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Alert and Awake: Role of alertness and attention on rate of new product introductions
Abstract
Integrating the attention-based view and entrepreneurial alertness perspective, we develop our theoretical framework to test the influence of CEO attention and alertness on rate of new product introduction (NPI). We propose that a firm's rate of NPI is predicted independently and jointly by attention and alertness, two different yet complementary cognitive characteristics of the CEO. Using a sample of 271 US-based small and medium size enterprises (SMEs) from 2004 to 2015, we show that CEO's attention to R&D, customers, and competitors positively influence NPI, while attention to organization negatively impacts the relationship. We also find that CEO alertness has positive impact on the rate of NPI; however, high alertness hurts the rate of NPI. Such theoretical elaboration and empirical illustrations contribute to a better understanding of the microfoundations of managerial cognition and its role in NPI. By adding alertness from entrepreneurship literature and explicating the nexus between alertness and attention, our study explains how some CEOs who are able to acquire novel information and stay focused are able to achieve higher rate of NPI.
... This cluster represents the influence of the behavioral strategy on DMCs. The behavioral and cognitive characteristics of managers individually and in groups are represented through their personality (Bromiley & Rau, 2016;Gerstner et al., 2013), traits (Lin, 2014), attributes (Nickerson et al., 2017), experiences (Cui et al., 2013), human capital , gender (Krammer, 2022;Post et al., 2022), attention (Srivastava et al., 2021;Zhong et al., 2021;Gerstner et al., 2013), alertness (Srivastava et al., 2021), etc. These characteristics influence their perceptions of reality and decision-making and impact organizational performance and outcomes. ...
... This cluster represents the influence of the behavioral strategy on DMCs. The behavioral and cognitive characteristics of managers individually and in groups are represented through their personality (Bromiley & Rau, 2016;Gerstner et al., 2013), traits (Lin, 2014), attributes (Nickerson et al., 2017), experiences (Cui et al., 2013), human capital , gender (Krammer, 2022;Post et al., 2022), attention (Srivastava et al., 2021;Zhong et al., 2021;Gerstner et al., 2013), alertness (Srivastava et al., 2021), etc. These characteristics influence their perceptions of reality and decision-making and impact organizational performance and outcomes. ...
... While studies have focused on a wide range of outcomes, such as the adoption of technology discontinuity (Gerstner et al., 2013), business model innovation (Heubeck & Meckl, 2022), international expansion (Lin, 2014), value-based marketing and price setting (Smith, 2020) and new product introduction (Srivastava et al., 2021), there remains significant potential for continued exploration. ...
The literature on dynamic managerial capabilities (DMCs) has grown considerably and has evolved over the past two decades. Helfat and Martin (2015) reviewed this literature, which helped clarify the nomological network surrounding DMCs while synthesizing the empirical literature related to its impact on strategic change and firm performance. In this paper, we build on their work by applying bibliometric techniques to trace the evolution of this multidisciplinary construct. The analysis of 33 key journals and 188 articles spanning more than three decades (1989-2023) comprises distinct time periods and longitudinal trends that support meaningful visual representations of the bibliographic data. The findings reveal seven foundational themes for DMC research: upper echelons, cognitive biases, cognitive strategic groups, capability configurations, issue interpretation, individual & group characteristics, and market & network orientation. We also extend the DMC framework of Helfat & Martin (2015) by including political capital as the fourth underpinning. On the basis of the temporal and topic trend analysis, we conclude with recommendations for further research avenues that can shed light on the future of DMC literature. We also highlight practical implications for practicing managers and firms to strengthen competitive differentiation by building and leveraging DMCs.
... EA originates from Kirzner's theory of opportunity discovery (Kirzner, 1973(Kirzner, , 1979(Kirzner, , 1985 and signifies an entrepreneur's ability to perceive what was previously unnoticed by others (Kirzner, 2009). However, although several studies confirm the link between EA and performance (Karami & Hossain, 2023;Roundy et al., 2018;Srivastava et al., 2021;Tang et al., 2021), there is a scarcity of studies examining the performance outcomes of opportunities initiated through EA beyond a domestic context (exceptions include Crespo et al., 2022;Lew et al., 2023). It is essential to acknowledge the role of international markets as they significantly affect firms' strategies and performance (Hilmersson, 2014). ...
... This contributes to the broader discourse on how cognitive processes and behavioral patterns shape and are shaped by the complex dynamics of international markets. Specifically, we address the limited research on EA and the action mechanisms that connect EA to international performance, encompassing behavior, decision-making, and strategies (Adomako, Opoku, et al., 2018;Crespo et al., 2022;Srivastava et al., 2021;Tang et al., 2012) and, thus, offering a more comprehensive understanding of how entrepreneurs perceive, interpret, and act upon global opportunities and challenges. Building from this, we go beyond previous studies that have examined EA and its performance effects, mainly in a domestic market environment. ...
... Some researchers argue that EA is a prerequisite for surprising opportunity discoveries and is an ability to notice what is happening in the market without a deliberate search effort (Srivastava et al., 2021). Other studies, on the other hand, suggest that EA is more active. ...
By shedding light on the often-overlooked early stages of opportunity development initiated by entrepreneurial alertness and its performance outcomes in an international setting, this study examines the interplay between alertness and two decision making logics, effectual flexibility and causal prediction, in the context of small-and medium-sized enterprises (SMEs) internationalization. Leveraging structural equation modeling on a data set of 680 manufacturing SMEs across five countries, this study uncovers distinct effects: effectual flexibility moderates , while causal prediction mediates, the positive relationship between alertness and the international performance of SMEs. The research makes noteworthy contributions to international entrepreneurship literature by linking alertness with performance in the international context and disentangling the nuanced pathways through which SMEs can achieve success in the global arena.
... The results reveal that TMT attention to digital transformation and attention intensity have positive impacts on innovation activities, while attention breadth exhibits an inverted U-shaped impact. These findings are consistent with expectations and are also consistent with the attention-based view literature (Srivastava et al., 2021). Regarding the moderating variables, being located in the eastern region, state ownership and policy support play positive moderating roles, while CEO duality has a negative moderating effect. ...
... In terms of attention breadth, studies have found that selective attention of TMT on unfamiliar, distant, and diverse stimuli is conducive to new product R&D, while intense attention to these stimuli is not conducive to such R&D (Li et al., 2013). An inverted U-shaped relationship exists between CEO alertness and new product innovation because alert CEOs consider too many opportunities, leading to excessive attention distraction that impairs their ability to realize opportunities (Srivastava et al., 2021). ...
... This method is rarely used because the link between demographic characteristics and attention is indirect and weak (Barr et al., 1992). The other method is text analysis (Srivastava et al., 2021). This method extracts keywords from relevant texts and calculates the occurrence frequency of these keywords in the text to compute the level of manager attention to relevant issues. ...
Digital transformation, as a global trend, has captured a lot of attention from management. How management allocates attention resources has become an important issue if a firm plans to pursue digital transformation. We provide an empirical analysis for this problem from the perspective of the attention-based view. We use data from 493 listed Chinese manufacturing firms from 2012-2020 to examine how the allocation of top management team (TMT) attention to digital transformation affects innovation activities. The results reveal that TMT attention to digital transformation and its intensity has a positive impact on corporate innovation activities, while the breadth of attention exhibits an inverted U-shaped impact on innovation activities. These findings are consistent with theoretical predictions. We also examine the moderating roles of external factors such as market conditions, corporate ownership, CEO duality, and policy support that distract managers' attention, and reveal different characteristics of moderating role of Chinese state-owned firms. These findings provided a reference for further promoting digital transformation.
... Accordingly, we propose a new concept, CEO vigilance, which represents heightened awareness, alertness and willingness to capitalize on opportunities. Vigilant CEOs are constantly attentive and actively seek out weak and unexpected signals in their environment (Srivastava et al., 2021). This construct builds upon the foundations of upper-echelons theory (UET) and the attention-based view (ABV). ...
... Chen et al. (2015) established a positive association between CEO attention to firm innovation and patent applications. Srivastava et al. (2021) demonstrated that CEO attention to R&D positively influences new product introduction. However, narrower and more restricted CEO attention may lead to myopia (Hambrick et al., 1996;Levinthal and March, 1993), hindering intended organizational goals. ...
... The concept of CEO attention uniqueness is an important addition to the ABV framework as it captures whether CEOs are constantly seeking new information and identifying new opportunities. Attention uniqueness is similar to CEO alertness as developed in Srivastava et al. (2021). However, there are marked differences in the operationalization. ...
Purpose
By integrating perspectives from the resource-based view, attention-based view, upper echelon theory and competitive dynamics (CD), the authors seek to understand how chief executive officer (CEO) vigilance influences the way resources are utilized in relation to competitive behavior.
Design/methodology/approach
This study's empirical analysis is conducted using a longitudinal design in the US software and IT services industry with a final sample consisting of 44 publicly traded firms and 471 firm-year observations from 1995 to 2009. The authors respectively use the fixed-effects negative binomial model and generalized estimating equation (GEE) model to test the effects of technology resource breadth on competitive intensity and competitive deviance and the interacting effects with CEO attention broadness and uniqueness.
Findings
This study's results show that CEO vigilance (attention broadness and uniqueness) interacts with technology resource breadth to jointly influence competitive intensity and deviance. Firms with vigilant CEOs utilize firm resources to compete less intensively but in an unconventional way.
Practical implications
This study reveals that when CEOs have a broader focus and attend to a wide range of information, their ability to quickly utilize firm resources for formulating competitive actions decreases. Consequently, it is crucial for CEOs to acknowledge the limitations of their attentional capacity. They need to understand that the allocation of their attention and information processing capacity has significant implications for the speed and quality of their decision-making processes.
Originality/value
The authors conceptualize and operationalize CEO vigilance, which is a novel construct that has not been studied. The authors show that CEO vigilance plays critical roles in utilizing resources to compete. This study offers significant research implications for attention-based view, upper-echelons theory, CD perspective and resource-based view.
... The person's alertness is affected by their attention and adrenaline rush, and their alertness may be increased by prior high alertness (directed alertness) [38,39]. Workers' adrenaline rush is improved by strict deadlines and job demands, as well as a lack of communication and information management at work [40][41][42]. Time pressure among workers has a significant impact on workplace demands, including a lack of job control [43,44]. ...
... The attention and adrenaline rush affect the alertness of the person [38] and the person's alert may increase by previous high alertness (directed alertness) [39]. The adrenaline rush of workers is increased by time pressure and job demand [40,41] as well as lack of communication and information management during the work [42]. ...
... The simulation trace is shown in Fig. 7 shows the worker's attention is controlled by the worker's alertness and complex adaptive systems around him/her as well as it is recent finding [40]. Thus, by taking = 1 , the worker's attention is solely based on alertness. ...
Self-awareness emotional intelligence symptoms will be unavoidable in the job. These symptoms are
generally regarded as acceptable by certain standards, as they are an important part of keeping people informed (or
commonly known as situational awareness). However, the most recent research focuses on external components of
situational awareness aspects and lacks adaptable methods to deal with the individual's situational awareness dynamics.
