Hostname: page-component-cd9895bd7-gvvz8 Total loading time: 0 Render date: 2024-12-26T15:33:12.518Z Has data issue: false hasContentIssue false
  • English
  • Français

Looking backward through the looking glass: Reference groups and social comparison

Published online by Cambridge University Press:  05 November 2018

Juil Lee ,
Mooweon Rhee  and
Kyung Min Park Open the ORCID record for Kyung Min Park [Opens in a new window]
Juil Lee
Affiliation:
Yonsei University School of Business, Yonsei University, Seodaemun-gu, Seoul, Korea
Mooweon Rhee
Affiliation:
Yonsei University School of Business, Yonsei University, Seodaemun-gu, Seoul, Korea
Kyung Min Park*
Affiliation:
Yonsei University School of Business, Yonsei University, Seodaemun-gu, Seoul, Korea
*
*Corresponding author. Email: kminpark@yonsei.ac.kr
Get access Rights & Permissions [Opens in a new window]

Abstract

Scholars often assume that reference groups are industry-wide, homogeneous, and stable. We examine this assumption and suggest hypotheses based on managers’ motivations such as self-enhancement and self-improvement, social identity, and affiliation-based impression management. We test hypotheses on failure-induced changes in reference groups and their direction in terms of upward and downward comparisons. An empirical examination of changes in reference groups for firms listed on the Dow Jones Industrial Average Index between 1993 and 2008 shows that performance below social aspirations induces changes in reference groups and toward upward comparisons. The results indicate that managers can choose to change the reference group – a cognition-centered response – as an alternative to such action-centered responses as organizational search and risk-taking in response to poor performance from social aspirations and that upward comparisons may be the result of social performance shortfalls to give a better impression and to improve firm performance.

Keywords

reference group changeaspiration levelself-enhancementself-improvementaffiliation-based impression managementupward comparison
Type
Research Article
Information
Journal of Management & Organization , Volume 26 , Issue 1 , January 2020 , pp. 110 - 131
Copyright
Copyright © Cambridge University Press and Australian and New Zealand Academy of Management 2018

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Abrahamson, E, & Park, C (1994). Concealment of negative organizational outcomes: An agency theory perspective. Academy of Management Journal, 37(5), 1302–1334.Google Scholar
Altman, E. I (1983). Corporate financial distress. New York: Wiley.Google Scholar
Arrfelt, M, Wiseman, R, & Hult, G. T. M (2013). Looking backward instead of forward: aspiration-driven influences on the efficiency of the capital allocation process. Academy of Management Journal, 56(4), 1081–1103.CrossRefGoogle Scholar
Audia, P. G, & Brion, S (2007). Reluctant to change: Self-enhancing responses to diverging performance measures. Organizational Behavior and Human Decision Processes, 102(2), 255–269.CrossRefGoogle Scholar
Audia, P. G, Brion, S, & Greve, H. R (2015). Self-assessment, self-enhancement, and the choice of comparison organizations for evaluating organizational performance. In Cognition and Strategy, (pp. 89–118). Emerald Group Publishing Limited.Google Scholar
Audia, P. G, & Greve, H. R (2006). Less likely to fail: Low performance, firm size, and factory expansion in the shipbuilding industry. Management Science, 52(1), 83–94.CrossRefGoogle Scholar
Baum, J. A. C, & Lant, T. K (2003). Hits and misses: Managers’(mis) categorization of competitors in the Manhattan hotel industry. Geography and Strategy, 20, 119–156. Emerald Group Publishing Limited.CrossRefGoogle Scholar
Baum, J. A. C, Rowley, T. J, Shipilov, A. V, & Chuang, Y. T (2005). Dancing with strangers: Aspiration performance and the search for underwriting syndicate partners. Administrative Science Quarterly, 50(4), 536–575.CrossRefGoogle Scholar
