Business Group Affiliation and Firm Search Behavior in India: Responsiveness and Focus of Attention

This paper investigates the effects of organizational form on problemistic search. We contrast how Indian firms affiliated to business groups and unaffiliated firms evaluate performance and react by adjusting their internal technology search and external market search. We propose that, compared with unaffiliated firms, business group firms are more externally oriented in setting aspiration levels and more likely to respond to low performance in the market domain. We find support for an external orientation of business group affiliated firms and find that group affiliation determines the responsiveness to performance feedback in different search domains. The findings suggest a need to add considerations of organizational form and governance to the theory of organizational search.