This study investigated the use of an agent-based modeling strategy for situational awareness in the workplace. It
focuses on environmental and personal factors that influence the level of situational awareness at work in a dynamic
way. The outcomes included a range of scenarios that corresponded to various personality traits and environmental
conditions. Finally, equilibria analysis and automated logical verification were employed to evaluate this
computational model in order to check whether there were any conceptual defects, as indicated in the literature. The
suggested computational agent-based model has shown rational behavior patterns that are consistent with existing
psychology literature on situational awareness in the workplace.
... Drawing on the rich literature on coalitions (Cyert and March, 1963;Mithani and O'Brien, 2021;Stevenson et al., 1985) and corporate venturing (Ireland et al., 2009;Narayanan et al., 2009), we create a theoretical framework encompassing the parent firm, the parent firm-venture intersection, and the venture levels to delineate the factors that might jointly affect CV innovation. We build upon fuzzy-set qualitative comparative analysis (fsQCA) (Fiss, 2011;Ragin, 2008), which has recently gained prominence in leading management and innovation journals (Douglas et al., 2020;Gilbert and Campbell, 2015;Kimmitt et al., 2020). ...
... As such, our findings show that the involvement of the dominant coalition can replace autonomy, thus opening the discussion for a reconceptualization of CV autonomy. Finally, we contribute to the research on coalitions in organizations (Mithani and O'Brien, 2021;Pearce, 1995;Stevenson et al., 1985) by drawing out how dominant coalitions can balance interdependence with subunits, such as CVs, by installing them as either controlled, linked, or detached coalition setups. ...
... The concept of organizations as consisting of coalitions vying for influence has been popularized by the work of Cyert and March (1963), who used the term to describe a group of individuals (temporarily) working together striving to achieve a shared goal. Since its inception, the term coalition has been adopted by several research streams (Mithani and O'Brien, 2021;Stevenson et al., 1985). For instance, resource dependence theory has built upon coalitions to investigate the allocation of resources and conflicts between subunits (Pfeffer and Salancik, 1978;Schwochau et al., 1988), while upper echelon theory has focused on the organization's elite, the "dominant coalition," and its impact on organizational outcomes (Hambrick and Mason, 1984). ...
Organizations often create new businesses, so-called corporate ventures (CVs), with the purpose of fostering innovation. However, not all venture initiatives turn out to be innovative. Prior research in particular refers to the ambivalent role of the parent firm's dominant coalition in fostering or hindering innovation in CVs. Using a configurational (fsQCA) approach, we investigate the interplay of five key conditions at the parent firm, the parent firm-venture intersection, and venture levels that potentially drive CV innovation. Building on 62 interviews from 43 corporate ventures, we identify four equifinal configurations and outline four roles that the dominant coalition plays in creating CV innovation. This study contributes to the understanding of which CV configurations drive innovation, extends the role of the dominant coalition in corporate venturing, and shows how dominant coalition involvement can replace autonomy as a driver of innovation.
... We position entrepreneurial alertness schemata (Tang et al., 2012) as a key intervening construct in transforming cross-cultural experience into intentions to pursue entrepreneurship. Entrepreneurial alertness comprises three dimensions proven to be influential in recognizing or developing commercial opportunities: scanning and search, association and connection, and evaluation and judgment (Srivastava et al., 2020). Thus, we argue that breadth of cross-cultural experience-the diversity of foreign countries visited, in particular, provides individuals with the range and novelty of cognitive inputs required to enhance these entrepreneurial schemata. ...
... Entrepreneurial alertness is a set of schemata whereby some individuals possess this entrepreneurial "antenna" that enables them to identify commercial potential (Valliere, 2013). A body of literature has emerged on entrepreneurial alertness and found that it is an influential capacity among both existing and prospective entrepreneurs for developing and taking action on new ideas (e.g., Levasseur et al., 2020;Sharma, 2019;Srivastava et al., 2020). Tang et al. (2012) suggest that entrepreneurial alertness consists of three distinct yet mutually important schemas. ...
... While we find significant paths for only the scanning and search and evaluation and judgment dimensions, we are confident that entrepreneurial alertness is meaningfully influential in connecting novel experiences with proclivities to engage in entrepreneurship. Indeed, recent studies have drawn on this same conceptualization to develop alternate linguistic-based measures of alertness dimensions and found evidence for its link to related outcomes (Srivastava et al., 2020). Further, as alertness is cognitive construct grounded in processing unique combinations of stimuli for novel entrepreneurial ideation, we provide a foundation for research exploring the mediating role of conceptually similar constructs such as paradoxical mindset (Liu et al., 2019;Prashantham et al., 2018;Waldman et al., 2019) and Janusian thinking (Ko and Butler, 2006). ...
Emerging evidence suggests that there is a meaningful link between overseas experience and entrepreneurial activity. However, we find very limited inquiry at the individual-level into why cross-cultural exposure seems to enhance proclivities to engage in entrepreneurship. Drawing from Schema Theory, we argue that breadth of cross-cultural experience cultivates entrepreneurial intentions through the role of alertness—a set of schematic aptitudes for spotting commercial potential. Using a sample of lay individuals from the U.S. (N = 581) with diverse entrepreneurial and overseas experience, we find support for our model. Our findings help explain why cross-cultural experiences can be so impactful for nascent venturing. The greater the diversity of foreign cultural exposure one attains, the greater it expands scanning and search, association and connection, and evaluation and judgment schemata salient to the pursuit of new venture opportunities.
... On the other hand, other scholars have suggested that paying attention to multiple strategic issues simultaneously (i.e., broad SAB) allows for better opportunity identification and greater responsiveness to market changes (Kaplan, 2011;Shepherd, Mcmullen, & Ocasio, 2017). For example, CEOs with broad SAB may be better able to quickly deploy and utilize firm resources toward achieving the firm's strategic goals (Li & Yang, 2023), and be better able to launch new products successfully (Srivastava, Sahaym, & Allison, 2021). ...
... On one hand, the managerial cognition literature (Kaplan, 2011) suggests that narrow SAB is undesirable and leads to lower firm performance, since narrow SAB may lead firms to miss opportunities in their market due to executive blind spots (Danneels, 2003) and to an inability to properly respond to changing environments (Tripsas & Gavetti, 2000). Conversely, the managerial cognition perspective views broad SAB as helpful, since it allow for better opportunity scanning (Danneels, 2003), better new product launches (Srivastava et al., 2021), better conviction in identified opportunities (Shepherd et al., 2017), better sensemaking of the new information (Nadkarni & Barr, 2008), and better resource utilization (Li & Yang, 2023). Yet, the cognition perspective is in disagreement with the ABV, which views broad SAB as undesirable and potentially leading to lower firm performance. ...
The attention-based view contends that executives possess limited attentional capabilities that must be carefully allocated across different strategic issues. Although many scholars contend that narrow strategic attention breadth leads to better performance, others argue that broad strategic attention breadth may be more beneficial due to better opportunity scanning. We posit that the relationship between strategic attention breadth and performance will be inverted U-shaped, where strategic attention breadth is positively related to firm performance up to an optimal point, after which firms will see declining benefits due to executive cognitive overload. Furthermore, we propose that executives’ assessment of strategic opportunities will be influenced by the firm’s corporate social responsibility perspective, as the firm’s environmental and ethical commitment may mitigate executive blind spots and enhance opportunity selection. We support our hypotheses with multiple measures of firm performance and a content analysis of annual reports corresponding to a 5-year longitudinal sample of 2,245 S&P 500 firms.
... Indeed, Alert individuals are attuned to changes, trends and signals within the market (Zaheer & Zaheer, 1997). They can spot shifts in consumer preferences, emerging technologies, regulatory changes and other factors that create opportunities for new products, services or business models (Srivastava et al., 2021) through the recognition of inefficiencies or suboptimal processes within industries (Shane, 2000). The entrepreneurs with high level of alertness are synthetizing information from different sources and disciplines to uncover novel opportunities at the intersection of various fields as the patterns they then perceive in these events or trends suggest ideas for new products and services (Baron, 2006). ...
... Indeed, thinking creatively is necessary for the students to generate innovative ideas, while to be alerted could be the good wind for them to recognize opportunities (Saadat et al., 2022). The teaching activities need to help students to identify the market needs, think to solve real problems to create unique products and to be aware about the market trends (Srivastava et al., 2021). Creative thinking is to picture new solutions to existing problems which is essential for proposing new value that may procure the competitive advantage to the novel ideas they are discussing while preparing their business plan (Zhao et al., 2021). ...
Since 2018, the entrepreneurship course in the Omani universities has become a university requirement one for all the disciplines followed by undergraduate students, thus focusing on the adequate pedagogy enhancing the student’s entrepreneurial competencies and traits, is a must. The choice of the content and the pedagogical approaches had always been very challenging for such a course, especially in the last COVID-19 pandemic, where online education was imposed for all the entrepreneurship instructors all over the world. The aim of this chapter is toward creating an effective online entrepreneurship teaching course using the “design thinking” approach. Drawing fresh literature dealing with the design thinking pedagogical teaching practices and methods while exploring the suitable outcomes from the entrepreneurship paradigms, a teaching model has been developed to highlight the suitable outcomes of the entrepreneurship course. The main originality of the research is to propose an online teaching method to improve the “Creative alertness”, self-efficacy and opportunity evaluation among the students. An interesting discussion may be developed regarding the standardization of the “toolbox” of successful entrepreneurship online teaching and training programs and the way of how measuring the effectiveness of their learning outcomes.
... Existing studies on financial literacy largely refer to households and personal finance (Graña-Alvarez et al., 2022). Moreover, our study also extends international entrepreneurship (Prashantham and Floyd, 2019;Schwens et al., 2018;Verbeke and Ciravegna, 2018) and innovation (Dahlander, O'Mahony and Gann, 2016;Srivastava, Sahaym and Allison, 2020) literature. While prior work in this area pointed to the role of individuallevel cognition for the identification of new opportunities (Acedo and Jones, 2007), our work indicates that cognitive factors also allow entrepreneurs to mobilize the necessary resources to exploit these opportunities. ...
... By looking at the moderating effects of new firms' growth-oriented strategies, our study also responds to the repeated plea in the literature to incorporate decision-makers' cognitive processes into theoretical models of internationalization (Prashantham and Floyd, 2019;Schwens et al., 2018;Verbeke and Ciravegna, 2018) and innovation (Dahlander, O'Mahony and Gann, 2016;Srivastava, Sahaym and Allison, 2020). A limited number of studies on the internationalization and innovation activities of small, new enterprises (Prashantham and Floyd, 2019) have paid attention to the role of managers' and entrepreneurs' cognitions -such as their industry experience or risk perception -to identify and exploit international and innovative business opportunities (e.g. ...
How does a founder's knowledge of debt financing influence his/her new firm's ability to obtain the amount of debt financing it desires? Building on the cognitive psychology literature, we propose that the depth of a founder's debt financing knowledge is positively associated with the new firm's ability to obtain debt financing as he/she will be better at selecting and acquiring relevant sources of debt financing. Integrating insights on entrepreneurial growth‐oriented strategies, we further argue that this relationship will be more pronounced when the new firm internationalizes and innovates more. Using a Heckman full information maximum likelihood model, we analyse survey data on 1845 Flemish new firms. The first stage of the model estimates the new firm's probability of raising debt financing. The second stage tests the relationship between the founder's knowledge depth of debt financing and the new firm's debt financing ability, conditional on the decision to raise debt financing. We find that the founder's knowledge depth of debt financing is positively associated with the new firm's ability to obtain debt financing. This association becomes even more pronounced when the new firm internationalizes more. These findings extend the entrepreneurial finance, entrepreneurial strategy and cognitive psychology literature.
