Web database of the German
Federal Statistical Office.
Perceived environmental munificence. Perceived
munificence reflects managers’ perceptions of an
industry environment supportive of sustained
growth (Sutcliffe and Huber, 1998). CEOs with
this perception are likely to see their firm’s envi-
ronment as supportive enough to overcome possi-
ble adversity associated with the EU enlargement
and are less likely to scrutinize the implications
of the event. We measured perceived munificence
with a seven-item scale adapted from previous
work (Sutcliffe and Huber, 1998). Two items were
eliminated due to low factor loadings. The coeffi-
cient alpha for the scale is 0.83.
Ambivalence related controls
Firm age. We controlled for the age of a firm
because over time firms develop more fine-grained
and more diverse perceptual filters. Managers of
older firms might therefore be exposed to more
diverse information about the EU enlargement and
as a result develop more ambivalent evaluations.
We measured the age of the firm as the natural
logarithm of years since founding. We obtained
firm age from the Hoppenstedt database.
Firm performance. A firm’s financial perfor-
mance may bias evaluations of specific events to
the extent that performance levels provide a gen-
eral evaluation of the firm’s situation. We used a
subjective measure of performance due to the lack
of archival performance measures. Prior research
suggests that perceptual measures of performance
tend to correlate strongly with archival measures
(Venkatraman and Ramanujam, 1987). The two
items measuring firm performance were adapted
from previous work (Venkatraman and Ramanu-
jam, 1987) and asked respondents to rate their
company’s sales growth and profitability (return on
assets [ROA], return on investment [ROI]) relative
to their main competitors. The coefficient alpha for
the scale was 0.79.
Copyright 2010 John Wiley & Sons, Ltd. Strat. Mgmt. J.,31: 689– 710 (2010)
DOI: 10.1002/smj
700 N. Plambeck and K. Weber
Perceived environmental instability. In less stable
environments, executives are likely to lack the time
and the cognitive resources to investigate a strate-
gic issue further. Too many issues may demand
executives’ attention at the same time in turbu-
lent environments (Eisenhardt, 1989). As a result,
more ambivalent interpretations may become less
likely in these environments. We controlled for
the perceived instability of the environment with
an eight-item scale adapted from Sutcliffe and
Huber (1998). Higher scores indicate perceptions
of greater stability. We eliminated four items due
to low factor loadings. The coefficient alpha for
thescaleis0.58.
ANALYSIS AND RESULTS
We verified the factor structure of the survey mea-
sures using principal axis factoring with oblimin
rotation. We found strong support for the 10-factor
structure suggested by the included measures. In
particular, the items used to measure positive and
negative evaluations loaded onto two factors as
expected. The Appendix shows all survey items
and factor loadings.
Test of hypotheses
We tested the hypotheses with a series of regres-
sion models. We examined residual plots for all
variables in the regression equations and found
no major violations of distributional assumptions.
Variance inflation statistics indicated that multico-
linearity was not an issue. Plotting the data and
statistical analysis (Shapiro-Wilk test) also showed
that our dependent variable was normally dis-
tributed. To obtain correct standard error estimates
and accurate significance tests in the face of pos-
sible heteroskedasticity, all models report robust
standard errors using the Huber-White correction
(Gujarati, 1995: 379– 383). Table 1 shows descrip-
tive statistics. The results of the regression analysis
are shown in Table 2.
We first regressed ambivalence on the con-
trol variables associated with firms’ vulnerabil-
ity toward EU enlargement (Table 2, Model 1).
Next, we entered ambivalence related control vari-
ables (Model 2). We then entered the measures
of size and functional heterogeneity of the TMT,
corporate diversification, international experience,
and the linear terms of strategy orientation and
sense of control to obtain estimates of their main
effects (Model 3). Finally, we entered the quadratic
terms for the latter two variables to test for non-
linear relationships (Model 4). In creating the
quadratic terms, we mean-centered the variables
before squaring them.
