Abstract

Building on the notion of bounded rationality and decision making by heuristics, managerial cognition has increasingly attracted the attention of strategic scholars. One of the most interesting area of research is competitive analysis through a cognitive approach to the strategic groups. Traditionally, strategic groups are considered different sets of firms characterized by a comparable array of strategic choices. Recent empirical research on the cognitive strategic group suggests that group structures exist in the cognitive representations used by managers to make sense of the environment. This paper presents the results of a research conducted in the Italian pharmaceutical industry to represent intraindustry structure according to managerial perceptions. We identified the critical dimensions through a brain-storming session with three CEO's of pharmaceutical firms operating in Italy, then we validated the results with a larger group of 12 CEO's. We selected a representative sample of 40 pharmaceutical firms and submitted a questionnaire to the 15 CEO's contacted previously to evaluate each firm in the sample along the dimensions identified in the first phase. Finally, multi-dimensional scaling techniques were used to obtain a visual representation of cognitive strategic groups. Our results offer at least two interesting elements of discussion. First, the representation of the strategic composition of the Italian market highlights the stuck-in-the-middle dilemma of the majority of Italian firms suggesting the limits of health policies as industrial policy tools. Second, CEO's perceptions' homogeneity corresponds to similarities in their strategic behaviour, suggesting a specific role for the social meaning of competition in the assessment of market structure.