It has to be optimal: responsiveness to performance feedback and subsequent firm performance
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| Year of publication | 2024 |
| Type | Article in Periodical (without peer review) |
| MU Faculty or unit | |
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| Description | Purpose: What are the performance consequences of responses to performance feedback? This paper aims to contribute to answering the question. It explores the relationship between a firm's responsiveness to performance feedback and the subsequent performance of the firm. While responding to performance feedback helps the firm adapt to the environment, it is reasonable to expect that responsiveness that is too high or too low could be detrimental to future firm performance. Therefore, it is likely that the relationship between responsiveness to performance feedback and subsequent firm performance can be depicted graphically with an inverted U-shaped curve. Methodology: The study builds on data from U.S. manufacturing firms and uses fixed-effect panel data models. Findings: The study supports the inverted U-shape relationship between responsiveness and subsequent performance. Furthermore, it shows that the firm's proximity to bankruptcy has a moderating effect on the relationship. Originality: This research contributes to the literature on performance feedback and indicates potential avenues for prescriptive advice to firms. |