In Hypothesis 1, we expected an inverse U-
shaped relationship between strategic orientation
and ambivalence. This expectation was confirmed
as the quadratic term of the variable is signif-
icant and negative while the main effect was
marginally significant (Model 4). We performed
simple slope analyses (Aiken and West, 1991) to
establish whether both sides of the inverted U
were significant and in opposite directions at two
standard deviations from the mean. The results
of the analysis (p<0.018 in both cases) sug-
gested that clearly domain-offensive and domain-
defensive orientations reduced ambivalence. In
Hypothesis 2, we predicted a positive relation-
ship between a firm’s international experience and
ambivalence. In Hypotheses 3a, 3b, and 3c, we
predicted a positive relationship between diversity-
related variables and ambivalent evaluations. These
hypotheses were not supported. Hypothesis 4,
which suggested an inverse U-shaped relation-
ship between a sense of organizational control
and ambivalent evaluations, was supported. The
quadratic term of the variable is significant and
negative while the main effect was nonsignificant.
Simple slope analyses again confirmed that both
very high and very low levels of perceived con-
trol reduced ambivalence (p<0.004 in both cases).
With regard to our control variables, we found that
the perceived instability of the environment has a
positive relationship with ambivalence. In addition,
we found a marginally significant negative rela-
tionship between low discretionary slack resources
and ambivalence in the full model (Model 4).
Figure 1 plots significant relationships using the
coefficient estimates from Model 4. An ambidex-
trous strategic orientation and a moderate sense of
organizational control are associated with the high-
est level of ambivalence about EU enlargement.
Robustness checks
We conducted a series of further analyses to ver-
ify the robustness of our findings and to sub-
stantiate their interpretation. First, we tested our
hypotheses in separate models that included only
the controls and the independent variables related
Copyright 2010 John Wiley & Sons, Ltd. Strat. Mgmt. J.,31: 689– 710 (2010)
DOI: 10.1002/smj
CEOs’ Ambivalent Interpretations of Strategic Issues 701
Table 1. Means, standard deviations, and correlation coefficients
MeanSD1234567891011121314151617181920
1. Ambivalence of issue evaluation 0.66 1.39
2. Strategic orientation 4.82 1.27 0.00
3. Strategic orientation21.62 2.12 −0.14 −0.44
4. International experience 3.23 2.00 0.17 0.35 −0.17
5. TMT size (logged) 0.97 0.55 0.04 0.11 0.00 0.15
6. Functional heterogeneity 0.54 0.27 0.05 0.07 0.03 0.12 0.89
7. Diversified company (binary) 0.26 0.44 0.02 0.00 −0.01 0.09 0.06 0.05
8. Sense of control 4.65 1.51 0.21 0.24 −0.14 0.36 0.23 0.20 0.04
9. Sense of control22.28 2.89 −0.29 −0.11 0.09 −0.24 −0.11 −0.11 −0.12 −0.41
10. Firm age (logged) 3.47 0.99 −0.02 −0.09 0.07 0.07 0.05 0.07 −0.18 −0.06 0.05
11. Financial performance 4.62 1.08 −0.01 0.33 −0.08 0.18 0.12 0.12 0.03 0.27 −0.09 −0.06
12. Perceived instability 4.13 1.14 0.11 0.13 −0.03 0.10 0.03 0.08 −0.02 −0.06 0.09 −0.04 0.05
13. Firm size (logged) 4.45 1.03 −0.04 0.15 −0.08 0.16 0.32 0.22 0.01 0.21 0.14 0.03 0.28 0.14
14. Recoverable slack resources 5.03 1.18 −0.15 0.21 −0.08 0.14 0.02 −0.01 0.02 0.18 0.00 −0.13 0.12 −0.02 0.05
15. Available slack resources 3.70 1.70 0.01 0.19 −0.08 0.09 0.19 0.18 −0.01 0.16 −0.01 0.19 0.26 −0.04 0.15 0.02
16. Location (1 =former FRG) 0.88 0.33 −0.04 0.01 −0.03 0.04 0.08 0.09 −0.07 −0.01 0.04 0.37 −0.04 −0.16 0.06 −0.03 0.12
17. Economic sector (1 =service) 0.51 0.50 −0.01 −0.11 0.04 −0.31 0.00 0.01 −0.01 0.03 0.01 −0.17 −0.03 −0.08 0.06 −0.02 −0.06 0.03
18. Perceived environmental
munificence
3.40 1.21 0.15 0.30 −0.16 0.29 0.14 0.04 0.09 0.32 −0.20 −0.13 0.24 0.17 0.22 0.12 0.10 −0.08 0.01
19. Number of inhabitants (logged) 10.43 2.14 −0.06 0.01 0.08 0.06 0.13 0.11 0.10 0.14 0.00 0.02 −0.06 −0.05 0.12 0.07 0.01 0.25 0.29 0.07
20. Industry=non-metallic mineral
products
0.02 0.13 −0.10 −0.09 0.00 0.07 −0.01 −0.03 −0.08 −0.09 0.03 0.06 −0.02 0.04 −0.05 −0.08 −0.04 0.05 −0.14 −0.11 −0.05
21. Industry=construction 0.11 0.32 −0.29 −0.10 0.07 −0.33 −0.15 −0.11 −0.08 −0.33 0.23 −0.01 −0.14 0.03 −0.15 0.04 −0.07 −0.04 −0.05 −0.37 −0.13 −0.05
N=220.>0.18 are significant at p <0.01, >0.14 significant at p <0.05.
