Temporal attention, knowledge breadth, and firm growth

Abstract

This study integrates the attention-based view with Edith Penrose’s theory of growth to examine how the interplay between managerial attention and newly created technological resources influences firm growth. I draw upon research showing that combining broad types of knowledge during R&D creates new technological resources that are potentially valuable, and also relatively complex and ambiguous, making them challenging to utilize effectively. I theorize that attention’s temporal orientation shapes how managers understand complex technologies and construe opportunities for their use. I hypothesize that a shorter-term attentional focus is incongruent with broad knowledge combination, resulting in a less effective and more incremental use of newly created, complex technologies and lower levels of growth. Conversely, a longer-term attentional focus helps managers understand and identify novel, strategic opportunities for such complex technologies, leading to comparatively higher levels of growth. Analysis supports these predictions using a panel data set of 327 firms between 2003 and 2017.