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The Paradox of Stretch Goals: Organizations in Pursuit of the Seemingly Impossible

October 2010
Academy of Management Review 36(3)

DOI:10.5465/AMR.2011.61031811

Authors:

Sim Sitkin

Duke University

C. Chet Miller

University of Houston

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We investigate the organizational pursuit of seemingly impossible goals - commonly known as stretch goals. Building from our analysis of the mechanisms through which stretch goals could influence organizational learning and performance, we offer a contingency framework evaluating which organizations are positioned to benefit from such extreme goals, and which are most likely to pursue them. We conclude that stretch goals are, paradoxically, most seductive for organizations that can least afford the risks associated with them.

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THE PARADOX OF STRETCH GOALS:

ORGANIZATIONS IN PURSUIT OF THE

SEEMINGLY IMPOSSIBLE

SIM B. SITKIN

Duke University

KELLY E. SEE

New York University

C. CHET MILLER

University of Houston

MICHAEL W. LAWLESS

University of Maryland

ANDREW M. CARTON

The Pennsylvania State University

We investigate the organizational pursuit of seemingly impossible goals—commonly

known as stretch goals. Building from our analysis of the mechanisms through which

stretch goals could influence organizational learning and performance, we offer a

contingency framework evaluating which organizations are positioned to benefit from

such extreme goals and which are most likely to pursue them. We conclude that

stretch goals are, paradoxically, most seductive for organizations that can least afford

the risks associated with them.

As highlighted by a number of organizational

theorists, organizations must balance short-term

performance concerns with long-term learning ob-

jectives (e.g., Levinthal & March, 1993; Sutcliffe,

Sitkin, & Browning, 2000). An organization can en-

sure continued survival only by performing well in

the near term while positioning itself for strong

performance in an uncertain future. Although lan-

guage and concepts from a number of theoretical

domains can be used to characterize the balanc-

ing of attention between the short term and the

long term, the organizational learning literature

provides the most directly relevant conceptualiza-

tion. From this perspective, organizations must in-

vest in activities that “exploit” their known current

capabilities (i.e., refinement, implementation, and

execution) while also investing in activities that

“explore” new, unknown possibilities (i.e., experi-

mentation, innovation, playfulness; e.g., Kang,

Morris, & Snell, 2007; Levinthal & March, 1993;

March, 1991; McGrath, 2001; Sitkin, Sutcliffe, &

Schroeder, 1994).

Although exploration is critical for long-term

learning, change, and survival, organizations of-

ten have difficulty searching outside their current

routines and processes (Adler & Obstfeld, 2007;

Baumard & Starbuck, 2005). Returns to invest-

ments that exploit existing capabilities are imme-

diate, whereas returns to exploration and learning

are distant and uncertain (March, 1991). Instead of

facing uncertainty, organizational actors often fail

to look into the distant future, choosing to “solve

pressing problems rather than develop long-run

strategies” (Cyert & March, 1963: 119). In essence,

existing routines can become sources of inertia

(Edmondson, Bohmer, & Pisano, 2001; Leonard-

Barton, 1992; Levitt & March, 1988).

Organizational theorists have proposed a

number of approaches for encouraging explora-

tion and discontinuous advances in learning (for

For their helpful comments on previous versions of this

manuscript, we thank Bettina Buechel, Rich Burton, Laura

Cardinal, Christina Fang, John Joseph, Theresa Lant, Rick

Larrick, Ed Locke, Frances Milliken, Elizabeth Morrison,

Gerardo Okhuysen, Randall Peterson, and three anonymous

reviewers. We also thank participants in the Harvard–MIT

Organizational Economics Seminar Series and the 2008

Academy of Management annual meeting.

姝 Academy of Management Review

2011, Vol. 36, No. 3, 544–566.

544

holder’s express written permission. Users may print, download, or email articles for individual use only.

reviews see Greve, 2003; Huber, 1991; Levitt &

March, 1988; Sitkin, Sutcliffe, & Weick, 1998).

March (1991), for example, highlighted the value

of turnover that creates new perspectives. Chris-

tensen (1997) argued for forming new operating

units that are not encumbered by existing rou-

tines and capabilities. Siggelkow and Levinthal

(2003) considered the role of decentralization.

Levinthal and March (1993) suggested a number

of diverse tactics for encouraging change, in-

cluding leveraging employees who have failed

to thrive within the existing order or explicitly

manipulating risk preferences in the organiza-

tion. These ideas for promoting exploration have

been useful but also have nontrivial drawbacks,

such as the substantial structural changes re-

quired to implement new operating units or the

loss of still valuable tacit knowledge through

turnover. Moreover, these and other ideas for

promoting exploration often have been built on

a foundation of general or abstract theoretical

reasoning, leaving the underlying mechanisms

underspecified. All of these issues, as well as

the inherent complexity of the topic, have

helped to keep exploration at the forefront of

debates and study within the organizational re-

search community (for recent commentaries see

Fang & Levinthal, 2009; Kim & Rhee, 2009; Raisch

& Birkinshaw, 2008).

Both theory and intuition suggest that meth-

ods for promoting exploration and change

should facilitate attention, energy, and action in

the domain of alternative routines and capabil-

ities. Without attention being channeled to al-

ternative futures, new paths are not likely to be

considered (e.g., D’Aveni & MacMillan, 1990;

Drazin & Sandelands, 1992; Starbuck, 1983).

Without energy and enthusiasm for major

change, challenges to the status quo are un-

likely (e.g., Beer, Eisenstat, & Spector, 1990).

Without coordinated action, trial-and-error ex-

perimentation is less likely to yield meaningful

results (e.g., Huber, 1991; Sitkin et al., 1994). The

attention-based view of the firm (e.g., Ocasio,

1997), research into organizational change and

adaptation (e.g., Barnett & Pratt, 2000; Kotter,

2008), and studies of organizational learning

and design (e.g., Argyris, 1985) directly highlight

the importance of these cognitive, affective, and

behavioral mechanisms, respectively.

One method for exploration that might insti-

gate the mechanisms discussed above is the use

of seemingly impossible organizational goals—

commonly referred to as stretch goals. Because

they are extreme, stretch goals have been ar-

gued to serve as jolting events that disrupt com-

placency and promote new ways of thinking and

acting (e.g., Hamel & Prahalad, 1993; Rousseau,

1997). In effect, the imposition of such extreme

goals can be similar to an autogenic (i.e., inten-

tional, internally generated) crisis meant to spur

change (e.g., Barnett & Pratt, 2000; D’Aveni &

MacMillan, 1990). By forcing a substantial eleva-

tion in collective aspirations, stretch goals can

shift attention to possible new futures and per-

haps spark increased energy in the organiza-

tion. They thus can prompt exploratory learning

through experimentation, innovation, broad

search, or playfulness as organizational actors

seek new or varied approaches to reach the tar-

get. Stretch goals also can enhance tangible

performance outcomes as gaps between aspira-

tion and current performance elicit and guide

effort and persistence (Cyert & March, 1963).

Reflecting on both performance and explora-

tion, Rousseau put it this way: “[Stretch goals]

motivate high performance by mandating cre-

ativity and assumption-breaking thinking”

(1997: 528). Winter said the following in the con-

text of stretch goals and organizations develop-

ing new capabilities: “It is not a secret that high

aspirations can often contribute to high achieve-

ment” (2000: 990). These sentiments are echoed

in the business press. Steve Kerr, former Chief

Learning Officer at General Electric and Gold-

man Sachs, illustrated the popular motive for,

and the method of, stretch goals:

If done right, a stretch target...gets your people

to perform in ways they never imagined possible.

It’s a goal that, by definition, you don’t know how

to reach. You might, for instance, ask people to

cut costs by half or reduce product-development

time from years to months...[in order to] find

dramatically new ways of doing business (Sher-

man, 1995: 231).

Pursuing goals that are seemingly impossible

might stimulate exploratory learning specifi-

cally because radically new approaches are re-

quired. Southwest Airlines and Toyota provide

examples. After being forced to sell part of its

fleet early in its history, Southwest Airlines set a

goal of ten-minute turnaround times at airport

gates in an attempt to use its few remaining

planes more efficiently. Although officials with

the U.S. Federal Aviation Administration, Boe-

ing, and competing airlines believed the goal to

2011 545Sitkin, See, Miller, Lawless, and Carton

be unachievable (as did many Southwest em-

ployees), the seemingly impossible ten-minute

turnarounds were ultimately accomplished by

employing an approach (drawn from race car pit

crews) that was radically new and unfamiliar to

the airline industry (Freiberg & Freiberg, 1996).

Likewise, some have argued that at Toyota the

seemingly impossible goal of 100 percent near-

term improvement in fuel efficiency (relative to

prevailing standards) played a key role in the

development of hybrid vehicle technology (Takeu-

chi, Osono, & Shimizu, 2008). Beyond these two

anecdotal illustrations, researchers have sug-

gested that the use of stretch goals remains fairly

common in practice (for examples see Collins &

Porras, 1994; Takeuchi et al., 2008; Thompson,

Hochwarter, & Mathys, 1997).

Goals and aspirations in general have long

played an important role in organization the-

ory (e.g., Cyert & March, 1963), and stretch

goals in particular have generated interest

among the business press and the various

scholars noted earlier. Yet pushing the bound-

aries of goal attainability raises organiza-

tional implications that require deeper analy-

sis. In this article we integrate the literature

on organizational goals with research on

learning to examine the role of seemingly im-

possible goals in facilitating exploratory

learning while promoting, or at least not sac-

rificing, performance. Specifically, we con-

sider a number of fundamental questions at

the organizational level of analysis: What are

the mechanisms through which this class of

goals might promote exploratory learning and

organizational performance? What are the

risks to such extreme goals that could nega-

tively affect the organization’s capacity to per-

form and to learn? Do stretch goals increase

learning or performance in some circum-

stances but decrease them in others? Do orga-

nizations that could benefit the most from

stretch goals exhibit the greatest propensity to

pursue them?

