Maula et al (2013) – Top Management’s Attention to Discontinuous
Technological Change: Corporate Venture Capital as an Alert Mechanism
Summary
Logic: Interorganizational relationships can draw management attention away or towards
technological discontinuities – this depends on the type of partner and on the status of this
partner
Finding: Venture capitalists with a high status direct management attention of a focal firm
earlier to tech disruptions than Venture capitalists with a low status
Why? High status firms have large information networks AND their opinion is regarded as
more credible and thus they have a larger influence on top managements attention
allocation
________________________________________________________________________________
Topic
Managers sometimes do not pay attention to technological discontinuities – why is that?
Under what circumstances is attention (not) directed towards technological change?
What type of relationships facilitate this?
Technological discontinuities
Normally happens at the fringes of an industry, outside the normal focus of attention
Often imposed by start ups
Here operationalized by the internet and wireless technologies
Tech change & incumbents
Incumbents have difficulties to adapt to tech discontinuities – they often suffer from inertial
sources e.g.:
o Org. identity
o Escalation of commitment / irreversible commitments
o Cognitive barriers
o Existing org. routines
o Embeddedness in certain industry networks
Managerial attention to discontinuities
Organizational attention = the distinct focus of time & effort by the firm on a particular set of
issues, problems, opportunities, and threats and on a particular set of skills, routines,
programs, projects and procedures
Managerial action focuses on issues to which managers pay attention
Attention is situated – the context of the manager affects their attention
, Attention is structurally distributed – the context of the manager depends on how
organizations structurally distribute and control the allocation of issues and decision makers
(org design)
Influences on managers attention in times of change:
o The rules of the game = existing routines bias the decisions made
o The players on the field = e.g. top mgt demographics or future orientation of the CEO
o The structural position of players = players that are more importantly positioned in a
network receive more attention
Interorganizational relationships & managerial attention
Allocation of attention not only depends on “players” within the organization but also on
interorganizational relationships
Relationships bring important information and reduce a firm’s uncertainty about the nature
of business opportunities
Relationships can also be negative when the nature of networks does not suit the
information needs of the firm
Organizations tend to establish homophilous relationships (= associate with similar others
who hold similar views and do not possess new information)
H1: The larger the number of homophilous interorganizational ties to industry peers, the later the
time at which top management will pay attention to emerging discontinuous technological change.
Argument:
Homophilous relationships = relationships to firms/customers/suppliers in the same industry
Similarity makes it easy to absorb information
But: similarity may direct top mgt’s attention away from tech change due to several reasons:
o Industry peers hold similar knowledge – nothing can be learned about tech
discontinuities
o Industry peers normally use the same technologies, operating principles and have
the same competitors – their views on emerging discontinuities will likely resemble
those held by the focal firm
o Industry peers may not have an incentive to share information about tech change-
they might even try to manipulate other firms not to pursue tech change
Finally, upholding homophilous relationships takes time and attention and are normally
focused on routine business development issues – directing attention away from emerging
disruptions
Findings:
Hypothesis is NOT supported by the data
This might be due to the fact that an influence of an industry peer can change over time
The data shows that:
o Before the industry peer notices the change, they have a negative impact on
directing management attention of the focal firm towards technological change
o Once the industry peer starts paying attention to the change, the relationship
becomes positive
Technological Change: Corporate Venture Capital as an Alert Mechanism
Summary
Logic: Interorganizational relationships can draw management attention away or towards
technological discontinuities – this depends on the type of partner and on the status of this
partner
Finding: Venture capitalists with a high status direct management attention of a focal firm
earlier to tech disruptions than Venture capitalists with a low status
Why? High status firms have large information networks AND their opinion is regarded as
more credible and thus they have a larger influence on top managements attention
allocation
________________________________________________________________________________
Topic
Managers sometimes do not pay attention to technological discontinuities – why is that?
Under what circumstances is attention (not) directed towards technological change?
What type of relationships facilitate this?
Technological discontinuities
Normally happens at the fringes of an industry, outside the normal focus of attention
Often imposed by start ups
Here operationalized by the internet and wireless technologies
Tech change & incumbents
Incumbents have difficulties to adapt to tech discontinuities – they often suffer from inertial
sources e.g.:
o Org. identity
o Escalation of commitment / irreversible commitments
o Cognitive barriers
o Existing org. routines
o Embeddedness in certain industry networks
Managerial attention to discontinuities
Organizational attention = the distinct focus of time & effort by the firm on a particular set of
issues, problems, opportunities, and threats and on a particular set of skills, routines,
programs, projects and procedures
Managerial action focuses on issues to which managers pay attention
Attention is situated – the context of the manager affects their attention
, Attention is structurally distributed – the context of the manager depends on how
organizations structurally distribute and control the allocation of issues and decision makers
(org design)
Influences on managers attention in times of change:
o The rules of the game = existing routines bias the decisions made
o The players on the field = e.g. top mgt demographics or future orientation of the CEO
o The structural position of players = players that are more importantly positioned in a
network receive more attention
Interorganizational relationships & managerial attention
Allocation of attention not only depends on “players” within the organization but also on
interorganizational relationships
Relationships bring important information and reduce a firm’s uncertainty about the nature
of business opportunities
Relationships can also be negative when the nature of networks does not suit the
information needs of the firm
Organizations tend to establish homophilous relationships (= associate with similar others
who hold similar views and do not possess new information)
H1: The larger the number of homophilous interorganizational ties to industry peers, the later the
time at which top management will pay attention to emerging discontinuous technological change.
Argument:
Homophilous relationships = relationships to firms/customers/suppliers in the same industry
Similarity makes it easy to absorb information
But: similarity may direct top mgt’s attention away from tech change due to several reasons:
o Industry peers hold similar knowledge – nothing can be learned about tech
discontinuities
o Industry peers normally use the same technologies, operating principles and have
the same competitors – their views on emerging discontinuities will likely resemble
those held by the focal firm
o Industry peers may not have an incentive to share information about tech change-
they might even try to manipulate other firms not to pursue tech change
Finally, upholding homophilous relationships takes time and attention and are normally
focused on routine business development issues – directing attention away from emerging
disruptions
Findings:
Hypothesis is NOT supported by the data
This might be due to the fact that an influence of an industry peer can change over time
The data shows that:
o Before the industry peer notices the change, they have a negative impact on
directing management attention of the focal firm towards technological change
o Once the industry peer starts paying attention to the change, the relationship
becomes positive
