Managerial Search and the Pursuit of Opportunity

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This dissertation explores the search behavior of CEOs and how this behavior relates to the opportunities they recognize and take action upon. Opportunities are defined in this dissertation as the perception of a novel and appropriate resource combination acted upon or seized for potential gain. As such, recognizing and acting upon opportunities is among the most important roles of a manager. This is particularly true for CEOs since they are most often tasked with setting the strategic direction of the firm. Despite the importance of managers recognizing opportunities, the literature has failed to fully address the behaviors that influence the novelty and appropriateness of the opportunities those individuals recognize. This dissertation examines those behaviors, known as search. I define search as individual behavior resulting in the acquisition of information and knowledge that can be used to recognize and seize opportunities to solve problems.

Search is categorized into two broad categories: Search terrain (where the search takes place) and search process (the manner in which the terrain is searched). Searches consists of both a terrain and a process. Search terrains are comprised of three dimensions: Distance, familiarity, and breadth of information sources. Search processes are comprised of 4 dimensions: Effort, exhaustiveness, iteration, and formality. Hypotheses are tested to determine the impact that search has on the novelty and appropriateness of opportunities acted upon by CEOs. The findings offer some valuable information about CEO search. First, with respect to opportunity novelty, CEOs appear to maximize novelty when they are effortful and exhaustive in searching a narrow and familiar terrain. On the other hand, CEOs appear to maximize appropriateness in two ways. First, when searching in distant terrains outside the organization, CEOs need to exhaustively explore that terrain but only focus on information outside the organization that is easily obtained and understood. Additionally, it seems helpful to be informal when undertaking the search - particularly among unfamiliar terrains.