Search breadth and the cost of search

Curba Morris Lampert, Matthew Semadeni

Research output: Chapter in Book/Report/Conference proceedingConference contribution

2 Scopus citations

Abstract

We draw attention to an overlooked, yet key theoretical determinant of innovation search ' the cost of search. We address the question of why firms may not conduct broad search despite its many benefits. We argue that the costs of broadening search may inhibit exploration and identify two cost-leveraging strategies that can help firms overcome this constraint: (1) locating some of their activities in foreign countries (offshoring), and (2) joint development with other firms (partnering). Our model takes into account the costs of search on innovative activities and we find that by applying these cost-leveraging strategies, firms can 'afford' to conduct more exploratory search than if they did not use such strategies. Moreover, the degree to which offshoring and partnering benefit the firm is likely to be contingent on the firm's level of R&D spending, such that firms with lower amounts of R&D spending will enjoy greater benefits from offshoring and partnering than firms with greater amounts of R&D spending. Hypotheses were tested with longitudinal data from the U.S. pharmaceutical industry. The main contribution of this research is to show that that firms' search behaviors are driven not just what they can do (competencies), but also by what they can afford to do (costs). Though underemphasized by prior research on learning and exploration, costs matter and have implications for search and innovation activities.

Original languageEnglish (US)
Title of host publicationAcademy of Management 2010 Annual Meeting - Dare to Care: Passion and Compassion in Management Practice and Research, AOM 2010
StatePublished - 2010
Externally publishedYes
Event70th Annual Meeting of the Academy of Management - Dare to Care: Passion and Compassion in Management Practice and Research, AOM 2010 - Montreal, QC, Canada
Duration: Aug 6 2010Aug 10 2010

Other

Other70th Annual Meeting of the Academy of Management - Dare to Care: Passion and Compassion in Management Practice and Research, AOM 2010
CountryCanada
CityMontreal, QC
Period8/6/108/10/10

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Keywords

  • Innovation
  • Offshoring
  • Search

ASJC Scopus subject areas

  • Management of Technology and Innovation
  • Industrial relations

Cite this

Lampert, C. M., & Semadeni, M. (2010). Search breadth and the cost of search. In Academy of Management 2010 Annual Meeting - Dare to Care: Passion and Compassion in Management Practice and Research, AOM 2010