Dominant logic – Cognitive and practiced facets and their relationships to strategic renewal and performance

Abstract

In this study, we distinguish two facets of dominant logic and assess empirically their relationships to strategic renewal and firm performance. In a sample of 156 Finnish small and medium-sized enterprises (SMEs) in the forestry and forest products sector, we find that cognitive and practiced dominant logics have divergent relationships with outcomes. Practiced dominant logic is more strongly related to a recognized need for capability development and performance than cognitive dominant logic is. These effects appear regardless of whether the practiced dominant logic is efficiency- or proactivity-oriented. Further, the results suggest that the differences in practiced dominant logic may reflect future investment plans, especially in terms of investment in research and development and new markets. We contribute to the literature by examining with survey-based data the relationship that dominant logic has with strategic renewal and performance. The practiced and cognitive dominant logics are measured separately, and we present a novel operationalization of cognitive dominant logic.