Performance expectation fallout, knowledge search, and corporate dual innovation

Area of Science:

• Business Strategy
• Innovation Management
• Organizational Behavior

Background:

• Firms utilize an assessment-search-innovation process in response to performance feedback.
• Understanding how performance expectations influence dual innovation strategies is crucial for competitive advantage.

Purpose of the Study:

• To analyze the decision-making process firms use in response to performance feedback.
• To investigate the role of knowledge search in the relationship between performance expectation gaps and dual innovation.

Main Methods:

• Analysis of imbalanced panel data from 827 A-share high-tech firms (2010-2022).
• Empirical research using Stata software, including descriptive statistics, correlation, regression, robustness, and endogeneity tests.

Main Results:

• Performance expectation gaps stimulate broad knowledge search and hinder in-depth knowledge search.
• Broad knowledge search positively correlates with exploratory innovation; in-depth knowledge search positively correlates with exploitative innovation.
• Firms prioritize broad knowledge search over in-depth search when facing performance declines, especially with high bankruptcy risk.

Conclusions:

• Performance expectation disparities influence dual innovation by shaping knowledge search breadth and depth.
• Cross-industry knowledge search enhances exploratory innovation, while intra-industry search boosts exploitative innovation.
• The study provides theoretical and empirical evidence for how external knowledge seeking drives dual innovation strategies.