Aspiration formation and attention rules

Luca Berchicci*, Murat Tarakci

*Corresponding author for this work

Research output: Contribution to journalArticleAcademicpeer-review

23 Citations (Scopus)
88 Downloads (Pure)

Abstract

Research Summary: The behavioral theory of the firm (BTOF) proposes that firm behavior is goal-directed 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 aspirations. We also suggest that the attention of managers at higher levels of the organizational structure are directed from their own historical aspirations toward performance of others. We find corroborating evidence for our conjectures.

Original languageEnglish
Pages (from-to)1575-1601
Number of pages27
JournalStrategic Management Journal
Volume43
Issue number8
Early online date22 Dec 2021
DOIs
Publication statusPublished - 22 Aug 2022

Bibliographical note

Funding Information:
We thank Vibha Gaba for her exceptional editorial oversight and two anonymous reviewers for their constructive feedback and guidance. We also thank Daniela Blettner, Nel Dutt, Thomas Fewer, Pursey Heugens, Helge Klapper, Brad Miller, Ivo Rutten, and Daan Stam for their helpful insights and comments. We gratefully acknowledge feedback from the participants at the Academy of Management Conference in Chicago, Strategic Management Society's Special Conference in Frankfurt, Strategy Science Conference in Philadelphia, and GRONEN Reading Group at the University of Bath, as well as our colleagues at Rotterdam School of Management. The usual disclaimer applies.

Publisher Copyright:
© 2021 The Authors. Strategic Management Journal published by John Wiley & Sons Ltd.

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