On the last day of my research visit at the University of Kentucky, I presented a working paper to the Department of Management. The paper is a meta-analysis of the literature that examines organizational responses to performance shortfalls. Together with Pursey Heugens and Anna Nadolska, I show that organizations are eager to change when they perform worse than the year before. When they perform worse than their competitors, however, they are vigilant and prefer stability over change. I want to thank all participants for their feedback.
The notion that performance shortfalls trigger problemistic search and strategic change is the main premise of performance feedback theory and has inspired a burgeoning strand of literature. The empirical findings it produced, however, do not unequivocally support this claim and recent research has suggested that social and historical performance feedback might trigger different behavioral responses. To provide and explanation for these contradictory results, we draw upon regulatory focus theory and argue that historical performance shortfalls trigger eager strategies focused on change while social performance shortfalls trigger vigilant strategies focused on stability. Our meta-analytic synthesis of 54 primary performance feedback studies supports this idea and shows that organizations respond differently to social and historical performance feedback, with varying degrees of problemistic search and strategic change.