Searching for knowledge in response to proximate and remote problem sources: Evidence from the U.S. renewable electricity industry

Abstract

AbstractResearch SummaryWe consider how different problem sources—proximate versus remote—relate to heterogeneity in search breadth. While studies of search have established the importance of search breadth, and argued that problems trigger search, they have focused on a single problem source instigating search. We extend prior research by considering how search breadth differs in the presence of proximate and remote problem sources. Because of differences in familiarity with each type of problem, and in expectations of their ability to influence the problem source, problems triggered by remote sources associate with greater breadth. Firms' technological capabilities, meanwhile, temper these findings; capable firms exhibit broader search when facing problems raised by proximate sources. Using data describing the U.S. renewable electricity sector, we generate theoretical and empirical implications.Managerial SummaryWhen facing new problems, firms tend to seek knowledge from various sources to better understand the problem and identify relevant solutions. The source of the problem may be an important trigger to the breadth of search activities, particularly whether the source is proximate or remote. To test this notion, we compare U.S. utility firms' search breadth when facing regulations emphasizing increased renewable generation, from both the federal and the state government. We find that firms tend to search for knowledge about renewable technologies more broadly following federal regulatory actions. However, firms that have previously generated renewable electricity search more broadly following state regulatory actions. By exploring firms' choices in the U.S. renewable electricity sector, our research generates important managerial and public policy implications.