Benjamin, B. A, & Podolny, J. M (1999). Status, quality, and social order in the California wine industry. Administrative Science Quarterly, 44(3), 563–589.CrossRefGoogle Scholar
Blettner, D. P, He, Z, Hu, S, & Bettis, R. A (2015). Adaptive aspirations and performance heterogeneity: Attention allocation among multiple reference points. Strategic Management Journal, 36(7), 987–1005.CrossRefGoogle Scholar
Bourgeois, L. J III, & Singh, J. V (1983). Organizational slack and political behavior among top management teams. Academy of Management Proceedings, 43–47.CrossRefGoogle Scholar
Bromiley, P (1991). Testing a causal model of corporate risk taking and performance. Academy of Management Journal, 34(1), 37–59.Google Scholar
Bromiley, P (2005). The behavioral foundations of strategic management. Blackwell: Oxford, UK.Google Scholar
Burt, R. S (1992). Structural holes: The social structure of competition. Boston: Harvard University Press.Google Scholar
Buunk, A. P, & Gibbons, F. X (2007). Social comparison: The end of a theory and the emergence of a field. Organizational Behavior and Human Decision Processes, 102(1), 3–21.CrossRefGoogle Scholar
Chatterjee, S, & Wernerfelt, B (1991). The link between resources and type of diversification: Theory and evidence. Strategic Management Journal, 12(1), 33–48.CrossRefGoogle Scholar
Chen, M.-J (1996). Competitor analysis and interfirm rivalry: Toward a theoretical integration. Academy of Management Review, 21(1), 100–134.CrossRefGoogle Scholar
Chen, W. R (2008). Determinants of firms’ backward- and forward-looking R&D search behavior. Organization Science, 19(4), 609–622.CrossRefGoogle Scholar
Chen, W. R, & Miller, K. D (2007). Situational and institutional determinants of firms’ R&D search intensity. Strategic Management Journal, 28(4), 369–381.CrossRefGoogle Scholar
Chen, M.-J, Su, K.-H, & Tsai, W (2007). Competitive tension: The awareness-motivation-capability perspective. Academy of Management Journal, 50(1), 101–118.CrossRefGoogle Scholar
Collins, R. L (1996). For better or worse: The impact of upward social comparison on self-evaluations. Psychological Bulletin, 119(1), 51.CrossRefGoogle Scholar
Cyert, R. M, & March, J. G (1963). A behavioral theory of the firm. Malden, MA: Blackwell.Google Scholar
Davis, J. H, Schoorman, F. D, & Donaldson, L (1997). Toward a stewardship theory of management. Academy of Management Review, 22(1), 20–47.CrossRefGoogle Scholar
Desai, V. M (2008). Constrained growth: How experience, legitimacy, and age influence risk taking in organizations. Organization Science, 19, 594–608.CrossRefGoogle Scholar
Dimaggio, P. J, & Powell, W. W (1983). The iron cage revisited: Institutional isomorphism and collective rationality in organizational fields. American Sociological Review, 48(2), 147–160.CrossRefGoogle Scholar
Eisenhardt, K. M (1989). Agency theory: An assessment and review. Academy of Management Review, 14(1), 57–74.CrossRefGoogle Scholar
Elsbach, K. D (2003). Relating physical environment to self-categorizations: Identity threat and affirmation in a non-territorial office space. Administrative Science Quarterly, 48(4), 622–654.CrossRefGoogle Scholar
Elsbach, K. D, & Bhattacharya, C. B (2001). Defining who you are by what you’re not: Organizational disidentification and the National Rifle Association. Organization Science, 12(4), 393–413.CrossRefGoogle Scholar
Elsbach, K. D, & Sutton, R. I (1992). Acquiring organizational legitimacy through illegitimate actions: A marriage of institutional and impression management theories. Academy of Management Journal, 35(4), 699–738.Google Scholar
Festinger, L (1954). A theory of social comparison processes. Human Relations, 7(2), 117–140.CrossRefGoogle Scholar
Fiegenbaum, A, Hart, S, & Schendel, D (1996). Strategic reference point theory. Strategic Management Journal, 17(3), 219–235.3.0.CO;2-N>CrossRefGoogle Scholar
