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

2021 ◽  
pp. 1-36
Author(s):  
Lerong He ◽  
Liying Huang ◽  
Guangqing Yang
Keyword(s):  
Performance Feedback ◽  
Attention Allocation ◽  
High Tech ◽  
Moderating Effects ◽  
Managerial Cognition ◽  
Industry Competition ◽  
Aspiration Levels ◽  
The Relationship ◽  
Underperforming Firms ◽  
D Investment

ABSTRACT 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.

scholarly journals Government Support and R&D Investment Effectiveness in Chinese SMEs: A Complex Relationship

2017 ◽  
Vol 16 (1) ◽  
pp. 201-226 ◽  
Author(s):  
Claudio Petti ◽  
Lauretta Rubini ◽  
Silvia Podetti
Keyword(s):  
Government Support ◽  
High Tech ◽  
Moderation Model ◽  
And Performance ◽  
The One ◽  
Internal Balance ◽  
The Relationship ◽  
Innovative Capacity ◽  
D Investment ◽  
Innovation Support

This paper investigates the combined role of innovation support policies and firm's own innovative activities on the performance of Chinese small- and medium-sized enterprises (SMEs) in high-tech sectors. By distinguishing two components of innovative activities—research and development (R&D) investments and embedded innovative capacity—the paper develops and tests an integrative moderated moderation model. The results suggest that in Chinese high-tech SMEs innovation-support policies positively moderate the relationship between R&D investments and performance, but this positive effect diminishes when there are higher levels of embedded innovative capacity. These results highlight that the relationship between government innovation policies and a firm's own R&D investments is not only reciprocal but also more complex than the one so far analyzed in the literature. The results show in particular that the effects of innovation-support policies on R&D investments is not as neat as it seems, because of the internal balance within the firm between investment in R&D and other sources of innovation. Therefore, although innovation support policies have been found to help Chinese SMEs in high-tech sectors benefit from their R&D investments, these policies are particularly effective only when R&D investments are significantly driving firms’ innovative activities. This highlights the relevance of both government support and a firm's own efforts in the competitive modernization of Chinese SMEs.

scholarly journals The effects of R&D intensity and internationalization on the performance of non-high-tech SMEs

2017 ◽  
Vol 36 (1) ◽  
pp. 81-103 ◽  
Author(s):  
Lucas WA Booltink ◽  
Ayse Saka-Helmhout
Keyword(s):  
Firm Performance ◽  
Research And Development ◽  
Critical Threshold ◽  
High Tech ◽  
High Tech Sector ◽  
And Performance ◽  
The Relationship ◽  
D Investment ◽  
Level Of Risk

Research and Development (R&D) investment is seen as a fundamental driver of high-tech small and medium-sized (SME) firm performance. However, the same driver may be constraining growth among non-high-tech SMEs as it increases the level of risk faced by such firms. We challenge this argument by examining the relationship between R&D intensity and performance among non-high-tech SMEs. While the size of R&D investments is, by definition, limited in the non-high-tech sector, our study shows that such investments are important for non-high-tech firms. There is, however, an inverted U-shaped relationship between R&D intensity and performance among non-high-tech SMEs. Furthermore, increased internationalization leads non-high-tech SMEs to exploit their R&D investment more effectively to enhance firm performance, provided that R&D investment levels exceed a critical threshold.

Innovation and Performance: An Empirical Study of Russian Industrial Companies

2018 ◽  
Vol 15 (03) ◽  
pp. 1850027 ◽  
Author(s):  
Arkady Trachuk ◽  
Natalia Linder
Keyword(s):  
Research And Development ◽  
Critical Mass ◽  
High Tech ◽  
Manufacturing Companies ◽  
Industrial Companies ◽  
Strong Positive Relationship ◽  
And Performance ◽  
Relationship Of ◽  
The Relationship ◽  
D Investment

