Abstract
We examine the antecedents of local search behavior by focusing on relational and contextual factors, as opposed to typical focus on internal firm factors. We developed the concept of a firm's relative size, defined as the number of rivals in the market that have fewer resources than the focal firm, and found in a panel study that firms with larger relative size in a market search more intensely within the local domain than firms with smaller relative size. We also found that the entry and exit of similar and dissimilar firms moderate this relationship. The implications for innovation, capabilities and evolution literatures are discussed.
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