Cognition and Renewal: Comparing CEO and Organizational Effects on Incumbent Adaptation to Technical Change

“Most attempts to understand dynamic capabilities have operated at the organizational level of analysis ( Eisenhardt and Tabrizi 1995, Hill and Rothaermel 2003), but Adner and Helfat (2003, p. 1012) argued recently that they should be understood at the”

“Given the rapidly changing nature of the market and the fact that attention can shift over time (Hambrick et al. 1993), we sought a measure that would capture more directly time-varying attention to issues.”

“Eggers and Kaplan (2009) also showed that in the communications technology industry, companies whose CEOs paid greater attention to emerging fiber optic technologies entered new fiber optic–based product markets more quickly.”

“As in the past, when innovation managers attempt to recognize or develop new opportunities and ideas, they face two specific barriers (Eggers and Kaplan, 2009).”

“Overall research has found that executive attention, as reflected in letters to shareholders, affects multiple outcome variables including technological responsiveness to competitors (Eggers & Kaplan, 2009 ), technological innovations (Kaplan, 2008 ), and speed of response to sector and task changes (Nadkarni & Barr,…”

“Moreover, in these studies, individuals have a substantial impact on the effectiveness of the various modes of renewal, particularly top management (e.g., Tripsas 2009, Eggers and Kaplan 2009, Salvato 2009 ).”

“In the organization studies field, scholars have often used annual reports to study firms’ strategic intentions and letter to shareholders to measure CEO attention (Duriau et al., 2007; Eggers & Kaplan, 2009; Gamache, Mcnamara, Mannor & Johnson, 2015).”

“In the communications technology industry, less CEO attention on fiber optics was related to delayed firm entry into the emerging technology (Eggers and Kaplan 2009), and in disk drives, management focus on existing customers precluded recognition of emerging segments where new techology was…”

“1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 outcomes (Eggers & Kaplan, 2009; Nadkarni & Barr, 2008).”

“(Also see Tripsas (2009) and Eggers and Kaplan (2009) for managerial cognition perspectives on organizational change and renewal.”

““Adoption speed” (in its overall definition) should be a time measure reflecting, for instance, the number of years from the time the first company makes an adoption investment to the time the focal firm makes an adoption investment (Eggers & Kaplan, 2009).”

“Attention signals the manager’s willingness to pursue a course of action, serving as a sign-post for the organization’s employees and stakeholders about the focus and orientation of the organization (Eggers & Kaplan, 2009; Ocasio, 1997).”

“Eggers and I (Eggers and Kaplan, 2009; Kaplan, 2008b) explored these dynamics in larger samples to examine how CEO cognition interacts with organizational capabilities and incentives in shaping strategic outcomes.”

“of Eggers and Kaplan (2009) on managerial cognition,”

“Researchers have also noted that changes in CEOs have a “dramatic impact on the style, length, and content of letters” (Eggers & Kaplan, 2009: 468).”

“Research on organizational adaptation suggests that cognitive representations play an important role in guiding search (Eggers & Kaplan, 2009; Gavetti & Levinthal, 2000) and the evaluation of alternatives (Knudsen & Levinthal, 2007; Rerup, 2006).”

“Our study fails to corroborate prior findings of an association between managerial attention and subsequent strategic actions (e.g., Kaplan, Murray, and Henderson, 2003; Cho and Hambrick, 2006; Eggers and Kaplan, 2009).”

“As developed by Eggers and Kaplan (2009), this is closely linked to the literature on managerial attention (Ocasio, 1997), in which strategic action is in part shaped by the way managers notice and interpret change, and then make strategic choices.”

“…and top management teams (TMTs) use in the deployment of DCs as well as how other individual characteristics and influence and impact the organizations ability to deploy DCs (Benner & Tripsas, 2012; Eggers & Kaplan, 2009; Gavetti, 2005; Hodgkinson & Healey, 2011; Kunc & Morecroft, 2010).”

“2011), top manager’s attention to new opportunities (Eggers and Kaplan 2009; Kaplan 2008) and employees’ credentials, such as their education level (Doving and Gooderham 2008), participation in training (Kok and Ligthart 2014), previous professional experience (Lampel and Shamsie 2003) or…”

“For example, CEOs’ attention to new market opportunities has been found to affect their tendency to break strategic inertia (Eggers & Kaplan, 2009; Kaplan, 2008).”