... (Elenkov & Manev, 2009;Srivastava et al., 2021). The ability of managers to effectively recognize opportunities, leverage diverse cultural contexts, and harness their creative potential has emerged as a critical factor in determining business success. ...
... As alert individuals engage in information search and scanning, association, and connection, they become aware of dynamic changes in the external environment. This leads to the acquisition of diverse and novel information, which is critical to opportunity recognition and the development of innovative new products (Marvel et al., 2020;Srivastava et al., 2021). An important antecedent for opportunity recognition, and thus a necessary element for innovativeness is creative selfefficacy (CSE, Gibbs, 2009;Laguía et al., 2019;Tumasjan & Braun, 2012). ...
Globalization has encouraged the growth and popularity of recognizing opportunities worldwide. As such, entrepreneurial alertness and cultural intelligence stand out as essential catalysts for innovation and creativity. Managers' ability to identify opportunities, navigate diverse cultural contexts, and unleash their creative potential is now recognized as a critical factor for business success. However, previous research has primarily examined the independent influence of entrepreneurial alertness and cultural intelligence on other entrepreneurial outcomes, leaving a significant gap in understanding their independent and combined impact on creative self-efficacy (CSE). In this study, we bridge this gap by investigating the interplay between entrepreneurial alertness, cultural intelligence, and CSE among managers. Drawing on schema theory and entrepreneurial alertness literature, we hypothesize that entrepreneurial alertness enhances CSE, with cultural intelligence moderating this relationship. Our three studies, involving student and non-student samples, provide empirical evidence to generally support these hypotheses. Our study contributes to the existing literature by integrating concepts from entrepreneurship, psychology, and cross-cultural management, enriching our understanding of how these constructs influence CSE. The findings also shed light on the teachability of entrepreneurial alertness and its role in fostering CSE, thus aiding in better preparing future entrepreneurs for the complexities of the global marketplace.
... Ahn, 2020;Muller & Whiteman, 2016), innovation (e.g. Chen et al., 2015;Srivastava et al., 2021;Yadav et al., 2007), headquarters-subsidiary relationships (e.g. Ambos & Birkinshaw, 2010;Bouquet et al., 2009;Y. ...
... Overall, innovative outcomes seem to depend on a certain minimum attention of decisionmakers (e.g. Eggers & Kaplan, 2009;Yadav et al., 2007) and seem to be sensitive to the diversion of attention to unrelated issues (Mithani, 2017;Srivastava et al., 2021). ...
Over two decades ago, Ocasio (1997) introduced the Attention-Based-View (ABV) of the firm with a powerful argument: Firm-level behaviour is the result of the situated distribution and allocation of managerial attention, embedded in broader organizational structures and the environmental context. ABV-based research has received substantial and increasing scholarly attention, resulting in a complex and incoherent body of research. In order to address this issue, this paper takes stock of extant research on the ABV and consolidates key debates. Based on a systematic review of 173 papers, we synthesize existing research into a unifying framework. Drawing on this framework, we propose situated attention as a central theme for future research. We elaborate on four situational factors (materiality, social dynamics, temporality, and, what we call, framing of the strategic setting), which may influence how actors' attention is situated in the particular context.
... Further, it has been suggested that the activities a founder engages in are dependent on the EP domain that is activated (Cardon et al., 2009(Cardon et al., , 2013Drnovsek, Cardon and Patel, 2016;Mueller, Wolfe and Syed, 2017). This is consistent with the attention-based literature, which suggests that founders' attention is connected with a specific object which leads them to give preference to certain activities over others (Srivastava, Sahaym and Allison, 2020). The attention-based literature has primarily focused on stimuli originating from the organizational environment (Cho and Hambrick, 2006;Kammerlander and Ganter, 2015). ...
... passion for founding) can take entrepreneurs' attention away from other activities that might be more relevant for the venture strategy. Indeed, researchers argue that the attention of key decisionmakers is bounded, and it is difficult for them to pay attention to multiple activities simultaneously (Srivastava, Sahaym and Allison, 2020). The attention given to a particular activity reduces the attention that founders can allocate to other activities (Stevens et al., 2015). 2 As founders can employ their agency to influence new venture activities (Zheng, Ahsan and DeNoble, 2020), it is likely that their EP will influence the new venture activities and outcomes. ...
In this paper, we examine the differential effects of entrepreneurial passion (EP) on product innovation intensity through the mediating mechanisms of exploration and exploitation activities. Using time-lagged data from 260 new ventures from Ghana, we examine the direct relationships between the three domains of EP (i.e., inventing, developing and founding) and a new venture’s product innovation intensity (PII). Further, we test the indirect relationships between the three domains of EP and PII through the mediating mechanisms of a new venture’s exploration and exploitation activities. The empirical results provide a fine-grained understanding of the relationship between EP, exploration and exploitation activities and PII. Implications for theory and practice are also discussed.
... Retrospective calculation supports and enables the entrepreneurial function described in the tradition started by Kirzner (1973), while prospective calculation does the same for the theory grounded in Schumpeter's (2003Schumpeter's ( [1942) approach to the entrepreneur. We concentrate on these two seminal approaches because Kirzner's concept of alertness and Schumpeter's concepts of creative destruction and innovation are still ubiquitous in the entrepreneurship literature (e.g., Bennett, 2021;Klein & Bylund, 2014;Korsgaard et al., 2016;Norbäck et al., 2016;Srivastava et al., 2021). ...
We integrate the issue of economic calculation into the theory of the entrepreneur. In doing so, we fill a gap in the literature by demonstrating that retrospective economic calculation, i.e., financial accounting, dovetails with Kirzner's theory of the alert entrepreneur and that prospective calculation, i.e., the appraisal of investment objects, supports innovational activities by entrepreneurs and therefore facilitates creative destruction as emphasized by Schumpeter. Our integrative conceptualization of the calculating entrepreneur can lead to a better understanding of the role of economic calculation in the economy, thereby bringing theoretical economics and business administration closer together.
... Both Kim and Wilemon (2002b) and Koen et al. (2014) indicated that responsible and effective leadership is the fundamental foundation for successfully executing FFE activities, thus decreasing FFE uncertainties. From this point of view, as daily necessity manufacturing firms' CEOs' alertness will have a positive impact on new product introduction and avoid risks at the same time (Srivastava et al., 2021;Tang et al., 2012), we will thus test the moderating effect of CEOs' alertness between distributors' strategic orientation in daily necessity products' FFE innovation and daily necessity manufacturing firms' NPD performance in this study from a micro view. Therefore, based on our analysis above, we raised two research questions in this study: RQ 1. ...
This study intends to investigate how the extra-role behavior of distributors’ FFE strategic orientation affects daily necessity manufacturers’ NPD (New product development) performance. This study also probes the moderating effects of FFE external environment uncertainties and CEOs’ alertness on this relationship. Data for this study were collected from different categories of daily necessity manufacturing companies, such as daily hygiene firms, food and beverage firms and daily electronics firms. The collected data were analyzed by structural equation modeling. The results show that distributors’ customer orientation has a positive impact on daily necessity manufacturers’ NPD performance. Furthermore, the results also show that FFE market uncertainty and FFE economic policy uncertainty negatively moderate the relationship, while CEO alertness has a positive moderating effect. This study indicates that the extra-role behavior (behavior that beyond one’s normal business duty) of distributors should utilize daily necessity manufacturers’ FFE customer orientation to help build greater NPD performance. It also shows that CEOs’ alertness is vital for daily necessity manufacturers to defend against FFE external environment uncertainties. This study closes the gap between FFE strategic orientation and daily necessity manufacturers’ NPD performance. This study also explores extra-role behavior and CEOs’ role in daily necessity manufacturers’ FFE innovation.
... Even if entrepreneurial alertness may have an impact on the success of entrepreneurial firms, the majority of research on the topic has concentrated on defining the traits of attentive entrepreneurs and the conceptual parameters of the idea [22,46,47]. Additionally, several organizational outcome characteristics and entrepreneurial attentiveness have been connected in recent studies [2,[48][49][50]. Considering the result of organizational success, attentive entrepreneurs move swiftly and nimbly when making decisions [51]; hence, their firm is more likely to obtain a competitive edge. ...
Entrepreneurial firms’ success is significantly influenced by their capacity to seize market opportunities. At the same time, little is known about when and how entrepreneurs’ alertness to the potential for business opportunities and how it influences their success. To fill this vacuum in the literature on entrepreneurship, the current study focused on identifying the impact that fluctuations in the degree of entrepreneurial networking cause on the relationship between three pertinent dimensions of entrepreneurial attentiveness and the success of entrepreneurial firms. Based on primary data collected from 384 entrepreneurial firms that are operating in Pakistan, using an adapted questionnaire, this study discovered that improvements in dimensions of entrepreneurial alertness have a beneficial impact on the success of entrepreneurial firms. Moreover, the moderating role of entrepreneurial networking has proved significant in the relationships. The effect size of the moderator is also significant and large. This study is also important for the sustainability of entrepreneurial firms because the more they are successful in their mission, the more they will be sustainable. Moreover, the moderating role of entrepreneurial networking that helps them in times of crisis also improves their sustainability. This study also revealed how entrepreneurial alertness works as a driver of entrepreneurial business success and how success is magnified in the presence of a higher degree of entrepreneurial networking. The theoretical, managerial, and policy ramifications of the study are explained at the end, along with limitations and recommendations for future researchers.
... Согласно результатам аналитического сопоставления 167 работ, посвященных различным аспектам нейронаучного изучения предпринимательства, в (Sharma et al., 2021) было установлено, что предпринимательские намерения воздействуют на предпринимательскую деятельность посредством таких когнитивных актов, как осознание возможностей, их оценка и принятие на себя риска. Среди факторов, влияющих на предпринимательские намерения на уровне социальной среды, выделяются такие как юридические нормы, государственная поддержка (Stephen et al., 2005), а также культура (Thomas, Mueller, 2000;Hayton et al., 2002); на уровне семьи -опыт родителей и родственников, а также друзей и знакомых (Churchill et al., 1987); на индивидуальном (психологическом) уровне выделяют такие черты, как достижительность, внутренний локус контроля, готовность принятия риска, терпеливость (endurance) и понятливость (Shaver, 1995). В (Krueger, 1993) значимым фактором были названы субъективные нормы индивида, т.е. ...
The article deals with identifying the obstacles to the commercialization of academic research results generated by the differences in institutional environment for the production of scientific knowledge and the production of technological products by innovative start-ups. To do this, it gives the characteristics of the above-mentioned institutional environments, as well as patterns of behavior in them that do not have the character of formal or informal institutions. Particular attention is paid to psychological traits of entrepreneurs and their cognitive abilities, which may not be available to teachers and researchers at universities and research organizations. Comparison of the content of these environments gives grounds for distinguishing two types of institutional barriers: the first one is of a general economic nature and can generate significant costs for the work of innovative start-ups; the second one is intra-organizational in nature and can generate high risks of transition from science to commercial industry, preventing researchers and teachers from making decisions about creating innovative technology start-ups. The paper concludes with recommendations to reduce the level of barriers of the second type. In particular, to compensate for the risks associated with possible consequences of failure to create a startup and the difficulties of returning to the field of research activity, university management could legally guarantee a teacher or researcher a return to work in scientific or educational departments of faculties for at least five years after creating a startup.
