Facilitating the evaluation of distant opportunities: Bridging back after leaping forward

Abstract

Strategy scholars have argued that the pursuit of cognitively distant opportunities contributes to the sustainability of a firm’s competitive advantage. Success in this pursuit requires the firms not just to identify distant opportunities, but also correctly evaluate the opportunities’ potential. The research on distant search to date has considered how firms can identify distant opportunities, however, we know less about how firms evaluate such opportunities. Drawing on a historical case study of the emergence, evolution, and acceptance of mortgage-backed securities (MBS) in the United States between 1970 and 1983, this paper considers the process by which firms evaluate distant opportunities. My findings suggest that in evaluating distant opportunities decision makers can face two types of distance between the innovation domain and the domain of existing products—distance between two domains that share dimensions and distance between two domains that do not. In the former case, the distance between the domains can be evaluated along the shared dimension, thus, enabling the evaluation of the distant opportunity in question. In the latter case, the introduction of a dimension shared by the two domains is an important prerequisite for evaluating the distant opportunity in question.