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Organizations are frequently faced with high levels of complexity. While the importance of search for dealing with complex systems is widely acknowledged, how organizations should structure their search processes remains largely unexplored. This paper starts to address basic questions: How much of the entire system, and thus complexity, should be taken into consideration at any given time during a search process? Should a problem solver pursue an integrated search and be concerned with the whole system right from the start, or should a problem solver incrementally expand the "search domain," i.e., the subset of system elements and interdependencies that are included in the search efforts? If the latter, how "chunky" should these steps be? Our analysis of a simulation model yields four insights: (1) expanding the search domain in smaller steps can yield a distinct advantage in final system performance, (2) following a completely incremental expansion pattern is not necessary as long as larger chunks are added early on in the process, (3) the value of chunky search is particularly high if highly influential system elements are considered first and highly dependent elements are added later, and (4) under time pressure, chunky search can lose its performance advantage over more integrated search processes. We discuss the implications of our findings for managing organizational search and complex systems more broadly.

We conduct an experiment to examine how providing decision makers with high versus low peer performance information influences choices between exploration and exploitation. Previous work on organization-level learning suggests that a high-performing peer would fuel exploration, whereas a low-performing peer would dampen it. In line with this, we find that individuals who receive information about a high-performing peer explore more than those who receive information about a low-performing peer. However, we also find that compared to individuals with a low tendency to self-enhance, individuals with a high tendency to self-enhance are less likely to explore when receiving information about a high-performing peer. In fact, these individuals explore at levels comparable to those who receive information about a low-performing peer. We explain this behavioral pattern by demonstrating that as individuals learn and improve, information about a high-performing peer increasingly results in mixed performance feedback; under these conditions of relative interpretive flexibility, exploration is moderated by decision makers' tendency to self-enhance. When these individual dynamics are aggregated, our data suggest that an organization that provides peer performance information may experience either the same or less exploration than an organization that does not, with the exact difference depending on its proportion of high self-enhancers. These insights into the contingencies and aggregate effects of how individuals interpret and respond to peer performance information are particularly relevant given recent interest in designing organizations that shape employee behavior through the provision of feedback rather than through traditional instruments of coordination and control, such as incentives or hierarchy. Funding: This work was supported by Danmarks Frie Forskningsfond [Grant 25194]. Additionally, this research was supported by a grant from the HEC Paris Foundation.

When outsourcing design tasks, firms want their suppliers to be both efficient and adaptive. Whereas efficiency is necessary to reap economic gains from outsourcing, adaptation is required to deal with interdependencies as the design evolves. Achieving both objectives simultaneously, however, is difficult because procurement contracts require a trade-off between providing incentives for efficiency and facilitating adaptation. In the presence of formal contracts that provide strong incentives for efficiency, ensuring adaptation thus requires effective relational contracts between the buyer and the supplier. But because the focus of prior research has been on dyadic buyer–supplier relationships, it is unclear how the efficiency–adaptation trade-off can be mitigated in the multitier supplier systems that are common in many industries. Addressing this gap, we argue that in hierarchical supplier systems, relational contracts between contractual partners become more important, but at the same time harder to establish, than in single-tier supplier systems. An in-depth case study of the adaptive frictions that arose in the Airbus A350 program allows us to illustrate this challenge of tiered outsourcing. Moreover, we show how Airbus came to resolve the frictions by leveraging skip-level ties—direct informal contacts to lower-level suppliers with which no contractual relationship existed, thus replacing the archetypal notion of a supplier hierarchy by a more complex relationship structure. We discuss the boundary conditions of our findings and suggest propositions for the emergence of skip-level ties in tiered outsourcing.

Intra-organizational comparisons—managers and units benchmarking their performance against each other—can turn colleagues into competitors. To better understand when organizations should allow or even encourage internal social comparisons, we study their implications for organizational adaptation and performance. We conceptualize internal social comparisons as an upstream competitive process that shapes performance aspirations and creates interdependencies in search behavior. We distinguish this from downstream, product market competition or complementarities where performance is interdependent across units. Integrating both aspects into a computational model, we show how internal social comparisons affect adaptation and performance through two mechanisms: a balancing effect whereby the organization is guaranteed to contain both exploring and exploiting units, and a stabilizing effect whereby internal social comparisons protect against abandoning existing technologies too early. The benefits of upstream comparisons are accentuated when units are downstream complements, helping synchronize search. When units are downstream competitors, these benefits disappear, suggesting substitutive effects. We highlight empirical implications and discuss theoretical links to work on intra-organizational competition, social comparisons and aspiration-driven search, diversification and performance, and the adaptation of multi-business firms.