Effective Search in Rugged Performance Landscapes: A Review and Outlook

Forthcoming in Journal of Management

57 Pages Posted: 28 Sep 2018

See all articles by Oliver Baumann

Oliver Baumann

University of Southern Denmark - Strategic Organization Design Unit (SOD)

Jens Schmidt

Aalto University - Industrial Engineering and Management

Nils Stieglitz

Frankfurt School of Finance & Management; University of Southern Denmark - Strategic Organization Design Unit (SOD) - Department of Marketing & Management

Date Written: September 14, 2018

Abstract

The creation of novel strategies, the pursuit of entrepreneurial opportunities, and the development of new technologies, capabilities, products or business models all involve solving complex problems that require making a large number of highly interdependent choices. The challenge that complex problems pose to boundedly rational managers — the need to find a high-performing combination of interdependent choices — is akin to identifying a high peak on a rugged performance “landscape” that managers must discover through sequential search. Building on the NK model that Levinthal (1997) introduced into the management literature, scholars have used simulation methods to construct performance landscapes and examine various aspects of effective search processes. We review this literature to identify common themes and mechanisms that may be relevant in different managerial contexts. Based on a systematic analysis of 71 simulation studies published in leading management journals since 1997, we identify six themes: learning modes, problem decomposition, cognitive representations, temporal dynamics, distributed search, and search under competition. We explain the mechanisms behind the results and map all of the simulation articles to the themes. In addition, we provide an overview of relevant empirical studies, and discuss how empirical and formal work can be fruitfully combined. Our review is of particular relevance for scholars in strategy, entrepreneurship, or innovation who conduct empirical research and apply a process lens. More broadly, we argue that important insights can be gained by linking the notion of search in rugged performance landscapes to practitioner-oriented practices and frameworks, such as lean startup or design thinking.

Keywords: Complexity, Performance Landscape, Search, Problem Solving, Bounded Rationality, NK Model, Simulation

JEL Classification: C63, D21, D22, D83, D91, L2, M1, O31, O32

Suggested Citation

Baumann, Oliver and Schmidt, Jens and Stieglitz, Nils, Effective Search in Rugged Performance Landscapes: A Review and Outlook (September 14, 2018). Forthcoming in Journal of Management, Available at SSRN: https://ssrn.com/abstract=3249425

Oliver Baumann

University of Southern Denmark - Strategic Organization Design Unit (SOD) ( email )

Campusvej 55
Odense, DK-5230 M
Denmark
+45-6550-4433 (Phone)

HOME PAGE: http://www.sdu.dk/staff/oliv.aspx

Jens Schmidt (Contact Author)

Aalto University - Industrial Engineering and Management ( email )

POB 9500
02015, Aalto 00076
Finland

Nils Stieglitz

Frankfurt School of Finance & Management ( email )

Sonnemannstraße 9-11
Frankfurt am Main, 60314
Germany

University of Southern Denmark - Strategic Organization Design Unit (SOD) - Department of Marketing & Management ( email )

Campusvej 55
DK-5230 Odense M
Denmark

HOME PAGE: http://www.sdu.dk/sod

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