Research On The Effect Of Performance Shortfalls And Knowledge Acquisition On Firm Innovation

The global competitive landscape is undergoing significant changes,and we need to further implement the innovation-driven development strategy and further enhance the innovation capacity and efficiency of enterprises in order to turn crisis into opportunity.However,entrepreneurs do not have a spontaneous drive to innovate.Behavioral economics suggests that the gap between actual firm performance and expectations determines the attitude of the actor.The behavior theory of firms suggests that when performance falls below aspirations,the company will initiate problemistic search as a response to performance shortfalls.The performance gap of a firm is like a warning bell that can release business signals such as problems with business operations and existing strategies are wrong.This prompts firm managers to initiate problemistic search and drives the firm to take strategic actions of seeking new and seeking change.Therefore,“what kind of strategic changes will performance shortfalls drive firms to make and what impact will they bring to firm innovation?” has become a research question that urgently needs to be addressed.Although the behavior theory of firms indicates that the performance gap will prompt managers to search for solutions,it does not answer why.The knowledge-based view can provide supplementary explanations for it.Knowledge is the core element of competition.Firm innovation success not only relies on the creation of new knowledge and the formation of core competencies through internal knowledge resources but also needs to break organizations’ boundaries and explore high-value external innovation knowledge resources to avoid the trap of core competency ossification.Integrating two theories,the problemistic search is to narrow the performance gap by adjusting the knowledge deployment and acquisition process to generate new knowledge for innovation.This process not only includes the reorganization,relocation and manipulation of the existing knowledge base to create new knowledge,but also includes the active acquisition of external new knowledge across organizational boundaries and integrating it into the existing knowledge base.This study takes performance as the starting point to explore in-depth the driving role of performance shortfalls on knowledge acquisition and firm innovation.Specifically,this study focuses on the following four aspects.First,how performance shortfalls drive firm innovation.Second,how performance shortfalls drive internal knowledge creation and external knowledge acquisition.Moreover,the differential cognitive processing caused by regulatory focus climates will have what kind of impact on the relationship between performance shortfalls and firm knowledge creation/acquisition strategic behavior.Third,what kind of impact will knowledge creation and acquisition behaviors driven by performance shortfalls have on firm innovation? In the relationship of“performance shortfalls-knowledge creation/acquisition-firm innovation,” how do regulatory focus climates and external environmental competitiveness play their respective moderating roles? Fourth,are internal knowledge creation and external knowledge acquisition mutually substitute or complementary in their impact on firm innovation,and how is the substitute/complementary relationship affected by external environmental competitiveness?Two studies are designed to test the hypotheses.The secondary data method was used in study 1.In order to test the relationship between performance gap and firm innovation,this study selects the Ashare listed companies in Shanghai and Shenzhen Stock Exchanges of China from 2008 to 2020 as the research object,and finally obtains 1790 sample companies and 4886 unbalanced panel data observations.After descriptive and correlation analysis,regression analysis results show that there is a significant positive relationship between performance shortfalls and firm innovation.Moreover,after the robustness test,the conclusion is still valid.A combination of secondary data method and questionnaire survey method is adopted in study 2 to open the black box and explore the mediation mechanism and moderating effect.In Study 2,a two-stage questionnaire survey was administered to 1849 listed companies that were in the social performance shortfalls in 2019,and this study obtained 279 valid samples.In terms of data analysis,after passing the non-response bias,common method bias,reliability and validity tests,this study mainly used the PROCESS program developed by Hayes to empirically test the research hypotheses and obtained several findings.1.Performance shortfalls drive internal knowledge creation and external knowledge acquisition,and firms’ promotion climate plays a positive moderating role in the driving process,while the moderating effect of the firm’s promotion climate is not significant.2.Internal knowledge creation and external knowledge acquisition play a dual mediating role in the relationship between performance shortfalls and firm innovation,and the dual mediation mechanism is only moderated by the firm’s promotion climate.3.Internal knowledge creation and external knowledge acquisition promote firm innovation through complementary effects,and the greater the external environmental competitiveness,the stronger the complementary effect.The study has four key contributions.First,the separate model is used to analyze the direct and indirect influence of the performance shortfalls on firm innovation.This study has made contributions to solving the inconsistent conclusions in the study of negative performance.Second,by integrating the knowledge-based view with the behavioral theory of firm,this research reveals the positive relationship between performance shortfalls and internal knowledge creation and external knowledge acquisition.Thus,this study explains problemistic search from the perspective of knowledge.Third,the study reveals the role of firm’s promotion climate in driving the relationship between performance shortfalls,internal knowledge creation/external knowledge acquisition,and firm innovation under the rationale of cognitive processing process.This not only enriches the research on performance feedback from a cognitive perspective,but also extends regulatory focus theory to the firm level.Fourth,by combining the knowledge-based view with the contingency theory,this study finds moderated joint effects,which adds more contextual specificity to the complementary effects of internal knowledge creation and external knowledge acquisition on firm innovation,and therefore,enriches the knowledge management and innovation research.Moreover,by explaining why environment competitiveness has an insignificant moderating effect in “internal knowledge creation/external knowledge acquisition—firm innovation” and a significant positive moderating effect in “internal knowledge creation×external knowledge acquisition—firm innovation”,this study provides a detailed description of the application scope of the contingency theory.