Short- and Long-Term Performance Feedback and Absorptive Capacity

Abstract

Research on organizational learning from performance feedback has produced findings on how organizational change is influenced by performance relative to aspiration levels, but has focused on short-term goal variables. In this article, we examine how short- and long-term goals are related to short- and long-term actions, respectively. We do so by predicting changes in absorptive capacity from performance relative to aspiration levels, and by testing whether long-term goals mainly affect potential absorptive capacity, which has long-term effects, while short-term goals mainly affect the realized absorptive capacity, which has short-term effects. Using data from surveys of 252 decision makers representing 129 Israeli early-stage high-tech organizations, our analysis yields supportive empirical findings. The findings imply that performance relative to aspiration levels has effects on long-term strategic actions as well as short-term ones, and thus argue against strict myopia.

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