Multiple corporate and functional performance feedback and problemistic search

Abstract

In this study, we examine how decision makers assess and respond to more than two performance feedback regarding goals across different hierarchical levels. Building on Cyert and March's seminal work and later research on pattern perception, we argue that pattern simplicity and pattern predictability of multiple (functional) feedback help decision makers to better guide problemistic search and generate more plausible solutions to fix a serious corporate performance shortfall. In a longitudinal sample of 97 global incumbent pharmaceutical firms, we find that a simpler and more predictable set of functional performance signals strengthens the relationship between poor performance on a corporate goal (i.e., ROA) and the number of functional solutions (i.e., number of new product development projects) that a firm initiates. We discuss the implications of our findings to the performance feedback and managerial search literature.