Aspiration formation and attention rules

Abstract

The behavioral theory of the firm (BTOF) proposes that firm behavior is goaldirected and that organizational aspirations are a function of prior historical aspirations, past performance, and the performance of others. Despite the centrality of aspirations in the BTOF, little is known about aspiration formation and why firms favor one aspiration type over others, that is, attention rules. Drawing on the attention-based view, we posit that attention rules are shaped by environmental volatility over time and vary by locus of attention across firms. Data from US manufacturing firms managing their toxic chemical waste provide evidence for attention-rule adaptation. Managerial Summary: Firms must set aspirations, measure, and improve their toxic waste levels to avoid costly economic, regulatory, and environmental hazards. Although aspirations play a vital role in driving firm behavior, we still have limited understanding of how managers allocate their attention to various performance feedback during aspiration formation. We argue that attention allocation differs for managers across organizational hierarchy exposed to varying degrees of environmental volatility. Greater volatility of the business environment steers managerial attention from the performance of others toward their own historical

Like Performance, Perfect Match: Role of Past Performance in Venture Capital Syndication

“…In terms of the effect on decision-making process, some empirical evidence shows the performance relative to social aspiration functions differently from that relative to historical aspiration (Ye et al, 2021) while other evidence suggests the similar effect of performance relative to the two aspirations (Wan et al, 2022). Noticeably, prior research on such topic is largely focused on the evidence from individual perception and decision-making process of the managers (Berchicci & Tarakci, 2022; Blettner et al, 2015). Therefore, comparison between performance relative to social and historical aspiration in the sense of organization would be interesting for future research.…”

Organizational Goals, Outcomes, and the Assessment of Performance: Reconceptualizing Success in Management Studies

“…For instance, Gong et al (2013) argue that transparency, outcome orientation, participation, trust, and timely feedback are goals that define how business units operate. Organizations also pursue sustainable development goals (Markman et al, 2016), engage in sustainability standard adoption (substantive compliance) (Wijen, 2014), as well as target safety-related goals (Gaba and Greve, 2019) and waste-reduction goals (Berchicci and Tarakci, 2022). Non-economic goals are frequently pursued by hybrid organizations (i.e., organizations that operate at the intersection between multiple logics), such as family-firms and science-based firms.…”

“…In a similar fashion, Hahn et al (2019) studying academic spin-offs show that goals must be aligned to performance outcomes, otherwise, by focusing on conflicting (not aligned) goals, performance will be hampered. Berchicci and Tarakci (2022) propose and show that both the external environment and the locus of attention affect how decision-makers weigh multiple aspirations. Canales (2014) examines trade-offs in organizational practices, specifically between standardization and flexibility, which -if properly managed-may allow firms to pursue financial and non-financial goals at the same time.…”

Heroes or Villains? Recasting Middle Management Roles, Processes, and Behaviours

“…To illustrate, Ateş et al (2020) recently scrutinized how middle managers' (visionary) leadership style can either build or ruin a shared understanding of strategy within a team. Berchicci and Tarakci (2022) have recently documented how middle managers differ in forming performance aspirations. Hence, we join others (Gavetti et al, 2007(Gavetti et al, , 2012Powell et al, 2011) and call for developing a behavioural theory of strategy from the eyes of middle managers.…”