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Managerial Style and Attention

Author

Listed:
  • Wouter Dessein
  • Tano Santos

Abstract

Is firm behavior mainly driven by its environment or rather by the characteristics of its managers? We develop a cognitive theory of manager fixed effects, where the allocation of managerial attention determines firm behavior. We show that in complex environments, the endogenous allocation of attention exacerbates manager fixed effects. Small differences in managerial expertise then may result in dramatically different firm behavior, as managers devote scarce attention in a way that amplifies initial differences. In contrast, in less complex environments, the endogenous allocation of attention mitigates manager fixed effects. Firm owners prefer "managers with style" only in complex environments.

Suggested Citation

  • Wouter Dessein & Tano Santos, 2021. "Managerial Style and Attention," American Economic Journal: Microeconomics, American Economic Association, vol. 13(3), pages 372-403, August.
    • Handle: RePEc:aea:aejmic:v:13:y:2021:i:3:p:372-403
    DOI: 10.1257/mic.20190025
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    Citations

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    Cited by:

    1. Guido Friebel & Matthias Heinz & Nikolay Zubanov, 2022. "Middle Managers, Personnel Turnover, and Performance: A Long‐Term Field Experiment in a Retail Chain," Management Science, INFORMS, vol. 68(1), pages 211-229, January.
    2. Moritz Mosenhauer, 2022. "Salience and management‐by‐exception," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(8), pages 3685-3697, December.
    3. Desmond (Ho-Fu) Lo & Francisco Brahm & Wouter Dessein & Chieko Minami, 2022. "Managing with Style? Microevidence on the Allocation of Managerial Attention," Management Science, INFORMS, vol. 68(11), pages 8261-8285, November.
    4. Ni, Juan & Jin, Shuchang & Hu, Yi & Zhang, Lei, 2023. "Informative or distracting: CSR disclosure of peer firms and analyst forecast accuracy," International Review of Financial Analysis, Elsevier, vol. 87(C).
    5. Wei, A. & Hendrikse, G.W.J., 2022. "Cognition and Incentives in Cooperatives," ERIM Report Series Research in Management ERS-2022-007-ORG, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus University Rotterdam.

    More about this item

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • M10 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - General
    • M31 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Marketing
    • M54 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Labor Management

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