Fiegenbaum, A, & Thomas, H (1995). Strategic groups as reference groups: Theory, modeling and empirical examination of industry and competitive strategy. Strategic Management Journal, 16(6), 461–476.CrossRefGoogle Scholar
Gaba, V, & Joseph, J (2013). Corporate structure and performance feedback: Aspirations and adaptation in M-form firms. Organization Science, 24(4), 1102–1119.CrossRefGoogle Scholar
Gavetti, G, Greve, H. R, Levinthal, D. A, & Ocasio, W (2012). The behavioral theory of the firm: Assessment and prospects. Academy of Management Annals, 6(1), 1–40.CrossRefGoogle Scholar
Gavetti, G, & Levinthal, D. A (2000). Looking forward and looking backward: Cognitive and experiential search. Administrative Science Quarterly, 45(1), 113–137.CrossRefGoogle Scholar
Gavetti, G, Levinthal, D, & Ocasio, W (2007). Perspective–Neo-carnegie: The carnegie school’s past, present, and reconstructing for the future. Organization Science, 18(3), 523–536.CrossRefGoogle Scholar
Gong, G, Li, L. Y, & Shin, J. Y (2011). Relative performance evaluation and related peer groups in executive compensation contracts. The Accounting Review, 86(3), 1007–1043.CrossRefGoogle Scholar
Greene, W. H (2012). Econometric Analysis (7th ed.). Upper Saddle River, NJ: Prentice Hall.Google Scholar
Greve, H. R (1998a). Managerial cognition and the mimetic adoption of market positions: What you see is what you do. Strategic Management Journal, 19, 967–988.3.0.CO;2-L>CrossRefGoogle Scholar
Greve, H. R (1998b). Performance, aspirations and risky organizational change. Administrative Science Quarterly, 43(1), 58–86.CrossRefGoogle Scholar
Greve, H. R (2003a). A behavioral theory of R&D expenditures and innovations: Evidence from shipbuilding. Academy of Management Journal, 46(6), 685–702.Google Scholar
Greve, H. R (2003b). Organizational learning from performance feedback. Cambridge: Cambridge University Press.CrossRefGoogle Scholar
Greve, H. R (2008). A behavioral theory of firm growth: Sequential attention to size and performance goals. Academy of Management Journal, 51(3), 476–494.CrossRefGoogle Scholar
Greve, H. R (2013). Microfoundations of management: Behavioral strategies and levels of rationality in organizational action. The Academy of Management Perspectives, 27(2), 103–119.CrossRefGoogle Scholar
Haleblian, J. J, Kim, J. Y. J, & Rajagopalan, N (2006). The influence of acquisition experience and performance on acquisition behavior: Evidence from the US commercial banking industry. Academy of Management Journal, 49(2), 357–370.CrossRefGoogle Scholar
Hamel, G, & Prahalad, C. K (1992). Strategy as stretch and leverage. Harvard Business Review, 71(2), 75–84.Google Scholar
Harris, J, & Bromiley, P (2007). Incentives to cheat: The influence of executive compensation and firm performance on financial misrepresentation. Organization Science, 18(3), 350–367.CrossRefGoogle Scholar
Haveman, H. A (1993). Organizational size and change: Diversification in the savings and loan industry after deregulation. Administrative Science Quarterly, 38(1), 20–50.CrossRefGoogle Scholar
Heckman, J. J (1979). Sample selection bias as a specification error. Econometrica, 47(1), 153–161.CrossRefGoogle Scholar
Hoechle, D (2007). Robust standard errors for panel regressions with cross-sectional dependence. Stata Journal, 7(3), 281.CrossRefGoogle Scholar
Hu, S, He, Z, Blettner, D. P, & Bettis, R. A (2017). Conflict inside and outside: Social comparisons and attention shifts in multidivisional firms. Strategic Management Journal, 38(7), 1435–1454.CrossRefGoogle Scholar
Iyer, D. N, & Miller, K. D (2008). Performance feedback, slack, and the timing of acquisitions. Academy of Management Journal, 51(4), 808–822.Google Scholar
Jackson, L. A, Sullivan, L. A, Harnish, R, & Hodge, C. N (1996). Achieving positive social identity: Social mobility, social creativity, and permeability of group boundaries. Journal of Personality and Social Psychology, 70(2), 241.CrossRefGoogle Scholar
