Performance Negative Feedback and Firm's R&D Efficiency: Moderating Roles of Regional Institutional Environment

Furong Guo, Yiwen Xiang and Pan Wang
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Furong Guo: School of Accounting, Chongqing Technology and Business University, Chongqing, China
Yiwen Xiang: School of Accounting, Chongqing Technology and Business University, Chongqing, China
Pan Wang: School of Accounting, Chongqing Technology and Business University, Chongqing, China

Review of Economic Assessment, 2024, vol. 3, issue 3, 45-66

Abstract: Based on the behavioral theory of the firm, we investigate the impact of performance negative feedback on R&D efficiency. The results show that when performance falls below aspirations, firms pay more attention to R&D projects with high R&D efficiency to get rid of the operating pressure, reputation pressure and resource constraints caused by the decline in performance. This effect may be influenced by institutional differences. In the case of negative feedback, a good regional institutional environment is conducive to the improvement of R&D efficiency, while a weak regional institutional environment weakens this effect. Specifically, the higher the degree of IPR enforcement and financial market development, as well as the lower the degree of local government intervention, the more inclined firms are to increase R&D efficiency. The findings provide insights into understanding R&D efficiency improvement in the context of emerging markets.

Keywords: Performance Negative Feedback; Aspirations; R&D Efficiency; Institutional Environment (search for similar items in EconPapers)
Date: 2024
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