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Change or stability? A meta-analysis of organizational responses to social and historical performance feedback
Stefan Breet, Pursey Heugens, & Anna Nadolska
European Management Journal · Elsevier · 2025
Organizations constantly compare their performance, both against their competitors and against their own past. But what happens when an organization performs worse than expected? Does that trigger strategic change, or does it reinforce stability?
In this meta-analysis of 74 studies, we show that the type of performance feedback determines how organizations respond. When organizations perform worse than they did in the past (historical comparison), they are more likely to respond with strategic change. When they perform worse than comparable organizations (social comparison), they instead invest more in research and development: a more stable, incremental response.
These findings help managers better understand how performance feedback steers behavior, and when it makes sense to change course or to stay the course.
Academic Abstract
Performance feedback theory (PFT) proposes that performance shortfalls trigger problemistic search followed by strategic change. However, empirical studies report inconsistent results, suggesting that organizational responses depend on the type of feedback considered and the pathways through which firms attempt to restore performance. To reconcile these conflicting findings, we conducted a meta-analysis of 74 performance feedback studies and integrated PFT with regulatory focus theory to explain when and how organizations respond to performance shortfalls. Our findings show that historical shortfalls (comparisons with a firm's past performance) are associated with strategic change, whereas social shortfalls (comparisons with peers) lead to stability through increased R&D intensity. We also demonstrate that strategic change and R&D intensity represent distinct behavioral outcomes of the feedback process that vary independently rather than unfolding in a fixed sequence. These findings advance PFT by highlighting the differentiated impact of feedback types and provide practical insights for managers seeking to assess the performance of their firms.
Reference
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