Jensen, M. C, & Meckling, W. H (1976). Theory of the firm: Managerial behavior, agency costs and ownership structure. Journal of Financial Economics, 3(4), 305–360.CrossRefGoogle Scholar
Jordan, A. H, & Audia, P. G (2012). Self-enhancement and learning from performance feedback. Academy of Management Review, 37(2), 211–231.CrossRefGoogle Scholar
Kacperczyk, A, Beckman, C. M, & Moliterno, T. P (2015). Disentangling risk and change: Internal and external social comparison in the mutual fund industry. Administrative Science Quarterly, 60(2), 228–262.CrossRefGoogle Scholar
Kerr, S, & Landauer, S (2004). Using stretch goals to promote organizational effectiveness and personal growth: General Electric and Goldman Sachs. The Academy of Management Executive, 18(4), 134–138.Google Scholar
Ketchen, D. J Jr, Snow, C. C, & Hoover, V. L (2004). Research on competitive dynamics: Recent accomplishments and future challenges. Journal of Management, 30(6), 779–804.CrossRefGoogle Scholar
Kilduff, G. J, Elfenbein, H. A, & Staw, B. M (2010). The psychology of rivalry: A relationally dependent analysis of competition. Academy of Management Journal, 53(5), 943–969.CrossRefGoogle Scholar
Kim, D. H (1993). The link between individual and organizational learning. Sloan Management Review, 35(1), 37–50.Google Scholar
Kim, T, & Rhee, M (2017). Structural and behavioral antecedents of change status, distinctiveness, and relative performance. Journal of Management, 43(3), 716–741.CrossRefGoogle Scholar
Kim, K. H, & Tsai, W. P (2012). Social comparison among competing firms. Strategic Management Journal, 33(2), 115–136.CrossRefGoogle Scholar
Labianca, G, Fairbank, J. F, Andrevski, G, & Parzen, M (2009). Striving toward the future: Aspiration-performance discrepancies and planned organizational change. Strategic Organization, 7(4), 433–466.CrossRefGoogle Scholar
Labianca, G, Fairbank, J. F, Thomas, J. B, Gioia, D. A, & Umphress, E. E (2001). Emulation in academia: Balancing structure and identity. Organization Science, 12(3), 312–330.CrossRefGoogle Scholar
Lant, T. K, & Baum, J. A. C (1995). Cognitive sources of socially constructed and competitive groups: Examples from the Manhattan hotel industry. In W. R. Scott, & S. Christensen (Eds.), The Institutional Construction of Organizations (pp. 31–47). Thousand Oaks, CA: Sage.Google Scholar
Le Breton-Miller, I, Miller, D, & Lester, R. H (2011). Stewardship or agency? A social embeddedness reconciliation of conduct and performance in public family businesses. Organization Science, 22(3), 704–721.CrossRefGoogle Scholar
Lim, E. N, & Mccann, B. T (2013). Performance feedback and firm risk taking: The moderating effects of CEO and outside director stock options. Organization Science, 25(1), 262–282.CrossRefGoogle Scholar
Liu, T. C, & Chen, Y. J (2015). Strategy orientation, product innovativeness, and new product performance. Journal of Management & Organization, 21(1), 2–16.CrossRefGoogle Scholar
Livengood, R. S, & Reger, R. K (2010). That’s our turf! Identity domains and competitive dynamics. Academy of Management Review, 35(1), 48–66.Google Scholar
March, J. G, & Shapira, Z (1992). Variable risk preferences and the focus of attention. Psychological Review, 99(1), 172–183.CrossRefGoogle Scholar
March, J. G, & Simon, H. A (1958). Organizations (2nd ed.). Cambridge, MA: Blackwell.Google Scholar
Martin, J. A, & Butler, F. C (2017). Agent and stewardship behavior: How do they differ? Journal of Management & Organization, 23(5), 633–646.CrossRefGoogle Scholar
Massini, S, Lewin, A. Y, & Greve, H. R (2005). Innovators and imitators: Organizational reference groups and adoption of organizational routines. Research Policy, 34(10), 1550–1569.CrossRefGoogle Scholar
Mcdonald, M. L, & Westphal, J. D (2003). Getting by with the advice of their friends: CEOs’ advice networks and firms’ strategic responses to poor performance. Administrative Science Quarterly, 48(1), 1–32.CrossRefGoogle Scholar
