Attention to schemas: How schemas affect organizations’ ability to shift their focus of attention in response to a crisis

How decision-makers distribute their attention across stimuli reveals what information is noticed, encoded, and utilized for decision-making processes. Especially during crises, adaptation is crucial to the organization’s survival. To enable adaptation, it is important that organizations are able to shift their attention to the crisis’ stimuli. We examine how the ability to shift one’s attention in response to a crisis is affected by its schemas. Schemas are often understood as a source of inertia, as they can lead decision-makers to focus on unrelated stimuli. In contrast, we theorize that specific schemas may also lead decision-makers to favor the crisis’ stimuli, facilitating adaptation rather than causing inertia. Using the 2008 crisis in U.S. commercial banking as our empirical context, we assess whether the crisis’ initial shock shifts the banks’ focus of attention, and how this effect is moderated by different schemas. We find strong evidence that the shock caused a shift in banks’ focus of attention, and that this relationship is, depending on the schema, inhibited or facilitated. Our study expands the literature’s understanding of how schemas affect decision-making, showing that schemas should not solely be understood as an explanation of inertia, but also as a potential mechanism that facilitates organizational adaptation. We therefore contribute to the literature on behavioral decision-making and showcase a novel method how organizational attention and shifts in attention can be measured using archival data.

Keywords: Attention, Performance feedback, Aspiration level, Schema, Banking, Crisis.