The effect of performance expectations for the firm on CEO attention

Abstract Purpose: The purpose of this study is to understand the extent to which perceptions of a company’s performance prospects affect the focus of attention of its senior managers. Originality/value: Research has examined the decision environment, encompassing the internal and external material, social, and cultural factors of the company that influence organizational practices and decision making. They also addressed the cognitive and cultural schemas that managers use to interpret their environment and formulate responses. However, these studies focus on past changes, neglecting the impact of future expectations on managerial attention, a crucial aspect of strategic planning. This gap in the literature highlights the need to understand how future performance expectations influence managerial attention. Design/methodology/approach: We conducted a survey with 197 chief executive officers (CEOs) of medium and large Brazilian companies during the economic recession of 2015-2016, a period marked by environmental scarcity. Findings: Companies’ performance expectations have a positive effect on attention to growth and innovation and a negative one on attention to finance and costs. However, the hypothesized negative relationships between expected performance and attention to operations, political ties, and government policy did not find support in the data. Contribution/implication: Understanding strategic decision making in situations of economic hardship offers insights into how future performance expectations shape management attention and strategic choices. Our findings aim to elucidate the mechanisms linking environmental scarcity to managerial behavior, particularly, in developing economies.