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Performance Negative Feedback and Firm's R&D Efficiency: Moderating Roles of Regional Institutional Environment

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  • Furong Guo

    (School of Accounting, Chongqing Technology and Business University, Chongqing, China)

  • Yiwen Xiang

    (School of Accounting, Chongqing Technology and Business University, Chongqing, China)

  • Pan Wang

    (School of Accounting, Chongqing Technology and Business University, Chongqing, China)

Abstract

Based on the behavioral theory of the firm, we investigate the impact of performance negative feedback on R&D efficiency. The results show that when performance falls below aspirations, firms pay more attention to R&D projects with high R&D efficiency to get rid of the operating pressure, reputation pressure and resource constraints caused by the decline in performance. This effect may be influenced by institutional differences. In the case of negative feedback, a good regional institutional environment is conducive to the improvement of R&D efficiency, while a weak regional institutional environment weakens this effect. Specifically, the higher the degree of IPR enforcement and financial market development, as well as the lower the degree of local government intervention, the more inclined firms are to increase R&D efficiency. The findings provide insights into understanding R&D efficiency improvement in the context of emerging markets.

Suggested Citation

  • Furong Guo & Yiwen Xiang & Pan Wang, 2024. "Performance Negative Feedback and Firm's R&D Efficiency: Moderating Roles of Regional Institutional Environment," Review of Economic Assessment, Anser Press, vol. 3(3), pages 45-66, September.
    • Handle: RePEc:bba:j00010:v:3:y:2024:i:3:p:45-66:d:397
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    References listed on IDEAS

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    4. Mary M. Shirley, 2005. "Institutions and Development," Springer Books, in: Claude Menard & Mary M. Shirley (ed.), Handbook of New Institutional Economics, chapter 24, pages 611-638, Springer.
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    6. Oveis Madadian & Maud van den Broeke, 2023. "R&D investments in response to performance feedback: moderating effects of firm risk profile and business strategy," Post-Print hal-04133760, HAL.
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