Review of Research on the Negative Innovation Performance Feedback and Corporate Overinvestment

Qiaoyue Liu

doi:10.54691/17xxka36

Authors

Qiaoyue Liu

DOI:

https://doi.org/10.54691/17xxka36

Keywords:

Negative innovation performance feedback; corporate overinvestment; industry aspiration; historical aspiration.

Abstract

Insufficient innovation momentum and imbalanced investment efficiency both constrain socio-economic development. The key to addressing these two issues lies in activating the innovation potential of micro-enterprises and preventing irrational investment. While extensive research exists on performance feedback related to economic indicators, studies on those associated with other objectives remain scarce. Meanwhile, a research gap persists concerning the impact on corporate investment efficiency from the corporate behavior perspective. Against this backdrop, this paper analyzes the research contexts of innovation dilemmas and overinvestment, highlighting the necessity of studying their interrelationship. Additionally, following a brief review of the behavioral theory of the firm, threat-rigidity theory, and prospect theory, this paper synthesizes relevant literature on innovation performance feedback and overinvestment, and offers prospects for future research.

Downloads

Download data is not yet available.

References

[1] Akron,S., Demir,E., Díez-Esteban, J.M., García-Gómez,C.D. How does uncertainty affect corporate investment inefficiency? Evidence from Europe [J].Research in International Business and Finance, 2022, 62.

[2] Audia,P.G., Greve,H.R. Organizational learning from performance feedback: A behavioral perspective on multiple goals: A multiple goals perspective [J]. Cambridge University Press,2021.

[3] Beladi,H., Hu,M., Yang,J., Zhu,R. Dual-class stock structure and firm investment [J].Finance Research Letters,2022, 47.

[4] Berchicci,L., Tarakci,M. Aspiration formation and attention rules [J].Strategic Management Journal,2022,43(8):1575-1601.

[5] Cyert,R. and March,J. A Behavioral Theory of the Firm [M]. Prentice-Hall, Englewood Cliffs,1963.

[6] Evdokimov,E., Hanlon,D. , Lim,E.K. Do Generalist CEOs Magnify Boardroom Backscratching? [J]. Journal of Business Ethics, 2022,181:221–247.

[7] Gaba,V.,Bhattacharya,S. Aspirations,Innovation,and Corporate Venture Capital:A Behavioral Perspective [J].Strategic Entrepreneurship Journal, 2012,6(2):178-199.

[8] García-Gómez,C.D., Demir,E., Díez-Esteban,J.M. Popesko,B.,Investment inefficiency in the hospitality industry: The role of economic policy uncertainty [J]. Journal of Hospitality and Tourism Management,2023, 54:383-391.

[9] Goyal, L.,Goyal, V. Performance Shortfall, Feedback Interpretation and R&D Search: The Differential Effects of Peers’ Performance Below Historical and Social Aspirations [J]. British Journal of Management, 2022,33: 1584-1608.

[10] Greve, H.R. Organizational Learning from Performance Feedback: A Behavioral Perspective on Innovation and Change [M]. Cambridge University Press: Cambridge, 2003.

[11] Kahneman, D., Tversky, A. Prospect Theory: An Analysis of Decision under Risk [J]. Econometrica,1979,47(2):263–291.

[12] Kotiloglu, S.,Chen, Y., Lechler, T. Organizational responses to performance feedback: A meta-analytic review [J]. Strategic Organization,2021,19(2):285–311.

[13] Lopes, L. L. Between hope and fear: The psychology of risk. In L. Berkowitz (Ed.) [J]. Advances in experimental social psychology, 1987, 20:255–295.

[14] Martínez-Noya, A., García-Canal, E. Innovation performance feedback and technological alliance portfolio diversity: The moderating role of firms’ R&D intensity [J]. Research Policy, 2021, 50(9):104321.

[15] Martinez-Noya, A., García-Canal, E. Direct and moderating effects of public R&D support on external knowledge acquisition: the interaction with performance feedback [J]. Industry and Innovation, 2024, 31(9):1169–1202.

[16] Meng,C., Sousa, C.M.P., Chen,J. Unraveling the relationship between innovation performance feedback and outward FDI: Moderating influence of inward FDI spillovers [J].Journal of Business Research,2024, 181.

[17] Mu, C., Yang, J. Zhang,Y. Investment timing with information-processing constraints [J].Finance Research Letters,2020,32.

[18] Staw, B.M. , Sandelands, L.E., Dutton,J.E. Threat rigidity effects in organizational behavior: a multilevel analysis [J].Administrative Science Quarterly, 1981,26(4):501-524.

[19] Su,T.Y., Yu,Y.Z., Chen,Y.H. Hou,W.R.,On or off: The triggering effect of underperformance duration on cooperative innovation [J].Technovation,2023,126.

[20] Sun, B., Zhang,Y., Zhao,Y., Mao, H., Kang,M., Liang,T. Does continuous innovation failure lead firm innovation to hesitate to press forward?: Evidence from Chinese-listed technology-intensive industries firms [J].Journal of Business Research,2025, 186.

[21] Tian M., Yao,J., Xie,J., Hu,C. Innovation performance feedback and inter-organization knowledge search in high-tech firms: The moderating role of technical knowledge complexity [J].Journal of Business Research,2024, 182.

[22] Ye, Y., Yu, W., Nason, R. Performance Feedback Persistence: Comparative Effects of Historical Versus Peer Performance Feedback on Innovative Search [J]. Journal of Management, 2021, 47(4): 1053~1081.

[23] Yu,X., Yao,Y., Zheng,H., Zhang,L. The role of political connection on overinvestment of Chinese energy firms [J]. Energy Economics, 2020, 85.

[24] Zhang,D., Kong,Q. Do energy policies bring about corporate overinvestment? Empirical evidence from Chinese listed companies [J].Energy Economics, 2022, 105.

[25] Zhong, X., Chen, W., Ren, G. Continuous innovation failure, top management team relational capital and the overseas R&D activities of companies in emerging economies [J].Industry and Innovation, 2022, 29(5):623–648.