On or off: The triggering effect of underperformance duration on cooperative innovation

By complementing performance feedback theory with organizational pressure, we argue that underperformance duration breaks the balance between growth pressure and survival pressure and triggers the shift from “on” to “off” of cooperative innovation, which shows an inverted U-shaped relationship between the duration of underperformance and cooperative innovation. Moreover, compared with firms with historical underperformance, firms with peer underperformance will reach the inflection point of the inverted U-shaped relationship after a longer duration. In addition, we find that managerial overconfidence weakens the above relationship. Our hypotheses receive general support by testing the sample of 70 public biopharmaceutical manufacturing companies between 2007 and 2019 in China.