Analysing the dynamics of mental models using causal loop diagrams

Substantial evidence suggests that managerial mental models play an important role in firm performance. Yet managerial mental models are not static but dynamic. This research investigates the creation and evolution of mental models over time and how this dynamic process influences strategic choice and firm performance. We adopt the causal loop diagramming method, with in-depth case analysis over a period of 12？years, as the primary investigatory approach. Our research contributes to knowledge by identifying the shared mental model of the top management team, represented in the causal loop diagrams, for each stage of the company’s development. Our findings suggest that the dynamics of managerial mental models explains the changes in firm performance over time. JEL classification: L