Hu, S., He, Z.L., Blettner, D.P., Bettis, & R.A. (2017) Conflict inside and outside: Social comparisons and attention shifts in multidivisional firms Flashcards
GOAL
Expand performance feedback to how consistent and inconsistent feedback from social comparisons with the economic and political reference points affects the dynamics of divisional attention allocation in adaptive aspirations
Economic reference group vs reference point
the economic reference group, an entire population of external marketplace competitors
the economic reference point, the mean or median performance of this reference group
Political reference group vs reference point
However, as within a company different teams compete for attention, resources and power, thus a political conflict arises and hence there is a second second social reference group for each division:
- the political reference group, consisting of sister divisions
- the associated political reference point, representing the performance of sister divisions
Economic vs political references?
Division managers must simultaneously consider both social comparisons when adapting their aspirations at the division level. This raises the possibility of:
- Consistent feedback from comparing performance with both social reference points (the focal division outperforming or underperforming both)
- Inconsistent feedback (the focal division outperforming one and underperforming the other).
o May introduce ambiguity in performance interpretation that can result in managerial confusion and lack of direction and complicate subsequent attention allocation and decision making
The larger the weight of a reference point ?
The larger the weight of a reference point, the more relative attention it receives, and the more sensitive the organization is to that reference point
Organizations allocate relative attention to the reference points in adaptive aspiration.
- Own prior aspiration and prior performance are based on the focal organizations experience and thus also serve as a reference point
Can this attention allocation vary?
Where previously assumed stable, attention allocation should be allowed to vary across firms, and more emphasis should be placed on social comparisons when studying adaptive aspirations.
- This paper investigates attention allocation to multiple reference points (i.e. own experience and experience of the two reference groups)
When both economic and political reference points indicate:
Outperform
- Outperform: consistent feedback above both social reference points
> Provides reliable signal of success and the associated bargaining power for resources, attention, etc. May have less motivation to learn from the reference groups, however, tend to be more motivated to learn from own experience.
When both economic and political reference points indicate:
Underperform
- Underperform: consistent feedback under both social reference points
> Provides double threat and triggers extensive problemistic search. They are motivated to learn from other reference groups. Declined bargaining power.
When both economic and political reference points indicate:
Underperform
- Underperform: consistent feedback under both social reference points
> Provides double threat and triggers extensive problemistic search. They are motivated to learn from other reference groups. Declined bargaining power.
When there is inconsisten feedback:
- Inconsistent feedback with both social reference points
Go with either Fire alarm or Self-enhancement rules:
o Fire alarm, they shift their attention to the social reference point that they underperform and motivated to fix it. (Happens in the article)
o Self-enhancement, managers focus more on the social reference point that they outperform. Desire to maintain positive self-image. (win the political battle)
We find that the two opposing situations, consistent feedback above and below both social reference points, paradoxically generate the same result of more relative attention to the focal division’s own experience.
