Performance Feedback and Non-local Search: An Empirical Analysis of the U.S. WLAN Industry

Theories suggest that firms often search within familiar technology domains, even when exploring new areas could offer significant benefits. This local tendency of technological search raises a question: When do high-tech firms overcome the inertia of staying local and start searching in new technology domains? Based on the behavioral theory of the firm, this study argues that innovation performance feedback and technological impact rank influence a firm’s decision to engage in non-local technology search. The analysis of data from the U.S. wireless local area network industry between 1985 and 1997 revealed that firms are more likely to pursue non-local technology search when their innovation performance falls below social aspiration levels. Furthermore, a decline in technological impact rank also encourages an increase in non-local search.