(In)Consistent Performance Feedback and the Locus of Search

Area of Science:

• Organizational Behavior
• Strategic Management
• Innovation Studies

Background:

• Organizations often pursue multiple goals simultaneously, yet research on their response to performance feedback on these goals is limited.
• Existing studies primarily focus on search intensity, neglecting the spatial dimensions of search (technological and organizational).
• The self-enhancement perspective suggests that organizations may prioritize protecting their image when facing performance discrepancies.

Purpose of the Study:

• To develop and test a novel theory on how performance feedback from multiple goals influences the locus of organizational search.
• To investigate how performance on primary and secondary goals interact to shape search behavior.
• To extend understanding of self-enhancement and learning from performance feedback in multi-goal environments.

Main Methods:

• Utilized panel data from global pharmaceutical firms.
• Applied the behavioral theory of the firm as a theoretical foundation.
• Analyzed the relationship between performance feedback on multiple goals and the dimensions of search (technological and organizational).

Main Results:

• Below-aspiration performance on a primary goal increases propensity for distal search (unfamiliar technology, external search).
• Performance on a secondary goal moderates this effect, especially when the primary goal is underperforming.
• Feedback inconsistency (low primary, high secondary goal performance) leads to decreased distal search in both technological and organizational dimensions.

Conclusions:

• Performance feedback on multiple goals significantly regulates the locus of search choices.
• The self-enhancement perspective is crucial for understanding how organizations manage search behavior under mixed performance feedback.
• Findings underscore the importance of considering goal hierarchy and feedback inconsistency in organizational learning and strategic decision-making.