Performance feedback and obsessive passion: The moderating role of human capital

Abstract

Based on the behavioral theory of the firm, we research how performance feedback influences the formation of CEOs’ passion. We articulate that previous performance directly increases CEOs’ passion. Specifically, positive affective outcomes (performance above aspiration-level) advance CEOs’ positive feelings and motivation toward the domains of success (obsessive passion). For instance, when a firm accomplishes performance objectives, such as reaching sales goals, CEOs’ positive feelings toward developing current products would be boosted. Moreover, negative affective outcomes (performance below aspiration-level) would also positively impact CEOs’ passion since the CEOs would endeavor to reduce the difference between performance and their aspiration-level. As such, performance feedback is a critical antecedent of CEOs’ obsessive passion. In addition, we apply human capital as a moderator between performance feedback and CEOs’ obsessive passion. Results based on multiphase survey data from 189 CEOs of Korean small- and medium-sized enterprises indicate that both positive and negative performance feedback positively increase CEOs’ obsessive passion. Moreover, human capital negatively moderates the relationship between positive performance feedback and CEOs’ obsessive passion and positively moderates the relationship between negative performance feedback and CEOs’ obsessive passion.