Mezias, S. J, Chen, Y. R, & Murphy, P. R (2002). Aspiration-level adaptation in an American financial services organization: A field study. Management Science, 48(10), 1285–1300.CrossRefGoogle Scholar
Miller, K. D, & Chen, W.-R (2004). Variable organizational risk preferences: Tests of the March-Shapira model. Academy of Management Journal, 47(1), 105–115.Google Scholar
Mishina, Y, Dykes, B. J, Block, E. S, & Pollock, T. G (2010). Why “good” firms do bad things: The effects of high aspirations, high expectations, and prominence on the incidence of corporate illegality. Academy of Management Journal, 53(4), 701–722.CrossRefGoogle Scholar
Moliterno, T. P, Beck, N, Beckman, C. M, & Meyer, M (2014). Knowing your place: Social performance feedback in good times and bad times. Organization Science, 25(6), 1684–1702.CrossRefGoogle Scholar
Montgomery, C. A, & Hariharan, S (1991). Diversified expansion by large established firms. Journal of Economic Behavior & Organization, 15(1), 71–89.CrossRefGoogle Scholar
Mullen, B, Brown, R, & Smith, C (1992). Ingroup bias as a function of salience, relevance, and status: An integration. European Journal of Social Psychology, 22(2), 103–122.CrossRefGoogle Scholar
O’brien, J. P, & David, P (2014). Reciprocity and R&D search: Applying the behavioral theory of the firm to a communitarian context. Strategic Management Journal, 35(4), 550–565.CrossRefGoogle Scholar
O’Shannassy, T. F (2016). Strategic intent: The literature, the construct and its role in predicting organization performance. Journal of Management & Organization, 22(5), 583–598.CrossRefGoogle Scholar
Park, K. M (2007). Antecedents of convergence and divergence in strategic positioning: The effects of performance and aspiration on the direction of strategic change. Organization Science, 18(3), 386–402.CrossRefGoogle Scholar
Peteraf, M, & Shanley, M (1997). Getting to know you: A theory of strategic group identity. Strategic Management Journal, 18, 165–186.3.3.CO;2-R>CrossRefGoogle Scholar
Pfeffer, J, & Salancik, GR (1978). The external control of organizations: A resource dependence perspective. New York, NY: Harper and Row.Google Scholar
Podolny, J. M (1993). A status-based model of market competition. American Journal of Sociology, 98(4), 829–872.CrossRefGoogle Scholar
Podolny, J. M (2001). Networks as the pipes and prisms of the market. American Journal of Sociology, 107(1), 33–60.CrossRefGoogle Scholar
Podolny, J. M (2010). Status signals: A sociological study of market competition: Princeton University Press.CrossRefGoogle Scholar
Porac, J. F, & Thomas, H (1990). Taxonomic mental models in competitor definition. Academy of Management Review, 15(2), 224–240.CrossRefGoogle Scholar
Porac, J. F, Thomas, H, & Baden-Fuller, C (1989). Competitive groups as cognitive communities: The case of Scottish knitwear manufacturers. Journal of Management Studies, 26(4), 397–416.CrossRefGoogle Scholar
Porac, J. F, Thomas, H, Wilson, F, Paton, D, & Kanfer, A (1995). Rivalry and the industry model of Scottish knitwear producers. Administrative Science Quarterly, 40(2), 203–227.CrossRefGoogle Scholar
Porac, J. F, Wade, J. B, & Pollock, T. G (1999). Industry categories and the politics of the comparable firm in CEO compensation. Administrative Science Quarterly, 44(1), 112–144.CrossRefGoogle Scholar
Reger, R. K, & Huff, A. S (1993). Strategic groups: A cognitive perspective. Strategic Management Journal, 14(2), 103–124.CrossRefGoogle Scholar
Salancik, G. R, & Meindl, J. R (1984). Corporate attributions as strategic illusions of management control. Administrative Science Quarterly, 29(2), 238–254.CrossRefGoogle Scholar
Schimmer, M, & Brauer, M (2012). Firm performance and aspiration levels as determinants of a firm’s strategic repositioning within strategic group structures. Strategic Organization, 10(4), 406–435.CrossRefGoogle Scholar
