Conditional Embeddedness: Local Government Attention Under Institutional Incentives

ABSTRACT Government attention is crucial to policy change and outcome. For local agents, their attention is explained by various factors, and a thorough understanding is needed to integrate diverse perspectives. Combining vertical, horizontal, local, and personal influences, we formulate a conditional embeddedness framework for local agents. The framework explains that agents' attention is primarily directed by principals, but this directed shift is horizontally and locally shaped by political and economic contexts, conditional on agents' traits. Empirically, we test attentional responses of 328 prefecture‐level governments to an environmental reform in China. Results corroborate our hypotheses, showing that local government attention generally increases following a reform, but the increases vary due to promotion competition and firm dominance and are further moderated by mayors' education and work experience. The findings demonstrate the importance of interactions between contextual and individual features in the shifts of local government attention and their responsiveness in a principal‐agent relationship.