Performance Feedback, Government Goal‐setting and Aspiration Level Adaptation: Evidence From Chinese Provinces

Organizational goals shape performance feedback and have salient influences on strategic behaviours and outcomes. I develop a model of goal‐setting by combining performance gap and bureaucratic control theories. I predict that governments set goal levels historically in line with their past goal levels and attainment discrepancies, horizontally targeting the comparable peers' goal levels and performance gaps, and vertically aligning with the upper‐tier authorities' mandates. Using the data on annual economic growth of 31 Chinese provinces from 2000 to 2012, the within‐between random‐effects model substantially supports these hypotheses.