Research in upper echelons theory (UET) has highlighted the use of heuristic reasoning by top management teams (TMTs), particularly in uncertain environments. However, it remains unclear how TMTs make collective heuristic decisions—specifically, how individual-level heuristic decisions transition to group-level decisions. We address this question by explaining the process through which the building blocks of heuristic reasoning—search, stopping, and decision rules—are adapted for collective decision-making, with a particular focus on social heuristics. We also explain how the different TMT power structures (flat, hierarchical, heterarchical) shape the building blocks and the use of heuristic reasoning by TMT. Our phenomenon-based theorizing advances UET by offering a nuanced understanding of the underlying mechanisms of heuristic reasoning in TMTs. Additionally, we contribute to behavioural strategy by strengthening its psychological foundations.
