Organizational attention and learning under regulatory intervention: Governmental investigation into auto engine quality

We examine the efficacy of government regulation on a firm's product. We draw on the behavioural approach of organization research in order to understand the micromechanisms whereby the regulatory intervention process affects corporate operation. We suggest that while government investigations may limit the improvements in product quality by distracting a firm's attention, this unintended outcome depends on the extent to which the firm engages...