Managerial cognition and data-related capability evolution in growth firms

Abstract

Digital businesses generate abundant data that can improve decision-making, optimize operations, and enable new strategic directions. Yet even among young, data-generating firms, there are striking differences in the roles that data and data capabilities play in their business model and operations. This study develops a cognition-based explanation for these differences. Drawing on a multi-case study of eight young growth firms, we show that firms' ability to develop data-related capabilities depends on the co-evolution of managerial resource cognition and capability development—how managers interpret the uses, limits, and strategic potential of data as their firms grow. Managers who believed in data capability implementation as an opportunity and as value-consistent with the firm's identity mobilized investments, learning, and organizational practices that expanded data's role in value creation. In contrast, when data was construed as a technically or operationally challenging issue or as a threat to the firm's identity consistency, its strategic relevance remained peripheral. Our findings reveal how belief-driven interpretations and identity alignment interact with emerging strategy processes to shape capability development in the context of resources, such as data, whose inherent value is not obvious. We delineate a model that outlines the constituents of belief-driven resource cognition evolution, explaining why data can become a central strategic capability in some young firms but not in others. These results offer new insights into how managerial cognition guides firm-level development of data-driven capabilities.