I presented a working paper at the Strategic Management Society Annual Meeting in Paris. In this paper, my co-authors and I review the performance feedback literature and examine how firms react when they do not achieve their goals. The paper was part of the “Performance Feedback” session in which three other co-author teams presented their papers as well.
Although performance feedback theory provides one of the primary explanations of organizational adaptation, the findings of studies that have examined the effect of performance below aspiration levels on problemistic search and strategic change are inconsistent. This paper uses meta-analytic techniques to synthesize the empirical evidence of 54 studies and test the theory’s primary predictions. We find that organizations that perform below the aspiration level devote more resources to problemistic search but are less likely to initiate strategic change in order to restore firm performance. In addition, we show that strategic change is primarily driven by organizational experience. We discuss the implications for performance feedback theory and threat-rigidity theory.
Co-Authors: Professor Pursey Heugens & Professor Anna Nadolska.
The session “Performance Feedback” took place in Studio D of the Marriott Rive Gauche in Paris. Professor Luke Rhee (from the University of California, Irvine) organized and chaired the session, which was part of the Behavioral Strategy track (Track P). The following four papers were presented:
- Performance Feedback in New Product Development: Financial Goals and Gestalt Properties of Multiple Functional Goals by Evangelos Syrigos, University of Zurich, and Konstantinos Kostopoulos, University of Piraeus
- Performance Feedback, Problemistic Search and Strategic Change: A Meta-Analysis by Stefan Breet, Erasmus University Rotterdam, and Anna Nadolska, Erasmus University Rotterdam
- Performance Feedback and New Product Innovations: The Role of CEO Financial Orientation by Ali Samei, IESE Business School, and Thomas Klueter, IESE Business School
- Performance Feedback and Risk Relationship: A Cross- Cultural Examination by Ali Alipour, Sabanci University, Remzi Gozubuyuk, Sabanci University, and Huseyin Ekrem Cunedioglu, Iskenderun Technical University