Turning the Tide: Persistent Search After Technological Failures

There is a longstanding agreement in management literature that failures should be tolerated to achieve innovative breakthroughs. However, less is known about how organizational search processes unfold after having encountered a failure and how firms can persist in searching within the same idea in order to fix it. This study builds on cognitive research on scientific reasoning to introduce a theory of persistent search during the discovery of a technological invention. This theory argues that organizations search for the latent value of a fully novel technology by generating alternatives (i.e., hypotheses on how the technology works) and experimenting with them. Biases characterize discovery search processes in both the hypotheses and the experiments. After a failure, solely persisting in searching for evidence is detrimental, but a coupled persistent search in the evidence space and the hypotheses space can improve the likelihood of reaching a successful result for the failed technology. The theory is tested by using a unique dataset of dynamic portfolios of research projects built on drug-development data.