The Attention-Based View

Within the resource orchestration framework presented in Figure 3.2, especially in the “Identifying” dimension, lays the notion of attention. Attention is a key yet mostly implicit construct underlying many studies on responses to subpar performance, particularly the ones in the international business realm. Broadly defined as taking notice of something and acting upon it (Oxford Dictionaries, N/A), attention can be understood as a resource that is scarce and critical to organizational success (Cyert & March, 1963; Simon, 1947; Bouquet & Birkinshaw, 2008). Although attention has been studied in many different ways, Ocasio (1997) was the first to explicitly combine attention with strategy, leading to an attention-based view (ABV) of the firm (for an extension, see Ocasio, 2011). Within this view, attention is understood to be a multifaceted concept which can be defined “to encompass the noticing, encoding, interpreting, and focusing of time and effort by organizational decision-makers on both (a) issues; [i.e.] problems, opportunities, and threats; and (b) answers: the available repertoire of action alternatives” (Ocasio, 1997: 189). The ABV is thus designed to provide an explanatory framework for understanding whether and how firms respond to changing internal and external

contexts, as well as the contingencies that may underlie these occurrences. As such, the key dependent variable within the ABV is that of organizational moves which Ocasio (1997: 201) defines as “the myriad of actions undertaken by the firm and its decision-makers in response to or in anticipation of change in its external and internal environment.” He differentiates the

organizational moves concept from that of decisions by emphasizing that moves imply that the

action is not only planned but also performed. The concept of organizational moves is thus very similar to the concept of responses to subpar performance as it is used in this thesis. The theoretical framework developed by Ocasio (1997: 192) is replicated in Figure 3.3.

The ABV is different from related theories within the cognition realm in that it “focuses on the structural determinants that lead to strategic action” (Ocasio, 2011: 1292) and acts as a meta-theory which provides a background for detailing mechanisms. Individual-level cognition studies, in contrast, focus more on directly observing attention patterns as they unfold within a specific person. As a result of this difference, the ABV can be expanded across different levels of analysis, rather than being tied to the individual-level. Moreover, the ABV emphasizes less the performance implications of an action and more the determinants that lead to the confronting of an issue with an action or the ignoring of it through non-action (Ocasio, 1997: 194) in the first place.

Very few studies within the organizational turnaround literature have made the concept of attention explicit. One example is D’Aveni and MacMillan’s (1990) study of crises of demand decline in a matched sample of 57 bankrupt firms and 57 turnaround firms. The results suggest that those firms that did not survive the crisis practically ignored the external (output) environment and focused their attention on the internal (input) environment, supporting the threat-rigidity perspective (McKinley, 1993). Another example is Musteen, Liang, and Barker’s

Figure 3.3. A Model of Predicting Organizational Moves through an Attention-based View (Ocasio, 1997: 192; Recreated).

Note: The Figure was recreated to exclude references to specific hypotheses, for the purpose of better readability. (2011) study using a sample of 110 MBA and Executive MBA students in a case-study setting. The objective of that research was to explore the individual-level determinants of decision- makers’ attention/perception of organizational decline severity and its impact on the extent of retrenchment activity. More mature decision-makers with a background in throughput functions (Accounting & Finance, Production, Production/ Operation), and an external locus of control perceived the decline to be stronger, leading to more pronounced retrenchment decisions.

The interest in exploring the role attention plays in an MNE headquarters’ resource allocation process has grown though (Campbell, 1989; Bouquet & Birkinshaw, 2008; Ambos & Birkinshaw, 2010). Headquarter attention is a rare and valuable resource; a notion which emphasizes the headquarters’ orchestration role (as opposed to its planning role). The objective is to initiate action under certain contingencies (Ambos & Birkinshaw, 2010). Most headquarters-subsidiary studies drawing from the attention construct focused on a top-down

Issues and Answers Attention Structures Procedural and Communi- cation Channels Decision Makers Organizational Moves Environment of Decision

process of attention structures and decision-making (what Ocasio (2011) calls attentional perspective). However, combinations of top-down and bottom-up processes of attention (what Ocasio (2011) terms attentional engagement) have also found consideration. For instance, Bouquet and Birkinshaw (2008) suggest that the weight (strategic or operational importance) and the voice (initiatives) a subsidiary possesses within an MNE can influence the amount of headquarter attention it receives.

We are aware of no studies which focus specifically on the role of attention in a headquarter-subsidiary relationship when the foreign subsidiary’s performance is at subpar levels. What the discussion of the literature has revealed so far is that the chances for a successful turnaround increase when a response is offered. Responses require that top- management attention is allocated in a way that allows for the initiation of such a response in the first place. The turnaround literature has recognized the implications of this relationship between attention and response for situations of organizational decline. In the international business context, the allocation of top-management attention is even more salient, where the “distinctive features of MNEs are high levels of geographical and cultural diversity coupled with complex portfolios of businesses, functions, and markets.” (Bouquet & Birkinshaw, 2008: 577). The spatial, temporal, and cultural barriers put an even higher strain on the information processing and attention allocation capabilities of the organization than in smaller and or purely domestic firms. As a result, attention (and by implication, action) is often unevenly spread across subsidiaries and may thus help explain differences between subpar performing subsidiaries with regards to whether they experience a response from their headquarters and if so, which one. Thus, a stronger focus on attention may be a useful extension of the existing studies on headquarters-subsidiary relationships in situations of subpar performance.