In gaining an understanding of why organiza-

tions would use seemingly impossible goals

and how their use influences exploratory learn-

ing and performance, we address an important

theoretical gap at the intersection of research on

organizational goals and organizational learn-

ing processes. In particular, we contribute new

insights on how the use of extreme goals might

relate to exploring new and innovative practices

(e.g., Levinthal & March, 1993; March, 1991; Rah-

mandad, 2008; Uotila, Maula, Keil, & Zahra,

2009), organizational risk taking (e.g., Singh,

1986; Sitkin & Pablo, 1992), learning under am-

biguous feedback (March & Olsen, 1976; Weick,

1979, 1995), and dynamic capability develop-

ment (e.g., Agarwal & Helfat, 2009; Capron &

Mitchell, 2009; Winter, 2000). Our work reveals

ways that the extremity of stretch goals might

challenge core assumptions about the relation-

ships among aspirations, learning, and firm per-

formance (e.g., Ethiraj & Levinthal, 2009; Cyert &

March, 1963; Greve, 1998; Lant, 1992; Lant & Sha-

pira, 2008; Mezias, 1988). We suggest that as

goals become extreme, there are complex yet

predictable organizational effects that are likely

to be negative except under a limited set of

specifiable circumstances. Moreover, we con-

tribute to scholarly thinking on organizational

change and adaptation by examining why orga-

nizations would be drawn to using stretch goals

as intentional, internally generated jolts or crises

(e.g., Barnett & Pratt, 2000; D’Aveni & MacMillan,

1990), as well as the conditions under which such

jolts might successfully or unsuccessfully trigger

discontinuous advances in learning (e.g., Beer et

al, 1990; Meyer, 1982; Romanelli & Tushman, 1994).

Our theoretical analysis also advances the under-

standing of the little-known effects of unattain-

able goals (e.g., Garland, 1982, 1983; Locke, 1982,

2004; Rousseau, 1997) by examining the underly-

ing mechanisms through which such goals can

lead to collective outcomes.

In the following section we specify our con-

ceptual space by providing a definition of

stretch goals. We then examine the underlying

cognitive, affective, and behavioral mecha-

nisms through which stretch goals might posi-

tively or negatively influence organizational

learning and performance outcomes. Building di-

rectly on this discussion, we formulate pro-

positions around recent performance and slack

resources as the key contingency factors deter-

mining when stretch goals will facilitate versus

disrupt learning and performance. We follow with

propositions concerning how these same contin-

gency factors also determine the likelihood that

an organization will be drawn to using stretch

goals. As part of our closing discussion, we recon-

sider reported stretch goal success stories in light

of our analysis and highlight important contexts

for future empirical inquiry.

546 JulyAcademy of Management Review

STRETCH GOALS DEFINED

Consistent with an early stage of conceptual

development, stretch goals have not been pre-

cisely defined, and the term has not been used

consistently within or across previous commen-

taries. Even so, earlier use of the term does pro-

vide guidance in formulating a definition. Draw-

ing on prior descriptions (e.g., Collins & Porras,

1994; Hamel & Prahalad, 1993; Rousseau, 1997;

Sherman, 1995), we define a stretch goal as an

organizational goal with an objective probabil-

ity of attainment that may be unknown but is

seemingly impossible given current capabilities

(i.e., current practices, skills, and knowledge).

Because we define stretch goals in terms of an

unknown yet seemingly impossible (i.e., 0 per-

cent) probability of attainment, we depart mark-

edly from the focus in organizational behavior

research on challenging goals, which have a

nonzero (typically, 10 percent) probability of at-

tainment (Locke & Latham, 1990). We do not de-

part, however, from the usual focus on outcome-

oriented performance goals as opposed to

process-oriented learning goals (e.g., Seijts &

Latham, 2005; Winters & Latham, 1996). Setting a

performance goal entails specifying a tangible

outcome to be reached (usually a quantifiable

level of performance), such as a specific reduc-

tion in turnaround times at airport gates, a per-

centage increase in fuel efficiency of vehicles, a

reduction in cycle time in a production process,

or an increase in sales from new products. Once

that performance goal is set, the entity charged

with pursuing it must devise strategies to reach

the targeted outcome. Although learning can re-

sult as a by-product of dealing with the de-

mands of meeting a performance goal, it is im-

portant to emphasize that stretch goals are still

articulated by the organization in terms of a

specific level of performance or output. In con-

trast, setting a learning goal that does not make

explicit a specific outcome to be reached (but,

rather, articulates the acquisition of procedural

knowledge as the end in itself) would not qual-

ify as a stretch goal under our definition.

Our characterization of stretch goals high-

lights that they differ from ordinary difficult

goals in two important respects: (1) extreme dif-

ficulty—an extremely high level of difficulty

that renders the goal seemingly impossible

given current situational characteristics and re-

sources—and (2) extreme novelty—there are no

known paths for achieving the goal given cur-

rent capabilities (i.e., current practices, skills,

and knowledge). Although these dimensions im-

ply each other, extreme difficulty and novelty

stress different aspects of the stretch goal con-

struct (the specified performance outcome and

knowledge of the means to reach it, respec-

tively) and also directly relate to the two differ-

ent core outcomes of interest in this article (or-

ganizational performance and organizational

learning, respectively). Thus, below we elabo-

rate on the dimensions separately in order to

facilitate systematic theorizing about distinct

stretch goal effects.

Extreme Difficulty

Stretch goals involve extreme or radical ex-

pectations. Even if the stretch goal involves en-

hancing a process already in place (e.g., the

elapsed time between an order and delivery of a

product to the customer), the desired process

improvement extends beyond what is possible

with current capabilities. Returning to the

Southwest Airlines example, the goal of a ten-

minute turnaround certainly involved a familiar

task (efficient turnarounds at airports), but the

target was dramatically beyond the company’s

then-current performance limits, as well as the

industry average and range of industry prac-

tices. Regardless of the method Southwest Air-

lines deployed to try to reach the stretch target,

attainment would at best be extraordinarily dif-

ficult and was perceived to be impossible.

We note that a goal need not be universally

(or eternally) impossible in order to qualify as a

“stretch” for an organization in a given context.

Although it is likely that seemingly impossible

goals for one organization are also seemingly

impossible for most other organizations in the

industry at the time, there could be exceptions.

Overall, the determination of extreme difficulty

is context specific.

Extreme Novelty

A second aspect of stretch goals is the lack of

a discernible path to attainment. When an orga-

nization lacks the skills, knowledge, or practices

to attain a stretch goal and does not have knowl-

edge of any feasible approaches, it is effectively

forced to search outside of its normal routines

and knowledge to see if any ways to achieve the

2011 547Sitkin, See, Miller, Lawless, and Carton

goal exist or can be created. At issue are the

particular circumstances of the organization

charged with pursuing the goal. To continue

with the Southwest Airlines illustration, the goal

of a ten-minute turnaround could only be

achieved by learning to employ a radically new

approach. There were no guiding templates to

use within the organization or even within the

airline industry. In other words, the path to

achievement was unimaginable at the time the

goal was set, and, thus, novel means were re-

quired to achieve the goal.

STRETCH GOALS AS FACILITATORS AND

DISRUPTORS OF ORGANIZATIONAL

LEARNING AND PERFORMANCE

There is as yet no explicit theory of the poten-

tial effects of seemingly impossible goals on

exploratory learning and organizational perfor-

mance. Indeed, macrolevel goals are often in-

voked in the organizational literature, but their

unique effects have rarely been examined, and

unattainable goals remain outside nearly all of

the available scholarly work. Much of the pub-

lished work focused directly on organizational

stretch goals has been restricted to commentar-

ies or applied case studies (Collins & Porras,

1994, 1996; Golovin, 1997; Hamel & Prahalad,

1993; Hughes, 2001; Kerr & Landauer, 2004; Rous-

seau, 1997; Sherman, 1995; Takeuchi et al., 2008;

Thompson et al., 1997). With few exceptions (e.g.,

Hughes, 2001; Kerr & Landauer, 2004; Sherman,

1995), these authors have focused solely on the

presumed benefits of seemingly impossible

goals, and their work has remained general,

rarely proposing specific causal mechanisms.

Notwithstanding these limitations, we have

been able to draw on work in organizational

theory and cognition to analyze how stretch goal

usage can influence learning and performance

outcomes through a variety of specific mecha-

nisms that we sort as cognitive, affective, or

behavioral (as summarized in Figure 1). Our

analysis surfaces both potential facilitative and

disruptive stretch goal effects. We then propose

a set of contingency factors that determine

whether stretch goals will have positive or neg-

ative effects on learning and performance.

In line with our central purpose and with prior

work, we conceptualize learning as exploration

that yields meaningful insights regarding new

practices and capabilities (e.g., March, 1991). We

conceptualize performance in terms of an orga-

nization’s tangible outcomes along such dimen-

sions as productivity, product or service quality,

profitability, growth, and market share (e.g., see

Hitt, 1988, and Quinn & Rohrbaugh, 1983).

Facilitative Effects of Stretch Goals on

Exploratory Learning and Performance

Facilitative effects via cognition. Attention is

a well-recognized mechanism of influence on

organizational learning and performance out-

comes (Cyert & March, 1963; Ocasio, 1997; Sut-

cliffe, 1994). Because stretch goals involve ex-

treme redefinitions of what an organization is

capable of being or achieving, they can capture,

shift, and refocus attention. According to Rous-

seau, “Where performance expectations are el-

evated well beyond the limits of past experi-

ence” and “where previously successful

frameworks are questioned, revised, or dis-

carded, prior experience is often a poor guide for

stretch-goal achievement . . . [and this] shifts the

performers’ attention away from old routines

and assumptions toward novel and creative ap-

proaches” (1997: 529). Stretch goals present an

information-processing challenge (Galbraith,

1973) because the organization needs to find

new sources and types of information and also

new ways to process that information. A positive

reaction to this challenge would be for the orga-

nization to become heedful (Weick, 1995; Weick,

Sutcliffe, & Obstfeld, 2005) or vigilant (Janis &

Mann, 1977) in proactively scanning and assess-

ing the situation. The organization could thus

become more open to new information from a

variety of sources (Huber, 1991; O’Reilly, 1982;

Sutcliffe, 1994) and question the validity of old

assumptions, old information, and old frame-

works (Meyer, 1982; Rousseau, 1997). These con-

ditions can facilitate learning processes.

