The Architecture of Attention: Group Structure and Subsidiary Autonomy

49 Pages Posted: 10 Mar 2017

See all articles by Sharon Belenzon

Sharon Belenzon

Duke University; NBER; Duke Innovation & Entrepreneurship Initiative

Niron Hashai

Reichman University - Interdisciplinary Center (IDC) Herzliyah; Hebrew University of Jerusalem - Jerusalem School of Business Administration

Andrea Patacconi

University of East Anglia (UEA) - Norwich Business School

Date Written: March 7, 2017

Abstract

This paper examines the relationship between strategic decision-making at the subsidiary level and organization structure. In many organizations, the interaction between central headquarters and subsidiaries is mediated by the presence of intermediate organizational units. Building on the attention-based view of the firm, we argue that the greater the "organizational distance" of a focal subsidiary from headquarters (as measured by the number of intermediate subsidiaries separating the subsidiary from headquarters), the greater the level of autonomy the subsidiary will enjoy. Using a large and comprehensive dataset on the structure of corporate groups in Western Europe, we provide two pieces of evidence consistent with this hypothesis. First, perceived autonomy of subsidiary managers, as measured by the World Management Survey, and organizational distance are strongly positively related. Second, the performance of subsidiaries near the bottom of a pyramid is more similar to that of matched standalones in response to changing industry conditions, than the performance of subsidiaries near the top. By contrast, we find little support for the view that tall pyramids are created to magnify the voting control of large shareholders.

Keywords: Subsidiary Autonomy, Organization Structure, Hierarchy, Attention-Based View, Corporate Groups

JEL Classification: L22, L23, K22

Suggested Citation

Belenzon, Sharon and Hashai, Niron and Patacconi, Andrea, The Architecture of Attention: Group Structure and Subsidiary Autonomy (March 7, 2017). Duke I&E Research Paper No. 2017-07, Available at SSRN: https://ssrn.com/abstract=2929741 or http://dx.doi.org/10.2139/ssrn.2929741

Sharon Belenzon

Duke University ( email )

100 Fuqua Drive
Durham, NC 27708-0204
United States

NBER ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States
(1) 617 588 1484 (Phone)

Duke Innovation & Entrepreneurship Initiative ( email )

215 Morris St., Suite 300
Durham, NC 27701
United States

Niron Hashai

Reichman University - Interdisciplinary Center (IDC) Herzliyah ( email )

P.O. Box 167
Herzliya, 4610101
Israel

Hebrew University of Jerusalem - Jerusalem School of Business Administration ( email )

Mount Scopus
Jerusalem, 91905
Israel

Andrea Patacconi (Contact Author)

University of East Anglia (UEA) - Norwich Business School ( email )

Norwich
NR4 7TJ
United Kingdom

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