Japan–US differences and R&D investments in response to performance feedback

We investigate effects of culturally situated differences in cognition on Japanese and US firms’ responses to performance feedback through R&D investments. Performance feedback research has mostly assumed a universal nature of decision makers’ cognition and responses. We posit firms from Japan should have a more holistic cognitive orientation than US firms, making them less responsive to problemistic and slack search mechanisms of performance feedback when making R&D investments. These expectations are largely supported in the context of 37 Japanese and 19 US automotive firms (546 firm-year-observations) from 2003 to 2019. We find further support using data on 106 global automotive firms (902 firm-year-observations), from 14 holistic or analytic oriented countries. This study establishes the culturally situated cognitive-orientation theoretical construct as a moderator of problemistic and slack search. Additionally, managers could adopt decision-making processes reflecting both holistic and analytic cognitive orientations while responding to performance feedback, to avoid biases.