IDEAS home Printed from https://ideas.repec.org/a/eee/eurman/v41y2023i5p709-719.html
   My bibliography  Save this article

The effect of performance feedback on strategic alliance formation and R&D intensity

Author

Listed:
  • Han, Sangyun

Abstract

This study explores whether performance feedback influences firms to form a strategic alliance or engage in R&D, both of which are risk-taking activities. Based on the behavioral theory of the firm and the resource-based view, this study shows that both low- and high-performing firms may engage in risk-taking activities by forming a strategic alliance or engaging in R&D as an organizational response to performance feedback. That is, low-performing firms are more likely to address underperformance in the short term – to solve the immediate performance problem – by forming a strategic alliance, whereas high-performing firms, which have slack resources to sustain their competitive advantage in the long run, will more likely engage in R&D activity over the long term. In addition, the moderating effect of two boundary conditions — government R&D investment and the level of industry competition — are examined to understand the relationship between performance feedback and organizational responses. The results show that as a firm's financial performance falls below its aspiration level, it has a higher probability of forming a strategic alliance. However, as a firm's performance rises above its aspiration level, it has greater R&D intensity. Government R&D investment and industry competition moderate the relationship between the firm's performance feedback and its risk-taking behavior. This research extends recent studies to further explore the effect of performance feedback on firms' strategic decision-making based on their performance feedback.

