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Chasing ‘Animal spirits’: business expectations, performance feedback, and advertising intensity in Japanese firms

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“…our decisions to do something positive, the full consequences of which will be drawn out over many days to come, can only be taken as the result of animal spirits” -Keynes (1936, pp. 161–162).

Abstract

Research on managerial responses to poor performance suggests performance shortfalls lead managers to search for solutions to the shortfalls. Managers in smaller or financially distressed firms may also perceive existential threats to their organizations, causing them to avoid expending resources searching for solutions to poor performance. Until now, this research has assumed that managers search for solutions to performance shortfalls without considering expectations on the future business environment. We posit that positive expectations about the near future business environment will enhance the intensity with which managers search for solutions to poor performance in the form of advertising investments. We also posit that positive expectations about the near future business environment will reduce the likelihood that smaller or financially distressed firms avoid increases in advertising investments. Results in the context of public non-manufacturing firms from 1986 through 2019 in Japan lend support for these ideas.

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Acknowledgements

The authors would like to thank Editor Fabian Jintae Froese and two anonymous reviewers for their feedback on this research. All authors contributed equally to this article.

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  1. College of Business and Economics, Western Washington University, 516 High Street, Bellingham, WA, 98225, USA

    K. Skylar Powell & Eunah Lim

  2. Research Institute for Economics and Business Administration, Kobe University, 2-1 Rokkodai, Nada, Kobe, 657-8501, Japan

    Hidenori Takahashi

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Powell, K.S., Lim, E. & Takahashi, H. Chasing ‘Animal spirits’: business expectations, performance feedback, and advertising intensity in Japanese firms. Asian Bus Manage 22, 1035–1064 (2023). https://doi.org/10.1057/s41291-022-00190-6

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