What role does generic strategy play in how managers adapt their aspirations in response to performance feedback?
Journal of Strategy and Management
ISSN: 1755-425X
Article publication date: 14 April 2022
Issue publication date: 12 October 2022
Abstract
Purpose
When managers set aspirations for their firms, they typically compare their own firms' performance to past aspirations as well as to the performance of social reference groups. The authors explore how firm generic strategy affects managers' adaptation of firm aspirations in response to feedback from three social reference groups that vary in terms of breadth (population average, strategic group, and one direct rival).
Design/methodology/approach
The authors propose that firm generic strategy (low-cost or differentiation) functions as an organizational information filter through with managers interpret performance feedback. The authors test for whether generic strategy has a moderating effect on the influence of performance feedback from social reference groups.
Findings
Based on a longitudinal sample of US airlines, the study shows that all firms are influenced most strongly by their strategic groups. Low-cost and differentiation generic strategies differ in terms of which social reference group motivates a larger reaction when overperforming: low-cost firms are more influenced by the population average which is contributed to by the entire industry than are differentiating firms, while differentiating firms are more swayed by the narrow focus of their direct rivals than are low-cost firms.
Originality/value
Although firm strategy represents a core decision at the firm level, to the best of the authors’ knowledge, performance feedback research, surprisingly, has not yet integrated generic strategy into its models.
Keywords
Citation
Ruckman, K. and Blettner, D. (2022), "What role does generic strategy play in how managers adapt their aspirations in response to performance feedback?", Journal of Strategy and Management, Vol. 15 No. 4, pp. 718-744. https://doi.org/10.1108/JSMA-01-2021-0018
Publisher
:Emerald Publishing Limited
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