Knowing Your Place: Social Performance Feedback in Good Times and Bad Times

Abstract

Performance comparisons, specifically performance relative to aspirations, are central to the Behavioral Theory of the Firm. Firms evaluate their performance in relation to their own prior performance ("historical comparison") and the performance of other organizations ("social comparison") and base subsequent organizational change on this performance feedback. Of the two, social performance comparison has received relatively little theoretical or empirical development. This paper seeks to fill that gap by extending the theoretical conceptualization and empirical specification of the socially-derived performance targets against which organizations compare their performance. Drawing on insights from the social psychology literature, we argue first that organizational decision-makers monitor two sociallyderived performance benchmarks: an upwardly focused "top performance threshold" marking the highest levels of performance in the reference group, and a downwardly anchored "reference group threshold" marking the performance level below which organizations can not consider themselves members of the reference group. Building on these arguments, we also motivate a new, and more complete, way to conceptualize performance comparison. Integrating socially and historically derived sources of performance feedback, we propose the "historically-based social aspiration threshold" (HiBSAT) as an additional aspiration point representing the socially-derived performance threshold closest to the organization's prior performance. In an empirical analysis of German soccer Bundesliga clubs between 1992 and 2004, we find that organizations have both upward and downward socially-derived performance targets, and that performance relative to the HiBSAT is particularly salient in motivating organizational change.

How Third-Party CSR Evaluation Matters: Keeping Up with Rivals in CSR Performance Ratings of Korean Firms, 2011–2015

“…Scholars of the behavioral theory of firms have long argued that a firm's current performance below or above a specific reference point (i.e., the industry average) determines managers' perception of their firm's degree of failure or success [9][10][11][12][13][14][15]. In particular, perceptions of failure compared with industry rivals are likely to motivate managers to allocate more efforts and resources toward finding solutions that they believe can remedy the shortfalls in the firm's current performance vis-à-vis those of their rivals [9][10][11][12][13][14][15].…”

“…In particular, perceptions of failure compared with industry rivals are likely to motivate managers to allocate more efforts and resources toward finding solutions that they believe can remedy the shortfalls in the firm's current performance vis-à-vis those of their rivals [9][10][11][12][13][14][15]. That is, when managers see their firm's current performance falling below the expectation or reference level, they will perceive the current state of their firm's operations as being problematic, and in need of updates or overhaul [9][10][11][12][13][14][15].…”

“…Combining insights from the research on ratings/rankings [1][2][3][4][5][6][7][8] and a behavioral theory of the firm [9][10][11][12][13][14][15], we hypothesize that rated firms are more likely to enhance their subsequent CSR behavior, and hence performance ratings, when their negative CSR rating gaps-CSR ratings below the industry average-are large rather than small, while positive CSR rating gaps-CSR ratings above the industry average-are unlikely to change their subsequent behavior. We reason that this relationship arises because firms tend to seek to eschew being seen as CSR laggards compared with their industry rivals, thereby putting more efforts toward elevating their CSR performance.…”

Resource orchestration in the context of knowledge resources acquisition and divestment. The empirical evidence from the Italian “Serie A” football

“…Sports settings are particularly suited to management research (see Wolfe et al, 2005;Day, Gordon, & Fink, 2012) because they frequently allow for the observation of phenomena of particular interest from the viewpoint of the orchestration of knowledge resources, such as the fit between a given strategy and the available knowledge resources (Wright, Smart & McMahan, 1995;Sirmon, Hitt, & Ireland, 2008;DiMinin et al, 2015); individual and collective skills and tacit knowledge (Berman, Down, & Hill, 2002;Shamsie & Mannor, 2013); resource management and value creation (Holcomb et al, 2009); knowledge resource bundling (Sirmon et al, 2008); knowledge resource acquisition and release (Moliterno & Wiersema, 2007); interorganizational co-mobility of knowledge resources (Campbell et al, 2014); performance comparisons (Moliterno et al, 2014); and resource complementarity (Ethiraj & Garg, 2012;Crocker & Eckardt, 2014). Furthermore, although football teams may differ in terms of size, age and historical relevance (from a sporting viewpoint), they share a common market for resources (factors) and a general environment.…”

Disentangling Risk and Change

“…Our findings for risky change, when positive external feedback and negative internal feedback together result in the highest levels of risky change, may suggest the primacy of internal social performance feedback. This possibility is best examined, however, after reconsidering whether the median performance represents an appropriate aspiration point when assessing the organizational effects of social performance feedback (see Moliterno et al, 2014).…”