Unveiling the dark side of business models: A novel framework for managerial cognition and decision-making

Decision-making has long been recognized as being at the core of organizational life. Yet, the cognitive mechanisms by which managers make decisions represent a critical field of exploration. In this context, business models (BMs) are cognitive representations of organizational architectures that managers use to orient their firms in the business environment. While BMs—as managerial schemas—have been extensively studied for their beneficial applications at the strategic level, scholarly attention has rarely focused on their dark side. In this chapter, we point out that BM thinking that focuses excessively on established schemas might narrow managerial cognition in the process of fine-tuning the current BM; in the process, opportunities for more radical BM innovation can be overlooked thwarted. We systematize March and Simon’s contribution on managerial cognition into a more comprehensive conceptual framework by integrating the perspectives of Kahneman, Baron, and Gollwitzer. The result is an epistemologically coherent framework for managerial cognition and decision-making that focuses on how managers can overcome cognitive biases that derive from a reliance on established BMs as schemas. We close the chapter with directions for further research.