Because stretch goals move an organization

into uncharted waters, they naturally require

flexible thinking about revisable alternative

strategies for goal attainment (March, 1991;

March & Olsen, 1976). Thus, seemingly impossi-

ble goals can elicit a more open, reflective, and

opportunity-oriented focus that is beneficial for

performance (Sitkin, 1992). By allowing the orga-

nization to more freely tap previously underuti-

lized sources of information and insight, the jolt

of stretch goals can cause an organization to

more avidly attend to and consider novel paths

548 JulyAcademy of Management Review

for pursuing the stretch target (March, 1991). As

part of this response, capabilities could be care-

fully reevaluated for their potential to be recom-

bined in novel ways (e.g., Henderson & Clark,

1990), which would focus attention productively

on controllable internal resources and would

have positive consequences for performance

(Beer et al., 1990; Lant & Shapira, 2008; Levinthal

& March, 1981).

Facilitative effects via affect. Seemingly im-

possible goals can facilitate organizational

learning and performance by positively influ-

encing the collective emotion and initiative in-

fused into the organization (Adler & Obstfeld,

2007). This is not to suggest that organizations

feel emotions but, rather, to recognize that sig-

nificant opportunities or threats can have a col-

lective impact that goes beyond individual

members’ affective responses through conta-

gion processes (Barsade, 2002; Barsade & Gib-

son, 2007; Bartel & Saavedra, 2000).

Because stretch goals involve such high lev-

els of ambition directed toward novel and unfa-

miliar opportunities, they can generate energy

and greater initiative to learn by evoking a

range of positive collective reactions, such as

optimism, urgency, enthusiasm, curiosity, and

playfulness (March, 1976, 1991). When U.S. Pres-

ident John Kennedy announced in 1961 the goal

of landing a man on the moon within a decade,

FIGURE 1

Mechanisms Through Which Stretch Goals Can Influence

Organizational Learning and Performance

Facilitation

Disruption

Learning

Cognitive

Vigilance (heedfulness/mindfulness)

Systematic processing of new information

Openness

Affective

Enthusiasm, energy

Optimism

Sense of urgency

Curiosity, playfulness

Behavioral

Trial-and-error cycles

Broad search for new sources and

discontinuous advances

Performance

Cognitive

Focus on internal/controllable factors

Opportunity interpretations

Attention on usable new information

sources and analyses

Affective

Initiative to improve

High resilience to negative feedback

Behavioral

Effort and persistence

Effective strategy selection

Cognitive

Hypervigilance

Inability to process new information

Affective

Fear

Helplessness

Aversion to change

Defensiveness

Behavioral

Chaotic change

Insufficient familiarity for interpreting

feedback

Cognitive

Focus on external/uncontrollable factors

Threat interpretations

Attention on quick fixes

Affective

Low commitment to goal

Low resilience to negative feedback

Behavioral

Threat rigidity

Impaired coordination

Resource diversion resulting in loss of

beneficial routines

2011 549Sitkin, See, Miller, Lawless, and Carton

he introduced a target that excited those he led,

even though at the time they had no idea how to

achieve the goal, or even if its achievement was

possible. More generally, stretch goals can stim-

ulate exploration by highlighting a potentially

better and more exciting future (cf. Shamir,

House, & Arthur, 1993). By creating a sense of

urgency to take on new challenges and to move

toward new understandings, stretch goals can

impose a “crisis” that stimulates the initiative

within or across the organization to undertake

experimentation and learning (Barnett & Pratt,

2000; Baumard & Starbuck, 2005; D’Aveni & Mac-

Millan, 1990; Kim, 1998). In other words, the cou-

pling of positive affective drivers (e.g., enthusi-

asm, energy) with modest stress-related drivers

(e.g., urgency) can provide the spark and collec-

tive initiative to explore and learn (Argyris &

Scho¨n, 1978; Kotter, 2008).

The extreme difficulty of attaining stretch goals

should also elevate aspirations (Rousseau, 1997),

which is critical for ensuring that organizations

strive to increase performance. Organizational the-

ory suggests that aspirations well above existing

performance levels create a problem to be solved

and increase the initiative and desire to find a solu-

tion (Cyert & March, 1963; Greve, 1998; Lant, 1992;

Levinthal & March, 1981). In Greve’s work (1998), for

example, aspirations well above existing perfor-

mance led to enhanced motivation to improve per-

formance. Strategic planning research also sug-

gests that plans involving goals positively affect the

desire to enhance performance, because strategic

goal setting gives direction to the firm and promotes

adaptive thinking (e.g., Miller & Cardinal, 1994). The

literature on charismatic leadership, visionary lead-

ership, and transformational leadership further sug-

gests that the establishment of targets beyond cur-

rent capabilities builds collective enthusiasm and

resilience (Bass & Riggio, 2005; Dvir, Eden, Avolio, &

Shamir, 2002; Nanus, 1992; Shamir et al., 1993).

Facilitative effects via behavior. Since there is

no known path to achieving a stretch goal, put-

ting such a goal in place may generate actions

directed toward exploring and learning new

practices. When compared with other condi-

tions, the extreme demands of stretch goals

could stimulate broader and more active search

for ideas and solutions (e.g., Baum & Dahlin,

2007; Fang & Levinthal, 2009; Mezias, 1988).

Stretch goals could also propel the search for

more radical, discontinuous advances (Cyert &

March, 1963; Raisch & Birkinshaw, 2008), involv-

ing actions such as making contacts with unfa-

miliar sources of ideas, imitating innovative

techniques (e.g., Sitkin et al., 1994), or undertak-

ing trial-and-error learning (see Ingram & Baum,

1997, and Levitt & March, 1988). Moreover, by

loosening old restraints and providing focus

and energy, stretch goals may allow for trial-

and-error learning to be undertaken with faster

cycle times (Argote, 1999; Argyris, 1985; March,

1991). In effect, stretch goals can prompt search

and experimentation behaviors traditionally as-

sociated with learning.

Stretch goals can also instigate actions that

have positive effects on performance. Once the

organization has identified and focused on a

stretch target, prior research suggests that its

use of specific and measurable (as opposed to

vague) goals can lead to increases in organiza-

tional performance outcomes via greater collec-

tive effort, persistence, and the development of

coherent action strategies for attaining the tar-

get (e.g., Chesney & Locke, 1991; Cyert & March,

1963; Smith, Locke, & Barry, 1990). For example,

Chesney and Locke (1991) found that specifically

articulated goals influenced the development of

business strategies that increased simulated

firm performance in an experiential strategic

management exercise. Moreover, research on

top management teams has connected upper-

echelon agreement on the goals of the firm to

financial performance (e.g., Colbert, Kristof-

Brown, Bradley, & Barrick, 2008; Dess, 1987). Mov-

ing from the use of attainable goals to the case

of stretch goals, to the extent that top manage-

ment agreement on a stretch goal signals a

greater sense of specificity and unified purpose,

more effective pathways and strategies for ap-

proaching the goal could lead to higher perfor-

mance. Essentially, when a stretch goal is artic-

ulated as achieving a specific outcome, parallel

or independent strategies can be more easily

developed and coordinated as the beacon-like

stretch target directs and channels action to-

ward a singular end point.

Disruptive Effects of Stretch Goals on

Exploratory Learning and Performance

Disruptive effects via cognition. In contrast

to the positive dynamics of vigilance or mind-

fulness discussed above (Janis & Mann, 1977;

Weick, 1995), the jolt of stretch goals could

conceivably elicit negative attentional re-

550 JulyAcademy of Management Review

sponses that compromise information process-

ing and the capacity to learn. In the face of a

seemingly impossible problem that is not well

understood and for which there are no discrete

steps that constitute credible paths toward solu-

tion, the organization may respond to the over-

whelming situation with hypervigilance (Janis &

Mann, 1977). With such a response, the organi-

zation’s information processing becomes disor-

ganized, impulsive, and less systematic in the

consideration of alternatives. Thus, instead of

presenting a stimulating intellectual challenge

for information processing, stretch goals could

constitute an information processing “bridge too

far,” in that the organization simply lacks the

capacity to match the complexity and demands

of its situation or to incorporate new approaches

or inputs that could lead to learning (Weick,

1979).

The lack of obvious capabilities to respond to

the demands of stretch goals can also shift at-

tention to potential quick fixes from outside

(Beer et al., 1990), even though the organization

may not have the absorptive capacity to import

these approaches (Cohen & Levinthal, 1990;

D’Aveni & MacMillan, 1990). Attending to outside

ideas also diverts attention from a more produc-

tive focus on internal resources and ideas for

change (Beer et al., 1990; Lant & Shapira, 2008).

While shifting some attention externally is gen-

erally positive for exploration, the extreme dif-

ficulty of pursuing a stretch goal can lead the

organization to focus attention too much or too

haphazardly on outside ideas (e.g., obsessive

monitoring or unsystematic benchmarking of

other firms), which would directly limit perfor-

mance as the organization directs insufficient

attention to opportunities that are most useful

given its unique history and environment (Cyert

& March, 1963).

Disruptive effects via affect. The contagion

processes that drive collective affect in organi-

zations occur regardless of whether the affective

response is positive or negative (Barsade, 2002).

While the high levels of ambition associated

with stretch goals could raise the level of posi-

tive collective affect, as discussed earlier,

stretch goals signal the need for change and,

thus, simultaneously have the potential to elicit

the negative affective responses that often ac-

company change (Barnett & Pratt, 2000). In par-

ticular, facing a goal that is seemingly impossi-

ble could instigate a negative affect contagion

whereby exploration and willingness to try new

approaches are impeded by a sense of collective

fear, helplessness, and demotivation (Sitkin,

1992). Under such conditions, any incentives to

explore induced by stretch goals would be

dwarfed by the more salient threat created by

them. A high level of negative collective affect is

generally expected to constrict the motivation to

use learning-enhancing processes and the ca-

pacity to absorb learning opportunities that may

serendipitously present themselves (Cohen &

Levinthal, 1990; Levinthal & March, 1993; Levitt &

March, 1988; Woodman, Sawyer, & Griffin, 1993).

