Attention as the Mediator Between Top Management Team Characteristics and Strategic Change: The Case of Airline Deregulation

Abstract

We integrate the upper-echelons perspective with the attention-based view of the firm by examining the role of attentional orientation of top management teams (TMTs). In the context of airline deregulation, we find that deregulation caused a shift in managerial attention, but that this shift in attention was the greatest for firms that changed the composition and compensation of their TMTs in ways that favored the deregulated regime. We also find that attention partially mediated the relationship between TMT changes and strategy changes. The results of this study shed light on the transformation of industry attention patterns following an environmental shift, and the role of TMT composition and incentive systems in that process.

Environmental context, managerial cognition, and strategic action: an integrated view

“…Attention focus about the environment is important because it influences the degree of mindful attention that will be directed to a given environmental event (Weick, 1995) and influences the likelihood that any given environmental event will make it onto the firm's strategic agenda (Cho and Hambrick, 2006;Dutton and Jackson, 1987;Huff, 1990). Causal logics, on the other hand, are the primary basis for decision making in general (Fiske and Taylor, 1991) and have been found to influence the way in which strategic decisions are made, understood, and communicated (Huff, 1990).…”

Entrepreneurial Cognition

“…These processes can be more top down or more bottom up. Thus far, the majority of research has utilized top-down processes to explore the association between the allocation of attention (Cho and Hambrick 2006;Ocasio 1997) and the ability to recognize and make sense of new opportunities (Eisenhardt and Schoonhoven 1990;Tripsas and Gavetti 2000). Researchers have given these top-down processes different names, but each of these different conceptualizations generally outlines a set of knowledge structures that managers draw on to engage with their environment to recognize, make sense of, and respond to signals from the environment (Bogner and Barr 2000)-namely, signals that indicate potential opportunities.…”

Attention and Entrepreneurial Cognition

“…These processes can be more top down or more bottom up. Thus far, the majority of research has utilized top-down processes to explore the association between the allocation of attention (Cho and Hambrick 2006;Ocasio 1997) and the ability to recognize and make sense of new opportunities (Eisenhardt and Schoonhoven 1990;Tripsas and Gavetti 2000). Researchers have given these top-down processes different names, but each of these different conceptualizations generally outlines a set of knowledge structures that managers draw on to engage with their environment to recognize, make sense of, and respond to signals from the environment (Bogner and Barr 2000)-namely, signals that indicate potential opportunities.…”

“…However, firms can develop methods to enhance their decision-making speed in areas of particular interest. My (Dean) colleague and I (Bakker and Shepherd 2017) built on Cho and Hambrick's (2006) notion of attentional orientation (which in turn drew on Ocasio's work on attention (1997,2011)) to theorize on a firm's attention level toward specific opportunity-advancement stages. Attention ranged from higher attention levels focused on earlier-stage exploration activities and related assessment decisions to higher attention levels focused on later-stage exploitation activities and related assessment decisions.…”