Knowing Your Place: Social Performance Feedback in Good Times and Bad Times

Thomas P. Moliterno (), Nikolaus Beck (), Christine M. Beckman () and Mark Meyer ()
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Thomas P. Moliterno: Isenberg School of Management, University of Massachusetts Amherst, Amherst, Massachusetts 01003
Nikolaus Beck: Faculty of Economics, University of Lugano, CH-6904 Lugano, Switzerland
Christine M. Beckman: Paul Merage School of Business, University of California, Irvine, Irvine, California 92697; and Robert H. Smith School of Business, University of Maryland, College Park, Maryland 20742
Mark Meyer: Institute for Economic Structures Research, D-49080 Osnabrück, Germany

Organization Science, 2014, vol. 25, issue 6, 1684-1702

Abstract: Performance comparisons—specifically, performance relative to aspirations—are central to the behavioral theory of the firm. Firms evaluate their performance in relation to their own prior performance (“historical comparison”) and the performance of other organizations (“social comparison”) and base subsequent organizational change on this performance feedback. Of the two, social performance comparison has received relatively little theoretical or empirical development. This paper seeks to fill that gap by extending the theoretical conceptualization and empirical specification of the socially derived performance targets against which organizations compare their performance. Drawing on insights from the social psychology literature, we argue first that organizational decision makers monitor two socially derived performance benchmarks: an upwardly focused “top performance threshold” marking the highest levels of performance in the reference group and a downwardly anchored “reference group threshold” marking the performance level below which organizations can not consider themselves members of the reference group. Building on these arguments, we also motivate a new, and more complete, way to conceptualize performance comparison. Integrating socially and historically derived sources of performance feedback, we propose the historically based social aspiration threshold (HiBSAT) as an additional aspiration point representing the socially derived performance threshold closest to the organization’s prior performance. In an empirical analysis of German soccer league (Bundesliga) clubs between 1992 and 2004, we find that organizations have both upward and downward socially derived performance targets and that performance relative to the HiBSAT is particularly salient in motivating organizational change.

Keywords: performance feedback; aspirations; organizational change; behavioral theory of the firm (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (26)

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