Abstract
Integrating insights from the organizational imprinting theory with the problemistic search literature, we inquire how historical environments of firms affect the adaptive process of innovative search by firms from emerging economies during periods of performance shortfall. Utilizing the context of institutional transitions in the emerging economy of India, we surmise that imprints inscribed by the inhibitory and protectionist policy environment in the pre-liberalization period deter firms from focusing on innovation and precludes the development of innovation routines, which impedes innovative search by firms facing performance shortfall in the post-liberalization era. Additionally, we postulate that firms' strategic choices and exogenous conditions of active and passive technological exposure, respectively, attenuate the effects of imprints stamped by the pre-liberalization institutional epoch on the relationship between performance shortfall and innovative search. We test and find considerable support for our predictions on a large dataset of 9088 firm-year observations belonging to the Indian manufacturing industry during 1995 – 2010. Our findings unravel the salience of historical institutional environments in explaining the innovative search behavior of emerging market firms facing performance shortfall.
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