... Yet, much fruitful inquiry is needed to understand the role entrepreneurial alertness plays within the fundraising context. For instance, Srivastava et al. (2021) developed and validated a linguistic measure of entrepreneurial alertness which they applied to CEO narratives within annual reports. Intriguingly, while CATA (computer-aided content analysis) methodology has been applied heavily in crowdfunding research in recent years to capture the role of various types of entrepreneurs' rhetoric on funding effectiveness (e.g., Anglin et al., 2018), this validated entrepreneurial alertness measure has yet to be used in this context. ...
Entrepreneurial alertness is a psychological aptitude generally associated with aspects of nascent venturing, centered on individuals’ environmental observations, the association of resources, and idea evaluation. A decade following the Tang et al. (2012) consensus construct and scale, critiques remain questioning its utility and unique value to the major conversations in entrepreneurship. Proponents put great emphasis on entrepreneurial alertness’s proven association with opportunity recognition and entrepreneurial actions. Yet, critics suggest it might be an unnecessary step offering little more than a positive association with opportunity recognition in a highly generalized and static way. The purpose of this paper is to address this tension. We do so through a ‘steel man’ approach to these valid concerns. Further, we question the logic of limiting a cognitive construct to a singular event: ‘opportunity recognition’ for a new venture (which we term here, the “Big O”). Drawing on a comprehensive framework inclusive of the full entrepreneurship phenomenon, and integrating insights from cross-cultural psychology, we put forth the case for an ongoing culturally contextualized process perspective towards venturing where individuals are alert to and pursue opportunities (and cope with threats) continuously. This paper provides a new framework for delineating a theoretically grounded “what” and “when” of entrepreneurial alertness.
... Indeed, Alert individuals are attuned to changes, trends, and signals within the market (Zaheer & Zaheer, 1997). They can spot shifts in consumer preferences, emerging technologies, regulatory changes, and other factors that create opportunities for new products, services, or business models (Srivastava et al., 2021) through the recognition of inefficiencies or suboptimal processes within industries (Shane, 2000). The entrepreneurs with high level of alertness are synthetizing information from different sources and disciplines to uncover novel opportunities at the intersection of various fields as the patterns they then perceive in these events or trends suggest ideas for new products and services (Baron, 2006). ...
The design of entrepreneurial processes deserves a concept as complex as the phenomenon of entrepreneurship. In fact, designing a single process in which an individual with specific entrepreneurial traits can evaluate the opportunities and move forward the entrepreneurial action within an institutional environment, is very challenging. The aim of this research is to envision a contingent model of entrepreneurship effective in terms of entrepreneurial activity dynamism. Drawing a recent literature, the formal institutional support, alertness trait, opportunity evaluation, and entrepreneurial action, have been identified as main important ingredient of the current designed conceptual framework. The originality of this research lies in presenting a complete outline of entrepreneurship while exploring the effectiveness of alertness trait among nascent entrepreneurs and the way they perceive entrepreneurship formal institutional support, in improving their competence in evaluating opportunities and passing to the action stage. The research also enables the discussion of more research questions in addition to many other challenges facing policymakers about how to stimulate entrepreneurship activity, especially in developing countries.
... Considering a firm as a system where attention is distributed, the ABV suggests that attention focus influences the possibility of entering a firm's strategic agenda as a possible response (Nadkarni & Barr, 2008). However, it is difficult to observe multiple stimuli simultaneously because of the bounded nature of attention; therefore, decision-makers should direct their attention to some issues while ignoring others to economise their cognitive resources and address issues more efficiently (Ocasio et al., 2021;Srivastava et al., 2021). ...
Drawing on the attention‐based view and leadership theory, this study proposes a theoretical framework for the relationship between CEOs' attention load and firms' sustainability orientation, with supply chain leadership and CEOs' social capital playing mediating and moderating roles, respectively. We tested the theoretical framework by analysing panel data on 236 CEOs from 102 listed companies in the agricultural and food industries in China from 2012 to 2019. We find that (a) CEOs' attention load negatively affects firms' sustainable orientation; (b) this relationship is partially mediated by firms' supply chain leadership; and (c) CEOs' social capital positively moderates this mediating effect. Lower CEO attention loads are associated with increased supply chain leadership and higher sustainability orientation for the firm. Additionally, CEOs' social capital positively moderates the relationship between attention load and sustainability orientation. This study integrates the attention‐based view and leadership theory into sustainable development research, investigating the translation mechanism of CEO attention to a firm's managerial orientation towards sustainability. It contributes to leadership theory by extending sustainable and ethical leadership from an intra‐ to inter‐organisational context.
... Growth (Ndeveni et al., 2019), Business performance (Ndeveni et al., 2019), Firm performance (Srivastava et al., 2021), Financial performance (Tang et al., 2021), Perceived Firm Success (Amato et al., 2017), Market performance (Njeru and Bwisa, 2012), Satisfaction (Chen & Tseng, 2020), International performance (Crespo et al., 2014) Opportunity Recognition Ability to find new business opportunities based on existing information (You et al., 2020). Opportunity entrepreneurship (GEM, 2022), Opportunities (Lim 2019), Opportunity discovery (González et al., 2017), Perceived opportunity , Opportunity novelty (Cox, 2016), Opportunity development (Cox, 2016) Innovation Creation of new products, services, or work practices (Van de Ven, 1986). ...
Entrepreneurial alertness (EA) has attracted increasing attention in scholarly work, and a multitude of empirical studies have examined the antecedents and outcomes of entrepreneurial alertness. Although there is consistent evidence for significant associations, ambiguities exist concerning the directions and magnitude of the relationships. The purpose of this study is to meta-analytically assess the antecedents and outcomes of EA. A total of 125 empirical studies were analyzed with 597 effect sizes derived from 18 different constructs and a sample of 1,820,331 individuals. We advance our understanding of the critical role of alertness in generating entrepreneurial outcomes, its antecedents, and the directions and magnitude of the associations. We also provide several directions for further theorizing the role of alertness in entrepreneurship.
... Although entrepreneurial alertness helps an SME's executive director to identify opportunities that were cast aside by other individuals, this is only true in certain circumstances because sometimes the information obtained does not help the entrepreneur to grasp the potential (Brockman, 2014). So, executive directors must first concentrate on the factors that are essential for innovation, before distributing resources among other opportunities found, aiming for greater control and preventing an excess of common alternatives, i.e. an overload effect (Srivastava et al., 2021). In fact, as an intangible resource (Mosakowski, 1998), entrepreneurial alertness can help entrepreneurs be more successful in opportunity identification (Ardichvili et al., 2003;Bilal and Fatima, 2022). ...
Objective – This study aims to understand whether entrepreneurial alertness is a relevant determinant in creating opportunities in the context of small and medium-sized enterprises (SME).
Methodology – To this end, qualitative research was undertaken, specifically the case study method. The study context was formed of four SMEs (cases) located in an inland region of Portugal. The data-collecting instrument was an individual interview held with the owners-managers of the chosen firms and the data treatment technique was content and thematic analyses.
Findings – The results obtained reveal that entrepreneurial alertness is always present in the SME entrepreneurs/business-people’s daily lives and clearly creates good business opportunities not yet observed by the competition.
Practical implications – This study seeks to help SME owners-managers to understand the phenomenon of entrepreneurial alertness and understand the importance of this determinant for their firms’ success.
Originality/value – This study is innovative as it helps to characterise and understand entrepreneurial alertness by showing its importance for SMEs in creating valuable opportunities and achieving success.
... Entrepreneurial initiatives are key contributors to firm adaptation and growth (Covin & Miles, 1999;Dougherty & Hardy, 1996). Such initiatives involve judgments about deploying resources to particular (entrepreneurial) projects (Casson & Wadeson, 2007;Foss & Klein, 2012) as well as associated processes of bringing those projects to fruition (Srivastava et al., 2021). Current understanding of firm growth reflects a received view from neoclassical economics thatalthough firm growth rate could be influenced by some systematic factors related to the firm or the industrial environmentgrowth itself is a nearly random process (Geroski, 2005). ...
This paper uses system dynamics modelling to explore processes through which entrepreneurial initiatives within firms lead to firm growth. Our model captures the interplay among various sub-processes and finds these processes form a complex system involving multiple interacting feedback processes. Simulation analysis shows that minor changes in firm conditions could lead to qualitatively different growth trajectories. They involve growth dynamics such as better before worse, and worse before better scenarios. These findings prompt us to move beyond linear understanding of how entrepreneurship contributes to firm growth.
... Innovative performance and output are the cornerstones of the strategic management of technology and innovation (Keupp et al., 2012). Many of the reviewed articles explored the microfoundations of such outcomes as the number of new products (e.g., Srivastava et al., 2020) or the revenues made with new products (e.g., Mollick, 2012). Nevertheless, the investigation of innovative performance and output in a microfoundations perspective exhibits three shortcomings. ...
While innovations and new technologies are often pivotal to the long-term prosperity of firms, such firm-level outcomes emerge from the actions and interactions of organizational members who develop innovations and use new technologies. The “microfoundations movement” seeks to understand how micro-level (e.g., individual) actions and interactions lead to macro-level (e.g., organizational) outcomes and mediate relations between macro-level variables. Although the movement has grown tremendously over the last decade, it has yet to deeply pervade the domain of strategic technology and innovation management. Due to its tremendous growth, it is quite fragmented and dispersed, which impedes the identification of the most promising opportunities for future research. To overcome this problematic situation, we conduct a systematic literature review of existing research on microfoundations in the strategic management of technology and innovation, synthesize it into an integrative framework, and chart promising paths for future research. Specifically, we apply a multi-coder, multi-step approach, identify 87 relevant articles published in 23 leading academic journals over the period from 2003 to 2022, and propose a research agenda comprising more than 20 promising avenues for future research based on the resulting insights. These findings have important implications for the academic literature and management practice.
... When entrepreneurs turn their attention to customers by continuously interacting with them, they can gain valuable information about future market demand, which helps them decide whether to adjust the size of the business. In contrast, when entrepreneurs turn their attention to R&D, it can increase the level of innovation activity and the rate of new product introductions (Srivastava et al., 2021). ...
The manufacturing industry is the foundation for building and strengthening a country. Micro-manufacturing enterprises are the basis for the development of manufacturing, and products are the core and life of enterprises. Based on micro data from industrial enterprises, this study conducts a statistical measurement on the indicators of high-quality product development. Taking the Baidu Index as the proxy variable for attention allocation, the influence of attention allocation on high-quality development of products is systematically examined both theoretically and empirically; Additionally, it seeks to ascertain whether factor stock adjustment has a mediating effect. The findings are as follows: 1. Within the full sample, 63.63% of the attention allocation process to promote high-quality development of products is achieved by optimizing the factor stock adjustment channels. 2. Capital stock and labor stock adjustment have a partial mediating effect on the high-quality development of products in capital-intensive industries, while labor stock adjustment has a partial mediating effect on labor-intensive industries. 3. The regional results show that the adjustment of capital and labor stock has a partial mediating effect in the eastern region. This conclusion provides a theoretical basis for realizing the high-quality development of China's manufacturing industry.
