The Role of Network Position and Structure in Determining Attainment Discrepancy Attentiveness

Abstract

Prior performance and the performance of others serve as two important performance feedback benchmarks in the aspiration literature, yet their distinction is often overlooked. We argue that because historical and social aspirations represent different modes of organizational learning, this affects the way managers prioritize their attention to either historical or social attainment discrepancies. We predict that institutional pressures on the saliency of these learning modes will impact whether firms are more likely to focus on their own prior performance or to that of their social peers, and the network literature offers a lens to apply institutional theory towards attainment discrepancy attentiveness. In a sample of 4,726 firms (2000-2015), we find that firms with high network centrality are more sensitive to social attainment discrepancy due to the socially constructed pressures of status associated with centrality and the need to outperform peers in order to maintain their advantageous positioning, whereas firms with low centrality are more sensitive to historical attainment discrepancy. We also find that network closure intensifies the relationship between centrality and social attainment discrepancy, possibly by amplifying the degree to which these institutional norms are transmitted through dense networks. Conversely, high levels of structural holes intensify the relationship between non-centrality and a firm’s attendance to historical aspirations.