Self‐Assessment versus Self‐Improvement Motives: How Does Social Reference Group Selection Influence Organizational Responses to Performance Feedback?

Abstract The performance feedback theory (PFT) proposes that organizations compare their performance to other organizations (i.e. their social reference group) and initiate responses based on this comparison. While social comparison represents a core element of the PFT, it is not well understood how organizations select social reference groups and how this selection may affect organizational responses (e.g. risk‐taking, change, innovation). We propose that the motives that organizations use to select their social reference groups impact their responses to performance feedback. Our meta‐analysis of 99 empirical PFT studies focuses on two motives underlying the selection of social reference groups for performance feedback: self‐assessment and self‐improvement. While self‐assessment through comparison requires the selection of a relevant set of referent organizations, self‐improvement relies on the selection of the highest performing referent organizations. Our results show that organizational responses to performance feedback differ depending on which motive‐based reference group is selected for comparison. These differences are more evident when performance is above aspirations. This finding has important implications for PFT researchers to predict organizational responses more precisely.