... Nevertheless, the underlying mechanism which leads different people to employ different strategies in deciding on entrepreneurial action still lacks exploration from a synthetic perspective, since people always make a general decision based on a series of evaluations unconsciously [19]. The underlying mechanism which is cultivated or educated would intuitively dominate the decision process [20]. ...
Given its impact on preference for different information, the cognitive schema is recognized as a critical mechanism for people to make up their minds on willingness to act. However, how entrepreneurial cognitive schema influences cognitive processes remains unclear. Based on entrepreneurial action theory and information processing theory, we delineate the relationship between entrepreneurial cognitive schema and decision of entrepreneurial action by decomposing the cognitive process of comprehending external information related to entrepreneurial opportunity. We randomized 123 participants into different priming groups and collected their decision policies with a conjoint analysis experiment. Firstly, we found the individuated cognitive process, since the positive effect of founding rates is strengthened, and dissolution rates are reduced by positive knowledge-relatedness. Further, we partly validated the moderating role of entrepreneurial cognitive schema, with a more positive relationship between founding rates and willingness to act, and between knowledge-relatedness and willingness to act when participants are primed with this future-focused schema. This paper proves one critical cognitive unit while making a decision to act on entrepreneurial opportunity and indicated an active role of entrepreneurial cognitive schema in enabling people to emphasize and make better use of relevant information.
... However, despite the above outlined good intentions in trying to "bring realistic assumptions about human cognition, emotions, and social behavior to the strategic management of organizations" (Powell et al., 2011;p. 1371), behavioral strategy research has mainly established its foundations on works investigating psychological variables on secondary data (Schumacher et al., 2020;Srivastava et al., 2020). Yet, the required consideration of the emotional side of human mind (Prietzel, 2020) which, for some scholars, is the driver of cognition and consequent behavior (Healey and Hodgkinson, 2018;, has been lacking. ...
The milestone work of Powell, Lovallo, and Fox (2011) established the boundaries of a new field of research in management and organization studies: Behavioral Strategy. This new field “merges cognitive and social psychology with strategic management theory and practice” (Powell, 2011; p. 1371). From that, the ‘behavioral revolution,’ based on bounded rationality (Simon, 1947), dominant coalitions (Cyert and March, 1963), the investigation of sociodemographic features of executives (Hambrick and Mason, 1984), and the study of executives’ deviations from rationality (i.e., cognitive biases; Kahneman et al., 2011), is finally gain momentum in strategy research (Greve 2013; Levnithal, 2011). Additionally, behavioral strategy also serves as a good interpretative lens for the ongoing COVID-19 pandemic (Foss, 2020).
Notably, behavioral strategy is aimed at understanding: i) how the cognition of the individual scale up to collective behavior (Lovallo and Sibony, 2010; Gavetti, 2012), ii) how complex judgment in organizations is made (Garg, 2017; Augier et al., 2018), and iii) how designing organizational environments that can reduce the occurrence of biases (Echols and Neck, 1998; Cristofaro, 2017; Sibony et al., 2017). In brief, behavioral strategy deals with the “psychological origins of strategy” and try to advance them as to better exploit the antecedents of strategy – such as personality traits, mental health or disorders, beliefs, spirituality emotions, etc. (e.g., Ackers and Preston, 1997; Mendenhall, Butler, and Ehat, 2014) – and how it is ‘really’ formed in organizations.
However, despite the above outlined good intentions in trying to “bring realistic assumptions about human cognition, emotions, and social behavior to the strategic management of organizations” (Powell et al., 2011; p. 1371), behavioral strategy research has mainly established its foundations on works investigating psychological variables on secondary data (Schumacher et al., 2020; Srivastava et al., 2020). Yet, the required consideration of the emotional side of human mind (Prietzel, 2020) which, for some scholars, is the driver of cognition and consequent behavior (Healey and Hodgkinson, 2018; Cristofaro; 2020), has been lacking.
As such, the goal of this Special Issue is to (re-)affirm the foundations of Behavioral Strategy as conceived in its origins. In brief, research based on multi-level theories and/or multiple empirical approaches – based on primary data – that take into account the behavior of executives intertwining affective states and cognition are strongly encouraged, so that our collective efforts will advance strategy as an act of human behavior rather than an application of tools.
... After many rounds of discussions, they established an IoT strategy for the ecosystem business, starting from the mobile phone peripheral products. Such a process reflects the importance of the two distinct yet complementary cognition of the top management team in influencing a firm's strategy [72]. ...
Establishing a hub-based innovation ecosystem is an effective way for companies to cope with technological transformation and achieve sustainable development. While existing literature has explored how a hub firm develops or manages an innovation ecosystem, little attention has been paid to the strategic challenges in the development and management process. In strategic management, managerial cognitive capability has been proposed as a key factor that influences how firms make strategic changes and adapt to dynamic environments. Hence, from the perspective of managerial cognitive capability, this paper strives to investigate the development of an innovation ecosystem from the perspective of managerial cognitive capability. To do so, we conducted a qualitative case study of Xiaomi’s innovation ecosystem from 2010 to 2019. The research adopts an interpretive approach and finds that (1) the evolution of the innovation ecosystem can be divided into incubation, growth, and regeneration periods, with developing core products, related products, and unrelated products as respective focus; (2) under rapid technological and market changes, it is critical to match the managerial cognitive capability of the hub-firm with its innovation ecosystem; (3) building innovation ecosystems enables the hub-firm to achieve sustainable competitive advantages. The study builds a model for the growth of innovation ecosystems and enriches theoretical research on innovation ecosystems and managerial cognitive capability.
Contributing to ongoing conversations about the central role of
creativity in entrepreneurship, we propose that creativity leads to
positive entrepreneurial outcomes through a crucial mediating
mechanism: entrepreneurial alertness. We conducted a multilevel
meta-analysis of 92 published studies with 209 effect sizes
extracted and a cumulative sample size of 927,615 participants.
Our findings suggest that alertness fine-tunes creativity and channels it toward more promising opportunities, innovation, and firm performance. Integrating Schumpeterian and Kirznerian perspectives, this study provides a pragmatist view of entrepreneurship and paves the way for further theorizing the association between creativity and alertness in explaining entrepreneurial outcomes.
Opportunity recognition is a distinctive and essential entrepreneurial behaviour and a core concept in entrepreneurship research. However, the mechanisms by which passion influences opportunity recognition, as well as the conditions under which this relationship occurs, are not well understood. This study analyses time-lagged data from 258 entrepreneurs to explore how, when, and which aspects of entrepreneurial passion influence opportunity recognition through entrepreneurial alertness. The results indicate that all three types of entrepreneurial passion—passion for inventing, passion for founding, and passion for developing—enhance opportunity recognition by increasing entrepreneurial alertness. However, only passion for inventing and passion for developing have a direct impact on opportunity recognition. Additionally, passion for inventing and passion for founding boost entrepreneurial alertness, but only in highly dynamic environments. On the other hand, the effect of passion for developing on alertness remains consistent regardless of environmental conditions. Further analysis reveals that each of the three passion domains affects opportunity recognition through different dimensions of entrepreneurial alertness.
This study analyzed the important role of top management team (TMT) social networks in enterprise digital innovation as well as the moderating impact of financing constraints on this association based on an attention-based perspective. A sample of A-share listed companies in China in 2010–2018 is employed. The multidimensional fixed-effect regression results show that the influence of internal TMT relationship stability on digital innovation exhibits an inverted U-shaped relationship and the external TMT alumni network exerts positive effects on digital innovation. The interaction between TMT relationship stability and TMT alumni network positively affects digital innovation. In addition, financing constraints have no moderating effects on the relationship between TMT relationship stability and digital innovation, but negatively moderate the relationship between TMT alumni network and digital innovation. These findings extended the literature on the relationship between TMT social networks and digital innovation from the perspective of attention allocation.
The literature presents entrepreneurial alertness (EA)—a cognitive resource—as an antecedent of entrepreneurial opportunity identification, although empirical evidence is lacking. The aim of this study is to test this relationship and explore the influence of entrepreneurial orientation (EO), which provides a mobilizing vision for leveraging firm's resources, as a mediating mechanism for this relationship. Using data collected from 152 French entrepreneurs, our results empirically confirm the relationship between EA and entrepreneurial opportunity identification. Furthermore, we find a positive relationship between EA and each of the three dimensions of EO (i.e. innovativeness, proactiveness, and risk-taking propensity). However, only one dimension of EO—proactiveness—has a significant relationship with entrepreneurial opportunity identification. Our results highlight the mediating role of proactiveness in the relationship between EA and the identification of entrepreneurial opportunities and also confirm the interest in further research on this critical dimension of EO.
The strategy-by-doing perspective argues that firms operating in highly dynamic environments can benefit from taking strategic actions in lieu of advance planning because such actions have learning effects that help the firm keep pace with changes in the environment. The implicit assumption is that strategy by doing is effective in dynamic environments but likely not in stable environments. This study challenges this notion and expands the purview of the strategy-by-doing perspective. We first argue that strategy by doing is generally an effective strategy due to the organizational learning it facilitates. We next discuss how environmental dynamism is multidimensional, encompassing both market and technological dynamism. The positive effects of strategy by doing on product-market performance are amplified in highly dynamic environments that feature high levels of both market and technological dynamism. We go on to argue that stable environments are also suitable for strategy by doing, where it can facilitate opportunity creation. However, strategy by doing may hinder performance in mixed environments where one form of dynamism is present and the other is not. Focusing on strategy by doing in the form of product changes, our analysis of 4,000 firms over a period of 20 years shows support for our arguments about environmental contingencies affecting the relationship between strategy by doing and performance. We discuss how these findings have implications for theory and practice.
In his seminal contribution, Baumol (1990) proposes that the direction of entrepreneurial effort towards its productive (e.g., start-up activity) or unproductive (e.g., rent-seeking) use in a society depends on institutions or the “rules of the game”. We focus on an important micro-foundation of Baumol's theory namely that certain individuals change the direction of entrepreneurial efforts with institutional change. Our research contrasts with previous work on the role of institutions, which mostly focuses on the aggregate macro-level, while not observing individual behavior. We analyze who decides to start a venture in East Germany after the fall of the Berlin Wall and find that many individuals who demonstrated commitment to the anti-entrepreneurial communist regime in the GDR were active in launching new ventures soon after German re-unification. We argue that commitment to communism among post-communist entrepreneurs reflects rent-seeking. Once institutions change radically, entrepreneurial efforts are directed towards start-up activity. We rely on the German Socio-Economic Panel Study (SOEP) that includes information on whether East German respondents had a telephone before German re-unification, which was one of the most sought-after rewards for commitment to the regime. We find that telephone owners had a higher propensity of becoming successful firm founders. Telephone owners were also more likely to have an entrepreneurship-prone personality profile and value orientation. Our results confirm Baumol's theory and suggest that alertness to entrepreneurial arbitrage opportunities is guiding the redirection of entrepreneurial effort in the face of drastic institutional change.
Executive summary
There is a large body of literature on the effect of institutions on entrepreneurship. A good share of this literature is rooted in the seminal contribution by Baumol (1990) who argues that the shape of institutions determines whether people direct entrepreneurial effort to productive, unproductive or destructive entrepreneurial activities. Despite the fact that Baumol‘s main argument is at the individual micro-level, most of the literature focuses only on the macro-level implications of his theory. In contrast to most previous studies, we are not focusing on the aggregate level of entrepreneurship but explore the micro-foundations of Baumol's theory and analyze how (drastic) institutional change affects the entrepreneurial choice at the individual level.
