Abstract: Research based on the behavioral theory agrees that firms adjust their organizational practices based on the gap between the level of expectation and actual performance, but the organizational practices of concern are limited to resource-consuming activities. In this study, the allocation of innovation resources is categorized into two opposite types: resource-releasing and resource-consuming, and both are included in the analysis of the performance feedback model. It is found that positive discrepancy stimulates resource-releasing innovative activities induced by problem search, while negative discrepancy promotes redundant search-oriented resource-consuming behaviors. Second, organizations are influenced by peer behavior when adjusting resource allocation decisions based on performance feedback, with managers tending to amplify positive signals from peers in positive feedback situations and negative signals from peers when performance feedback is negative. Finally, peer effects are further moderated by executive overconfidence and technological uncertainty.

Key words: behavioral theory, performance feedback, resource releasing, resource consuming, peer effect