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Problemistic Search of the Embedded Firm: The Joint Effects of Performance Feedback and Network Positions on Venture Capital Firms’ Risk Taking
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2022 | Organization Science | Citations: 0
Authors: Hu, Songcui; Gu, Qian (Cecilia); Xia, Jun

Abstract: The Behavioral Theory of the Firm suggests that performance below aspirations tr ... Expand

Abstract: The Behavioral Theory of the Firm suggests that performance below aspirations triggers problemistic search that can lead to risk taking. This prediction has received empirical support from most studies on the topic. However, this literature has typically focused on the internal determinants of firm search and risk-taking behavior and given little attention to the influences of social networks in which firms are embedded. To this end, we incorporate the network embeddedness perspective regarding firms’ network positions and their roles in firm decision making. We suggest that a firm’s search behavior is jointly directed by its performance feedback and network positions. Specifically, network brokerage and centrality play important yet distinct roles in guiding firm search behavior by differentially shaping the direction of problemistic search: high brokerage directs problemistic search to high-risk solutions, whereas high centrality directs problemistic search to low-risk solutions. Our theoretical predictions receive general empirical support based on analyses using longitudinal data from the Chinese venture capital industry. Our approach incorporates the crucial role of network structures into the problemistic search model and works toward building a problemistic search theory of the embedded firm. Collapse

Semantic filters: problemistic search theory

Topics: decision making social network database system organizational productivity organizational change

Methods: theory development qualitative interview statistical hypothesis test descriptive statistic generalized linear model

Theories: problemistic search theory theory of bounded rationality
The Effects of Operational and Financial Performance Failure on BI&A-Enabled Search Behaviors: A Theory of Performance-Driven Search
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2020 | Information Systems Research | Citations: 0
Authors: Anand, Abhijith; Sharma, Rajeev; Kohli, Rajiv

Abstract: Business intelligence and analytics (BI&A) systems enable firms to analyze data ... Expand

Abstract: Business intelligence and analytics (BI&A) systems enable firms to analyze data and search for insights that could potentially lead to improved organizational performance. While there is evidence that BI&A systems can improve performance through search, our theoretical understanding of how and under what conditions firms leverage BI&A systems to conduct search is rather limited. In particular, while problemistic search theory posits that performance failures motivate search, how firms respond to different types of performance failures remains unclear. We draw on and extend problemistic search theory by theorizing that BI&A-enabled search is influenced by complex interactions between failures in financial and operational performance and performance-related aspirations. We refer to this notion as the Theory of Performance-driven Search (TPS) and test it using longitudinal data gathered for a four-year period from seven U.S. hospitals. We find evidence that firms employ BI&A systems to search in a narrow set of circumstances. We find that performance failures are an important antecedent of BI&A-enabled search. In particular, failures in financial performance, failures in operational performance, and their joint failures are important conditions that trigger BI&A-enabled search. We find that historical and social aspiration levels of financial and operational performance influence BI&A-enabled search during failures in operational performance. We also find that only in organizations experiencing a sustained failure in financial performance do operational performance failures trigger BI&A-enabled search and that the latency of search response is dependent on the speed of failure in financial performance. Through our findings, we make two important contributions: we extend the business value of IT literature by identifying the contextual conditions that trigger BI&A use for search and we extend problemistic search theory by theorizing for the differential effects of operational and financial performance failures. Collapse

Semantic filters: problemistic search theory

Topics: analytical information system financial performance organizational context organizational productivity decision making

Methods: theory development longitudinal research statistical hypothesis test hierarchical linear modeling robustness check

Theories: performance theory problemistic search theory attribution theory

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Problemistic Search of the Embedded Firm: The Joint Effects of Performance Feedback and Network Positions on Venture Capital Firms’ Risk Taking

The Effects of Operational and Financial Performance Failure on BI&A-Enabled Search Behaviors: A Theory of Performance-Driven Search