We extend performance feedback research by considering the influence of dominant coalitions’ political goals on firms’ responses to performance feedback. We propose that dominant coalitions use the opportunity afforded by strong performance to make changes that reinforce their dominance, while taking defensive maneuvers to neutralize the threats to their dominance posed by poor performance. However, dominant coalitions’ ability to leverage the opportunities or address the threats depends on the amount of political slack they have. Our analysis of South Korean family-controlled firms shows that endowed with enough political slack, a family coalition can retain the incumbent family CEO despite below-aspiration performance and initiate a family CEO succession, especially by a next-generation family member, even when above-aspiration performance calls for the retention of the incumbent CEO.