Copyright 2010 John Wiley & Sons, Ltd. Strat. Mgmt. J.,31: 689– 710 (2010)
DOI: 10.1002/smj
702 N. Plambeck and K. Weber
Table 2. OLS regression estimates
Dependent variable: ambivalence of issue evaluations
Model 1 Model 2 Model 3 Model 4
Constant −0.227 −0.688 −0.665 −0.406
(0.420) (0.528) (0.543) (0.534)
Firm size (logged) −0.087 −0.105† −0.111† −0.075
(0.055) (0.057) (0.06) (0.060)
Recoverable slack resources −0.093∗−0.084† −0.101∗−0.087†
(0.046) (0.046) (0.047) (0.046)
Available slack resources 0.002 0.006 0.002 0.007
(0.032) (0.033) (0.034) (0.033)
Location (1 =former FRG) −0.058 −0.028 −0.005 −0.025
(0.169) (0.181) (0.182) (0.177)
Economic sector (1 =service) −0.047 −0.021 0.014 −0.010
(0.111) (0.113) (0.12) (0.117)
Perceived environmental munificence 0.058 0.044 0.026 0.015
(0.049) (0.050) (0.053) (0.051)
Number of inhabitants (logged) −0.027 −0.026 −0.035 −0.019
(0.027) (0.027) (0.027) (0.027)
Industry =non-metallic mineral products −0.791∗−0.845∗−0.849∗−0.883∗
(0.396) (0.395) (0.401) (0.389)
Industry =construction −0.728∗∗∗ −0.772∗∗∗ −0.626∗∗∗ −0.594∗∗
(0.179) (0.180) (0.190) (0.185)
Firm age (logged) 0.022 0.008 0.017
(0.061) (0.063) (0.061)
Financial performance −0.011 −0.027 −0.010†
(0.054) (0.056) (0.055)
Perceived instability 0.111∗0.116∗0.136∗∗
(0.049) (0.051) (0.049)
Strategic orientation 0.081 −0.095†
(0.042) (0.051)
Strategic orientation2−0.064∗
(0.027)
International experience −0.043 0.023
(0.048) (0.032)
TMT size (logged) 0.036 −0.009
(0.033) (0.219)
Functional heterogeneity 0.001 0.056
(0.226) (0.436)
Diversified company (binary) 0.058 −0.061
(0.449) (0.121)
Sense of control −0.025∗0.028
(0.124) (0.044)
Sense of control2−0.060∗∗
(0.021)
Model F value 3.796∗∗∗ 3.325∗∗∗ 2.589∗∗ 3.190∗∗∗
R-square 0.145 0.168 0.195 0.251
Adjusted R-square 0.107 0.117 0.120 0.173
Change in F over Model 2 1.098 2.655∗∗
N=220. Standard errors are in parentheses.
†p <0.10; ∗p<0.05; ∗∗ p<0.01; ∗∗∗ p<0.001; two-tailed tests.
to each hypothesis. This also allowed us to assess
the amount of variance accounted for by each
hypothesized antecedent individually. These anal-
yses fully confirmed the results from the main
analysis.
