Strategic search: Adaptation of internal fit and market positioning under competition

Abstract Research Summary Firms seeking competitive advantage need both internal fit and a distinctive market position, yet strategy research says little about how the search for the two is related. We develop a model of strategic search that integrates an NK landscape with differentiated Cournot competition, allowing a firm's position to shape both its internal fit and distinctiveness. We show that, under low complexity, competition constrains search, locking firms into resource configurations and creating a trade‐off between internal fit and distinctiveness. Conversely, under high‐complexity competition drives distant search, so that internal fit and distinctiveness go hand‐in‐hand. We further show that competitive lock‐in constrains search by early leaders, while distant search drives the emergence of new leaders, thus offering a search‐based theory of market disruption. Managerial Summary How does the search for operationally effective configurations of resources and capabilities affect the distinctiveness of a firm's offering, and vice versa? Our work suggests that the need for distinctiveness may constrain search close to rivals but also enable the discovery of effective configurations far away from them. In relatively simple environments, where firms tend to converge on the same relatively obvious configurations, the search for distinctiveness is constraining, but in more complex environments it may enable the discovery of superior configurations. Further, early leaders may be constrained in their search as rivals cluster around them, while early followers may benefit more from distant search, potentially leading to a disruption of the market as early success proves constraining.