Stretch goals and the distribution of organizational performance

摘要

Stretch goals improve performance by disrupting complacency, promoting new ways of thinking, stimulating search and innovation, energizing employees, and guiding effort and persistence. However, literature does not validate the arguments that stretch goals can have a positive performance effect on well-structured tasks, and most cases that are reported are selected ex post on the basis of success. Previous research also shows that stretch goals are difficult to achieve and managers engage in local search for incremental improvements of the current strategy or distant search for entirely new strategies through risky organizational changes. This makes stretch goals difficult to achieve and mostly stretch goals alter the shape of the performance distribution. The article analyzes the effects of adopting stretch goals on the mean, variance and skewness of organizational performance. This is done using two laboratory experiments employing a widely used, realistic business simulation. Participants take the role of senior management leading a start-up in a mature industry. The experiment involves varying financial performance to explore how stretch compares with moderate goals affect the performance distribution. The causes of the outcomes are explained using a comparison of the effects of stretch compared with moderate goals on goal commitment and willingness to take risk. The results showed that stretch goals are not a rule for riches for all organizations. Instead, they lead to riches for a few. (75 refs.)