Experiential Learning, Inter-Firm Imitation, and Advice-Seeking During Corporate Restructuring

Abstract

Advice-seeking is an integral part of decision-making for upper echelons and has important implications for firms’ strategic actions and performance. However, factors leading to firms’ advice-seeking behavior remain poorly understood in the management literature. Using the context of corporate divestitures, this study conceptualizes firms’ advice-seeking as a function of experiential learning (divestiture experience), interfirm imitation (industry peers’ practices), and task types (sell-off or spin-off). The results show that direct learning from past experience decreases, while industry peers’ advice-seeking practices increase, the likelihood of firms’ advisor engagement during divestitures. Also, firms’ cumulated divestiture experience helps to reduce their tendencies to imitate industry peers’ advice-seeking behavior. These relationships, however, are weakened when a divestiture event is classified as high in uncertainty, variation, and complexity. This study contributes to the organizational learning and restructuring literatures by offering insights into the antecedents for firms’ advice-seeking during critical corporate change events such as asset divestitures.