Performance feedback and problemistic search: The moderating effects of managerial and board outsiderness

Abstract

Extending the research on performance feedback and problemistic search, which theorizes that firm performance below the aspiration level triggers organizational search behaviors, this study examines how the inside-outside distinction of the firm management team and board members can influence the allocation of organizational attention to the performance feedback process. A longitudinal study of Korean manufacturing firms demonstrates that while a firm management team's outside experience intensifies the firm's R&D investment in response to underperformance, this effect is substituted by the presence of outside directors on the board. Our results indicate that both managers and board members can have notable influence on performance feedback and suggest that performance feedback research should examine the factors that affect the attention processing of key decision makers.