“…of attention on learning processes (Rerup, 2009), headquarters–subsidiary relationships (Ambos, Andersson, & Birkinshaw, 2010), entry into new markets (Eggers & Kaplan, 2009), formation of service orientation in the business strategy (Gebauer, 2009), and innovation (Yadav, Prabhu, & Chandy, 2007).”

“While early work in this area relied primarily on word counts based on pre-defined dictionaries (Eggers & Kaplan, 2009; Uotila, Maula, Keil, & Zahra, 2009), scholars have increasingly used the power of AI algorithms to produce more sophisticated representations of unstructured text, such as the use…”

“For example, research has shown that the attention focus of top management can increase firm receptivity to new technologies (Kaplan, 2008), shape the timing of market entry (Burgelman, 1991), and amplify firm capabilities (Eggers and Kaplan, 2009).”

“It has long been recognized that problems compete for the attention of members (e.g., Cyert & March, 1963; Simon, 1947), with wide-ranging implications for decision making in organizations (e.g., Eggers & Kaplan, 2009; Joseph & Ocasio, 2012; Sullivan, 2010).”

“Eggers and Kaplan (2009) build on this, and investigate the degree to which cognitive effects interact with organizational orientation in processes of strategic renewal.”

“Eggers and Kaplan (2009) also examined the effect of managerial cognition and the effect of organizational capabilities concurrently to understand how they interact with each other to shape an incumbent’s technology adoption.”

“Our study contributes also to the literature on attention-based views of strategy (Ocasio and Joseph, 2005; Bouquet and Birkinshaw, 2008; Eggers and Kaplan, 2009; Maula et al., 2013) by linking attention structures to attentional processes in support of new issue focus.”

“Some studies have undertaken analyses finding that the style, word choice, and content of letters exhibit strong within-CEO consistency and between-CEO differences (e.g., Eggers & Kaplan, 2009; Gamache et al., 2015).”

“As a result, they offer reasonable proxies for senior management’s attention that can be constructed through text analysis (Cho and Hambrick 2006, Duriau et al. 2007, Eggers and Kaplan 2009, Kaplan 2008).”

“…strategic renewal (Flier et al. 2003; Kim and Pennings 2009; Volberda and Lewin 2003); as well as the organizational, unitlevel and team-level structures and processes that enable firms to embrace and manage strategic renewal (Cho and Hambrick 2006; Eggers and Kaplan 2009; Tippmann et al. 2014).”

“…in adapting to radical inventions by others, such as complementary assets (Rothaermel, 2001; Rothaermel & Hill, 2005; Sosa, 2009, 2011; Taylor & Helfat, 2009; Tripsas, 1997), cognition (Eggers & Kaplan, 2009; Kaplan, 2008; Nadkarni & Barr, 2008), and external stakeholders (Benner, 2007, 2010).”

“CEOs can be seen as key agents for promoting changes in the firm that support innovation (Eggers and Kaplan, 2009) by displaying commitment to it (Ling et al., 2008) and by communicating about its importance to firm members (Papadakis, 2006).”

“…which suggests that firms could adapt more successfully by placing authority in the hands of, for example, scientists with directly relevant knowledge, instead of executives who may be wedded to existing business models (Christensen and Bower 1996, Tripsas and Gavetti 2000, Eggers and Kaplan 2009).”

“For example, scholars might pair qualitative work with generalizable quantitative models to evaluate patterns of frame flexibility over time (e.g., Eggers & Kaplan, 2009).”

“The choice of managers rests inalienably with the owner, and crafting an effective alignment between managerial skills and the resource configuration requirements is essential to performance (Eggers & Kaplan, 2009; Tripsas & Gavetti, 2000).”

“Research has shown, however, that CEO attention is a critical driver of innovation (Yadav et al., 2007), accelerates entry into new technological markets (Eggers and Kaplan, 2009), and contributes to changes in strategy (Cho and Hambrick, 2006).”

