Managerial myopia: Self-serving biases in organizational planning.

Abstract

Recent work indicates that people hold a variety of self-serving biases, believing themselves more capable than they are in fact. Such biases, if extended to the organizational level, would lead to overly optimistic planning for the future. This prediction was tested with two groups of management students and with a sample of corporate presidents. The management students consistently overestimated their abilities; in a marketing exercise, they likewise indicated that a hypothetical firm, of which they were sales managers, would quickly overtake established competition. The executive sample also predicted inordinate success; the latter group, however, moderated projections somewhat if prior planning experience had been unsatisfactory. The importance of managerial myopia to considerations of marketing, resource management, and demarketing is discussed.