According to the behavioral theory of the firm, the organizational search is central to decision making which forms the core of organizational adaptation and change process. Lamenting the inconsistent findings of previous research, scholars have called for the comprehensive conceptualization of search behavior as well as poor performance situation. In this study, we examine (1) the impact of the intensity and the duration of performance shortfall relative to aspiration levels on the direction of organizational search, whether the search is more explorative or less explorative, and (2) the moderating effect of micro-foundations of CEO’s regulatory focus on the above relationships. Our conceptualizations extend the theory of problemistic search and performance feedback and offer possible explanations for contradictory findings in the literature of performance feedback and organizational change post-performance shortfall. We test our theoretical model using dynamic panel data analysis technique on a unique panel dataset of 3545 firm-year observations of Indian firms and find support for our key predictions.
|Journal||Academy of Management Proceedings|
|Publisher||Academy of Management|