Performance Feedback in Hierarchical Business Groups: The Cross-Level Effects of Cognitive Accessibility on R&D Search Behavior

Rhee, L., Ocasio, W. and Kim, T. Performance Feedback in Hierarchical Business Groups: The Cross-Level Effects of Cognitive Accessibility on R&D Search Behavior. Organization Science, Forthcoming

37 Pages Posted: 16 Nov 2017 Last revised: 23 Jun 2018

Date Written: November 14, 2017

Abstract

This study examines the cross-level effect of group-level managers on member firms’ problemistic search in hierarchical business groups. Using multi-level data from Korean business groups, we propose that the effects of failure to meet an aspiration level on R&D search intensity increase when member firm performance and R&D investments are more cognitively accessible to group-level managers. Specifically, we find, first, that when underperforming firms are widespread in a business group, a focal member firm intensifies R&D search in response performance below an aspiration level because member firm performance, as a group-level problem, becomes cognitively accessible to group-level managers. Second, as member firms operating in R&D intensive industries are more prevalent in a business group, R&D investments, as a search solution, become more cognitively accessible to group-level managers. Thus, a focal member firm reinforces R&D search in response to the performance shortfall. We discuss the implications of these findings for research on the behavioral theory of the firm and performance feedback.

Keywords: Cognitive Accessibility, Attention Based View, R&D Search Behavior, Hierarchical Business Groups

Suggested Citation

Rhee, Luke and Ocasio, William C. and Kim, Tae-Hyun, Performance Feedback in Hierarchical Business Groups: The Cross-Level Effects of Cognitive Accessibility on R&D Search Behavior (November 14, 2017). Rhee, L., Ocasio, W. and Kim, T. Performance Feedback in Hierarchical Business Groups: The Cross-Level Effects of Cognitive Accessibility on R&D Search Behavior. Organization Science, Forthcoming, Available at SSRN: https://ssrn.com/abstract=3071395

Luke Rhee (Contact Author)

University of California, Irvine

Campus Drive
Irvine, CA California 62697-3125
United States

William C. Ocasio

Northwestern University - Kellogg School of Management ( email )

2001 Sheridan Road
Evanston, IL 60208
United States

Tae-Hyun Kim

Northwestern University ( email )

2001 Sheridan Road
Evanston, IL 60208
United States

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