Technology exploration versus market expansion under inconsistent performance feedback

Constrained by the liabilities of smallness and newness, new ventures constantly navigate a fundamental strategic tension between value creation and value appropriation. Bridging the behavioral theory of the firm (BTOF) with the value creation-appropriation framework, we examine how inconsistent performance feedback shapes the value orientation of organizational search. Using a panel of Chinese A-share new ventures, we find that when performance falls below social aspirations but exceeds historical aspirations, firms prioritize technology exploration to cultivate external competitiveness and create value. Conversely, when performance exceeds social aspirations but falls below historical aspirations, firms shift toward marketing expansion to secure immediate commercialization and appropriate value. And when performance falls below social but exceeds historical aspirations, market competition strengthens value-creating technology exploration, whereas organizational slack mitigates this strategic reorientation. By framing inconsistent feedback as a catalyst for value orientation rather than merely a driver of search intensity, this study extends the BTOF and advances understanding of value creation–appropriation trade-offs in entrepreneurial firms.