Stretch goals can also have disruptive effects

on performance if collective commitment to the

goal becomes compromised by widely held em-

ployee perceptions that a seemingly impossible

goal is unrealistic or unworthy of pursuit. The

extremity of stretch goals can also dampen col-

lective affective responses like satisfaction and

morale, because organizational attempts to

reach the goals are likely to involve one or more

failures. Thus, less extreme goals that are diffi-

cult but still attainable are often advised (Locke

& Latham, 1994). Indeed, using goals that are

difficult enough to require great effort or persis-

tence, yet are still within reach, is consistent

with many motivational perspectives (e.g., At-

kinson, 1964; Heath, Larrick, & Wu, 1999; Locke &

Latham, 1990; Vroom, 1964). For example, Heath

et al. (1999) built on prospect theory to contend

that because a goal serves as a reference point,

initiative for working toward the goal dimin-

ishes with distance from the goal. Taken to-

gether, stretch goals have the potential to dis-

rupt performance by diminishing collective

initiative, morale, commitment, and resilience

in the face of setbacks.

Disruptive effects via behavior. By definition,

stretch goals are associated with extreme tar-

gets whereby current capabilities are not ade-

quate in any obvious way for goal attainment.

As such, actions associated with stretch goal

implementation could create too large a break

from the past, or the actions may simply lead to

too many simultaneous changes to effectively

distinguish signal from noise (March, 1976). In

either case, organizational decision makers

would be unable to learn which enacted

changes are effective and which are ineffective

or detrimental (March & Olsen, 1976). Moreover,

organizational learning is best facilitated

within at least moderately familiar territory

2011 551Sitkin, See, Miller, Lawless, and Carton

where there is a frame of reference to under-

stand causal relationships and interpret feed-

back from changes that are made (Cohen &

Levinthal, 1990; Sitkin, 1992; Weick, 1984). With-

out some degree of familiarity, organizations

lack an effective frame, and feedback from ac-

tions and change efforts is experienced as

ambiguous (cf. Levitt & March, 1988; March &

Olsen, 1976). The novel means associated with

stretch goal pursuit imply that there is little “do-

main relevance” to bring to bear on the situa-

tion, since “it is hard to be intelligent about that

which is unfamiliar” (Sitkin, 1992: 245). Thus,

conditions that could facilitate effective learn-

ing, such as controllable change in familiar ter-

ritory with interpretable feedback, are unlikely

to hold in the presence of stretch goals.

The extreme novelty of stretch goals could

generate actions that complicate organizational

performance. Because it is not clear initially

how to start working toward a seemingly impos-

sible goal, the inherent novelty and task com-

plexity involved in attaining a stretch goal can

compromise some types of organizational per-

formance (e.g., Carley & Lin, 1997; Perrow, 1979).

Moreover, an additional concern is the magni-

tude of change that would typically be required

in attempting to bridge the gap between current

capabilities and the attainment of a stretch

goal. Greater scale change can be disruptive to

performance because problems encountered

and lessons learned are often not amenable to

effective coping (Beer et al., 1990), whereas re-

duced scale of change creates more manage-

able problems with smaller performance mile-

stones (Sitkin, 1992; Weick, 1984). The prospect of

large-scale change induced by stretch goals can

also instigate a threat-rigidity response (Staw,

Sandelands, & Dutton, 1981)—an inability to act

when under threat—that can undermine perfor-

mance. Threat rigidity would be particularly

maladaptive in the context of stretch goal pur-

suit, since rigidly clinging to existing practices

cannot result in stretch goal attainment.

The extreme novelty and difficulty of attain-

ing stretch goals could also directly impair co-

ordination. Mandating the use of an organiza-

tional stretch goal can be done almost instantly,

but actual attempts at implementation demand

radical organizational change under vague

guidance. Urgent change under such ambigu-

ous circumstances can cause different organiza-

tional subunits to develop discrepant views

about causality and appropriate action (Beer et

al., 1990; Levitt & March, 1988). The resulting

plurality of “stories” ascribed to the actions and

outcomes associated with attempting to reach

the stretch goal is likely to impair coordination

among subunits that have separate purposes,

specialties, and interests (Lawrence & Lorsch,

1967; Martin, 1992). Information distribution and

integration, which are fundamental coordina-

tion elements inherent in organizational perfor-

mance (as well as learning), are likely to be

negatively affected as a result (Huber, 1991).

Finally, because stretch goals require new

routines and resources, working to attain them

could reduce (or eventually eliminate) the effec-

tive organizational exploitation of existing ca-

pabilities, practices, and investments that are

otherwise working well. Exploring new routines

is, of course, a large part of the rationale and

promise of using stretch goals. But diverting too

much or diverting for too long from existing,

well-functioning investments can undermine

overall performance (March, 1991; Perrow, 1979),

even in the best case scenario where the orga-

nization is simultaneously reaping some learn-

ing and performance returns from the stretch

pursuit. That is, while stretch goals are intended

to break problematic inertial forces, beneficial

path dependencies can also be lost if any rou-

tines that remain useful are thrown out. The jolt

that stretch goals provide can thus outstrip the

organization’s existing capabilities and

resources.

Our analysis in this section has suggested a

number of specific mechanisms by which

stretch goals could have either facilitative or

disruptive effects, as summarized in Figure 1. In

the following section we propose a contingency

model of the primary organizational factors that

ultimately predict whether stretch goals will fa-

cilitate or impede exploratory learning and

performance.

CONTINGENCY FACTORS DETERMINING

STRETCH GOAL EFFECTS ON LEARNING

AND PERFORMANCE

To consider the contingencies that influence

when organizations benefit or suffer from the

use of stretch goals, we focus on the two core

organizational factors that reflect the system’s

capacity to extract value from radical changes

or new approaches: recent performance and

552 JulyAcademy of Management Review

slack resources (Cyert & March, 1963). In terms

of the mechanisms we analyzed in the prior

section, we seek to answer the question, “How

do recent performance and level of slack re-

sources influence the balance between the fa-

cilitative and disruptive aspects of the cogni-

tive, affective, and behavioral mechanisms by

which stretch goals can influence exploratory

learning and performance?” In other words,

we propose a contingency framework to ex-

plain when stretch goals will have positive or

negative effects on learning and performance

outcomes depending on the levels of recent

performance and slack resources of the orga-

nization using such goals.

Recent Performance

Is an organization fresh from success (e.g.,

recent performance above a benchmark, such

as the organization’s own performance in a

prior period, average industry performance, or

performance of a particular competitor) better sit-

uated to leverage the potential benefits of stretch

goal use and to withstand fallout from any fail-

ure? With respect to the mechanisms summarized

in Figure 1, there are reasons to expect that stron-

ger recent performers, if they use stretch goals, are

well situated to achieve facilitative effects on both

learning and performance outcomes, whereas

weaker recent performers are situated for disrup-

tive effects from the use of stretch goals.

Recent performance is likely to drive

whether stretch goals shift organizational at-

tention in a way that is focused productively or

counterproductively. Having just experienced

success, stronger recent performers are less

likely to perceive an immediate threat; thus, if

they undertake a stretch goal, they should be

more open to new ideas and more mindful in

the scanning and processing of new informa-

tion, both of which foster learning (e.g., Levitt

& March, 1988; Weick et al., 2005). As part of

being more mindful and vigilant, stronger re-

cent performers are more likely to attend to

contextual features and organizational capa-

bilities that are internal and controllable (e.g.,

Staw et al., 1981; Sutcliffe, 1994), precisely be-

cause they have a (recent) history of deploying

those features successfully (March & Olsen,

1976). Thus, in striving to reach a stretch goal,

any routines that could be leveraged for radi-

cal performance-enhancing recombinations

would be cognitively available to, and de-

tected by, stronger recent performers.

Weaker recent performers, however, do not

have the attentional advantages afforded by

success. Because they are already in a com-

promised state owing to recent losses, if

weaker recent performers choose to pursue a

seemingly impossible goal, they are more

likely to be overwhelmed by its demands and

resort to hypervigilant, disorganized, or even

frantic information processing that is disrup-

tive to learning. Scattered attention and un-

systematic information processing are also

disruptive to performance such that weaker

recent performers may attempt to reach a

stretch goal by haphazardly or obsessively

monitoring others in the industry for exter-

nally sourced quick fixes. Such external re-

sources and practices may not pertain to in-

ternal resources (Beer et al., 1990), leverage

existing strengths (March & Olsen, 1976), or

allow for forging new paths and solutions

through recombination (Henderson & Clark,

1990).

Recent performance would also be expected

to influence whether the collective affective re-

sponses to stretch goals facilitate or disrupt

learning and performance. Success generates

optimism, enthusiasm, and commitment and be-

comes self-reinforcing (March & Olsen, 1976;

Weick, 1984). Thus, if strong recent performers

use stretch goals, they should be more able to

leverage optimism and energy from their recent

success toward learning solutions for goal at-

tainment and increased performance. In con-

trast, poor recent performance undermines

many of these affective mechanisms. Poor re-

cent performers attempting to reach a stretch

goal are thus more susceptible to collective re-

We note one situation at the far extreme of poor perfor

mance, where setting stretch goals is the only option for

survival. Like the “Hail Mary” pass at the end of a U.S.

football game, the pursuit of stretch goals when an organi-

zation has no other option could be normatively superior so

long as it does not hasten death. However, one could also

draw an analogy to the pursuit of a miracle cure for a

terminal disease, which introduces the notion that if setting

stretch goals consumes fungible resources that could still be

used more effectively in other pursuits (e.g., employees de-

voting time to find other employment or more resources

available to pay creditors), then the use of stretch goals even

for survival may not always be the superior option to a quick

and relatively painless organizational death.

