Aspiration Adaptation to Multiple Performance Comparisons: Generic Strategy as Information Filter

Abstract

When adapting aspirations, managers compare their firm’s performance to their own past aspirations and to performances of social reference groups. In this paper, we explore how firms adapt their aspirations in response to comparison with three social reference groups and argue that generic strategy functions as a filter in the process of interpreting performance feedback. In a longitudinal sample of U.S. airline companies, we show that low cost or differentiation strategy moderates the performance feedback process in that firms with a well-defined generic strategy are heavily influenced by their own performance feedback when underperforming and the social reference groups that most closely align with themselves when overperforming.