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In this paper, we examine how intra-organizational peer performance feedback influences exploration-exploitation decisions. Data from two behavioral experiments suggest that an agent’s propensity to explore is influenced not only by whether their peer performs better or worse but also by individual and situational factors that affect how peer performance feedback is interpreted. In particular, we report three main findings. First, we find that providing individuals with feedback from a high-performing peer leads to more exploration than feedback from a low-performing peer. Second, we find that this difference in behavior is driven by the subset of individuals who receive feedback from a high-performing peer who also have a low tendency to self-enhance. Third, we find that when the task environment is less ambiguous, feedback from a low-performing peer tends to curtail exploration; when the task environment is more ambiguous, this is no longer the case. Overall, our findings provide insight into the individual and situational contingencies of learning from performance feedback. They also suggest implications for organization design, which we address in our discussion section.

We study how firms adapt to the dynamics of “external” goals – relevant performance expectations by external parties that are beyond firms’ direct control. Using analyst forecasts as proxies, we (1) document that external goals “ratchet asymmetrically,” i.e., upward goal adjustments following over-achievements are larger than downward adjustments following under-achievements of the same magnitude, and (2) test competing hypotheses about firms’ adaptive response: that firms increase search to identify novel long-run bases of performance; or that they reduce search to control the goal through lower performance variability. We find support for the latter, suggesting that learning in the presence of external goals is driven by both feedback and foresight: firms respond to the goal dynamics they experience, but anticipate potential future goal adjustments.

How to allocate resources between competing uses, such as between exploration and exploitation, denotes a fundamental management challenge. In this paper, we use an agent-based approach to model co...

It is common to view organizations as instruments to pursue collective goals. But beyond recognizing the presence of organizational goals, important questions relate to how these goals come about a...

The article explains system and decision theories which are used to solve the problem of managing interdependent activities within organizations and during periods of growth. The contextual analysi...

This symposium focuses on a central question of corporate strategy research: how to allocate corporate resources in multi-business firms? Spurred by early qualitative theory, a surge of empirical r...

Business incubators help new ventures overcome the liability of newness. While early incubators provided only basic services, recent years have seen increasing levels of support, raising the questi...

Much is known about the coordination and cooperation problems that interfirm collaborations often entail, and about how to organize accordingly. Yet surprisingly little is known about how mechanism...

For producers of complex product systems, higher-level outsourcing – shifting larger packages with a wider scope of responsibility for design and integration to suppliers – is a double-edged sword:...

A large body of literature has highlighted the importance, but also the challenges, of identifying, pursuing, and maintaining the right mix between exploration and exploitation. Given these challen...