2011 553Sitkin, See, Miller, Lawless, and Carton

sponses of fear or defensiveness that would ob-

struct the readiness to try new things and learn

from them (Argyris, 1985; Sitkin & Pablo, 1992), as

well as hamper the initiative and commitment

needed to effectively pursue the performance

opportunities offered by a stretch goal (Baumard

& Starbuck, 2005).

Finally, the actions taken in the attempts to

reach a stretch target would conceivably be very

different as a function of an organization’s re-

cent performance and would therefore bring

about different learning and performance out-

comes. To the extent that success breeds the

persistent utilization of the routines and prac-

tices that led to that success (Audia, Locke, &

Smith, 2000; March & Olsen, 1976; Weick, 1984),

strong recent performance might initially lead

the organization down the erroneous path of try-

ing to reach a stretch goal only by repeating

actions undertaken in the past. However, once it

determines that such an approach is not suffi-

cient for reaching a stretch target, a stronger

recent performer, lacking an existing threat,

could respond to the crisis imposed by stretch

goals with greater flexibility (Barnett & Pratt,

2000), such as by devising new strategies to

meet the target and undertaking more effortful

search activities, which are actions that can

yield both learning and performance benefits.

Poor recent performance, however, can com-

promise the capacity to undertake systematic

and controlled experimentation, thus leaving or-

ganizational actors to approach a stretch goal

by instituting more chaotic changes that will not

provide the clear feedback needed for complete

learning. Moreover, recent performance prob-

lems signal that an organization is already un-

der threat. It may even be the case that the

stretch goal itself is related to the performance

problems. Thus, encountering a stretch goal

when there is existing pressure and where it is

not immediately clear how to approach the goal

could evoke a dysfunctional threat-rigidity re-

sponse (Barnett & Pratt, 2000; Staw et al., 1981).

Overall, stronger recent performers using

stretch goals are better situated to experience

facilitative effects on learning and performance,

whereas weaker recent performers using stretch

goals are situated for disruptive effects.

Proposition 1: For organizations with

strong (weak) recent performance, the

use of stretch goals will yield positive

(negative) effects on learning and

performance.

Slack Resources

The presence of financial or other resources

that have not been committed or deployed in the

system (Bourgeois, 1981) and are available for

the discretionary use of management (Nativi-

dad, 2009) creates a buffer that scholars have

conceptualized as unabsorbed slack. How might

greater unabsorbed slack resources affect the

capacity for organizations to reap successful

outcomes when pursuing the seemingly impos-

sible? Existing research suggests that greater

slack resources protect against many of the dis-

ruptive mechanisms listed in Figure 1 and

thereby help to facilitate positive effects on both

exploratory learning and performance for orga-

nizations using stretch goals.

Slack serves a practical role in that finding

exciting opportunities and identifying and cul-

tivating internal capabilities to reach a seem-

ingly impossible goal will typically demand the

availability of people, money, time, and other

resources. As a result, greater slack imbues an

organization that opts to use stretch goals with

certain cognitive advantages. By providing the

time and access to the resources necessary to

discover positive potential outcomes and attain-

ment paths, slack allows for more openness to

new information and vigilance in the processing

of that information, which is beneficial for

learning.

Moreover, the presence of slack resources

should shift attention in a way that could be

beneficial for performance (Ferrier, 2001; Nohria

& Gulati, 1996; Young, Smith, & Grimm, 1996). We

argue that, for an organization that is pursuing a

stretch goal, having sufficient slack resources

creates a situation in which the stretch goal is

more likely to be interpreted as an opportunity

to generate and sift through new ideas that are

potentially usable based on internal existing

capabilities. In contrast, limited slack would ob-

struct attention to possibly innovative (yet not

obvious) leveraging of current capabilities,

since detecting novel recombinations takes time

and effort that would be less available.

Having slack also enables stretch goals to

facilitate learning and performance by serving

as both a literal and psychological buffer

against the potentially negative collective affec-

554 JulyAcademy of Management Review

tive responses to seemingly impossible goals.

Because stretch goals involve the prospect of

extreme change without an obvious method for

goal attainment, collective responses of fear

and helplessness may ensue if there are insuffi-

cient available resources to bring to bear on the

situation. Greater slack reduces the pressure of

obtaining resources necessary for trying to reach

a seemingly impossible goal, and, thus, the pur-

suit of stretch goals can be met with more playful-

ness, curiosity, and enthusiasm, which are condu-

cive to learning (Cyert & March, 1963; March, 1976).

An organization opting to use a stretch goal when

it has greater slack should also experience affec-

tive responses that aid in performance improve-

ments. Stretch goal pursuit would typically in-

volve failures and complications, at least in the

early stages of implementation, and having ade-

quate (or more than adequate) resources should

make collective commitment more resilient when

those obstacles surface (Young et al., 1996). A lack

of tangible slack resources to credibly attempt

stretch goal attainment, however, could easily

lower morale and resilience needed to sustain

initiative.

In addition, organizations with greater slack

can test more varied actions and survive fail-

ures, which underresourced competitors are less

capable of doing (e.g., having a capital reserve

or back orders on existing products can help an

organization survive a large R&D effort that

fails). Using an organizational stretch goal to

impose a crisis is precarious, since such inten-

tionally generated crises meant to spur change

“usually overwhelm organizations and their

members’ emotional, cognitive and behavioral

capacities” and can result in dysfunctional ri-

gidity (Barnett & Pratt, 2000: 75). However, orga-

nizations are more likely to avoid rigidity and

instead respond to the imposed crisis with flex-

ibility to the extent that they have sufficient time

and encouragement for knowledge generation

(Barnett & Pratt, 2000). Having slack resources

thus permits an organization using stretch goals

to encourage knowledge generation and to more

feasibly and successfully engage in actions that

can bring about learning from the goal, such as

search that is extensive both in breadth and

duration (Sitkin, 1992). Moreover, when excess

slack resources are available, parallel initia-

tives for stretch goal attainment can be pursued

in different units (Brown & Eisenhardt, 1998;

March, 1991; Weick, 1984), allowing for the sys-

tematic and controlled experimentation vital to

learning (Campbell, 1969). When slack is un-

available, however, learning is likely to be ham-

pered, because a lack of resources constrains

the capacity to undertake careful trial-and-error

activities and obtain useful feedback (Cyert &

March, 1963; Singh, 1986).

Finally, whereas slack resource availability

allows organizations to take on new stretch tar-

gets without having to abandon what is already

working well, low slack requires organizations

pursuing stretch goals to divert resources away

from other areas, which if carried out too exten-

sively or for too long might eventually result in the

loss of beneficial path dependencies and decline

in overall performance. Organizations pursuing

stretch goals with insufficient slack are also likely

to experience impaired coordination, because co-

ordinating actions across units on how to address

radical change requires effort and time, a problem

that is exacerbated as the internal task environ-

ment becomes more complex, interdependent,

and urgent (Perrow, 1979). Taken together, organi-

zations using stretch goals with greater slack re-

sources are better situated to experience facilita-

tive effects on learning and performance, whereas

organizations without slack are situated for dis-

ruptive effects if they use stretch goals.

Proposition 2: For organizations with

high (low) slack resources, the use

of stretch goals will yield positive

(negative) effects on learning and

performance.

DETERMINANTS OF STRETCH GOAL PURSUIT

As we argued above, levels of recent perfor-

mance and slack resources determine whether

an organization is positioned to experience fa-

cilitative or disruptive effects of stretch goals on

exploratory learning and performance. But how

do these same organizational factors influence

whether an organization will actually use

stretch goals in the first place? In this section we

examine how recent performance and slack rep-

resent two distinct motives for pursuing any rad-

ical tool or technique: because the organization

must (e.g., in response to recent performance

problems) or because the organization can (i.e.,

availability of slack resources).

2011 555Sitkin, See, Miller, Lawless, and Carton

Recent Performance

We argued above that recent organizational

success (performance above a benchmark) sig-

nals a greater capacity to reap beneficial out-

comes from using stretch goals, but whether or-

ganizations with stronger recent performance

will actually be drawn to using such goals is a

separate question. Undertaking a radical tool

like a stretch goal is likely to be driven in part by

organizational sensitivity to risk and a propen-

sity to accept new challenges, which are af-

fected by levels of recent success. Prior research

suggests that success can breed a conservative

disposition toward risk in organizations (e.g.,

Levitt & March, 1988; Sitkin & Pablo, 1992). There

is an observed tendency for strongly performing

organizations to fall into a success or compe-

tency trap, in that success reinforces habits and

leads to more exploitation of current skills and

practices and less exploration of new capabili-

ties (Lant, Milliken, & Batra, 1992; Levitt & March,

1988; Maidique & Zirger, 1985). For example,

while consistent success leads to more focus

within proven routines, Weick (1984), March and

Olsen (1976), and Sitkin (1992) argue that it also

results in less expansive search activities and a

reduced willingness to utilize less established

skills in pursuing riskier, innovative paths. Like-

wise, prospect theory (Kahneman & Tversky, 1979),

which characterizes the behavior of both individ-

uals and organizations (e.g., Mezias, 1988; Singh,

1986), implies risk aversion in the domain of gains

such that when an organization has been perform-

ing well, it tends to continue its current strategy

and course of action rather than try new or risky

approaches like stretch goals.

In contrast, an organization experiencing re-

cent performance below a benchmark tends to

interpret its present situation as a loss relative

to the benchmark. Under such conditions, the

organization is more likely to undertake risky

actions or even to try radically new methods

with uncertain prospects for success

(e.g.,

Levinthal & March, 1993; Singh, 1986; Sitkin &

Pablo, 1992). Stretch goals may therefore appear

more frequently in organizations that are driven

to “go for broke” (Singh, 1986; Sitkin & Pablo,

1992: 27) after experiencing noteworthy poor per-

formance (called “the failure trap” by Levinthal

& March, 1993: 105). Fiegenbaum (1990), Wise-

man and Catanach (1997), and Shoham and

Fiegenbaum (2002), for example, found that

poorly performing organizations were more

likely to exhibit risky action relative to orga-

nizations above the industry average in per-

formance. Simon, Houghton, and Savelli (2003)

and Miller and Chen (2004) found that organi-

zations with disappointing performance un-

dertook riskier projects. Lee (1997) found that

organizations unable to match their own past

performance exhibited risk seeking relative to

those exceeding their own past performance.

