Distributed Attention and Shared Emotions in the Innovation Process: How Nokia Lost the Smartphone Battle

We conducted a qualitative study of Nokia to understand its rapid downfall over the 2005-2010 period from its position as a world-dominant and innovative technology organization. We found that top and middle managers' shared emotions during the smartphone innovation process caused cycles of behaviors that harmed both the process and its outcome. Together, organizational attention structures and historical factors generated various types of shared fear among top and middle managers. Top managers were afraid of external competitors and shareholders, while middle managers were mainly afraid of internal groups, including superiors and peers. Top managers' externally focused fear led them to exert pressure on middle managers without fully revealing the severity of the external threats and to interpret middle managers' communications in biased ways. Middle managers' internally focused fear reduced their tendency to share negative information with top managers, leading top managers to develop an overly optimistic perception of their organization's technological capabilities and neglect long-term investments in developing innovation. Our study contributes to the attention-based view of the firm by describing how distributed attention structures influence shared emotions and how such shared emotions can hinder the subsequent integration of attention, influencing innovation processes and outcomes and resulting in temporal myopiaa focus on short-term product innovation at the expense of long-term innovation development.