Exploring the Direct and Indirect Effects of Feedback Orientation, Feedback Quality, and Feedback Use on Budgetary Performance in Public Healthcare

ABSTRACT We examine the effects of feedback quality, feedback orientation (individuals' receptivity to feedback), and the use of feedback on budgetary performance. Building on London and Smither's (2002) model, we propose that both feedback orientation and feedback quality directly influence feedback use and budgetary performance. Furthermore, we test the indirect effect of feedback use on the relationship between feedback quality, feedback orientation, and budgetary performance. Our analysis of data from 130 Italian budget holders working in a public healthcare organization reveals that feedback quality and feedback orientation significantly influence feedback use, which, in turn, positively impacts budgetary performance. The findings also indicate that individual differences in receptivity to feedback directly influence performance, whereas feedback quality does not. In addition, the results show that feedback use positively mediates the relationship between feedback orientation, feedback quality, and budgetary performance. These findings enhance our understanding of how organizations can foster a feedback culture and improve budgetary performance by ensuring the quality of performance measurement information, thereby promoting greater employee receptivity to feedback and its use.