All of this suggests that stretch goals would be

less likely to be used by successful performers

than by unsuccessful ones.

Proposition 3: Stronger recent perfor-

mance is associated with a lower like-

lihood that an organization will use

stretch goals.

Slack Resources

The ready availability of excess uncommitted

resources should position an organization to

reap positive effects on learning and perfor-

mance should it choose to use stretch goals, as

we argued above. Although slack resources al-

low for experimentation with radical tools such

as stretch goals (e.g., Cyert & March, 1963;

Nohria & Gulati, 1996), an organization with

slack resources is probably unlikely to actually

use such goals, because slack functions as an

inertia- and complacency-fostering buffer be-

tween the organization and the environment

(e.g., Sitkin, 1992), rather than as a force for the

creation of an enriching, exploration-enhancing

milieu. Indeed, empirical studies have shown

that the presence of unabsorbed slack inhibits

risk taking and adaptiveness (e.g., Kraatz & Za-

jac, 2001; Maidique & Zirger, 1985).

It is important to emphasize that recent performance is

the focus of our argument. Over a longer time horizon, per-

formance can cause aspirations to change. Performance that

has been consistently below an industry average or some

other reference point can drive down aspirations, resulting

in a decreased propensity to undertake risks designed for

performance improvement (Lant, 1992; Mezias, Chen, & Mur-

phy, 2002). Similarly, work on threat rigidity (Staw et al., 1981)

and permanently failing organizations (Meyer & Zucker,

1989) highlights that some organizations with extreme levels

of poor performance may avoid escalating risky behavior

because of an inability to respond (e.g., threat rigidity) or an

ability to buffer (e.g., permanent failure).

556 JulyAcademy of Management Review

We surmise that “free” resources (i.e., slack)

typically are not used by organizations to ex-

plore more freely; instead, slack seems to reduce

the felt pressure for organizations to be respon-

sive. Thus, we expect that having greater slack

results in less motivation to engage in actions

that involve substantial adaptation or change in

routines. In terms of the behavioral theory of the

firm (Cyert & March, 1963), we posit that organi-

zations will not typically engage in expansive

slack-driven search, even in the presence of suf-

ficient slack, but, rather, will engage in at most

incremental search and local adaptation, which

will preclude attraction to the use of radical

initiatives like stretch goals.

Proposition 4: Greater slack is associ-

ated with a lower likelihood that an

organization will use stretch goals.

The Paradox of Stretch Goals

Figure 2 summarizes our propositions con-

cerning how different combinations of slack and

recent performance influence the expected va-

lence (positive versus negative) of stretch goal

effects on learning and performance (Proposi-

tions 1 and 2), as well as the likelihood organi-

zations will actually use stretch goals (Proposi-

tions 3 and 4). The figure reveals that there is a

misalignment between the organizations we

predict are most likely to reap learning and per-

formance benefits from stretch goals and the

organizations most likely to pursue such goals.

In cell 2, for example, an organization has both

the slack resources to help take on the risks of

trying a stretch goal and the positive momentum

associated with recent performance success

(Propositions 1 and 2). However, when an orga-

nization is doing well, we suggest it will gener-

ally be averse to aggressive risky or radical

change initiatives (Propositions 3 and 4). An or-

ganization in this cell thus has the lowest rela-

tive likelihood of pursuing stretch goals, al-

though it is arguably the best situated for

facilitative learning and performance effects. It

is understandable that such a munificent cir-

cumstance could obviate the perceived need to

use stretch goals, but organizations in such a

situation would be advised to fight inertia and

occasionally go against their inclination to

avoid stretch goals because they have the req-

uisite resources and resilience (in terms of cog-

nitive, affective, and behavioral capacity) to

benefit from such goals.

In cell 3, where recent performance and slack

are both low, Propositions 3 and 4 would suggest

that stretch initiatives are most likely to be un-

dertaken, particularly as a way to reverse past

FIGURE 2

The Paradox of Stretch Goals

High

Effect of use: Neutral to

disruptive

Likelihood of use: Low

Cell 1

Effect of use: Most

facilitative

Likelihood of use: Lowest

Cell 2

Slack resources

HighLow

Recent

performance

Low

Cell 3 Cell 4

Effect of use: Most

disruptive

Likelihood of use: Highest

Effect of use: Neutral to

facilitative

Likelihood of use: High

2011 557Sitkin, See, Miller, Lawless, and Carton

failures or as a last-ditch effort for survival. De-

spite the motivational, performance-driven se-

duction of stretch goals when recent perfor-

mance and slack are both low, organizations in

this cell are positioned to experience primarily

disruptive effects on learning and performance

because they do not have the cognitive or affec-

tive advantages of recent success (Proposition 1)

or the buffer around experimental action that

slack provides (Proposition 2). Counter to what

we predict will be the inclination of such orga-

nizations, they should avoid stretch goals and

should instead pursue “small wins” (Weick,

1984) to try to accumulate resources and resil-

ience. Or, at most, such organizations could try a

“small losses” strategy (Sitkin, 1992) that allows

for building experience in a way that costs less

and requires less resilience for survival.

Figure 2 also reveals that for two combina-

tions of slack and recent performance (cells 1

and 4), the likelihood of using stretch goals is

reasonably aligned with the expected positive

or negative valence of effects. In cell 1, organi-

zations with strong recent performance and low

slack should have a relatively low propensity to

pursue stretch goals (as compared to cells 3 or 4).

Recalling Proposition 3, organizations with very

strong recent performance may become mired in

competency traps and tend to avoid risky

change. These organizations simply do not have

a pressing need for stretch goals in the near

term. Although Proposition 4 suggests that less

slack tends to be associated with a higher pro-

pensity to pursue stretch goals, we expect that

this tendency is tempered significantly by per-

formance-driven conservatism. Because of the

powerful effects of recency on judgment (e.g.,

Bjork & Whitten, 1974; Hogarth & Einhorn, 1992),

we surmise that recent performance will be a

stronger factor than slack when it comes to what

drives an organization to act, and, thus, organi-

zations with strong recent performance will ex-

hibit a relatively low likelihood to pursue

stretch goals.

Organizations in this cell should,

in fact, follow their strategic inclination to avoid

using stretch goals. Although strong recent per-

formance would provide some advantages in

leveraging the positive potential of stretch goals

(Proposition 1), limited unabsorbed slack re-

sources act as a significant constraint that

would contribute to primarily disruptive (or at

best neutral) effects of stretch pursuit on learn-

ing and performance (Proposition 2).

In cell 4, where the level of slack resources is

high but recent performance is weak, organiza-

tions will exhibit a relatively high likelihood of

pursuing stretch goals (compared to cells 1 or 2).

For organizations in this cell, the pursuit of

stretch initiatives is driven by the desire to re-

coup recent performance losses (Proposition 3),

without the tempering effect of (slack) resource

constraints. Although higher levels of slack

could contribute to complacency and dampen

enthusiasm for radical change (Proposition 4),

we once again expect that the power of re-

cency (e.g., Bjork & Whitten, 1974; Hogarth &

Einhorn, 1992) is likely to motivate organiza-

tional decision makers to emphasize recent

poor performance, even over successful (but

far less salient) longer-term past performance.

Organizations in this cell also have some ad-

vantages that should protect them from disrup-

tive stretch goal effects on learning and perfor-

mance. Greater slack resources provide buffers

against short-run performance problems and

make the organization more resilient in the face

of the extreme demands of stretch goals, and the

ongoing munificence of the internal environ-

ment makes large-scale, risky projects more fea-

sible to undertake (Proposition 2). Overall, when

reacting to recent performance losses and ade-

quately resourced with slack, organizations

are reasonably likely to use stretch goals and

are also positioned to experience some facilita-

tive (or at least neutral) effects on learning and

performance.

Our analysis reveals a paradox: the organiza-

tions most likely to benefit from stretch goals are

least likely to use them, and the organizations

least likely to benefit from them are the most likely

to use them (i.e., cells 2 and 3 in Figure 2). This

pattern suggests that it is really only under quite

limited conditions that organizations will be

safely positioned to experience positive learning

and performance outcomes from pursuing stretch

targets—namely, organizations with both high

slack resources and high recent performance (cell

2 in Figure 2). Yet few organizations can realisti-

cally be expected to fall into that category. In fact,

we speculate that most organizations carry low

levels of unabsorbed slack (cells 1 or 3), which by

Recency effects (e.g., Bjork & Whitten, 1974; Hogarth &

Einhorn, 1992) in psychology refer to a cognitive tendency

where recent stimuli or events are more salient and, thus, are

given disproportionate weight in judgment and decisions.

558 JulyAcademy of Management Review

our analysis would suggest that stretch goals usu-

ally will have disruptive, or at best neutral, effects

on learning and performance for the typical

organization.

DISCUSSION

Drawing from a variety of theoretical perspec-

tives, our primary purpose in this article is to ad-

vance the understanding of exploratory learning

and adaptation by systematically investigating

the causes and effects of pursuing seemingly im-

possible organizational goals—stretch goals. In

this section we review our conclusions and exam-

ine the contributions our work makes to extant

theory and research in several areas of inquiry.

We also consider the reasons behind the common

belief that stretch goals are simple and widely

successful when careful analysis suggests a more

complicated picture. Finally, we identify research

opportunities that extend beyond the scope of the

present investigation and highlight implications

for managerial practice.

Opening the Theoretical Black Box of

Seemingly Impossible Goals

Goals and aspirations play an important role

in organizational theory (e.g., Cyert & March,

1963). Yet scholars have placed little emphasis

on understanding the specific underlying pro-

cesses through which macrolevel goals, partic-

ularly unattainable goals, can influence organi-

zational outcomes. Thus, our theoretical

investigation of how stretch goals function and

affect organizational outcomes began with a

thorough consideration of the cognitive, affec-

tive, and behavioral mechanisms by which

seemingly impossible goals can influence ex-

ploratory learning and organizational perfor-

mance (summarized in Figure 1). Going beyond

prior thinking on organizational stretch goals,

which has not systematically considered mech-

anisms and has focused largely on presumed

positive effects, we examined the potential for

seemingly impossible goals to both facilitate

and disrupt learning and performance. We then

proposed that whether facilitative or disruptive

effects ensue is contingent on two core organi-

zational factors: recent performance and slack

resources (Propositions 1 and 2). We also posited

that these same two factors determine the like-

lihood that organizations will be drawn to using

stretch goals (Propositions 3 and 4).

