Invest in Innovation or Not? How Managerial Cognition and Attention Allocation Shape Corporate Responses to Performance Shortfalls

This study investigates the influence of managerial cognition and attention allocation on firms’ responses to negative performance feedback. We explore how managerial cognition, as shaped by managers’ experiences, connections, positions, and industry environments, affects underperforming firms’ attention allocation and, consequently, their decisions to invest in innovation. Utilizing a longitudinal sample of Chinese high-tech firms from 2009 to 2017, we find that firms increase investment in research and development (R&D) when performance falls below aspiration levels. We also document that underperforming firms are associated with an even larger R&D investment increase when their CEOs have an R&D or engineering background, serve simultaneously as the board chair, or are not politically connected. In addition, we highlight the moderating effects of industry competition and industry norms on the relationship between firm underperformance and R&D intensity. We conclude that managerial cognition affects firms’ allocation of attention to innovation as a solution for closing performance gaps and shapes corporate responses to negative performance feedback. 本文研究高管认知与注意力分配对企业面临负面绩效反馈时所采取的反应。具体而言，本文探讨了高管的认知能力—由其经历、关系、职位和行业环境所塑造的-- 对绩效下滑企业的管理者注意力分配以及企业创新投资行为的影响。作者对2009年至2017年期间在深圳创业板上市的高新技术企业数据进行了分析，发现当业绩低于期望水平时，企业会增加研发投入。而且，创新研发投入在CEO本人兼任董事长、有工程或研发背景、或者没有政治联系时，幅度更大。此外，行业竞争强度以及行业研发投入强度对企业在业绩下滑时的研发投入也具有调节作用。总而言之，高管认知会直接影响企业是否把注意力放在创新上作为应对企业业绩下滑的解决方法。