How does performance shortfall affect problemistic search by firms from emerging economies? Despite the importance of context of emerging economies in the proliferation of the problemistic search research, attempts to achieve the same remain far and few. Thus, advancing scholarship on the emerging economy firm's search behavior following performance shortfall, this study combines research on the problemistic search theory, with the literature on catch-up strategies and national policies. We suggest that emerging economy firms exhibit an external orientation to search and pursue technological catch-up strategies following performance shortfall. Further, the national innovation policies that outline the government’s emphasis on technology transfer and assimilation moderate the baseline relationship. We examine our predictions on a sample of Indian manufacturing firms during the period 1992 – 2018 and find empirical support. This study contributes to the nascent stream of research examining emerging economy firm’s problemistic search behavior and underlines the role of national policies that guide formation of institutions and firm search processes.