How the ghosts of past experience haunt problemistic search

Abstract

The behavioral theory of the firm suggests that when performance falls below aspirations, firms engage in problemistic search for solutions to the performance shortfall. In this article, we contend recent experience is a critical determinant of the search mode employed by the firm. With this foundation, we examine the boundary conditions of search and investigate whether central behavioral theory of the firm concepts of coalitions, routines, and slack resources exacerbate or alleviate the effect of recent experience. We focus our theorizing and empirical tests on R&D search, and results confirm that a firm will generally only engage in a specific search mode in response to performance shortfalls if it has had recent experience with that activity. Examination of boundary conditions indicates that the influence of recent experience is weaker for firms that have experience with other search modes, weaker for diversified firms, stronger for larger firms, and stronger for firms with more absorbed slack.