Do Managers have an Illusion of Explanatory Depth in Digitalization?

In this paper we focus on one aspect of managerial overconfidence, the illusion of explanatory depth (IOED). We extend the current research to the question “do managers realize how well they understand digital technologies and their future impact on their business models”. Three experiments with a total of 358 international managers show that there is a significant IOED among managers concerning their understanding of digital technologies. The study also shows that ad-hoc visualizations, like sketches, help to reduce the IOED by making gaps in one’s knowledge explicit and create a disfluency in thought to recognize one’s overestimation of knowledge.