Attainment discrepancy and investment: Effects on firm performance

Palash Deb, Parthiban David, Jonathan P. O'Brien and Augustine Duru

Journal of Business Research, 2019, vol. 99, issue C, 186-196

Abstract: Although the behavioral theory of the firm posits that performance shortfalls trigger problemistic search, the actual performance consequences of problemistic search remain an open question. We argue that certain cognitive, affective, and behavioral mechanisms triggered by performance shortfalls make managers more aware, attentive, motivated, and disciplined, resulting in adaptation, learning, and enhanced firm value. Furthermore, differences in the extent to which managers feel pressured to adapt, and have the ability to adapt, can shape managerial awareness, motivation, and capability, and hence firm value. Our empirical analysis, using data for a sample of US manufacturing firms (1994–2013), confirms that problemistic search enhances firm value, and this association is strengthened when firms face greater pressure to adapt or have a greater ability to adapt.

Keywords: Behavioral theory of the firm; Firm performance; Performance feedback; Problemistic search; Strategic investment (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0148296319301377
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:99:y:2019:i:c:p:186-196

DOI: 10.1016/j.jbusres.2019.02.047

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 ().