We performed two supplemental analyses to ver-
ify our interpretation of the findings regarding the
two dimensions of ambivalence: intensity and sim-
ilarity. Based on the SIM model described above,
we would expect that the examined contextual
Copyright 2010 John Wiley & Sons, Ltd. Strat. Mgmt. J.,31: 689– 710 (2010)
DOI: 10.1002/smj
CEOs’ Ambivalent Interpretations of Strategic Issues 703
factors predict ‘true’ ambivalence at more intense
evaluations, but not ‘indifference’ at low-intensity
valuations. The theory behind the SIM model also
suggests that the examined contextual factors pre-
dict ambivalence better when the positive and neg-
ative evaluations of the EU enlargement are very
similar. To verify these expectations, we first split
the sample at the mean of the intensity of eval-
uations: the extremity of the combined positive
and negative scores (mean=2.88). We replicated
our analyses in both subsamples and found that
our main results held for the observations above
the mean (N=116), but not for the ones below
the mean (N=104). Next, we split the sample at
the mean of the similarity of evaluations: how
much negative and positive evaluations deviate
from each other (mean=−2.27). Replicating our
analyses in both subsamples, we found that our
main results held for the observations above the
mean (N=100), but not for the ones below the
mean (N=120). A replication of the analyses with
a sample split at the median provided the same
results. In sum, these analyses support our main
results concerning the antecedents, with the SIM
measure of ambivalence as the dependent variable.
Based on the argument that led to the inclu-
sion of the vulnerability controls in the test of
the hypotheses, we performed another analysis
and used information about how important CEOs
perceived the EU enlargement because perceived
importance may influence the attention given to
the issue. The response format for the single item
was 1, ‘of very little importance,’ to 7, ‘of very
large importance.’ This information was available
for a subset of respondents (N=101) because data
on the interpretation of EU enlargement were col-
lected as part of a larger research project. Entering
the perceived importance of EU enlargement in
our models in this smaller subsample did not alter
the findings reported in the main analyses. We also
did not find a direct relationship between perceived
issue importance and ambivalence.
DISCUSSION AND CONCLUSION
Despite the importance of executives’ ambivalence
for strategic sensemaking, a systematic discussion
or an empirical analysis of how organizational con-
text influences such ambivalence has been lacking
(Gilbert, 2006). Our study addresses these gaps.
Figure 1. Relationships between ambivalence and strate-
gic orientation and controllability.
We provide a theoretical account of how orga-
nizational context may lead CEOs to develop an
ambivalent evaluation of a strategic issue by com-
bining insights from psychological research on
ambivalence with research on strategic issue diag-
nosis and organizational sensemaking. In addition,
we add empirical support for the relevance of the
firm’s context for developing ambivalent evalua-
tions. We find that CEOs of firms with a more
ambidextrous strategic orientation and a moder-
ate sense of control over their environment are
most likely to develop ambivalent issue evalua-
tions. This supports our general expectation that
organizational characteristics that supply diverse
perspectives in domains associated with an issue,
and that attribute moderate agency to the firm in
relation to its environment, foster effortful sense-
making and prompt ambivalence at the executive
level. Organizational characteristics that are less
domain specific, such as TMT functional diver-
sity and corporate diversification, appear to be less
potent antecedents.
This study contributes to recent research on
strategic sensemaking (Barr and Glynn, 2004;
Julian and Ofori-Dankwa, 2008), as well as to the
Copyright 2010 John Wiley & Sons, Ltd. Strat. Mgmt. J.,31: 689– 710 (2010)
DOI: 10.1002/smj
704 N. Plambeck and K. Weber
growing literature on mindfulness and creativity in
organizations (Fiol and O’Connor, 2003; Levinthal
and Rerup, 2006; Weick and Sutcliffe, 2006). First,
it clarifies the effect of organizational characteris-
tics on how CEOs evaluate strategic issues, and
thus tests the role of contextual antecedents of
CEO ambivalence. We also specify underlying
social and psychological mechanisms that link top
executives’ context to their strategic sensemak-
ing. Finally, we identify organizational interven-
tion points for fostering the qualities associated
with ambivalence. We discuss each contribution
in turn.
The role of organizational context in
executives’ ambivalence toward strategic issues
Our findings clarify the link between strategy ori-
entations and executives’ interpretations of events.
Prior research predicted a firm’s strategic orienta-
tion as domain offensive or defensive to lead to
the interpretation of issues as positive or negative,
but failed to find empirical support (Thomas and
McDaniel, 1990). We instead argue and find that a
more ambidextrous strategic orientation translates
into more ambivalent issue evaluations at the indi-
vidual level of top executives. Executives at firms
that lack strategic ambidexterity are less likely to
develop ambivalent interpretations.
