Performance feedback, performance prospects, and firm search behavior: the role of institutional settings

Ali Alipour, Kamyar Goudarzi, Nüfer Yasin Ateş, Remzi Gözübüyük and Mehmet Genç

Journal of Business Research, 2025, vol. 200, issue C

Abstract: The Behavioral Theory of the Firm (BTOF) posits that firms undertake R&D search when their current performance falls below their aspirations, reflecting a backward-looking driver of search, or when anticipated future performance is projected to fall short of targets, representing a forward-looking driver. However, little is known about how external contingencies influence the prominence of these search drivers. Drawing on the literature on institutions, we argue that financial systems in a country, a key aspect of firms’ institutional settings, influence the salience of forward- and backward-looking drivers by shaping firms’ temporal and cognitive orientations. Specifically, we propose that while firms in market-based financial systems are more responsive to performance expectations below targets, firms in bank-based financial systems are more responsive to performance below aspirations. We further argue that the influence of financial systems depends on firms’ slack resources and equity dependence. Our analyses on a sample of 3,908 manufacturing firms from 24 countries corroborate these hypotheses, stressing the central role of institutional settings in shaping firms’ R&D search behavior.

Keywords: Behavioral theory of the firm; R&D search; Institutional setting; Country financial systems; Performance aspirations; Performance expectations (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0148296325004539
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:jbrese:v:200:y:2025:i:c:s0148296325004539

DOI: 10.1016/j.jbusres.2025.115630

Access Statistics for this article

Journal of Business Research is currently edited by A. G. Woodside

More articles in Journal of Business Research from Elsevier
Bibliographic data for series maintained by Catherine Liu ().