Abstract
This paper investigates the effects of organizational form on problemistic
search. We contrast how Indian firms affiliated with business groups
and unaffiliated firms evaluate performance and react by adjusting
their internal technology search and external market search. We propose
that, compared with unaffiliated firms, business group-affiliated
(BG-affiliated) firms are more externally oriented in setting aspiration
levels and more likely to respond to low performance in the market
domain. We find support for an external orientation of BG-affiliated
firms and find that group affiliation determines the responsiveness
to performance feedback in different search domains. The findings
suggest a need to add considerations of organizational form and governance
to the theory of organizational search. © 2010 INFORMS.
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