Abstract
In this study, we examine how decision makers assess and respond to more than two performance feedback regarding goals across different hierarchical levels. Building on Cyert and March's ...seminal work and later research on pattern perception, we argue that pattern simplicity and pattern predictability of multiple (functional) feedback help decision makers to better guide problemistic search and generate more plausible solutions to fix a serious corporate performance shortfall. In a longitudinal sample of 97 global incumbent pharmaceutical firms, we find that a simpler and more predictable set of functional performance signals strengthens the relationship between poor performance on a corporate goal (i.e., ROA) and the number of functional solutions (i.e., number of new product development projects) that a firm initiates. We discuss the implications of our findings to the performance feedback and managerial search literature.
Integrating signaling research with the institutional perspective on capital markets, we argue that, in conditions of radical technological change, investor perceptions about firm value are enhanced ...by the CEO's orientation toward digital technologies that exceeds the firm's industry peers. This base relationship is moderated by board characteristics so that the board members’ digital expertise and knowledge diversity enhance the effect of the CEO's relative digital technology orientation on firm value. Furthermore, the monitoring power of independent board members who do not have digital expertise negatively moderates our baseline hypothesis, whereas board monitoring exerted by independent board members with digital expertise has a positive moderating effect. To test our theory, we use advanced natural language processing techniques to develop the CEO's relative digital technology orientation construct combined with a unique, hand-collected set of measures associated with board members’ digital expertise and knowledge diversity in a sample of S&P 500 companies. Our article offers novel insights on how technology-related signals associated with the CEO's communications to shareholders interact with board characteristics in determining investor perceptions of the firm's value in conditions of high technological uncertainty.
We investigate how CEO entrepreneurial orientation affects firm value creation and how this relationship is moderated by three sources of CEO entrenchment. We conducted a longitudinal analysis of S&P ...500 firms between 1999 and 2007, and, in line with our predictions, we found that CEO entrepreneurial orientation enhances firm value creation and that this positive effect is reduced when CEOs are entrenched (1) due to corporate governance provisions that protect them from the majority will of shareholders, (2) due to substantial ownership that provides them too much decision–making power, and (3) because their family has substantial holdings in the corporation.
Despite the prevalence and importance of multiple goals for organizations, research on how organizations respond to performance on multiple goals continues to be limited and has examined only search ...intensity as the focal response, ignoring that search may occur in different locations. We extend the research on multiple goals by developing and testing novel theory on the relationship between performance feedback on multiple goals and the locus of search. Drawing upon the behavioral theory of the firm and using panel data from global pharmaceutical firms, we first show that when performance is below aspirations on a primary goal, a firm's propensity to engage in distal search increases along both the technological (i.e., familiar vs. unfamiliar search) and the organizational dimension (i.e., internal vs. external search). However, building on more recent literature that points to the need to consider multiple goals of unequal importance and, specifically, the self-enhancement perspective, we argue and find that performance on a secondary goal modifies this pattern, particularly when performance on a primary goal is unsatisfactory. Under feedback inconsistency, where performance on a primary goal is low but performance on a secondary goal is high, decision-makers decrease distal search to both unfamiliar technological areas and areas external to the organization. Our theory and findings highlight the importance of performance feedback regarding multiple goals in regulating the key locus of search choices and extend research on self-enhancement and learning from performance feedback.
