Managing with Style? Micro-Evidence on the Allocation of Managerial Attention

Abstract

How does task expertise affect the allocation of attention? Our theory argues that when attention is scarce, expertise and attention are complements: A manager optimally focuses her attention on tasks in which she has relatively more expertise; she “manages with style.” In contrast, when attention is abundant, attention and expertise become substitutes: A manager shifts her attention toward tasks in which she has less expertise; she “manages against her style.” Using microlevel data on managers from two unrelated companies and employing various measures of time stress and managerial attention, we find converging and supporting evidence. A manager’s attention capacity determines whether she manages with style or against it. Whereas current behavioral approaches view managing with style as prevalent and biased, our theory and findings suggest, instead, that it is contingent and optimal. This paper was accepted by Joshua Gans, business strategy.