The fog of feedback: Ambiguity and firm responses to multiple aspiration levels |
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| Authors: | John Joseph Vibha Gaba |
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| Affiliation: | 1. Strategy Area, Duke University, Durham, North Carolina, U.S.A.;2. Entrepreneurship and Family Enterprise Area, INSEAD, Singapore, Singapore |
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| Abstract: | This study examines firms' responses to performance assessments relative to multiple aspiration levels. We argue that comparisons of performance to multiple aspiration levels over time affects the interpretative clarity of feedback and, consequently, shapes a firm's responsiveness. We further conceptualize the relationship between performance relative to social and historical aspirations as ambiguous, inconsistent, and consistent performance feedback. Empirically, we examine the effects—on firms' responsiveness—of weak, negative, and positive correlations between performance relative to social and historical aspirations, where responsiveness is measured in terms of new product introductions. We find that both inconsistent and consistent feedback increase a firm's responsiveness, whereas ambiguous feedback dampens responsiveness. Our focus on this type of feedback ambiguity is novel, and it establishes the functional form of the relationship between feedback clarity/ambiguity and responsiveness. This paper augments the behavioral theory of the firm and research on performance feedback; it also extends previous work on ambiguity in strategic decision making. Copyright © 2014 John Wiley & Sons, Ltd. |
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| Keywords: | performance feedback multiple aspirations behavioral theory of the firm ambiguity decision making |
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