When Do Public Organizations Adapt?: Performance Feedback, Thresholds, and Adaptive Learning in Public Organizations

• In Event: Reforming and Renovating Local Governments in South Korea

Abstract

Despite widespread use of performance evaluations in the public sector, public

organizations often vary in how they respond to feedback. This study investigates how performance

shortfalls influence strategic improvement efforts in South Korea’s government-affiliated research

institutes. Drawing on the behavioral theory of the firm, we propose a threshold feedback model in

which organizations respond only when they experience a compound performance shortfall—

falling below both their own past performance standards and the performance of peer institutions.

We further argue that such responsiveness depends on organizational capacity, especially the

availability of slack resources.

Using fixed-effects panel regression on panel data from 26 public research institutes overseen by

the National Research Council for Economics, Humanities and Social Sciences between 2018 and

2023, we find that single performance gaps do not lead to increased effort. Only when both internal

and comparative benchmarks are missed do organizations significantly increase research-focused

spending. In addition, we find that financial slack reduces improvement efforts following strong

performance, while human resource slack consistently dampens response to feedback, suggesting

organizational complacency.

These findings advance the public administration literature on performance management by

showing that public organizations engage in strategic, resource-bounded learning, responding

selectively and only when failure becomes sufficiently salient across multiple dimensions.

Author

• Jeeseun Baik, Yonsei University
  Presenting Author