In our discussion of Baumol's work, we also introduce Kirzner's concept of individual alertness to arbitrage opportunities which he originally formulated for market economies. We extend Kirzner's insights on the role of alertness to other institutional contexts (e.g., socialism) and forms of arbitrage (e.g., engagement in socialist organizations) other than start-up activity, and highlight the role of institutional change in shaping processes of opportunity formation.
It is important to understand how individuals allocate their entrepreneurial effort in times of major historical shocks and institutional changes for several reasons. First, since entrepreneurship is an important driver of economic growth and development, it is crucial to understand how institutional change affects entrepreneurial behavior at the individual level for designing policy measures targeted at increasing the entrepreneurial propensity of people. Second, the share of people with an entrepreneurial talent in a society is an enormous resource to cope with socio-economic change. Third, it is also important to understand the micro-foundations of Baumol's work as vast empirical evidence on the impact of institutions on entrepreneurial activities that is available at the macro-level relies on the validity of the micro-foundations.
We find that people who demonstrated commitment to one of the most anti-entrepreneurial institutional regimes in history—communism—were more likely to start a firm after transition to a market economy. Our analysis is based on the case of East Germany that saw a sudden shift from an anti-entrepreneurial communist regime that did not reward start-up activities towards an entrepreneurship-facilitating market economy after the fall of the Berlin Wall. Those people who were actively committed to the regime as evidenced by material rewards obtained in the GDR were more likely to become (successful) self-employed after the fall of the Berlin Wall. We also observe that people with an entrepreneurship-prone personality profile and those who put a strong emphasis on entrepreneurial values were more likely to have obtained material rewards in communism that indicate a strong commitment to the system.
We argue that applying and extending Baumol's and also Kirzner's ideas helps understanding this puzzling phenomenon. In essence, regime commitment can be seen as a form of rent-seeking activity, which is a classic example of unproductive entrepreneurial activity discussed by Baumol. Rent-seeking in the context of communism could be expressed, for example, in enthusiastic engagement in public organizations (e.g., party councils, youth organizations, state-owned enterprises) in exchange for specific material rewards. Their pronounced alertness to new arbitrage opportunities may have enabled these same individuals to switch to start-up activity once this option became available to them and if it was more profitable than rent-seeking.
We contribute to the literature by supporting the idea that the institutional framework conditions determine the type of entrepreneurial activity to which entrepreneurially talented people devote their efforts. So far, this claim found support mainly in aggregated macro-level data. Another important insight from our analysis is that entrepreneurs are flexible and agile economic agents who are alert to arbitrage opportunities and able to promptly adapt themselves to even radical changes, such as the shock transition from a socialist command economy to a market economy. Alertness to opportunities in a market economy context could hardly be learned in an anti-entrepreneurial context. Hence, an immediate re-allocation of entrepreneurial efforts indicates that alertness to arbitrage opportunities emerging in a market economy does not necessarily require experience in a market economy context.
Our assessment also suggests that institutional change is shaping subjective processes of opportunity formation. Hence, the debate on whether opportunities are ‘out there’ or they have to be created should take into consideration how institutions and institutional change set the boundaries for opportunities. In particular, identifying and pursuing new opportunities brought about by institutional change could represent a specific form of “entrepreneurship talent.”
Alertness is increasingly associated with entrepreneurial opportunities. However, ambiguity in the conceptualization and operationalization of the construct have limited its potential and utility for entrepreneurship research. Given the variations in treatment of alertness, we investigate the concept as it is currently evolving in entrepreneurship scholarship. With this examination, we bring to the forefront inconsistencies and emerging trends regarding the nomological alignment and measurement of alertness. This review and synthesis of alertness research clarifies conceptual inconsistencies stemming from its Kirznerian roots and offers a framework with agenda for entrepreneurial alertness research. This agenda includes the application of entrepreneurial alertness to the opportunity creation paradigm.
We investigate the impact of entrepreneurs' cross-cultural experience on new venture performance. Drawing on social cognitive theory, we examine how two socio-cognitive traits, entrepreneurial self-efficacy, and alertness to opportunities moderate the relationship between cross-cultural experience and new venture performance. We adopt a multi-method approach. In Study 1, we implement an experiment on a sample of 177 participants enrolled in an innovation and entrepreneurship program. In Study 2, we conduct a field survey of 65 entrepreneurs with varying cross-cultural experience. Our findings suggest that cross-cultural experience has a positive effect on new venture performance, and that entrepreneurial self-efficacy and alertness to opportunities bolster this relationship. Our research contributes to entrepreneurship research in a cross-cultural context and to the growing literature regarding individual cognitions in entrepreneurship.
Recognition of potentially valuable business opportunities is often the start of entrepreneurship. The present research focused on entrepreneurial alertness, which has been found to play a role in this process. Previous research has highlighted the effects of alertness; we seek to extend this research regarding alertness by investigating its antecedents. Drawing upon psychological capital literature, we focus on two potential contributors to alertness: self-efficacy and optimism. We also seek to clarify the relationship between alertness and firm outcomes. Data collected from CEOs of public firms in China were first used to validate the alertness scale, and data collected with entrepreneurs of private small and medium-sized enterprises in Taiwan were used to test our theoretical model. Results indicated that both entrepreneurs’ self-efficacy and optimism are positively related to alertness. Findings also clarify the effects of alertness by indicating that it is positively related to firm innovation which, in turn, is positively related to financial performance.
Pursuing sources of entrepreneurial and competitive advantage, researchers have been exploring cognition. We examine how cognitive capabilities affect competitive performance, drawing on two constructs rooted in psychology and economics. A familiar one is analytic skill, the ability to solve abstract problems. To that, we add strategic intelligence — the ability to anticipate competitors’ behavior and preempt it. Using incentivized experiments, we measure the constructs in participants, then let them compete for cash in a highly competitive market. Although the market is designed to eliminate any advantages, whether from market structure or strategic resources, some profit much more than others. We trace performance differences to heterogeneity in analytic skill and strategic intelligence, and show how the two fuel superior performance, even against tough competition.
Keywords: Cognition, Skill, Theory of Mind, Market, Asset, Experiment, Cognitive ability, Bounded rationality, Level-k, Nonequilibrium behavior, Beauty contest, Repeated games, Intelligence, Raven test
JEL Classification: C92, C73, D83
We examine how country-level institutional context moderates the relationship between three socio-cognitive traits-entrepreneurial self-efficacy, alertness to perceived business opportunities, and fear of failure-and entrepreneurial action. To do this, we blend social cognitive theory (SCT) with institutional theory to develop a multi-level model of entrepreneurial entry. We merge data from the Global Entrepreneurship Monitor (GEM) surveys and the Economic Freedom of the World (EFW) index for 45 countries from 2002 to 2012. Our results, which are based on a multi-level fixed-effects model, suggest that entrepreneurs' self-efficacy and alertness to perceived opportunities promote entrepreneurial action while fear of failure discourage it. However, the strength of these relationships depends on the institutional context, with entrepreneurial self-efficacy and alertness substantially more likely to lead to new ventures in countries with higher levels of economic freedom. These results suggest that economic freedom not only channels individual efforts to productive entrepreneurial activities, but also affects the extent to which individuals' socio-cognitive resources are mobilized to encourage high-growth entrepreneurship.
Research summary: Pursuing sources of entrepreneurial and competitive advantage, researchers have been exploring cognition. We examine how cognitive capabilities affect competitive performance, drawing on two constructs rooted in psychology and economics. A familiar one is analytic skill, the ability to solve abstract problems. To that, we add strategic intelligence — the ability to anticipate competitors' behavior and preempt it. Using incentivized experiments, we measure the constructs in participants, then let them compete for cash in a highly competitive market. Although the market is designed to eliminate any advantages, whether from market structure or strategic resources, some profit much more than others. We trace performance differences to heterogeneity in analytic skill and strategic intelligence, and show how the two fuel superior performance, even against tough competition .
Managerial summary: Why do some entrepreneurs outperform others? How can companies succeed against tough competition? Certainly, some benefit from unique resources, such as patents, and others can winnow competition, as through mergers. But some have entered highly competitive markets, lacking obvious resources, yet managed to achieve impressive success: think Under Armour, Wal‐Mart or Home Depot. Here we test how advantage can stem from managerial cognition. We measure two kinds of cognitive skill in market participants, and then let them vie for cash in intensely competitive markets. Some end up with far more profit than others. Tracing the root of high performance, we find it is predicted by a combination of analytic skills, the ability to solve abstract problems, and strategic intelligence—ability to anticipate competitors' behavior and preempt it . Copyright © 2017 John Wiley & Sons, Ltd.
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This article has earned an Open Data badge for making publicly available the digitally‐shareable data necessary to reproduce the reported results. The data is available at http://doi.org/10.17605/OSF.IO/P49YA . Learn more about the Open Practices badges from the Center for Open Science: https://osf.io/tvyxz/wiki .
Since its inception, entrepreneurship has struggled with the academic version of a new venture’s liability of newness; the field was considered pre-paradigmatic (Research methodology in strategy and management, New York, pp 1–32, 2005b), bereft of theory or conceptual frameworks (J Bus Ventur 19:617–620, 2004; Acad Manage Rev 26):8–11, 2001) and so lacking in understanding that investigators could not agree on what constituted the phenomenon of interest: any kind of self-employment? New venture creation? Corporate venturing? Something else? All of the above (J Bus Ventur 5:15–28, 1990; Acad Manage J 48:556–564, 2005a; Entrep Theory Pract 26:17–25, 2001, Encyclopedia of entrepreneurship, Englewood Cliffs, 1982)?
Research summary: We examine the interplay of behavioral and environmental uncertainty in shaping the effectiveness of two key governance mechanisms used by strategic alliances: contractual and trust-based governance. We develop and test hypotheses, using a meta-analytic dataset encompassing over 15,000 strategic alliances across 82 independent samples. We find that contractual governance works best under low to moderate levels of behavioral uncertainty and moderate to high levels of environmental uncertainty, while it is detrimental to alliance performance when both types of uncertainty are low or high. Trust-based governance is most effective at high levels of behavioral uncertainty and low levels of environmental uncertainty. It suffers a large loss of usefulness at high behavioral uncertainty as environmental uncertainty increases. Managerial summary: Strategic alliances allow firms to gain greater efficiency and create value. Yet, many such alliances fail because they are not able to deal with the twin challenges posed by behavioral and environmental uncertainty. Findings from our meta-analysis imply that under conditions of high behavioral uncertainty and low-to-moderate levels of environmental uncertainty, the use of trust-based governance alongside contractual governance might enhance the latter's effectiveness. The combined effectiveness of contractual and trust-based governance under high levels of both behavioral and environmental uncertainty is not obvious. When both behavioral and environmental uncertainty are high, contractual governance hurts alliance performance while trust-based governance does not function at its best either. Under these conditions, it might be better for firms to turn to hierarchy or vertical integration.
