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Managerial Style and Attention

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  • Dessein, Wouter
  • Santos, Tano

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 which 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

  • Dessein, Wouter & Santos, Tano, 2019. "Managerial Style and Attention," CEPR Discussion Papers 13527, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:13527
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    References listed on IDEAS

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    Keywords

    Managerial style; Attention; Firm strategy; Firm behavior;
    All these keywords.

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