The Mediating Role of TMT Attention in Foreign Entry Mode Selections

Abstract

According to the attention-based view (ABV) of the firm (Ocasio, 1997) and the upper-echelon theory (Hambrick et al., 1984), TMT (top management team) attention plays an important role in strategic decision making, especially in the more complicated international context (Aharoni et al., 2011). By combining the attention-based view and upper-echelon theory, we built and tested an attention-based, decision-making model to open up the “black box” of the TMT decision-making process to examine how a TMT identifies the ideal entry mode to invest in a foreign market. By analyzing data from 116 manufacturing firms listed on the Chinese Stock Exchanges, we found that TMT’s attention to the opportunities in the foreign market mediates the relationship between TMT characteristics and their choice of foreign entry mode. Specifically, a TMT having members with more international experience or higher levels of education tends to pay more attention to the opportunities in the external environment; thus selecting a full-control entry mode. Whereas a TMT comprised of aged members tends to pay less attention to the external opportunities in the foreign market and selects a shared-control mode.