Search antecedents and outcomes of new venture perceived and actual knowledge incongruence

Abstract

This study explores the new venture knowledge search process, including what role differences in perceived and actual knowledge play, and the resulting influence on strategic choice and performance. A model was created that identifies proposed relationships among key constructs associated with knowledge satisfaction, search, strategy, and new venture performance. We found that perceived relative knowledge strength is deemed to influence the degree of strategic leverage a new venture selects, which subsequently influences performance, contingent on actual relative knowledge strength. The model more clearly distinguishes the role of search in perceived and actual knowledge, which identifies potentially disadvantageous effects on strategic choice and performance. Research implications include the importance of acknowledging that perceived knowledge is just as critical as actual knowledge when utilizing the resource‐based and knowledge‐based views of the firm. Both internal and external search contain advantages and disadvantages that are important for firms trying to achieve external fit within a dynamic competitive environment. Practical implications include that new ventures should be cognizant of potential differences between perceived knowledge and actual knowledge because any incongruence can mislead new ventures in their search efforts and strategic initiatives. Moreover, new ventures should continually engage in external search, even when they have superior knowledge, because the process of external search provides a variety of competitive information that can help new ventures determine their degree of advantage. New ventures also need to recognize the dynamic nature of competition and accurately assess performance fluctuations in order to enhance their performance.