Effects of Environmental Change on Executive Attention: Analysis of Auto Industry Letters to Shareholders 1963-1987
Introduction: Much debate in management theory concerns the degree to which organizations can adapt to environmental change and the role of leadership in facilitating such change. Many firms today face the situation Americam auto makers faced in the 1970s: an unexpectedly strong challenge from an unexpected corner of the globe. Japanese preeminence in design and manufacturing, and sociopolitical changes that threaten their viability - the Arab oil embargoes which quadrupled the price of gasoline. In the wake of globalization and unstable interdependencies, past competencies can quickly become obsolete and a firm's position in market and society can abruptly deteriorate. In the aftermath of these events in the late 1970s and early 80s, the continued viability of American automating was in doubt, and the industry came under a barrage of criticism from all corners, politicians left (Brown 1980, Commoner 1980) and right (Clark 1980, Stockman 1986), academics (Ackoff 1978), public interest groups (Nader 1965, 1970, 1973), financial analysts (Keller 1989), journalists (Halberstam 1985, Yates 1983) and even from within (DeLorean 1988) for a failure to foresee and respond effectively to these events. But did they fail? And, if so, why? A study of attention can illuminate the first step or lack thereof in organizational adaptation, but also complicates the notion of adaptation implicit in the debate. In this project, I develop a construct of executive attention which I use to analyze change in the auto industry over three decades, including periods of relative environmental calm and upheaval. The principal findings which obtain and which I discuss in this article are: 1. A long lag between the central event of the period - the emergence of Japanese preeminence in design and manufacturing and executive attention (an extremely long lag in the case of GM). 2. A pattern of executive attention that is difficult to reconcile as part of a rigorous attempt to maximize profit. Rather, it can be can be more readily understood as part of an attempt to address concerns from relevant publics. 3. Which publics are relevant is better understood in terms of organizational identity and executive appropriateness than economic rationality, managerial vision, or socioeconomic constraints.
executive attention, environmental change, socioeconomic