Suggested Citation

  • Han, Sangyun, 2023. "The effect of performance feedback on strategic alliance formation and R&D intensity," European Management Journal, Elsevier, vol. 41(5), pages 709-719.
    • Handle: RePEc:eee:eurman:v:41:y:2023:i:5:p:709-719
    DOI: 10.1016/j.emj.2022.03.010
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0263237322000561
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.emj.2022.03.010?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Anna Sabidussi & Boris Lokshin & Geert Duysters, 2018. "Complementarity in alliance portfolios and firm innovation," Industry and Innovation, Taylor & Francis Journals, vol. 25(7), pages 633-654, August.
    2. Khan, Zaheer & Lew, Yong Kyu & Marinova, Svetla, 2019. "Exploitative and exploratory innovations in emerging economies: The role of realized absorptive capacity and learning intent," International Business Review, Elsevier, vol. 28(3), pages 499-512.
    3. Christos N. Pitelis, 2007. "A Behavioral Resource-Based View of the Firm: The Synergy of Cyert and March (1963) and Penrose (1959)," Organization Science, INFORMS, vol. 18(3), pages 478-490, June.
    4. John Joseph & Vibha Gaba, 2015. "The fog of feedback: Ambiguity and firm responses to multiple aspiration levels," Strategic Management Journal, Wiley Blackwell, vol. 36(13), pages 1960-1978, December.
    5. Caroline Flammer & Pratima Bansal, 2017. "Does a long-term orientation create value? Evidence from a regression discontinuity," Strategic Management Journal, Wiley Blackwell, vol. 38(9), pages 1827-1847, September.
    6. Pasi Kuusela & Thomas Keil & Markku Maula, 2017. "Driven by aspirations, but in what direction? Performance shortfalls, slack resources, and resource-consuming vs. resource-freeing organizational change," Strategic Management Journal, Wiley Blackwell, vol. 38(5), pages 1101-1120, May.
    7. Van Wijk, Raymond & Nadolska, Anna, 2020. "Making more of alliance portfolios: The role of alliance portfolio coordination," European Management Journal, Elsevier, vol. 38(3), pages 388-399.
    8. Joel A. C. Baum & Kristina B. Dahlin, 2007. "Aspiration Performance and Railroads’ Patterns of Learning from Train Wrecks and Crashes," Organization Science, INFORMS, vol. 18(3), pages 368-385, June.
    9. Kim, Ji-hyun & Bae, Sung Joo & Yang, Jae-Suk, 2014. "Government roles in evaluation and arrangement of R&D consortia," Technological Forecasting and Social Change, Elsevier, vol. 88(C), pages 202-215.
    10. Akie Iriyama & Rajiv Kishore & Debabrata Talukdar, 2016. "Playing dirty or building capability? Corruption and HR training as competitive actions to threats from informal and foreign firm rivals," Strategic Management Journal, Wiley Blackwell, vol. 37(10), pages 2152-2173, October.
    11. Defeng Yang & Aric Xu Wang & Kevin Zheng Zhou & Wei Jiang, 2019. "Environmental Strategy, Institutional Force, and Innovation Capability: A Managerial Cognition Perspective," Journal of Business Ethics, Springer, vol. 159(4), pages 1147-1161, November.
    12. Williamson, Oliver E., 1988. "Technology and transaction cost economics : A reply," Journal of Economic Behavior & Organization, Elsevier, vol. 10(3), pages 355-363, October.
    13. Wesley M. Cohen & Richard R. Nelson & John P. Walsh, 2000. "Protecting Their Intellectual Assets: Appropriability Conditions and Why U.S. Manufacturing Firms Patent (or Not)," NBER Working Papers 7552, National Bureau of Economic Research, Inc.
    14. Dae-II Kim & Robert H. Topel, 1995. "Labor Markets and Economic Growth: Lessons from Korea's Industrialization, 1970-1990," NBER Chapters, in: Differences and Changes in Wage Structures, pages 227-264, National Bureau of Economic Research, Inc.
    15. Joel A. C. Baum & Jitendra V. Singh, 1994. "Organizational Niches and the Dynamics of Organizational Founding," Organization Science, INFORMS, vol. 5(4), pages 483-501, November.
    16. Wennberg, Karl & Delmar, Frédéric & McKelvie, Alexander, 2016. "Variable risk preferences in new firm growth and survival," Journal of Business Venturing, Elsevier, vol. 31(4), pages 408-427.
    17. Escribano, Alvaro & Fosfuri, Andrea & Tribó, Josep A., 2009. "Managing external knowledge flows: The moderating role of absorptive capacity," Research Policy, Elsevier, vol. 38(1), pages 96-105, February.
    18. Richard R. Nelson, 1959. "The Simple Economics of Basic Scientific Research," Journal of Political Economy, University of Chicago Press, vol. 67(3), pages 297-297.
    19. Diwei Lv, David & Zhu, Hang & Chen, Weihong & Lan, Hailin, 2021. "Negative performance feedback and firm cooperation: How multiple upward social comparisons affect firm cooperative R&D," Journal of Business Research, Elsevier, vol. 132(C), pages 872-883.
    20. Beverly B. Tyler & Turanay Caner, 2016. "New product introductions below aspirations, slack and R&D alliances: A behavioral perspective," Strategic Management Journal, Wiley Blackwell, vol. 37(5), pages 896-910, May.
    21. Alam, Ashraful & Uddin, Moshfique & Yazdifar, Hassan, 2019. "Institutional determinants of R&D investment: Evidence from emerging markets," Technological Forecasting and Social Change, Elsevier, vol. 138(C), pages 34-44.
    22. Ohad Ref & Zur Shapira, 2017. "Entering new markets: The effect of performance feedback near aspiration and well below and above it," Strategic Management Journal, Wiley Blackwell, vol. 38(7), pages 1416-1434, July.
    23. Constance E. Helfat & Margaret A. Peteraf, 2003. "The dynamic resource‐based view: capability lifecycles," Strategic Management Journal, Wiley Blackwell, vol. 24(10), pages 997-1010, October.
    24. Katila, Riitta & Mang, Paul Y., 2003. "Exploiting technological opportunities: the timing of collaborations," Research Policy, Elsevier, vol. 32(2), pages 317-332, February.
    25. Balagopal Vissa & Henrich R. Greve & Wei-Ru Chen, 2010. "Business Group Affiliation and Firm Search Behavior in India: Responsiveness and Focus of Attention," Organization Science, INFORMS, vol. 21(3), pages 696-712, June.
