Behavioral influences on the relationship between firms' aspiration performance gap and innovation input: The moderating role of executives' vocational socialization

Abstract

While extant research shows a curvilinear relationship between aspiration performance gaps and innovation input, we know far less about how vocational experiences of key firm decisions makers may shift this relationship. We propose the concept of executives' vocational socialization and explore how it influences the relationship between firms' aspiration performance gaps and innovation input from the perspectives of the behavioral theory of the firm and upper echelons theory. We theorize that two aspects of executives' vocational socialization, namely, executives' technical career experience and firm tenure, strengthen the inverted U-shaped relationship between the negative aspiration performance gap and innovation input and weaken the U-shaped relationship between the positive aspiration performance gap and innovation input respectively. We test these hypotheses using a panel dataset of 1158 listed firms in China from 2008 to 2017, and the empirical results from switching regression and fixed-effect models support our hypotheses. Our study contributes to research on the aspiration performance gap, innovation input, and behavioral theory of the firm.