“…research provides compelling evidence that the CEO is the primary author of the letter, or at least is highly involved in its drafting and editing (Eggers & Kaplan, 2009; Duriau, Reger, & Pfarrer, 2007), perhaps owing in part to the fiduciary duty that CEOs have to attest to the content of the…”

“…in response to environmental shifts, research has begun to explore the factors that allow them to flexibly respond to new information and take actions such as initiate change (Bartunek, 1984; Dutton and Dukerich, 1991; Eggers and Kaplan, 2009; Gilbert, 2006; Kaplan, 2008; Smith and Tushman, 2005).”

“We also hypothesize that three dimensions of an organization ’ s entrepreneurial orientation — autonomy, innovativeness, and risk taking — positively moderate these relationships.”

“Recent studies, however, have consistently found incumbents to be more responsive to and to invest in the radical technology (e.g., Eggers & Kaplan, 2009; Rothaermel, 2001; Tripsas, 1997).”

“A few researchers analyze the point in time at which firms introduce a new offering (Eggers & Kaplan, 2009; Haneda & Ito, 2018; Srivastava & Lee, 2005).”

“, Shane and Stuart, 2002), strategies and growth orientations (Eggers and Kaplan, 2009), and actor-specific capabilities (Teece, Pisano, and Shuen, 1997).”

“4 performance (Barney 1991; Grant 2002; Peteraf 1993); however, achieving optimal configurations of resources and capabilities is a complex task in which not all organizations succeed (Dierickx and Cool 1989; Eggers and Kaplan 2009; Zollo and Winter 2002).”

“Numerous researchers have studied CEOs’ cognitive content, primarily via the attention-based view (Ocasio 1997, Cho and Hambrick 2006, Gavetti and Rivkin 2007, Eggers and Kaplan 2009), but the idea that CEO cognitive content might change as a function of tenure has not been explored.”

“Combining theoretical elements from cognition studies and dynamic capabilities, I argue that firms that engage in innovation activities are more likely to cope well with the challenges of COVID-19 as they benefit from better managerial know-how and increased attention to environmental conditions (Kiesler and Sproull,…”

“…in the current accounts of organizational strategy and a growing body of research focuses on the role of managerial cognition in perceiving and reacting to environmental change through the investment in and deployment of alternative capabilities (Nadkarni and Barr 2008; Eggers and Kaplan 2009).”

“This study’s implications for literatures on first-mover advantage (e.g., Franco et al., 2009) and firm adaptation to technological change (e.g., Eggers and Kaplan, 2009) are similar.”

“For example, managerial attention and knowledge can compensate for the lack of organizational capabilities (Eggers & Kaplan, 2009; Kaplan, 2008; McGee, Dowling, & Megginson, 1995), whereas firms with advanced ordinary capabilities but without open-minded top management often face a considerable…”

“…take publically available documents, such as letters to shareholders in a firm's annual reports, as the proxies for the strategic thinking of CEOs and employ content analysis to uncover themes pertaining to managerial cognition and strategy (Nadkarni and Barr, 2008; Eggers and Kaplan, 2009).”

“Exploration may need to destroy cognitive barriers regarding technology and product areas (Eggers and Kaplan, 2009) and help firms to considerably broaden their perspective on technology commercialization opportunities.”

“For example, in the managerial cognition literature, Kaplan finds that the attention of the CEO predicts organizational decisions such as patenting (Eggers & Kaplan, 2009; Kaplan, 2008).”

“Empirical evidence supports this argument, as studies have shown that executive attention is a key mechanism influencing firms’ innovation behavior (Eggers & Kaplan, 2009), responses to environmental events (Nadkarni & Barr, 2008), and sustainability performance (Ahn, 2020).”

“This market is also excluded from this research, as it was clear from the beginning that LCD would dominate this market. can be seen as studying incumbent responses to technological discontinuities (Eggers and Kaplan, 2009; Henderson and Clark, 1990; Sosa, 2009).”

“Eggers and Kaplan (2009) complemented this finding by establishing that managerial attention timing is important for explaining the speed of asset reconfiguration.”

“Attention can be defined as focused awareness on a subset of available information (Helfat and Peteraf, 2014), for example, information pertaining to a particular emerging technology (Eggers and Kaplan, 2009).”

“Hambrick 2006) as being important in predicting organizational outcomes (Eggers and Kaplan 2009).”

“Customers might import understandings of the technology from existing and/or related industries (Benner and Tripsas, 2014; Eggers and Kaplan, 2009).”