Our study also advances research on the conse-
quences of organizational sense of control (Deni-
son et al., 1996; Durand, 2003). We find that a
moderate sense of organizational control is asso-
ciated with CEOs seeing new strategic issues in
more ambivalent ways. The effort to understand
more aspects of an issue increases with perceived
organizational control, but at very high levels of
perceived control confidence may lead to nar-
rower perceptions and reliance on less complex
knowledge structures so that interpretations are
less ambivalent.
Interestingly, we find no support for our hypoth-
esis that higher levels of international experience
are related to more ambivalent interpretations. A
possible explanation is that experience in this
domain may not lead to more complex knowl-
edge structures, but may rather lead issues in the
domain to appear more positive due to greater feel-
ings of competence. Although they did not directly
assess ambivalence, Denison et al. (1996) accord-
ingly found that more international experience led
to positive interpretations of foreign direct invest-
ment.
Finally, our findings do not support the hypothe-
ses that general diversity at the group or organi-
zational level is related to CEOs’ ambivalence.
It could be that executives of diversified firms
perceived the EU enlargement as having simi-
lar effects for different business units. Consis-
tent with previous research, we also expected
functional diversity of the TMT to be associ-
ated with cognitive diversity and thereby be a
precursor of ambivalent interpretations. It may
be that the effect of functional responsibilities
on the cognition of TMT members is generally
weak (e.g., Chattopadhyay et al., 1999), or that
top managers adopt views consistent with their
roles as members of the TMT rather than the func-
tional area they represent. Kilduff, Angelmar, and
Mehra (2000), for example, did not find a relation-
ship between functional heterogeneity and cogni-
tive diversity. Future research may reexamine our
diversity-related hypothesis with direct measures
of cognitive diversity of the TMT.
In our analysis of antecedents of ambivalence,
we followed the call of Julian and Ofori-Dankwa
(2008), who emphasized the importance of exam-
ining broad and ill-defined issues because such
issues match scholarly conceptualizations of strate-
gic issues (e.g., Dutton et al., 1983) and are
important for organizational environments. Deni-
son et al. similarly pointed out that strategic issues
associated with the global business environment
are central because they ‘are highly salient and
require action, but are poorly understood’ (Denison
et al., 1996: 468). Future work on strategic issue
diagnosis should, however, also investigate exec-
utives’ parallel interpretation of multiple strate-
gic issues. For example, does strategic ambidex-
terity lead CEOs to evaluate all strategic issues
in ambivalent ways no matter how many other
issues demand attention? Other questions arise
regarding the temporal dynamics of sensemaking
and ambivalence: is ambivalence a permanent or
temporary interpretive state, and do oscillations
between positive and negative evaluations follow
the same pattern as fully parallel evaluations?
Intervention points for top executives’
ambivalence
Our examination of how contextual factors trigger
ambivalent evaluations informs research on other
Copyright 2010 John Wiley & Sons, Ltd. Strat. Mgmt. J.,31: 689– 710 (2010)
DOI: 10.1002/smj
CEOs’ Ambivalent Interpretations of Strategic Issues 705
antecedents. Interpretive predispositions may orig-
inate at the individual, organizational, and envi-
ronmental level, including personal and organiza-
tional identities that clarify positions (Ashforth and
Mael, 1989; Dutton and Dukerich, 1991), expo-
sure to turbulent industries and turbulent team
membership that keep experience and tradition
from accumulating (Eisenhardt, 1989), or ideolo-
gies embedded in organizations that provide norms
and beliefs (Dutton and Dukerich, 1991; Prahalad
and Bettis, 1986). In addition, culture may affect
the prevalence of ambivalent evaluations. Cross-
cultural research has emphasized, for example, the
influence of East Asian and Western cultures and
related philosophical backgrounds on the toler-
ance for ambivalent affective evaluations (Bagozzi,
Wong, and Yi, 1999; Nisbett, 2003).
Our study suggests ways to foster organizational
mindfulness and exploration through the ambiva-
lence of top managers. The propensity of exec-
utives to see issues in an ambivalent light can
be increased through interventions aimed at orga-
nizational processes and cultures. Companies can
foster a culture of humility that prevents percep-
tions of high organizational control, and they can
refrain from forging dogmatic and one-sided strate-
gies or identities.
