Performance Feedback in Hierarchical Business Groups: The Cross-Level Effects of Cognitive Accessibility on R&D Search Behavior

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This study examines the cross-level effect of group-level managers on member firms' problemistic search in hierarchical business groups. Usingmultilevel data from Korean business groups, we propose that the effects of failure to meet an aspiration level on R&D search intensity increase when member firm performance and R&D investments are more cognitively accessible to group-level managers. Specifically, we find, first, that when underperforming firms are widespread in a business group, a focal member firm intensifies R&D search in response to performance below an aspiration level because member firm performance, as a group-level problem, becomes cognitively accessible to group-level managers. Second, asmember firms operating in R&D intensive industries aremore prevalent in a business group, R&D investments, as a search solution, becomemore cognitively accessible to group-level managers. Thus, a focal member firm reinforces R&D search in response to the performance shortfall. We discuss the implications of these findings for research on the behavioral theory of the firm and performance feedback.
Publisher
INFORMS
Issue Date
2019-01
Language
English
Article Type
Article
Citation

ORGANIZATION SCIENCE, v.30, no.1, pp.51 - 69

ISSN
1047-7039
DOI
10.1287/orsc.2018.1237
URI
http://hdl.handle.net/10203/261010
Appears in Collection
MT-Journal Papers(저널논문)
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