This article addresses the problem of testing the difference between two correlated agreement coefficients for statistical significance. A number of authors have proposed methods for testing the difference between two correlated kappa coefficients, which require either the use of resampling methods or the use of advanced statistical modeling techniques. In this article, we propose a technique similar to the classical pairwise t test for means, which is based on a large-sample linear approximation of the agreement coefficient. We illustrate the use of this technique with several known agreement coefficients including Cohen’s kappa, Gwet’s AC1, Fleiss’s generalized kappa, Conger’s generalized kappa, Krippendorff’s alpha, and the Brenann–Prediger coefficient. The proposed method is very flexible, can accommodate several types of correlation structures between coefficients, and requires neither advanced statistical modeling skills nor considerable computer programming experience. The validity of this method is tested with a Monte Carlo simulation.
More than five decades after the seminal works on how individuals process information and make decisions within organizations were published (Cyert & March, 1963; Simon, 1957), the thesis that individuals, groups, and organizations are bounded in their rationality and ability to attend to information continues to remain salient. Individuals and organizations display cognitive and motivational biases, both in their attention to information and in their decisions based on that information (De Dreu, Nijstad, & van Knippenberg, 2008; Ocasio, 2011; Tversky & Kahneman, 1974). The nature and volume of information, and managers' behaviors in seeking and using information, have undergone massive transformation over these past 50 years, which have seen the emergence of electronics, computers, and the Internet. Advances in information technology, mobile communications, and big data collection and storage mean that more people and firms have access to more information than ever before (George, Haas, & Pentland, 2014; Hilbert & Lopez, 2011). Yet, our frameworks of attention and decision making have not seen corresponding radical shifts. Perhaps, the underlying processes of decision making remain the same despite the transformative change in context. Alternatively, it is plausible that our theoretical advances have not matched the speed of change in information contexts confronted by businesses and policymakers alike. The growing ubiquity of information provides unprecedented opportunities—for learning, creativity , and innovation, as well as for performance. Understanding how to leverage these possibilities becomes an important challenge for management research and practice. However, the abundance of information also implies increasing competition for the attention of individuals, groups, and organizations ; increasing potential for information overload to fuel biases in decision making; increasing costs of collecting, storing, and sharing information ; and an increasing risk that all this information becomes a distraction from more relevant information or indeed from the job itself. Thus, a key challenge in the information age is to manage this wealth of available information and channel it to productive ends. In this thematic issue, we explore how management in the information age potentially differs and challenges our existing theoretical frameworks and assumptions. We assembled articles that address the rapidly evolving opportunities and challenges of managing in this new information-rich context. These articles are motivated by emergent themes and trends that set the stage for current and future scholarly research on information, attention, and decision making. We follow a brief analysis of these articles with potential directions for future research and highlight broader pastures where systematic research could further improve our understanding of how we live and work in the information age.
Research Summary: U- and inverted U-shaped relationships are increasingly explored in strategy research, with 11 percent of all articles published in Strategic Management Journal (SMJ) in 2008–2012 investigating such quadratic relationships. Moreover, a movement towards introducing moderation to quadratic relationships has emerged. By reviewing 110 articles published in SMJ from 1980 to 2012, we identify several critical issues in theorizing and testing of these relationships for which current practice falls short. These include insufficient causal argumentation, incorrect testing, mixing up two different types of moderation, and not realizing that the curve can flip completely. For these and other issues, a guideline is provided which, when followed, may bring clarity to theoretical motivation and rigor to empirical testing.
Managerial Summary: Too much can be as bad as too little. Many relationships in strategic management follow an inverted U-shaped pattern, where moderate levels of a strategy lead to optimal performance. To gain deeper insights into the conventional wisdom that too much of a good thing can be harmful to performance, we discuss how such relationships can be better theorized and tested based on a review of articles exploring U-shaped relationships in Strategic Management Journal during 1980–2012. We identify several critical issues that require close attention and provide a guideline to further develop and validate this important managerial intuition.
We develop and test an attention-based theory of search by top management teams and the influence on firm innovativeness. Using an in-depth field study of 61 publicly traded high-technology firms and their top executives, we find that the location selection and intensity of search independently and jointly influence new product introductions. We have three important findings. First, in contrast to the portrait of local managerial search, we find teams that select locations that contain novel, vivid, and salient information introduce more new products. Next, unlike informationgathering approaches that merely "satisfice", persistent search intensity may lead to increases in new product introductions. Finally, level of search intensity must fit the selected location of search to maximize new product introductions.
This research examines an integrated theoretical model that explains how strategies for participating in the market for corporate control (acquisitions and divestitures) affect internal control mechanisms and, together, influence internal and external innovation. Nine out of ten hypotheses received support, with results showing that firms engaging in acquisitions and divestitures emphasize financial controls, de-emphasize strategic controls, and thereby produce less internal innovation. Furthermore, these firms are likely to seek external innovation to gain short-term benefits in competitive advantage. We conclude that engaging in the market for corporate control strongly affects the context in which innovation is framed, the control mechanisms employed, and the design and process of innovation.
This article uses theoretical approaches from cognitive psychology to examine the basis for entrepreneurial alertness and to connect it to existing theories of attention in strategic management and decision-making. It thereby provides a theoretical basis for understanding how entrepreneurial alertness leads the individual to pay attention to new opportunities. A model is developed to show how attention and entrepreneurial alertness work together to support the recognition or creation of opportunities. Entrepreneurial alertness is believed to be a manifestation of differences in the schemata and cognitive frameworks that individuals use to make sense of changes in the environment. This suggests that entrepreneurial alertness mediates the impact of observed phenomena upon the situated attention of individual decision-makers.
This paper studies the role of publishing and patenting activities as predictors of new product development for a sample of companies in the U.S. pharmaceutical industry. The research also examines the relation between new product development and firm performance. Hypotheses are developed based on the well-established absorptive capacity literature. The results show that publishing scientific articles and stock of patents are both significant predictors of the number of new molecular entities (NMEs) for which a firm receives approval. In addition, the degree to which a firm builds on its own technology (measured as self-citations in its patents) also predicts NMEs, but the regression coefficient had an unexpected negative sign. Finally, the performance results confirm that the approval of NMEs is significantly associated with the market-to-book ratio of a firm. The managerial implications of these findings and study limitations are also discussed.
Purpose ‐ The aim of this study is to explore the drivers of supply and demand for attention in the managerial context, and develop a framework of managerial tools for allocating attention to various competing demands. Design/methodology/approach ‐ Deliberative attention refers to the application of attention to prolonged reflection and consideration of problems where routine approaches are insufficient. Drawing on theories of cognitive and structural constraints to the allocation of attention among competing stimuli, the paper investigates how managers match the strategic demands for deliberative attention and the supply available to individuals in their firms. This is used to develop a model of factors influencing the matching of supply and demand. Findings ‐ The paper uses this model to recommend specific strategies for explicitly managing deliberative attention and to categorize the appropriate application of a range of existing strategic management tools based on the nature and inherent uncertainty of the organizational problem being faced. Practical implications ‐ The model suggests that a primary strategic task of top managers is the appropriate management of attention within the firm. Understanding attention as a firm resource to be appropriately and deliberately managed helps to advance theoretical understanding of the human side of valuable resources in the firm. Such knowledge may also help practitioners to be more cognizant of their investments of valuable attention resources. Originality/value ‐ This is one of the first studies to treat attention as a scarce and valuable firm resource to be managed, and to use this as the foundation for more appropriate application of a wide range of current management techniques.
The current literature presents a mixed view of top managers, often characterizing them as an impediment to innovation, irrelevant for innovation, or, at best, having an indirect effect on innovation. In contrast, the authors use an attentional perspective to argue that chief executive officers (CEOs) have a positive, direct, and long-term impact on how firms detect, develop, and deploy new technologies over time. The authors test their arguments on longitudinal data from the U.S. retail banking industry. They show that CEO attention is a critical driver of innovation even (1) when the target of attention is not innovation per se but simply future events and external events in a generic sense; (2) when the innovation outcomes occur far in the future (sometimes several years in the future); (3) when the innovation outcomes are conceptually, empirically, and temporally distinct; and (4) in an empirical context (i.e., banking) that is not traditionally viewed as “high tech” and, thus, innovation centric.
Quick responses to environmental changes have become a vital success factor for today's companies. This study aims to identify the differential mechanisms that drive responsiveness to customers and responsiveness to competitors. In particular, the authors propose a conceptual framework that distinguishes between a cognitive and an affective organizational system as two important antecedents of organizational responsiveness. The results from a large-scale, cross-industry study show that the affective organizational system is more important in driving responsiveness to customers and that the cognitive organizational system is more important in driving responsiveness to competitors. Moreover, the relative importance of the cognitive system as a driver of responsiveness is greater in firms with a low market share and in markets with low entry barriers for new competitors.
Research Summary
This article explicitly introduces cognitive considerations into the treatment of strategic interactions, using the value‐based framework as an extended example. Through real‐world examples and prior empirical findings, it shows that many of the implicit assumptions of the framework are regularly violated in practice when actors simplify their complex realities into incomplete, inaccurate mental models. These violations lead to outcomes that are often contrary to the predictions of the classical framework. As initial steps toward developing a cognitively grounded theory of strategic interactions, the article characterizes the core components of strategic mental models that might form the foundation of such a theory and then lays out some open questions that this theory would need to address. These questions, when answered, can point to novel cognitive capabilities.
Managerial Summary
This article argues that a realistic analysis of interactions between strategic agents requires us to include the mental models, that is, belief systems, of those agents into the analysis. Real‐world examples and prior empirical findings are used to show that if such mental models are not accounted for, the outcomes predicted by the analysis could be quite different from those obtained in reality. The article identifies a few key aspects of these strategic mental models that deserve attention. It also identifies a few central questions that, when answered, could allow firms to develop novel cognitive capabilities that confer competitive advantage.
This study examines how CEO cognition, organizational capabilities, and organizational incentives interacted to shape firm strategy during the fiber-optic revolution. I tested for these factors' association with subsequent investment in optical technologies using longitudinal data from 71 communications firms. Results show that each is separately important in shaping outcomes, and their alignment toward the adoption of a new technology leads to the greatest levels of change. In addition, cognition can compensate when organization-level factors are lacking. Considering cognition, capabilities, and incentives together contributes to a more contingent view of the conditions under which CEO cognition matters for firm strategy.
Computer-aided text analysis (CATA) is a form of content analysis that enables the measurement of constructs by processing text into quantitative data based on the frequency of words. CATA has been proposed as a useful measurement approach with the potential to lead to important theoretical advancements. Ironically, while CATA has been offered to overcome some of the known deficiencies in existing measurement approaches, we have lagged behind in regard to assessing the technique’s measurement rigor. Our article addresses this knowledge gap and describes important implications for past as well as future research using CATA. First, we describe three sources of measurement error variance that are particularly relevant to studies using CATA: transient error, specific factor error, and algorithm error. Second, we describe and demonstrate how to calculate measurement error variance with the entrepreneurial orientation, market orientation, and organizational ambidexterity constructs, offering evidence that past substantive conclusions have been underestimated. Third, we offer best-practice recommendations and demonstrate how to reduce measurement error variance by refining existing CATA measures. In short, we demonstrate that although measurement error variance in CATA has not been measured thus far, it does exist and it affects substantive conclusions. Consequently, our article has implications for theory and practice, as well as how to assess and minimize measurement error in future CATA research with the goal of improving the accuracy of substantive conclusions.
