Files and links (1)
Preprint (Author's original)Open Access (License Unspecified), Open
Working paper
Myopic Search and Distant Goals
SSRN Electronic Journal
13 Apr 2021
Abstract
The need for venturing out to distant states is a well-established insight of the behavioral theory of the firm. Previous literature has paid particular attention to the need to complement local experimentation with exploratory search for solutions that involve a multitude of changes, especially when decision problems are complex. Less attention has received the notion that exploration is not a process that occurs instantaneously but rather involves a series of interim steps. An important distinction therefore is to be made between discovery of a distant opportunity and the local learning efforts of the underlying activities that are required. We argue that the discovery of a distant opportunity may serve as a goal that then may inform a firm’s local search. In a computer simulation, we explore how a decision maker’s consideration of a distant goal in local learning shapes a firm’s search path. In particular, we examine how a firm’s level of goal myopia and the goal setting scope affect firm performance. We find that goal myopia to some extent is necessary and helpful in navigating through complex decision problems. We also find that a bounded goal setting scope is preferable in complex environments as firms may in fact reach such goals and more frequently update their goals along the way. In contrast, when firms set very attractive but also very distant goals, they are more likely to get stuck along the way with mediocre strategies.
Metrics
19 Record Views
Details
- Title
- Myopic Search and Distant Goals
- Creators
- Daniel Albert - Drexel UniversityAnoop Menon - University of Pennsylvania
- Publication Details
- SSRN Electronic Journal
- Resource Type
- Working paper
- Language
- English
- Academic Unit
- Management
- Other Identifier
- 991019551686304721