The paper investigates the relationship between investment in research and development (R&D), innovation expenses, and productivity of manufacturing companies. These empirical results have shown that innovation investments (1) improve the performance of industrial companies with the elasticity of 0.09; (2) innovation investment has an impact on the performance of the company, and the extent of this impact depends on the value of R&D investment and has a range of elasticity ranging from 0.03 (for low volumes of R&D investment) to 0.16 in high volumes of R&D investment; (3) the relationship between innovation investment and the growth of performance is nonlinear in nature and has a strong positive relationship only after a critical mass of innovation investment has been reached; (4) a significant role in the relationship of innovation investment and productivity is played by the features of the industry in which the company operates (the companies that operate in high-tech industries not only invest more in R&D and innovation but also have a better performance due to research and development); (5) companies of low-tech industries have a negative elasticity of innovation investment and productivity, which is due to the influence of unprofitable innovation investments (appropriability effect), i.e. additional profits from the investment are not significant.

scholarly journals Dynamic Capabilities and Firm Performance in the High-Tech Industry: Quadratic and Moderating Effects under Differing Ambidexterity Levels

2019 ◽  
Vol 11 (18) ◽  
pp. 5004 ◽  
Author(s):  
Peng ◽  
Zhang ◽  
Yen ◽  
Yang
Keyword(s):  
Organizational Performance ◽  
Dynamic Capabilities ◽  
Response Rate ◽  
Dynamic Theory ◽  
High Tech ◽  
Moderating Effects ◽  
Effective Response ◽  
High Tech Industry ◽  
And Performance ◽  
The Relationship

This study uses the perspectives of dynamic capabilities and ambidexterity to investigate the direct effect of the development of an organization’s explorative and exploitative capabilities on organizational tensions and performance. We employed a sample of high-tech Taiwanese firms to test our hypotheses and surveyed the informants’ knowledge about their companies. We sent out 1000 questionnaires and received 234 valid responses, yielding a 23.4% effective response rate. The results also indicated that the consideration of incorporating balanced and combined dimension ambidexterity would benefit high-tech firms and help them facilitate higher performance. In summary, based on the results of previous studies, this study divided dynamic capabilities into exploitation capabilities and exploration capabilities, and divided ambidexterity into combined and balanced dimensions, so as to redefine the relationship between dynamic capabilities, ambidexterity and organizational performance from the perspective of tension, thereby enhancing the connotations of dynamic theory.

scholarly journals Performance Shortfalls and R&D Investment Change: Aspirations, Actions, and Expectations

2021 ◽  
Vol 13 (6) ◽  
pp. 3006
Author(s):  
Liying Huang ◽  
Lerong He ◽  
Guangqing Yang
Keyword(s):  
Performance Feedback ◽  
Theory Of The Firm ◽  
Firm Resources ◽  
Market Conditions ◽  
Firm Level ◽  
Internal Resources ◽  
Moderating Factors ◽  
Firm Response ◽  
Underperforming Firms ◽  
D Investment

Built on the Behavioral Theory of the Firm, the paper examines how firm response to performance feedback is influenced by firm expectation on the likelihood of an action to close the performance gap. Using firm level change in R&D intensity as a problemistic search behavior, we explore how performance shortfalls relative to social and historical aspirations may prompt underperforming firms to adjust its R&D investment intensity, and how the magnitude of this adjustment is moderated by firm resources, past experience, industry and market conditions. We conduct our analysis using a longitudinal sample of Chinese firms listed on the ChiNext Board between 2009 and 2017. Our results indicate that underperforming firms increase their R&D intensity to a larger degree than their over-performing peers and periods when these firms have substantial cumulated R&D spending, abundant organizational slack, and are competing in more dynamic industries. We also document that these moderating factors influence relationships between social and historical aspirations and R&D investment decisions in a distinct way. We conclude that firm internal resources, capabilities and external industry and market conditions all affect firm expectations, and consequently shape the direction and magnitude of organizational actions in response to performance aspirations.