The conclusion suggested by the aggregated

analysis of our four propositions, as revealed in

Figure 2, is the unfortunate tendency for the

wrong organizations to be most drawn to using

stretch goals. Furthermore, whereas weak organi-

zations might pursue stretch goals out of desper-

ation and make their dire circumstances worse,

those with the capabilities to truly benefit from

stretch goals typically fail to do so because the

same characteristics that make them well posi-

tioned to benefit from stretch goals also limit their

inclination to actually pursue them. This situation

is what we call “the paradox of stretch goals.”

Our theory building contributes interdisci-

plinary insights at the intersection of the litera-

ture on organizational goals, on learning, and

on adaptation by investigating the means by

which extreme goals can prompt exploration

(e.g., Rahmandad, 2008; Uotila et al., 2009) and

dynamic capability development (e.g., Agarwal

& Helfat, 2009; Capron & Mitchell, 2009; Winter,

2000). As summarized in Figure 1, our analysis

indicates that stretch goals can capture atten-

tion and facilitate openness to questioning the

validity of old assumptions, old information,

and old frameworks. Stretch goals can also

prompt behaviors traditionally associated with

learning, such as broad search, experimenta-

tion, and trial and error. Yet, at the same time,

some of the most critical conditions for effective

learning to occur (such as more experience, con-

trollable change, and interpretable feedback) do

not automatically hold in the case of stretch

goals, and, thus, organizations are unlikely to

learn from them unless they have the slack re-

sources to repeatedly and systematically exper-

iment and withstand failures.

The requisite resilience required to effectively

pursue stretch goals is also aided by strong recent

performance. These ideas provide a basis for

deeper analysis and clarity around the processes

and conditions needed for organizations to learn

effectively under ambiguity (March & Olsen, 1976;

Weick, 1979, 1995). Although we build on the be-

havioral theory of the firm (Cyert & March, 1963) in

suggesting that slack resources can positively en-

able organizations to benefit from using stretch

goals (Proposition 2), our predictions diverge from

the behavioral theory of the firm when we posit

that organizations with these capabilities are un-

likely to actually use innovation methods that are

as radical and risky as stretch goals (Proposition

4). That is, we diverge because we expect that

2011 559Sitkin, See, Miller, Lawless, and Carton

having greater unabsorbed slack, while enabling,

results in less motivation to actually engage in

actions that involve substantial adaptation, risk,

or change in routines.

In considering the reasons why organizations

might be drawn to use stretch goals, our analy-

sis speaks to the literature on organizational

change and adaptation to internal and external

jolts (e.g., Barnett & Pratt, 2000; Beer et al., 1990;

D’Aveni & MacMillan, 1990; Meyer, 1982). We ar-

gue that stretch goals can be viewed as auto-

genic crises meant to spur innovation, change,

learning, and increases in performance (e.g.,

Barnett & Pratt, 2000; D’Aveni & MacMillan,

1990). Our theoretical analysis of the causes and

effects of using seemingly impossible goals

generates additional insight into how organiza-

tions more or less effectively learn from both

internal and environmental stimuli (e.g., Sut-

cliffe, 1994), as well as the conditions that give

rise to punctuated organizational change pro-

cesses (Romanelli & Tushman, 1994).

Finally, our investigation advances our under-

standing of the effects of unattainable goals

(e.g., Garland, 1982, 1983; Locke, 1982, 2004; Rous-

seau, 1997) at a collective level by systemati-

cally surfacing specific mechanisms through

which such goals have organizational out-

comes. As such, our analysis contributes to the

literature on organizational goals (e.g., Cyert &

March, 1963; Ethiraj & Levinthal, 2009; Lant, 1992;

Lant & Shapira, 2008) by revealing how stretch

goals can challenge important scholarly as-

sumptions regarding the relationship between

aspirations and firm performance. We argue

that stretch goals create aspiration-performance

gaps that are too extreme to reliably lead to

organizational performance increases, except

for the rare organizations that have sufficient

slack resources and strong recent performance.

The Persistent Perception That Stretch Goals

Consistently Lead to Success

Because the scholarly research we draw from

suggests that the effects of seemingly impossi-

ble goals are complex and contingent, we need

to ask why so many authors (mostly, but not

exclusively, practice-focused authors) argue

that stretch goals are an unmitigated organiza-

tional success story. Numerous practitioner-

focused writings assert that stretch goals reli-

ably lead to positive performance results (e.g.,

Collins & Porras, 1994; Hamel, 1998; Hamel &

Prahalad, 1993), including reports concerning

3M, CSX, Motorola, General Electric, Union Pa-

cific, Boeing, Mead, and Toyota (Takeuchi et al.,

2008; Thompson et al., 1997; Tully, 1994). Such

highly visible successes make salient the per-

ception of universal stretch goal success, as il-

lustrated in the following effusive endorsement

from Jack Welch, former CEO of General Electric

(where the term stretch may have originated):

We have what we call stretch targets....Forex-

ample, we spent 105 years in this company and

we never had double digit operating margins. We

said in 1991 we want 15 and we put it in our

annual report. We told everybody. 9.6 or 9.5 was

our best. We’ll do 14 in 1994, and prices have been

going down in the global market. And we’ll do 15

next year. We never did more than 5 inventory

turns and we said we’ll do 10. We had no idea

how we would get to 10....The big line I use

today is that budgets enervate and stretch ener-

gizes. It’s real (Bartlett, 1999).

There are several reasons why stretch goals may

be persistently perceived and portrayed as more

beneficial for learning and performance than we

propose they actually are. Our theoretical analysis

suggests one particular reason why this mispercep-

tion may arise and persist: most famous stretch goal

success stories come from organizations in which

management set very ambitious performance goals

to prepare for a radical change while the organiza-

tion had good resource endowments (e.g., IBM in the

1960s, General Electric in the 1980s, and Toyota in

the 1990s; see also Bartlett & Wozny, 1999; Hamel,

1998; Sherman, 1995; Takeuchi et al., 2008; Thompson

et al., 1997). That is, proponents of stretch goals may

have overgeneralized based on evidence from orga-

nizations that had substantial slack resources and,

in many cases, also had strong recent performance

(i.e., cell 2 in Figure 2). By our analysis, these orga-

nizations were unusually well positioned to benefit

from stretch goals (Propositions 1 and 2). But these

organizations were probably outliers that somehow

avoided the dominant pattern of inertia that Propo-

sitions 3 and 4 would predict for organizations hav-

ing both a large amount of slack and strong recent

performance. Thus, we argue that the generalized

basis for the success of stretch goals has been mis-

construed and has consequently led to an oversim-

plified and inflated perception of their value.

Aside from focusing on high-performing organiza-

tions with substantial resources, the pervasive view

of stretch goals as beneficial could be due to success

stories based on incomplete learning cycles, such as

560 JulyAcademy of Management Review

when apparent consequences are actually unre-

lated to organizational action and lead to what

March and Olsen (1976) call “superstitious” experi-

ential learning (see also Huber, 1991). Similarly,

some organizational decision makers may come to

unjustified or overconfident conclusions based on

few data points, a sample size problem where faulty

learning can occur from low-frequency events in

which performance effects are often confounded

with random error or other fallacious data (March,

Sproull, & Tamuz, 1991). Moreover, failure myopia

(Levinthal & March, 1993) may be an issue, whereby

organizational learning is based on oversampling of

successes and undersampling of failures because

successful practitioner examples, salient and com-

pelling as they are, may be but a small, unrepresen-

tative drop in a large ocean of organizational initia-

tives (see also Denrell, 2003). Base-rate neglect can

also make highly risky exploration (e.g., stretch

goals) appear to be a good idea, with an unrealisti-

cally high expectation of success. In addition, orga-

nizations that pursue stretch goals, particularly

those that do so as a last-ditch effort when they are

already failing, might subsequently fail entirely and

disappear, thus biasing the observable sample of

users toward success. Observers trying to judge the

effectiveness of stretch goals are therefore exposed

to a systematically biased sample with an overrep-

resentation of successes.

All of these issues lead us to conclude that inves-

tigations based on a few select cases, including

many that appear in practice-focused publications,

are unlikely to present a balanced picture of stretch

goal processes and effects. By sidestepping glib ex-

hortations and focusing instead on a generative,

theoretically grounded analysis of mechanisms and

contingency factors, we hope we have provided

some useful guidelines for managers to use in tai-

loring their practices to conditions most likely to

lead to positive outcomes.

Foundations for Future Research

We conclude with a discussion of possible em-

pirical settings and extensions for research on

stretch goals, as well as a brief commentary on

two implications of stretch goal pursuit that are

beyond the scope of the current investigation but

highlight important areas for future inquiry.

Empirical tests of stretch goal effects. To set

the stage for future empirical work, we have

proposed a testable theory suggesting that

seemingly impossible organizational goals ex-

hibit a predictable pattern of positive and neg-

ative effects contingent on recent performance

and slack resources, and these contingency fac-

tors also determine when organizations are

more or less likely to use such goals. Our prop-

ositions could be examined using several em-

pirical approaches. For example, initial empiri-

cal studies of stretch goal effects could take the

form of qualitative theory testing, whereby mul-

tiple firms with different attributes are studied

in depth. Or a study using one very large orga-

nization could examine the use and effective-

ness of project proposals within the organiza-

tion (e.g., high-risk research initiatives or new

venture proposals). Alternatively, a simulation

study would provide the control to vary organi-

zational conditions and measure baseline levels

of learning and performance before and after

the imposition of a stretch goal.

