Innovation under Scrutiny: How Certifications Reorient Technological Search

Abstract

Certifications issued by authoritative institutions enhance organizational standing and facilitate access to resources for innovation. We argue, however, that when certification functions as a maintained status – a time-limited position contingent on continued compliance – the recurring evaluation required to preserve it generates conformity pressures that redirect innovation search toward familiar domains. Drawing on institutional theory, we show how ongoing monitoring and standardized evaluation criteria favor outcomes that are legible and verifiable within fixed review cycles. We further argue that these effects vary with firms’ technological prestige and the local institutionalization of certification. Studying China’s High and New-Technology Enterprise certification program using coarsened exact matching, an extended two-way fixed effects difference-in-differences design, and in-depth interviews, we find that certification reduces search in unfamiliar technological domains. This effect is attenuated among high-prestige firms and amplified where certification is widely institutionalized. These findings advance understanding of how evaluative regimes shape where firms search for new knowledge.