The high cost of accurate knowledge

We draw on a survey study to examine the relationship between top executive teams' perceptions of a company's market environment and their interpretive orientations, and the company's subsequent financial performance. Companies with executives that see their environment with a moderate degree of accuracy outperform those with highly accurate or highly inaccurate assessments. Positive interpretative orientations and a low sense of control also enhance subsequent performance. The study supports a pragmatic sensemaking view of executive cognition.