Purpose Drawing upon the behavioral theory of the firm (BTOF) and regulatory focus theory (RFT), this study investigates whether firms adjust their supply bases in response to environmental performance feedback (EPF) and how the two regulatory foci (i.e. prevention focus and promotion focus) moderate their responses. Design/methodology/approach To test our hypotheses, we analyze a panel dataset of 2,641 manufacturing firms from 2009 to 2023 using fixed-effects regression models. Findings We find that negative EPF leads firms to stabilize their supply bases, whereas positive EPF drives them to reduce stability. Furthermore, a prevention focus encourages supply base adjustments under negative EPF, while a promotion focus accelerates supply base dynamics under positive EPF. Originality/value This study extends the BTOF literature by uncovering the distinctive influences of EPF on supply chain decisions. By complementing the BTOF with RFT, we introduce a comprehensive framework to better understand firm behaviors in reaction to EPF.
Wu et al. (Fri,) studied this question.