Underperformance refers to the gap between the actual performance of an enterprise and its expected level. Although underperformance is a practical problem that enterprises often face, do enterprises need to readjust their organizational elements and structure when underperformance does occur? There is no consistent result in relevant empirical research. The reason may be that the response of enterprises to underperformance is not only related to the intensity of underperformance at a certain time point, but also related to the duration of underperformance. Based on the threat rigidity theory, this paper argues that when faced with the threat of continuous underperformance, managers will produce psychological pressure and anxiety, reduce their willingness and ability to flexibly deal with organizational difficulties, and take more conservative management measures, thus inhibiting organization reconfiguration. Based on the 454 effective observations of 81 listed companies in China’s chemical pharmaceutical industry from 2007 to 2017 and the data collected manually, the research confirms that the increase of the duration of underperformance will inhibit organization reconfiguration activities. Moreover, after the underperformance duration variable is included, the original significant underperformance intensity becomes no longer significant, which indicates that the duration of underperformance is a more important factor affecting organization reconfiguration. Further research shows that organizational redundancy and industry growth can alleviate the inhibitory effect of the duration of underperformance on organization reconfiguration. In fact, in the case of high organizational redundancy, the inhibitory effect of continuous underperformance on organization reconfiguration turns into a promoting effect. The contribution and significance of this paper are as follows: Firstly, in view of the differences in the existing research on the impact of underperformance, this paper proposes a more consistent theoretical mechanism from the perspective of threat rigidity. Secondly, by focusing on the duration of underperformance, this paper provides a more integrated explanation for how underperformance affects organizational response behavior from a dynamic perspective. Finally, this paper also enriches the antecedents of organization reconfiguration and dynamic capabilities, which is instructive for enterprises to carry out organization reconfiguration and build dynamic capabilities.
/ Journals / Foreign Economics & Management
Foreign Economics & Management
LiZengquan, Editor-in-Chief
ZhengChunrong, Vice Executive Editor-in-Chief
YinHuifang HeXiaogang LiuJianguo, Vice Editor-in-Chief
Underperformance Duration and Organization Reconfiguration
Foreign Economics & Management Vol. 43, Issue 05, pp. 77 - 90 (2021) DOI:10.16538/j.cnki.fem.20210325.101
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Jiang Shisong, Mao Dongzhe, Gong Limin, et al. Underperformance Duration and Organization Reconfiguration[J]. Foreign Economics & Management, 2021, 43(5): 77-90.
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