The Role of Organizational Structure in Senior Managers' Selective Information Processing

CEOs' perceptions of the environment and information processing shortcuts (or heuristics) they use to develop these are important organizations. We study whether organizational structure, an channel filter for flow in organizations, affects perception gaps pertaining competitive environment. Perception defined as systematic deviations subjective from conceptions based on objective data. Studying 281 CEOs 216 firms, we find that functional structures associated with wider environmental gaps, whereas divisional narrower gaps. To address endogeneity concerns, control firms' exposure varied environments only sample newly appointed CEOs, who, by definition, inherit predefined exogenous their own choices. Our advances understanding senior managers' clarifying how organizational-level influences (i.e., structure) affect (mis)perceptions