Top Management’s Attention to Discontinuous Technological Change: Corporate Venture Capital as an Alert Mechanism

Markku V. J. Maula (), Thomas Keil () and Shaker A. Zahra ()
Additional contact information
Markku V. J. Maula: Department of Industrial Engineering and Management, Institute of Strategy, Aalto University, FI-00076 Aalto, Finland
Thomas Keil: Department of Industrial Engineering and Management, Institute of Strategy, Aalto University, FI-00076 Aalto, Finland
Shaker A. Zahra: Strategic Management and Organization Department, Carlson School of Management, University of Minnesota, and Garry S. Holmes Center for Entrepreneurship, Minneapolis, Minnesota 55455

Organization Science, 2013, vol. 24, issue 3, 926-947

Abstract: Technological discontinuities pose serious challenges to top managers’ attention. These discontinuities, which often occur at the fringes of an industry, are usually driven by innovative and (often) venture capital-backed start-ups creating new products and transforming existing industries in ways that are difficult for incumbent managers to understand against the backdrop of their existing cognitive schemata. However, failing to appreciate and embrace successful technological discontinuities might endanger incumbents’ very existence. Extending the attention-based view, we explore whether and how interorganizational relationships guide top managers’ attention either to or away from technological discontinuities. We propose that homophilous relationships (e.g., alliances with industry peers) should exhibit a negative relationship with incumbents’ timely attention to technological discontinuities, whereas heterophilous relationships (e.g., with venture capitalists as a result of coinvestments) should exhibit a positive relationship. Furthermore, we hypothesize that the status of the partners strengthens the effect of homophilous and heterophilous relationships with the timely attention of top managers to technological discontinuities. Based on a longitudinal study of the incumbents in four information and communications technology industry sectors, we find that heterophilous ties through corporate venture capital (CVC), coinvesting with high-status venture capital firms, exhibit a strong positive relationship with timely attention. CVC, when it connects senior management to high-status venture capitalists through coinvestments, has a special role in directing top managers’ attention to technological discontinuities and ensuing business opportunities. Implications for the understanding of the role of interorganizational ties as structural determinants of top managers’ attention are discussed.

Keywords: attention; corporate venture capital; homophily; heterophily; status; technological discontinuity (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (48)

Downloads: (external link)
http://dx.doi.org/10.1287/orsc.1120.0775 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:inm:ororsc:v:24:y:2013:i:3:p:926-947

Access Statistics for this article

More articles in Organization Science from INFORMS Contact information at EDIRC.
Bibliographic data for series maintained by Chris Asher ().