How peers influence headquarter attention to foreign subsidiaries

Abstract Research Summary We examine how attention to foreign subsidiaries is structured by peer‐based cues originating both outside and inside the firm. Using the cognitive pillar of the attention‐based view, we show how executives rely on peer reference groups to allocate attention across subsidiaries, and we compare the relative influence of different peer types. Among peers outside the firm, industry peers exert a stronger influence on headquarter attention than home‐country peers, highlighting the dominance of competitive comparability. We also show that attention diffuses within the multinational enterprise, with attention to one subsidiary spilling over to other subsidiaries within the same cognitive category. Also, regional groupings drive stronger attentional spillovers than externally constructed categories. These findings reveal a category‐based process through which headquarter attention is allocated during ongoing foreign operations. Managerial Summary We examine how peer activity shapes where multinational headquarters focus their attention during foreign operations. Rather than monitoring every foreign subsidiary equally, headquarters rely on cues from peers to decide where to look more closely, but not all peer cues are equally influential. Among peers outside the firm, industry competitors have a stronger pull on headquarter attention than firms from the same home country, meaning competitive dynamics matter more than home‐country familiarity in directing headquarter attention. Within the firm, geographic regional groupings shape attention more powerfully than broad market categorizations. When attention is directed toward one subsidiary, it spills over to other subsidiaries in the same grouping, amplifying their visibility. Managers can anticipate where attention flows by understanding which peer categories headquarters finds most compelling.