An Attention-Based Theory of Firm Growth

This paper develops an attention-based view of firm growth. Most studies based on Penrose’s work have focused on managerial resources or outcomes that result from applying the firm’s heterogeneous resources and capabilities to new opportunities. We train our theoretical lens on those opportunities and problems to which organizations actually attend. We argue that attention to issues is a growth engine and that both the emergence of issues increase the firm’s growth rate through formation of new divisions. Also, we suggest that such coupling among units has important implications for divisional growth. To support and augment this theory, we use an example from our qualitative work at Motorola and supplement it with topic modeling analysis of technical issues drawn from firm patents. We conclude with suggestions for future research.