    26. Barth, James R. & Lin, Chen & Lin, Ping & Song, Frank M., 2009. "Corruption in bank lending to firms: Cross-country micro evidence on the beneficial role of competition and information sharing," Journal of Financial Economics, Elsevier, vol. 91(3), pages 361-388, March.
    27. Kristina Dahlin & Joel A.C Baum, 2007. "Aspiration performance and railroads' patterns of learning from train wrecks and crashes," Post-Print hal-00480399, HAL.
    28. Fernando Galindo-Rueda & Fabien Verger, 2016. "OECD Taxonomy of Economic Activities Based on R&D Intensity," OECD Science, Technology and Industry Working Papers 2016/4, OECD Publishing.
    29. Lin-Hua Lu & Poh-Kam Wong, 2019. "Performance feedback, financial slack and the innovation behavior of firms," Asia Pacific Journal of Management, Springer, vol. 36(4), pages 1079-1109, December.
    30. Yi, Jingtao & Wang, Chengqi & Kafouros, Mario, 2013. "The effects of innovative capabilities on exporting: Do institutional forces matter?," International Business Review, Elsevier, vol. 22(2), pages 392-406.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Kotiloglu, Serhan & Blettner, Daniela & Lechler, Thomas G., 2024. "Integrating national culture into the organizational performance feedback theory," European Management Journal, Elsevier, vol. 42(3), pages 327-347.
    2. Diwei Lv, David & Zhu, Hang & Chen, Weihong & Lan, Hailin, 2021. "Negative performance feedback and firm cooperation: How multiple upward social comparisons affect firm cooperative R&D," Journal of Business Research, Elsevier, vol. 132(C), pages 872-883.
    3. Smulowitz, Stephen J. & Smulowitz, Małgorzata & Cossin, Didier, 2025. "More risk-averse or more innovative? The effect of women board membership and aspirations on patent activity," Research Policy, Elsevier, vol. 54(1).
    4. Cheng, Lulu & Xie, En & Fang, Junyi & Mei, Nan, 2022. "Performance feedback and firms’ relative strategic emphasis: The moderating effects of board independence and media coverage," Journal of Business Research, Elsevier, vol. 139(C), pages 218-231.
    5. Lv, David Diwei & Chen, Weihong & Zhu, Hang & Lan, Hailin, 2019. "How does inconsistent negative performance feedback affect the R&D investments of firms? A study of publicly listed firms," Journal of Business Research, Elsevier, vol. 102(C), pages 151-162.
    6. Lakshmi Goyal, 2023. "Investments during institutional transitions: Driven by problems or opportunities?," Asia Pacific Journal of Management, Springer, vol. 40(4), pages 1733-1768, December.
    7. K. Skylar Powell & Eunah Lim & Hidenori Takahashi, 2023. "Chasing ‘Animal spirits’: business expectations, performance feedback, and advertising intensity in Japanese firms," Asian Business & Management, Palgrave Macmillan, vol. 22(3), pages 1035-1064, July.
    8. Martínez-Noya, Andrea & García-Canal, Esteban, 2021. "Innovation performance feedback and technological alliance portfolio diversity: The moderating role of firms’ R&D intensity," Research Policy, Elsevier, vol. 50(9).
    9. Hendriks, Guus & Slangen, Arjen H.L. & Heugens, Pursey P.M.A.R., 2024. "Country portfolio diversity and firms’ portfolio adjustment decisions: A behavioral perspective," International Business Review, Elsevier, vol. 33(4).
    10. Qu, Hongyan & Ding, Zhujun & Ahlstrom, David & Wu, Changqi & Cai, Huifen Helen, 2025. "When I have to versus when I am able to: Behavioral and resource explanations for firms’ international expansion via exporting," International Business Review, Elsevier, vol. 34(1).
    11. Moritz Hagen & Wenjia Su & Sebastian Junge, 2024. "60th birthday of ‘A Behavioral Theory of the Firm’: a review of the relational concepts and recommendations for future research," Management Review Quarterly, Springer, vol. 74(4), pages 2637-2682, December.
    12. David Maslach & Oana Branzei & Claus Rerup & Mark J. Zbaracki, 2018. "Noise as Signal in Learning from Rare Events," Organization Science, INFORMS, vol. 29(2), pages 225-246, April.
    13. Erk P. Piening & Ferdinand Thies & Michael Wessel & Alexander Benlian, 2021. "Searching for Success—Entrepreneurs’ Responses to Crowdfunding Failure," Entrepreneurship Theory and Practice, , vol. 45(3), pages 626-657, May.
    14. Su, Taoyong & Yu, Yuzhu & Chen, Yongheng & Hou, Wanrong, 2023. "On or off: The triggering effect of underperformance duration on cooperative innovation," Technovation, Elsevier, vol. 126(C).
    15. Mammadaliyev, Farid & Gilsing, Victor & Knoben, J., 2024. "How do firms adapt their portfolios of external collaborations to changing internal organizational attributes? The moderating role of firm age," Other publications TiSEM 56c854b7-ed86-4830-843e-c, Tilburg University, School of Economics and Management.
    16. Marleen McCormick & Stephanie A. Fernhaber, 2018. "Are growth expectations being met? Implications for the internationalization of micro-sized ventures," Small Business Economics, Springer, vol. 50(3), pages 591-605, March.
    17. Kent Ngan-Cheung Hui & Yuanyuan Gong & Qi Cui & Naipeng Jiang, 2022. "Foreign investment or divestment as a near-term solution to performance shortfalls? The moderating role of vicarious learning," Asia Pacific Journal of Management, Springer, vol. 39(4), pages 1481-1509, December.
    18. Walrave, Bob & Gilsing, Victor A., 2023. "Game of skill or game of luck? Distant search in response to performance feedback," Technovation, Elsevier, vol. 121(C).
    19. Mark DesJardine & Pratima Bansal, 2019. "One Step Forward, Two Steps Back: How Negative External Evaluations Can Shorten Organizational Time Horizons," Organization Science, INFORMS, vol. 30(4), pages 761-780, July.
    20. Samuel C MacAulay & John Steen & Tim Kastelle, 2020. "The search environment is not (always) benign: reassessing the risks of organizational search," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 29(1), pages 1-23.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:eurman:v:41:y:2023:i:5:p:709-719. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/wps/find/journaldescription.cws_home/115/description#description .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.