Making sense of mixed signals: the impact of (In)consistent performance feedback on corporate digital technology innovation

Abstract Digital technology innovation (DTI) is a vital source of competitive advantage in the digital transformation era. Drawing on the behavioral theory of the firm (BTOF) and the attention-based view (ABV), this study examines how consistent and inconsistent performance feedback influence firms’ digital technology innovation and how CEO attentional vigilance moderates these effects. Using data from Chinese A-share listed companies, we distinguish between mitigation and adaptation DTI to capture the heterogeneity of firms’ behavioral responses. The results show that when primary performance falls below aspiration, firms increase mitigation digital technology innovation but reduce adaptation digital technology innovation. In contrast, when feedback is inconsistent (primary performance below and secondary performance above aspiration), firms decrease mitigation (and increase adaptation) digital technology innovation. CEO attention quantity weakens (strengthens) the positive (negative) relationship between below-aspiration feedback and mitigation (adaptation) innovation, while CEO attention stability weakens (strengthens) the negative (positive) relationship between inconsistent feedback and mitigation (adaptation) innovation. These findings demonstrate how performance ambiguity and executive attention jointly shape the direction of DTI, advancing understanding of managerial cognition and organizational strategy in the digital context.