Performance data and innovation: how archival and perceptual information influences managerial innovation

Why do managers pursue innovation, and how does performance information shape this process? This study investigates how archival and perceptual performance data influence managerial innovation in U.S. nursing homes. Drawing on reference dependence and dialogue theories, this study argues that managers rely on performance comparisons both over time and against peer organizations to inform their innovation decisions. Using a combination of survey and administrative data from U.S. nursing homes, we find that both archival-based and perception-based performance gaps are positively associated with managerial innovation. Notably, perceptual assessments emerge as a more robust predictor of innovation than archival metrics, suggesting that managers respond more to their interpretations of performance than to externally reported indicators. These findings underscore the socially constructed nature of performance information and highlight the importance of incorporating both objective and subjective assessments into performance management systems. This study contributes to the literature on performance information use, strategic management, and innovation in public service organizations.