Sources of managers’ knowledge of organizational capabilities

In order to compete successfully in an industry, managers in organizations need to learn about emerging best practices and to implement them in their units. An essential part of this learning process is the development of an understanding of the current capabilities of the organization by its managers. We addressed the question of how managers' assessments of their organization's capabilities, which we call organizational self-knowledge, are affected by their exposure to relational and nonrelational sources of information. We developed hypotheses about the relationship between managers' exposure to different "learning channels" for both their individual depth of understanding of specific areas of practice and for their assessments of their organization's capabilities, which together contribute to organizational self-knowledge. We tested these hypotheses through a survey of 128 store managers in the retail food industry. The results showed that exposure to internal sources of information, both relational and nonrelational, as well as to external relational sources of information, is positively related to self-knowledge. Interestingly, the monitoring of external nonrelational sources of information was found to have no bearing on managers' assessments of their organization's capabilities. Our results counter common-sense beliefs and prior research that suggest that external nonrelational sources of information are an important input in assessing and building organizational capabilities.