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Goals and the performance feedback on those goals are fundamental to organizational learning and adaptation. However, most research has focused on single overall, high-level organizational goals while ignoring important operational goals farther down in the goal hierarchy. This paper explores the important issue of interdependent feedback on multiple operational goals with shared task environments. We conjecture about the impact of shared technological task environments on feedback across goals. We then empirically examine these conjectures using panel vector autoregression (PVAR) analysis of performance feedback from three strategically important operational goals with shared technological task environments in the automobile industry. We find that interdependent feedback can lead to severe and misleading confusion regarding learning from feedback on such goals with shared task environments. Then, we discuss the implications of our findings. These include the following: the absolute intractability of the problem of meeting multiple goals with interdependent task environments as the number of goals increases; limits on the modularity of organization structure; and severe challenges in ex post credit assignment and ex ante planning when goals share technological task environments. Finally, we discuss the application of PVAR to interdependent feedback problems in organizations. The online appendices are available at https://doi.org/10.1287/orsc.2018.1207 .

The Behavioral Theory of the Firm suggests that performance below aspirations triggers problemistic search that can lead to risk taking. This prediction has received empirical support from most studies on the topic. However, this literature has typically focused on the internal determinants of firm search and risk-taking behavior and given little attention to the influences of social networks in which firms are embedded. To this end, we incorporate the network embeddedness perspective regarding firms' network positions and their roles in firm decision making. We suggest that a firm's search behavior is jointly directed by its performance feedback and network positions. Specifically, network brokerage and centrality play important yet distinct roles in guiding firm search behavior by differentially shaping the direction of problemistic search: high brokerage directs problemistic search to high-risk solutions, whereas high centrality directs problemistic search to low-risk solutions. Our theoretical predictions receive general empirical support based on analyses using longitudinal data from the Chinese venture capital industry. Our approach incorporates the crucial role of network structures into the problemistic search model and works toward building a problemistic search theory of the embedded firm.

Do firms take more or less risk in response to performance shortfalls? Although the behavioral theory of the firm (BTOF) has been a guiding framework in this area, empirical evidence remains inconclusive. Moreover, empirical work has largely failed to distinguish between firms' motivation to take risks and their ability to do so. In this study, recognizing the distinct roles played by these two components, we specifically focus on risk-taking motivation. Drawing on March and Shapira's shifting-focus-of-attention model, we highlight that firms' motivation to take risks is contingent on their chosen reference points and the shifts between them. We propose that, on average, risk-taking motivation exhibits a positive monotonic relationship with performance shortfalls, a sequence involving an initial increase, subsequent leveling off, and then a renewed increase. To advance the theory of risk-taking motivation, we extend our inquiry to consider the moderating effect of concern for firm survival and subsequently explore factors influencing this concern. Furthermore, we investigate a critical implication of differentiating risk-taking motivation and ability. Because of the mismatch between motivation and ability, underperforming firms take the greatest risks when their performance is moderately below aspirations, with motivation and ability being at moderate levels, leading to an inverted U-shaped relationship between performance shortfalls and risk taking. Empirical evidence derived from experiments and archival data supports our theoretical predictions. This study contributes to the BTOF literature by demonstrating that underperforming firms' risk-taking behavior is jointly determined by their motivation, ability, focus of attention, and concern for survival. Funding: This work was supported by the Israel Science Foundation [Grant 677/20]. Supplemental Material: The online appendices are available at https://doi.org/10.1287/orsc.2020.13953 .