Schlenker, B. R (1980). Impression management: The self-concept, social identity, and interpersonal relations: Brooks/Cole Publishing Company Monterey, CA.Google Scholar
Sedikides, C, & Hepper, E. G. D (2009). Self‐improvement. Social and Personality Psychology Compass, 3(6), 899–917.CrossRefGoogle Scholar
Sedikides, C, & Strube, M. J (1995). The multiply motivated self. Personality and Social Psychology Bulletin, 21(12), 1330–1335.CrossRefGoogle Scholar
Shapira, Z (1994). Evolution, externalities and managerial action. In J. A. C. Baum, & J. V. Singh (Eds.), Evolutionary Dynamics of Organizations (pp. 117–126). New York: Oxford University Press.Google Scholar
Shimizu, K (2007). Prospect theory, behavioral theory, and the threat-rigidity thesis: Combinative effects on organizational decisions to divest formerly acquired units. Academy of Management Journal, 50(6), 1495–1514.CrossRefGoogle Scholar
Shinkle, G. A (2012). Organizational aspirations, reference points, and goals: Building on the past and aiming for the future. Journal of Management, 38(1), 415–455.CrossRefGoogle Scholar
Short, J. C, & Palmer, T. B (2003). Organizational performance referents: An empirical examination of their content and influences. Organizational Behavior and Human Decision Processes, 90(2), 209–224.CrossRefGoogle Scholar
Singh, J. V (1986). Performance, slack, and risk taking in organizational decision making. Academy of Management Journal, 29(3), 562–585.Google Scholar
Sitkin, S. B, See, K. E, Miller, C. C, Lawless, M. W, & Carton, A. M (2011). The paradox of stretch goals: Organizations in pursuit of the seemingly impossible. Academy of Management Review, 36(3), 544–566.Google Scholar
Staw, B. M, Mckechnie, P. I, & Puffer, S. M (1983). The justification of organizational performance. Administrative Science Quarterly, 28(4), 582–600.CrossRefGoogle Scholar
Straka, P. J (1993). Executive compensation disclosure: The SEC’s attempt to facilitate market forces. Nebraska Law Review, 72, 803–836.Google Scholar
Strang, D, & Macy, M. W (2001). In search of excellence: Fads, success stories, and adaptive emulation. American Journal of Sociology, 107(1), 147–182.CrossRefGoogle Scholar
Tajfel, H, & Turner, J. C (1979). An integrative theory of intergroup conflict. The Social Psychology of Intergroup Relations, 33(47), 74.Google Scholar
Vissa, B, Greve, H. R, & Chen, W.-R (2010). Business group affiliation and firm search behavior in India: Responsiveness and focus of attention. Organization Science, 21(3), 696–712.CrossRefGoogle Scholar
Washington, M, & Zajac, E. J (2005). Status evolution and competition: Theory and evidence. Academy of Management Journal, 48(2), 282–296.CrossRefGoogle Scholar
Westphal, J. D, Park, S. H, Mcdonald, M. L, & Hayward, M. L (2012). Helping other CEOs avoid bad press social exchange and impression management support among CEOs in communications with journalists. Administrative Science Quarterly, 57(2), 217–268.CrossRefGoogle Scholar
Wheeler, L, & Miyake, K (1992). Social comparison in everyday life. Journal of Personality and Social Psychology, 62(5), 760–773.CrossRefGoogle Scholar
Wills, T. A (1981). Downward comparison principles in social psychology. Psychological Bulletin, 90(2), 245.CrossRefGoogle Scholar
Wiseman, R. M, & Bromiley, P (1996). Toward a model of risk in declining organizations: An empirical examination of risk, performance and decline. Organization Science, 7(5), 524–543.CrossRefGoogle Scholar
Wooldridge, J. M (2010). Econometric analysis of cross section and panel data. Cambridge, MA: MIT Press.Google Scholar
Yip, J. J, & Kelly, A. E (2013). Upward and downward social comparisons can decrease prosocial behavior. Journal of Applied Social Psychology, 43(3), 591–602.CrossRefGoogle Scholar
Zajac, E. J, Kraatz, M. S, & Bresser, R. K. F (2000). Modeling the dynamics of strategic fit: A normative approach to strategic change. Strategic Management Journal, 21(4), 429–453.3.0.CO;2-#>CrossRefGoogle Scholar