This study integrates the configurational perspective with the problemistic search literature to identify constellations of factors that influence firm’s direction of risk, post performance shortfall. Literature on problemistic search has often analysed isolated effects of singular determinants across firm’s ability and motivation on its engagement with specific risky organizational changes. Building further on this stream of research, this study analyses firm’s direction of risk on negative performance discrepancy by examining the simultaneous impact of multilevel predictors arising from firm’s opportunity in the external environment, its motivation and ability. We adopt the fuzzy set methodology to conduct our inductive research in the context of the US pharmaceutical industry. Emphasizing equifinality, this analysis reveals the salient role of CEO compensation and cognition, environmental munificence, distance from bankruptcy and organizational inertia in impacting the degree of risk in a firm’s search behaviour.
|Journal||Academy of Management Proceedings|
|Publisher||Academy of Management|