Title: Overtaking in the rain: performance feedback and firm innovation during decoupling period

Authors: Haobang Chen; Shuzhe Jia; Jizhen Li; Donghong Li

Addresses: School of Economics and Management, Tsinghua University, Beijing, 100084, China ' School of Economics and Management, Tsinghua University, Beijing, 100084, China ' Research Center for Competitive Dynamics and Innovation Strategy, School of Economics and Management, Tsinghua University, Beijing, 100084, China ' Research Center for Global Trade and Industrial Competitiveness, School of Economics and Management, Tsinghua University, Beijing, 100084, China

Abstract: This research explores the behavioural mechanism of firm innovation in the context of the US-China decoupling since 2018. Under suddenly increasing environmental uncertainty, while most firms are risk-aversion, firms with a social performance feedback leap (i.e., pre-shock underperforming firms outperforming others after the shock) get promising information from the leap and thus are more likely to take risks and launch innovation. The effect is stronger for firms with a promotion focus, which are more likely to identify and positively interpret the leap and take actions to sustain the advantage. We find support for the arguments using data from 330 Chinese listed firms engaged in trade with the US. Our study introduces a behavioural mechanism to understand the impact of decoupling on innovation and contributes to the behavioural theory of the firm (BTOF) with a novel concept.

Keywords: innovation; decoupling; shock; behavioural theory of the firm; BTOF; social performance feedback leap; performance feedback; regulatory focus; TMT promotion focus.

DOI: 10.1504/IJTM.2025.151669

International Journal of Technology Management, 2025 Vol.98 No.2/3/4, pp.111 - 142

Received: 31 Mar 2024
Accepted: 11 Nov 2024
Published online: 13 Feb 2026 *

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