CONCLUSION
The importance of leaders’ ambivalence for strate-
gic change, mindfulness, and exploration in orga-
nizations has been highlighted and empirically
demonstrated by a growing number of organiza-
tional scholars. But sources of ambivalence have
often been elusive or highly contingent. Our find-
ings provide a larger systematic test of organiza-
tional conditions under which ambivalent interpre-
tations are likely. Our study not only documents
the contextual nature of ambivalent interpretations,
it also suggests ways for firms to influence ambiva-
lence in strategic sensemaking.
ACKNOWLEDGEMENTS
We are extremely grateful to Editor Richard A.
Bettis for his encouragement and support through-
out this project. We thank the two reviewers of
SMJ for their constructive comments and sug-
gestions. We also thank Pamela Barr, Rodolphe
Durand, Christina Fong, William Ocasio, Kathleen
Sutcliffe, and Tim Vogus for valuable earlier com-
ments.
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CEOs’ Ambivalent Interpretations of Strategic Issues 709
APPENDIX: MEASURESaAND ITEM LOADINGS
Construct Operational measure Factor loading
Positive interpretation To what extent do you agree with the
following statements?
1 Our company will benefit from the EU
enlargement.
0.73
2 The EU enlargement comprises a potential gain
for our company.
0.76
Negative interpretation To what extent do you agree with the
following statements?
1 The EU enlargement is something negative for
our company.
−0.74
2 There is a high probability of losing a great
deal because of the EU enlargement.
−0.81
Controllability interpretation To what extent do you agree with the
following statements?
1 Our company can manage the changes
resulting from the EU-Enlargement.
0.81
2 The EU-enlargement is something controllable
for our company.
0.83
3 Our company has the capability to address the
EU-enlargement.
0.86
Strategic orientation To what extent do you agree with the
following statements ? Our company...
1 always tries to be the first in the industry to
offer new solutions.
0.87
2 is usually among the first users of new product
design technologies.
0.79
3 always endeavors to develop new products. 0.83
4 responds rapidly to early signs of market
opportunities.
0.78
5 has a product portfolio which is constantly
growing.
0.62
Firm’s international experience To what extent do you agree with the
following statements?
1 A high percentage of our sales is generated
outside of Germany.
0.82
2 Our company cooperates with various foreign
trading partners.
0.87
3 Our company has got a lot of experience in
selling to foreign markets.
0.81
Firm performance In our primary business our company performs
(1, ‘much worse than our competitors,’ 7,
‘much better than our competitors’) with
respect to...
Sales growth. 0.87
Profitability (e.g., ROI, ROA, etc.). 0.87
Copyright 2010 John Wiley & Sons, Ltd. Strat. Mgmt. J.,31: 689– 710 (2010)
DOI: 10.1002/smj
710 N. Plambeck and K. Weber
APPENDIX (continued)
Construct Operational measure Factor loading
Available slack resources To what extent do you agree with the
following statements in reference to your
company’s resources?
1 Our company keeps in general high levels of
financial resources (e.g., cash, short-term
credit) in order to assure a steady flow of
production.
0.88
2 Our company has easy access to these financial
resources for growth and expansion.
0.85
Recoverable slack resources To what extent do you agree with the
following statements?
1 Employees for executive tasks work at full
capacity in our company.
0.84
2 Trained employees work at full capacity in our
company.
0.89
3 Resources (e.g., research and development,
logistics...) are fully utilized in our
company.
0.83
4 The production capacities work at full capacity
in our company.
0.68
Perceived munificence To what extent do you agree with the
following statements? In our industry...
1 demand is growing and will continue to grow. 0.82
2 the investment and sales opportunities are very
favorable at the present time.
0.84
3 sales have been growing are likely to grow. 0.80
4 the total value of assets for the firms are
declining and will continue to decline.∗
0.57
5 the capital expenditures of the firms are
growing and will continue to grow.
0.66
Perceived instability To what extent do you agree with the
following statements?
1 Customer demand and preferences change very
little in our industry from year to year.
0.67
2 Our company must frequently change the way
it produces its goods/services in order to
stay competitive.∗
0.53
3 The actions of our major suppliers change very
little from year to year.
0.66
4 The volume of sales for firms in our industry
fluctuates very little from year to year.
0.74
aThe response format for all items was 1, ‘small extent,’ to 7, ‘large extent’ (indicated were not applicable).
∗=reverse coded.
For clearness of the table, factor loadings below 0.4 are not reported.
Copyright 2010 John Wiley & Sons, Ltd. Strat. Mgmt. J.,31: 689– 710 (2010)
DOI: 10.1002/smj