Abstract
The limits of attention, which must be allocated among a given number of alternative uses, have been recognized by many economists. For example, a manager may want to allocate his or her attention between a number of projects or other sources of information. Or a manager may want to allocate employees’ attention among different tasks. However, in these models of allocating attention, the number of alternative uses to which attention may be allocated is exogenously given. When applied to the problems of innovation and product improvement, limited entrepreneurial attention is allocated between improving the declining profitability of current operations and increasing the number of current operations. The allocation of entrepreneurial attention endogenizes the number of current operations and the opportunity costs of attention. The optimal allocation of entrepreneurial attention thus determines the size of the firm, its rate of growth and the firm’s level of innovative activity.
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Gifford, S. (1998). Limited Attention. In: The Allocation of Limited Entrepreneurial Attention. Springer, Boston, MA. https://doi.org/10.1007/978-1-4615-5605-3_2
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DOI: https://doi.org/10.1007/978-1-4615-5605-3_2
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