Chasing ‘Animal spirits’: business expectations, performance feedback, and advertising intensity in Japanese firms

K. Skylar Powell (), Eunah Lim () and Hidenori Takahashi
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K. Skylar Powell: Western Washington University
Eunah Lim: Western Washington University

Asian Business & Management, 2023, vol. 22, issue 3, No 9, 1035-1064

Abstract: Abstract Research on managerial responses to poor performance suggests performance shortfalls lead managers to search for solutions to the shortfalls. Managers in smaller or financially distressed firms may also perceive existential threats to their organizations, causing them to avoid expending resources searching for solutions to poor performance. Until now, this research has assumed that managers search for solutions to performance shortfalls without considering expectations on the future business environment. We posit that positive expectations about the near future business environment will enhance the intensity with which managers search for solutions to poor performance in the form of advertising investments. We also posit that positive expectations about the near future business environment will reduce the likelihood that smaller or financially distressed firms avoid increases in advertising investments. Results in the context of public non-manufacturing firms from 1986 through 2019 in Japan lend support for these ideas.

Keywords: Performance feedback; Behavioral theory; Threat rigidity theory; Advertising intensity; Business sentiment (search for similar items in EconPapers)
Date: 2023
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DOI: 10.1057/s41291-022-00190-6

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