What is it about?

We have shown that as performance decrease below aspiration levels, a focal Dow Jones firm is more likely to change its reference group in such a way that the average performance of reference group increases, i.e., upward comparison.

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Why is it important?

As a new dependent for research on behavioral theory of the firm, reference group change, more specifically upward comparison has been suggested in our paper. While extant studies focused on actions, our study looks at perspective or cognitive framework when a firm evaluate its performance, i.e., reference group.

Perspectives

Research idea was great and original. Data came from 10K document on why the compensation level is determined using concepts of relative performance and peer group. As compensation level for executives is set based on evaluation of the firm's performance and other criteria, peer group can be used as reference group for performance evaluation. This paper may stimulate intellectually other scholars and practitioners.

Professor Kyung Min Park
Yonsei University

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This page is a summary of: Looking backward through the looking glass: Reference groups and social comparison, Journal of Management & Organization, November 2018, Cambridge University Press, DOI: 10.1017/jmo.2018.58.
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