Organizational responses to performance feedback: A meta-analytic review

Abstract

Performance feedback theory has been recognized as a generative theory in organization and management studies that explains why, when, and how organizations initiate or discontinue specific strategic actions. Over the past decades, an extensive body of empirical research has tested the theory, refined its key tenets, and broadened its applications. Yet, empirical results on the effects of performance feedback often vary and even produce conflicting insights that are difficult to interpret. Following recent developments, we suggest that empirical controversies can be largely reconciled once we consider different performance feedback conditions, organizational actions, and boundary conditions. We conducted a meta-analytic review of 113 empirical studies to statistically evaluate how and why the effects of performance feedback may vary according to various factors. By identifying factors shaping organizational responses to performance feedback, this study helps integrate existing empirical evidence and offers new directions for future theoretical development and empirical research.

Back to basics: Behavioral theory and internationalization

“…The theory of problemistic search has developed into a major research stream on the effects of performance feedback, started by papers showing that performance relative to aspiration levels, in fact, led to market entry and exit (Greve, 1998) as well as other strategic decisions such as R&D and innovation launches (Greve, 2003). This work exceeds 100 empirical papers and has been reviewed multiple times (Gavetti, Greve, Levinthal, & Ocasio, 2012;Kotiloglu, Chen, & Lechler, 2019;Posen, Keil, Kim, & Meissner, 2018;Shinkle, 2012), with scholars in agreement about its potential and usefulness to examining strategic decisions, including IB decisions such as corporate internationalization (Jung & Bansal, 2009) and international market development (Su & Si, 2015).…”

Searching for Success—Entrepreneurs’ Responses to Crowdfunding Failure

“…Third, we also extend problemistic search theory by introducing time as an important but neglected influence on decision makers’ responses to negative performance feedback (Yu et al, 2019). Adding to the growing number of studies on internal and external contingencies of problemistic search such as slack resources, organizational structures, and environmental dynamism (see Kotiloglu et al, 2019 for an overview), we show that a temporal perspective offers a novel explanation of why entrepreneurs’ responses to failure may vary. Finally, this study contributes to entrepreneurship research by addressing the call for additional studies on crowd-funded entrepreneurial opportunities (Pollack et al, 2019).…”

“…However, alternative theories and conflicting evidence have led scholars to increasingly challenge the view of problemistic search as a uniform process that involves minimal cognitive effort (e.g., Posen et al, 2018). For example, empirical evidence suggests that responses to negative performance feedback can vary substantially depending on contingency factors (e.g., feedback characteristics) and are not as myopic as often believed (Kotiloglu et al, 2019). In particular, based on the threat rigidity hypothesis according to which decision makers are unlikely to engage in risk-taking and commit resources to search activities in threatening situations (Staw et al, 1981), the literature has questioned the assumption that search represents a nearly automatic response to failure (Audia & Greve, 2006; Greve, 2011; Shimizu, 2007).…”

“…Severity refers to the degree of (negative) discrepancy between an entrepreneur’s aspiration level and actual performance, also referred to as attainment discrepancy (Lant, 1992). Dating back to Cyert and March (1963), behavioral theorists have argued that more severe performance problems intensify organizational search efforts and increase their scope (Chen & Miller, 2007; Kotiloglu et al, 2019). According to this view, entrepreneurs will perceive greater pressure to solve the problem at hand when performance is far below the aspiration level (Shimizu, 2007).…”

“…Posen et al (2018), among others, criticized that problemistic search theory is overly simplistic, conceptualizing search as a mechanistic, quasi-automatic response to failure. In addition, there are conflicting assumptions and mixed evidence on how individuals or organizations respond to performance below their aspiration level (e.g., Audia & Greve, 2006; Kotiloglu et al, 2019). For example, drawing on threat rigidity theory (Staw et al, 1981), several studies in the field have supported the opposite hypothesis that failure leads to rigidity (i.e., decision makers avoid new activities, conserve resources, and keep commitments) rather than to search, risk taking, and change (Greve, 2011; Iyer & Miller, 2008; Joseph & Gaba, 2015; Titus et al, 2020).…”