Searching for Knowledge in Response to Proximate and Remote Problem Sources: Evidence from the U.S. Renewable Electricity Industry

Abstract

Research Summary: We 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, this research has focused on a single problem source driving search. We consider, instead, how search breadth differs in the presence of proximate and remote problem sources. Because of differences in how familiar firms are 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, empirical, and public policy implications. Managerial Summary: When facing new problems, firms tend to seek knowledge from various sources to better understand the problem and identify solutions. We consider whether and how the breadth of their search differs in conjunction with the problem source by comparing proximate and remote problem sources. Specifically, we compare how U.S. utilities firms facing regulations emphasizing increased renewable generation, from the federal government as compared to the state government, seek knowledge about renewable technologies. We find that firms tend to search more broadly following federal regulatory changes. However, firms that have previously generated renewable electricity, search more broadly following state regulatory changes. By exploring firms’ actions in the U.S. renewable electricity sector from 2000 to 2010, our research generates important managerial and public policy implications.