Effects of performance feedback on firm search orientation: the case of positive attainment discrepancy

Abstract

Firms’ search behavior is considered as a significant factor for firms not only to generate novelties and recombinant opportunities but also to solve pre-existing problems, leading to achieving a competitive advantage. This study develops prior research on search behavior that has been mainly considered in its relationship with outcomes by examining its triggers. Thus, we investigate the effects of performance feedback on firms’ search orientation. In particular, we focus more on the positive attainment discrepancy that relatively has had little attention in the BTOF literature. We argue that firms pursue the boundary-spanning search to achieve long-term survival in the industry when they have a positive attainment discrepancy. We indicate empirical support for our argument with patent and financial data from U.S. electronics firms from 2010 to 2015. Results of this study found that boundary-spanning search orientation increases when the performance is above aspirations, whereas local search orientation decreases when the performance is above aspirations. This paper presents the significant trigger for determining search orientation type, which in turn allows firms to sustain better performance and adopt appropriate strategic decisions.