Previous studies suggest that entrepreneurs play a key role in the success of their ventures. But
relatively little is currently known about how they produce such effects. The present research provides
data suggesting that two modes of entrepeneurs’ self-regulation—locomotion and assessment—
enhance a firm’s success through their effects on the components of alertness. This
mediational model was tested and supported with data from 120 entrepreneurs. Locomotion was
positively related to the scanning and search component, while assessment was positively related to
the association and evaluation components. These findings are discussed in terms of the role of
founders’ self-regulation in the performance of their companies.
Previous studies of the market value impact of announcements of joint ventures have not considered industry effects. It is suggested that the impact of such announcements varies with the information-processing load associated with analyzing events in the relevant industry. An event study analysis based on a stratified sample of 108 announcements in 3 industry groups, one with a light, one with a moderate, and one with a heavy information-processing load, confirms this hypothesis. The implications for a signaling perspective on joint venture announcements are examined.
The authors developed hypotheses about the effectiveness of response rate techniques for organizational researchers surveying executives. Using meta-analytic procedures to test those hypotheses, the authors analyzed response rate data from 231 studies that surveyed executives and appeared in top management journals from 1992 to 2003. They found mean response rates to be declining over the period, yielding an overall 32% rate. Of the various methods suggested to increase response rates in other populations, none were found to be effective for executives. However, topical salience and sponsorship by an organization or person in the executive's social networks did bring about response rate increases. The authors provide recommendations about what (not) to do when trying to collectoriginal data from members of a firm's upper echelons.
An introduction is presented to articles in this issue including "What Are Microfoundations?," "Rational and Reasonable Microfoundations of Markets and Institutions" and " Microfoundations of Management: Behavioral Strategies and Levels of Rationality in Organizational Action."
Investigating behavioral explanations for the timing of corporate acquisitions, we focus on the effects of performance relative to aspiration level, slack, and proximity to bankruptcy. We used event history modeling to explain the hazard of acquisitions among U.S. manufacturing firms from 1980 to 2000. Results indicate acquisition activity increases as performance rises among firms performing below aspirations, but falls among firms performing above aspirations. Slack has a positive relation with acquisitions, and financial distress inhibits acquisitions. We also found support for shifts in firms' focus of attention between survival, aspirations, and slack.
To examine the transition from a planned to a market economy in China, this study uses census data from China’s National Bureau of Statistics from 1998–2006 to investigate multi-population dynamics across the three main organizational forms in China’s domestic sector: state-owned enterprises (SOEs), collectively owned enterprises (COEs), and privately owned enterprises (POEs). We conceptualize economic transition as a community-level change from an old, dominant organizational form (SOE), through a transitional form (COE), to a new form (POE). When the new organizational form conflicts with the prevailing identity codes represented by the old form, the transitional form—which has identity overlap with both the new and old forms—performs the critical tasks of transferring legitimacy to the new form and supporting its survival and proliferation. Our analysis showed that, though the existence of state-owned enterprises increased the exit rate of privately owned enterprises, collectively owned enterprises provided legitimation for privately owned enterprises. Meanwhile, privately owned enterprises crowded out both state-owned enterprises and collectively owned enterprises. We contribute to ecology theory by extending research that typically depicts a two-population scenario. Our framework accommodates cross-effects involving three organizational forms: old, transitional, and new.
The complexity surrounding globalization offers a unique context in which to study the moderating role of uncertainty on top management team (TMT) demographic effects. In a sample of United States-based industrial firms, TMT international experience, educational heterogeneity, and tenure heterogeneity were positively related to firms' global strategic postures, and functional heterogeneity exhibited a negative association. However, when the level of uncertainty facing TMTs was accounted for, these associations were found to be nonlinear.
How do entrepreneurs identify opportunities for new business ventures? One possibility, suggested by research on human cognition, is that they do so by using cognitive frameworks they have acquired through experience to perceive connections between seemingly unrelated events or trends in the external world. In other words, they use cognitive frameworks they possess to "connect the dots" between changes in technology, demographics, markets, government policies, and other factors. The patterns they then perceive in these events or trends suggest ideas for new products or services-ideas that can potentially serve as the basis for new ventures. This pattern recognition perspective on opportunity identification is useful in several respects. First, it helps integrate into one basic framework three factors that have been found to play an important role in opportunity recognition: engaging in an active search for opportunities; alertness to them; and prior knowledge of an industry or market. In addition, it also helps explain interrelations between these factors (e.g., the fact that active search may not be required when alertness is very high). Second, a pattern recognition perspective helps explain why some persons, but not others, identify specific opportunities. Third, a pattern recognition framework suggests specific ways in which current or would-be entrepreneurs can be trained to be better at recognizing opportunities. Future directions for research on a pattern recognition perspective are described, and its practical implications for entrepreneurship education are examined.
Using a multidimensional framework of CEO temporal focus (the degree to which CEOs characteristically devote attention to perceptions of the past, present, and future), we propose that a company's rate of new product introduction (NPI) is predicted by a CEO's focus on each of the three distinct time frames in interaction with environmental dynamism. Based on a longitudinal (from 1996 to 2003) analysis of 221 firms in 19 industries, we show that, in stable environments, new products are introduced faster in firms headed by CEOs with high past focus, high present focus, and low future focus. In dynamic environments, new products are introduced faster in firms headed by CEOs with low past focus, high present focus, and high future focus. These findings demonstrate how CEO temporal attentional bias shapes the rate of NPI.
Research about transformational CEOs' impact on firm-level outcomes, particularly corporate entrepreneurship, has been equivocal, partially because the underlying mechanisms remain largely unexplored. Given that the individuals most closely influenced by a firm's CEO are its top management team (TMT) members, we focus on the CEO-TMT interface as a salient intervening mechanism. We posit that transformational CEOs influence TMTs' behavioral integration, risk propensity, decentralization of responsibilities, and long-term compensation and that these TMT characteristics impact corporate entrepreneurship. Data from 152 firms supported most of our hypothesized links, underscoring how the CEO-TMT interface helps explain transformational CEOs' role in promoting corporate entrepreneurship.
We adopt an information acquisition and learning perspective to explore the relationship between new product development (NPD) strategy implementation duration and new venture performance. We suggest that the relationship between NPD strategy implementation duration and new venture performance is contingent on the level of environmental turbulence as reflected in an industry’s growth level and firm information-processing capabilities as reflected in the level of centralization of top management team (TMT) mental models. Longer NPD strategy implementation durations are appropriate in stable, low-growth industry environments or when firms are run by TMTs who exhibit high mental model centralization. Meanwhile, shorter NPD strategy implementation durations are called for in turbulent, high-growth industry environments or when firms are run by TMTs who exhibit low levels of mental model centralization. We also suggest that level of industry growth and TMT mental model centralization jointly influence the relationship between NPD strategy implementation duration and new venture performance and that this relationship is strongest for low-growth industries and high levels of TMT mental model centralization. Tests performed on a sample of 94 new ventures founded between 1996 and 2006 and competing in technology intensive industries confirm our hypotheses. We offer theoretical implications for research on new venture performance and on firm competitive strategy implementation.
People frame and make sense of their worlds through the use of cognitive categories, which researchers can only indirectly access. Public corporate statements are easily accessible and comparable across companies and over time, but it is unclear to what extent such statements reflect organization members' cognitive categorizations. This study is the first to directly compare executives' public and private statements to explore whether and along what dimensions public statements reflect internal company communications. Comparisons of internal and external documents generated by the forest products industry over ten years revealed no significant correlations in the two sets of documents between executives' positive or negative evaluations of events and situations; however, the correlations between their perceptions of control were positive and significant.
In this study, we examine the existence and performance of cognitive groups. In accordance with the attention-based view of managerial cognition, cognitive groups are defined as groups of firms in which the CEOs focus their attention on similar strategic elements when seeking to maximize their firm's competitive advantage. We developed a panel data extension of the original Data Envelopment Analysis to gauge CEOs’ focus of attention and then clustered firms into groups. We compared our approach, with other approaches that use content analysis of CEOs’ letters to shareholders and CEOs’ demographic characteristics to measure CEOs’ attention. Although the different approaches are related, indicating the existence of a common underlying construct (i.e., mental models), our approach explains a higher proportion of the variation in organizational performance.
The microfoundations of dynamic capabilities have assumed greater importance in the search for factors that facilitate strategic change. Here we focus on microfoundations at the level of the individual manager. We introduce the concept of ‘managerial cognitive capability’, which highlights the fact that capabilities involve the capacity to perform not only physical but also mental activities. We identify specific types of cognitive capabilities that are likely to underpin dynamic managerial capabilities for sensing, seizing, and reconfiguring, and explain their potential impact on strategic change of organizations. In addition, we discuss how heterogeneity of these cognitive capabilities may produce heterogeneity of dynamic managerial capabilities among top executives, which may contribute to differential performance of organizations under conditions of change. Finally, we propose possible directions for future research.
This paper analyzes the theory of “entrepreneurial incentives” in the work of Israel Kirzner. It argues that there is a logical problem with the notion of profit opportunities as exogenous causal agents: Without additional assumptions, the existence of opportunities alone does not sufficiently explain the alertness of entrepreneurs. The paper considers both stronger and weaker versions of this problem. It also questions the relation between entrepreneurial incentives and the tendency toward entrepreneurial success. Finally, it provides some commentary on the relevance of entrepreneurial incentives for an overall theory of the entrepreneur, and identifies several potential solutions to the problems discussed.
Organizations create high-impact inventions when they combine disparate strands of technology in their corporate research and development. We theorize that when undertaking complex inventive search characterized by high breadth, i.e., drawing on multiple diverse technology components, an organization’s propensity toward high-impact inventions depends on its stock of experience with recombining such components and on the focus of its inventive search. Building on learning transfer theory, we argue that the complexity and causal ambiguity of higher-breadth projects is such that experience with similar inventive search will be a poorer guide, comparatively reducing their inventive impact; however, this negative effect can be attenuated by the degree of focus of an organization’s contemporaneous inventive search. Using a longitudinal data set of patents from the photographic imaging industry, we find support for our predictions.
This paper argues that a key component in a firm's strategic response to unfamiliar environmental events is the interpretations managers develop about the event itself and about key dimensions of their strategy. Using historical data from the pharmaceutical industry, the revealed interpretations of top management from six firms over a ten-year period are analyzed and are compared to the timing and content of the changes in strategy each firm undertook following a significant change in regulation. The results reveal two distinct patterns of interpretation development that appear to be linked to whether or not the target of interpretation is familiar. Further, interpretations appear to be linked both temporally and in terms of content to the strategic change undertaken by each firm. Both sets of results suggest that the interpretations of managers are linked to organizational actions.
Organizational theory and research has increased attention to the determinants and consequences of attention in organizations. Attention is not, however, a unitary concept but is used differently in various metatheories: the behavioral theory of the firm, managerial cognition, issue selling, attention-based view, and ecology. At the level of the brain, neuroscientists have identified three varieties of attention: selective attention, executive attention, and vigilance. Attention is shaped by both top-down (i.e., schema-driven) and bottom-up (i.e., stimulus-driven) processes. Inspired by neuroscience research, I classify and compare three varieties of attention studied in organization science: attentional perspective (top-down), attentional engagement (combining top-down and bottom-up executive attention and vigilance), and attentional selection (the outcome of attentional processes). Based on research findings, I develop five propositions on how the varieties of attention in organization provide a theoretical alternative to theories of structural determinism or strategic choice, with a particular focus on the role of attention in explaining organizational adaptation and change.