In addition, quantitative investigations could

be undertaken to study both the effects and like-

lihood of pursuing stretch goals using a strati-

fied random sample based on archival indica-

tors of slack and recent performance. Within the

sample, evidence of stretch goal usage could be

measured by conducting a survey of senior man-

agers in organizations, or it could be extracted

from annual reports or letters to shareholders. In

any of these approaches, individual organiza-

tions in the sample could be coded for the timing

of stretch goal use and the type or nature of the

stretch goal (e.g., a goal to increase market

share, reduce manufacturing process time, re-

duce error rate) in order to better compare ef-

fects across organizations.

Beyond testing the organization-level effects we

have proposed in this article, future research

could focus more specifically on the potential un-

derlying processes and mechanisms summarized

in Figure 1. That is, researchers could study unat-

tainable goals in terms of their impact on the

cognitive, affective, and behavioral mechanisms

through which stretch goals can influence organi-

zational outcomes. To further enrich and extend

the theory proposed here, future studies could also

examine possible sequences, interactions, and

path dependencies among the mechanisms. It

would be interesting as well to explore the impli-

cations of variation in the degree of stretch goal

implementation, such as when unattainable goals

are used only by segments of an organization ver-

sus the entire organization.

2011 561Sitkin, See, Miller, Lawless, and Carton

In our theorizing we have discussed organiza-

tion-level effects on learning and performance,

but within the organization stretch goals might

have differential effects on various parts of the

system. Additionally, because the use of stretch

goals implies a willingness to undertake high

risks to pursue high rewards, variation in incen-

tives within organizations for the pursuit of stretch

goals could be examined to see how this affects

both use and effectiveness of such goals. All of

these questions highlight fruitful ways in which

the ideas we have proposed can be further ex-

tended and refined if future research were to focus

on the ripple effects inside organizations that use

stretch goals, rather than focusing only on the

aggregated organization-level outcomes that

have been our primary focus.

Process-oriented stretch goals. Scholarly and

practitioner accounts of stretch goals suggest

that such goals are typically used in the explicit

hope of directly improving performance, and po-

tentially also spurring exploratory learning in

the course of achieving the extreme target. Con-

sistent with the use of stretch goals in practice

and also the majority of goal research, we have

defined and analyzed stretch goals as outcome-

oriented goals that make explicit a specific,

quantifiable level of desired performance or out-

put (e.g., decrease errors by a particular percent-

age). Note that this precludes goals that are

articulated solely in terms of enhancing the

learning process as an end in itself (e.g., where

the goal is to formulate five ways of learning

how to decrease errors). This raises the question

of whether learning-focused organizations (i.e.,

considering the use of stretch goals solely to

learn) really need to use stretch goals (which are

performance outcome goals) as a vehicle, or

whether they could gain the facilitative benefits

of stretch goals and limit their disruptive liabil-

ities by using process-oriented learning goals

instead (see, for example, Seijts & Latham, 2005).

It is ultimately an empirical question, and future

work could explore whether our analysis holds

when one moves beyond outcome-oriented per-

formance goals to include seemingly impossible

goals that are explicitly focused on the acquisi-

tion of procedural knowledge at the organiza-

tion level of analysis.

Ethical implications of stretch goal pursuit.

While we have focused on the organization level

of analysis, we wish to point out some findings

at the individual level pertaining to the unin-

tended negative consequences of goal setting,

with a particular focus on how goals can induce

unethical behavior (Barsky, 2008; Jensen, 2003;

Locke, 2004; Ordonez, Schweitzer, Galinsky, &

Bazerman, 2009; Schweitzer, Ordonez, & Douma,

2004). Although goals can pose an especially

dangerous temptation to breach ethics when as-

sociated with performance measurement or

compensation systems by creating incentives to

misrepresent performance (Jensen, 2003; Locke,

2004; Schweitzer et al., 2004), empirical work pro-

vides direct evidence that even nonmonetary

rewards for meeting a goal (such as internal

satisfaction) are sufficient to influence unethical

behavior (Schweitzer et al., 2004).

Moving from merely difficult goals at the in-

dividual level to the case of stretch goals at the

organization level, the ethical implications

could be amplified. The seeming impossibility

of achieving stretch goals using ordinary means

could easily slip into the seductiveness of using

extraordinary means, such as falsifying records.

Managing the unintended ethical perils of

seemingly impossible goals, as well as other

individual-level disruptive effects that are be-

yond the scope of the present investigation, is

worthy of further examination.

CONCLUSION

We investigated the organizational pursuit of

seemingly impossible goals—commonly known

as stretch goals—and the effects of such goals

on exploratory learning and increased perfor-

mance. Despite widespread interest in the idea

of stretch goals and assertions about their sys-

tematic benefits, there are many reasons to in-

terpret the normative stories of stretch goal suc-

cess as resulting from misunderstandings of the

actual functioning and effects of this enticing

technique. Although our analysis suggests that

there are very specific and limited conditions

under which some organizations should pursue

seemingly impossible goals, we recognize that

organizations may continue to look for success

in all the wrong places. Thus, a challenge for

organizational researchers is to more clearly

identify control mechanisms, learning strate-

gies, and decision aids that organizations can

use to achieve greater effectiveness in overcom-

ing the paradox of stretch goals.

562 JulyAcademy of Management Review

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Andrew M. Carton (amc42@duke.edu) will be an assistant professor of management

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566 JulyAcademy of Management Review

Being Dr. Jekyll and Mr. Hyde: Role-Based Identity Foils in Organizational Life

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This article adopts a relational perspective to demonstrate that characteristics of the dyadic relationship between supervisors and their employees are critical to understanding individual-level exploration—understood as the extent to which organizational members pursue new opportunities and experiment with changes to current practices. To this end, we introduce the concept of power framing—that is, whether the control over valued resources is emphasized as the ability to reward or to punish—and propose that supervisor power framing shapes employee exploration. In an experimental study, we demonstrate that reward (versus punishment) power framing increases employee exploration behavior and that this effect is mediated by perceived trustworthiness of the supervisor. In a second survey study, we replicate these findings in a field sample and show that the relationship between reward power framing and exploration depends on the degree to which the focal employee is sensitive to power characteristics (i.e., power distance orientation). This investigation advances scholarship on the microfoundations of exploration while also highlighting the ability of leaders to alter trustworthiness perceptions and induce employee exploration through power framing. Funding: This work was supported by a National Science Foundation CAREER Award from the Directorate for Social, Behavioral and Economic Sciences [Grant 1943688] granted to O. Schilke. Additional funding was provided by the Sauder School of Business, University of British Columbia. Supplemental Material: The online appendix is available at https://doi.org/10.1287/orsc.2023.1672 .

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Although chief executive officers (CEOs) are the primary decision‐makers in their firms, there has been little research on how CEOs’ decision styles affect firm performance. This study explores the relationships between firm performance and two key dimensions of CEO decision style, namely the use of heuristics and decision standards. We conceptualize the speed and innovativeness of new product development (NPD) as mediators in these relationships. An empirical analysis of 1,046 German firms indicates that CEOs’ use of heuristics may lead to higher NPD speed and stronger firm performance. In addition, higher decision standards, i.e., a stronger tendency to make the best decisions possible, among CEOs may promote higher NPD speed, NPD innovativeness, and firm performance but may also lead to less use of heuristics. Our findings underscore the relevance of CEO decision styles for firm performance and NPD, contribute to the debate on the rationality of heuristics, and conceptually broaden the role of decision standards in decision‐making.

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The year 2020 was marked by the most destabilizing event that humanity has experienced in recent decades. It is the Covid-19 pandemic, which first appeared in the Chinese city of Wuhan, and then spread its wings around the world. This unprecedented situation has had a severe impact on consumer habits and behavior. The objective of this paper is to examine the perceived dynamics of these habits based on a review of consumer literature worldwide and in Morocco in particular. Our work is the result of reading 40 articles published in scientific journals, dealing with consumer behavior since the outbreak of the Covid19 pandemic. The main objective is to describe, synthesize and analyze the existing literature in order to detect the gap that could be the subject of future research. Based on a descriptive analysis, and after gathering common findings across articles, we divided the impact of the Covid19 pandemic on consumer behavior into three key components: Shopping, e-commerce, and food. At the beginning of the pandemic, a situation marked by panic and uncertainty, consumers adopted a behavior of stocking up on necessities and hygiene products. On the other hand, the sale of luxury goods dropped considerably. Consumers also used a new channel, e-commerce, and home delivery was part of their daily routine. After an analysis of previous research related to our research problem, the question of the new post-Covid consumer model was only weakly addressed, this could be the subject of future research

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Popular business press and academic publications have advocated for stretch goals, particularly to enhance firm performance. The general assumption is that stretch goals can create a more challenging task environment that upsets complacency, inspires motivation, encourages outside‐the‐box thinking, stimulates search and innovation, and guides efforts and persistence. Surprisingly few systematic empirical studies have been conducted to support stretch goal deployment, such as when and how to use them. This study introduces two reflection strategies – counterfactual reflection (managers confront performance feedback and create possible alternatives) and factual reflection (managers analyse their own decisions and explain performance feedback) – and uses two experimental laboratory studies to test how different reflection strategies contribute to the stretch goal‐performance relationship. The results indicated that using stretch goals does not affect firm performance, although theoretically, using stretch goals can create a more challenging task environment and enhance performance. Rather, it is the combination of the type of goal and reflection strategy that affects performance. I suspect that under stretch goals, managers may be unable to implement new ideas as expected, leading to growing performance gaps and perceived continuous failures over time. Consequently, their motivation to search for alternative solutions declines, and they may fall into a spiral of self‐constrained thinking. The results demonstrate that under stretch goals, managers use factual reflection strategies to deliberately reflect on performance feedback to achieve higher performance. In contrast, managers who are assigned moderate goals perform better if they use a counterfactual reflection strategy. I suggest that by using a different reflection strategy, managers can further improve performance by encouraging directed search behaviour and avoiding self‐constrained thinking spirals. My study provides a richer theoretical and empirical appreciation of the effect of reflection strategy depending on the task environment and goal‐setting.

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The technology of foolishness

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