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Causality Rules: Performance Feedback on Hierarchically Related Goals and Capital Investment Variability

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  • Ambra Mazzelli
  • Robert S. Nason
  • Alfredo De Massis
  • Josip Kotlar

Abstract

We extend March and Simon’s (1958) analysis of strategic decisions by distinguishing between two rules for allocating attention – priority versus causality. We develop theory concerning causality rules which have been largely overlooked in prior literature. Specifically, we examine how performance feedback on the intermediate productivity goal and the higher‐order profitability goal independently and jointly influence the variability of firm capital investments. Panel analysis of 2,477 Spanish manufacturing firms reveals that these goals jointly affect the variability of capital investments through both priority and causality attention rules. Our study provides new insights on how firms handle multiple goals, deconstruct performance feedback, and cope with the attentional constraints of bounded rationality.

Suggested Citation

  • Ambra Mazzelli & Robert S. Nason & Alfredo De Massis & Josip Kotlar, 2019. "Causality Rules: Performance Feedback on Hierarchically Related Goals and Capital Investment Variability," Journal of Management Studies, Wiley Blackwell, vol. 56(8), pages 1630-1654, December.
    • Handle: RePEc:bla:jomstd:v:56:y:2019:i:8:p:1630-1654
    DOI: 10.1111/joms.12432
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    Cited by:

    1. Su, Taoyong & Yu, Yuzhu & Chen, Yongheng & Hou, Wanrong, 2023. "On or off: The triggering effect of underperformance duration on cooperative innovation," Technovation, Elsevier, vol. 126(C).
    2. Liuyang Ren & Xi Zhong & Liangyong Wan, 2022. "Defending the shell: differential effects of delisting pressure on R&D intensity and bribery expenditure," Review of Managerial Science, Springer, vol. 16(5), pages 1437-1470, July.
    3. Lingjuan Zhao & Kent Ngan-Cheung Hui & Feng Xiong & Yuxin Xia, 2023. "When and Why Do Innovation Policies Change? A Performance Feedback Perspective," SAGE Open, , vol. 13(1), pages 21582440231, March.
    4. Ambra Mazzelli & Danny Miller & Isabelle Le Breton-Miller & Alfredo De Massis & Josip Kotlar, 2023. "Outcome-Based Imitation in Family Firms’ International Market Entry Decisions," Entrepreneurship Theory and Practice, , vol. 47(4), pages 1059-1092, July.
    5. Cheng, Lulu & Xie, En & Fang, Junyi & Mei, Nan, 2022. "Performance feedback and firms’ relative strategic emphasis: The moderating effects of board independence and media coverage," Journal of Business Research, Elsevier, vol. 139(C), pages 218-231.

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