Enhancing knowledge sharing in high-tech firms

2018 ◽  
Vol 25 (3) ◽  
pp. 468-491 ◽  
Author(s):  
Chou-Kang Chiu ◽  
Chieh-Peng Lin ◽  
Yuan-Hui Tsai ◽  
Siew-Fong Teh
Keyword(s):  
Positive Affect ◽  
Knowledge Sharing ◽  
Power Distance ◽  
Well Being ◽  
Expectancy Theory ◽  
High Tech ◽  
Moderating Effects ◽  
Content Type ◽  
Broaden And Build Theory ◽  
The Relationship

Purpose The purpose of this paper is to explore the development of knowledge sharing from the perspectives of broaden-and-build theory and expectancy theory. Its research purpose is to understand how knowledge sharing is driven by such predictors as optimism, pessimism, and positive affect through their complex interactions with collectivism or power distance. In the proposed model of this study, knowledge sharing relates to optimism and pessimism via the partial mediation of positive affect. At the same time, the influence of optimism, pessimism, and positive affect on knowledge sharing are moderated by the national culture of collectivism and power distance, respectively. Design/methodology/approach This study’s hypotheses were empirically tested using data from high-tech firms across Taiwan and Malaysia. Of the 550 questionnaires provided to the research participants, 397 usable questionnaires were collected (total response rate of 72.18 percent), with 237 usable questionnaires from Taiwanese employees and 160 usable questionnaires from Malaysian employees. The data from Taiwan and Malaysia were pooled and analyzed using: confirmatory factor analysis for verifying data validity, independent sample t-tests for verifying the consistency with previous literature regarding cultural differences, and hierarchical regression analysis for testing relational and moderating effects. Findings This study demonstrates the integrated application of the broaden-and-build theory and expectancy theory for understanding optimism, pessimism, and positive affect in the development of knowledge sharing. The test results confirm that positive affect partially mediates the relationship between optimism and knowledge sharing and fully mediates the relationship between pessimism and knowledge sharing. Moreover, collectivism and power distance have significant moderating effects on most of the model paths between knowledge sharing and its predictors except for the relationship between pessimism and knowledge sharing. Originality/value This study extends the expectancy theory to justify how optimistic and pessimistic expectations are stable traits that dominate the way employees share their knowledge sharing. This study shows how collectivism and power distance of Hofstede’s cultural framework can be blended with the broaden-and-build theory and expectancy theory to jointly explain knowledge sharing. Besides, this study provides additional support to the adaptation theory of well-being that suggests psychosocial interventions, which manage to enhance well-being by leveraging positive affect, hold the promise of reducing stressful symptoms and boosting psychological resources among employees.

scholarly journals THE MODERATING EFFECTS OF SLACK ON THE RELATIONSHIP BETWEEN AMBIDEXTROUS STRATEGY AND PERFORMANCE: EVIDENCE FROM HIGH-TECH FIRMS IN CHINA

2016 ◽  
Vol 17 (5) ◽  
pp. 734-748 ◽  
Author(s):  
Biao LUO ◽  
Changyue LUO ◽  
Jiajia GE ◽  
Dongli ZHANG
Keyword(s):  
Panel Data Analysis ◽  
High Tech ◽  
Moderating Effects ◽  
Slack Resources ◽  
High Technology Firms ◽  
And Performance ◽  
Long Term Performance ◽  
Term Performance ◽  
The Relationship

The purpose of this study is to examine the impacts of ambidexterity of exploration/exploitation on long-term performance and the moderating effects of slack resources. The methodology adopted is panel data analysis of a sample dataset of 125 high technology firms in China. The finding of this study shows that a moderating role of organizational slack between ambidexterity and long-term performance is strongly supported. The research and practical implications of this paper are: (1) Exploration and exploitation can be mutually enhancing instead of being fundamentally contradictory; (2) Slack resources moderate the relationship between ambidexterity and performance. The originality and value of the paper is that it is one of the earliest studies that empirically examine the moderating effects of slack resources on ambidexterity-performance relationship.

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