Institutional History, Negative Performance Feedback, and R&D Search: A Nexus of the Imprinting and Behavioral Perspectives

Abstract

According to the extant literature, organizational history binds strategic choices concerning problemistic search behaviors. To complement this line of inquiry, I draw from organizational imprinting theory to develop arguments regarding how institutional history impacts problemistic search behaviors. Using the regulatory punctuation of pro-market reforms characterizing the Indian economy as the research context, I examine how the timing of firms’ founding (i.e., in the pre- or post-reform period) explains their intensity of research and development (R&D) search following negative attainment discrepancy in the post-reform period. Furthermore, I explore how this relationship varies on the basis of the protectionist policies that characterized the industries in which firms operated during their founding. Overall, I find that firms that originated in the pre-reform period engage in less R&D search in response to negative attainment discrepancy; furthermore, this behavior is stronger among firms that were founded in more protected industries. Post hoc tests, however, reveal that when firms that originated in the pre-reform period face existential threats, they tend to commit greater resources to R&D search. These findings contribute to research at the intersection of history, institutions, and problemistic search theory, and provide novel insights into the problemistic search behaviors of emerging-economy firms.