Driving Performance via Exploration in Changing Environments: Evidence from Formula One Racing

Alessandro Marino (), Paolo Aversa (), Luiz Mesquita () and Jaideep Anand ()
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Alessandro Marino: Department of Business and Management, LUISS University, 00197 Rome, Italy
Paolo Aversa: Cass Business School, City University London, London EC1Y 8TZ, United Kingdom
Luiz Mesquita: W. P. Carey School of Business, Arizona State University, Tempe, Arizona 85287
Jaideep Anand: Fisher School of Business, The Ohio State University, Columbus, Ohio 43210

Organization Science, 2015, vol. 26, issue 4, 1079-1100

Abstract: Until recently, scholars have customarily lumped multiple dimensions of environmental change into single constructs, and usually ascertained that the more the context changes, the more value firms derive from higher levels of exploration. In sync with more recent studies focusing on specific dimensions of change, in this paper we borrow theoretical elements from systems theory to examine the possibility that the reward to developing innovative product components may itself be eroded by implicit and yet burgeoning costs to fit the new component technology into existing architectures, thereby dampening system performance. Specifically, we theoretically assess how varying magnitudes of industry regulatory changes affect the optimum level of firm exploration, and propose—counterintuitively vis-à-vis past literature—that the more radical (i.e., competence destroying), as opposed to incremental (i.e., competence enhancing), these changes are, the more the optimum intensity of firm exploration recedes. Based on quantitative as well as qualitative empirical analyses from the Formula One racing industry, we precisely trace the observed performance outcomes back to the underlying logic of our theory, stressing that impaired capabilities to integrate the new component in the architecture redesign and time-based cognitive limitations both operate to inhibit the otherwise positive relationship between firm exploration and performance. In the end, we offer new insights to theory and practice.

Keywords: exploration; environmental change; performance; technology; complexity; Formula One (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (16)

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