Managing market attention

Mark J. Zbaracki, Mark Bergen

Research output: Contribution to journalArticlepeer-review

4 Scopus citations

Abstract

We return to the problem that motivated the original behavioral theory of the firm, price adjustment, but from the standpoint of post-Carnegie School perspectives on cognition, attention, and routines. Whereas work in the Carnegie School tradition has tended to develop models of firms in opposition to economic theory, we seek to understand how economic ideas are used to shape decision processes. Using a combination of interview, observational, and archival data gathered at a large manufacturing firm that produced parts to maintain machinery, we develop a behaviorally plausible story of how organizations shape price adjustment. We follow three successive waves of managers seeking to improve the pricing routines through shifting attentional perspective, managing attentional engagement, and structuring attentional execution. We demonstrate how managers redesign routines to shape cognition and attention, thereby developing greater coherence in the market representations of the sales force. Our findings show how reshaping cognition and attention in pricing routines can improve organizational intelligence in pricing decisions. Economists treat markets as the ideal-the best that can be imagined-and organizations as second-best options-the best that can be achieved, but our findings invert the story, suggesting that in modern market economies, organizations and routines are essential to making the price system work.

Original languageEnglish (US)
Pages (from-to)371-405
Number of pages35
JournalAdvances in Strategic Management
Volume32
DOIs
StatePublished - 2015

Bibliographical note

Publisher Copyright:
Copyright © 2015 by Emerald Group Publishing Limited.

Keywords

  • Attention
  • Behavioral theory
  • Cognition
  • Price adjustment

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