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Search, Failure, and the Value of Moderate Patience

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  • Oliver Baumann

Abstract

Conventional wisdom suggests that successful innovation in complex and novel environments requires patience – persistence despite failures – to ensure broad search for good solutions. Using an agent-based simulation model, I show that the link between patience and innovation is complex: Moderate levels of patience promote broad and effective search. High levels of patience, in contrast, can have unintended effects and even decrease performance despite increasing the degree of search. Furthermore, because translating the gains of patience into performance improvements requires time, low levels of patience are generally optimal for shorter time frames. My findings indicate that paying attention to how patience affects both the explorative and exploitative aspects of search can show when patience may effectively boost innovation.

Suggested Citation

  • Oliver Baumann, 2010. "Search, Failure, and the Value of Moderate Patience," Schmalenbach Business Review (sbr), LMU Munich School of Management, vol. 62(3), pages 234-259, July.
  • Handle: RePEc:sbr:abstra:v:62:y:2010:i:3:p:234-259
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    Keywords

    Agent-Based Simulation; Complexity; Experimentation; Moderate Patience; Search; Innovation.;

    JEL classification:

    • C63 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computational Techniques
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives

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