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Are James March's ‘exploration’ and ‘exploitation’ separable? Revisiting the dichotomy in the context of innovation management
... March's conceptualization results in studying E/E as opposite activities that can only be carried out separately (Zhou, Dekkers and Chia, 2023). Thus, E/E is seen as two ends of a ''continuum'', where exploration refers to switching options and exploitation refers to remaining with one choice (Mehlhorn et al., 2015). ...
... Other perspectives consider E/E as ''independent'' and separate activities, occurring at different times and spaces. Zhou, Dekkers et al. (2023) posit that the continuum perspective has been tested only in simulated experiments and does not hold when analyzing empirical evidence. In contrast, they argue that conceptualizing E/E as ''intertwined and inseparable'' activities can provide a more comprehensive understanding of how individuals make decisions. ...
... We posit that it will influence users' actions while navigating, interacting with others, and consuming content. And given the multiple actions and features that social media platforms provide, it is important to distinguish the respective effects of E/E on user behavior (Zhou, Dekkers et al., 2023). Therefore, we propose to study E/E considering these two main perspectives, as a continuum and as independent activities to have a better understanding of this trade-off when individuals search for content on a social media platform. ...
... The keywords shown in Figure 1 were applied independently by the first two authors on the team to Scopus, Web of Science and Google Scholar. Using multiple databases is beneficial for including relevant studies, preventing relevant studies from missing out on specific databases (Zhou et al., 2023). These three are the most used databases with the coverage of high-impact and peerreviewed journals (Podsakoff et al., 2005). ...
... Only papers written in English are included. In addition, we only included papers published in peer-reviewed journals to ensure the quality of the data set, following the suggestions of some recent systematic literature reviews (e.g., Zhou et al., 2023). The initial search process was completed in April 2023. ...
Adopting digital technologies in different organizations has become a trend over the last decade, yet our understanding regarding impact of digital technologies on strategising needs to be more cohersive. This paper reviews existing research on how digital transformation intersects with strategic management to adress this gap. Specifically, the aim is to explore how the digital context changes strategising. Based on a systematic review of empirical evidence from 163 journal papers, we showcased the manifestation of strategising in the digital age in terms of strategic practitioners, practices and praxis. By consolidating these findings, a typology of strategic actions in the digital age is developed and discussed, highlighting the interplay among changes in strategy‐as‐practice parameters. This framework clarifies in strategic scenarios of digital transformation and identifies various strategic directions and actions. Overall, we argue that although digital transformation has created additional strategic options, it has yet to change the underlying assumptions of strategising in firms.
... A systematic literature review indicates little evidence for strictly separating exploration and exploitation, as they are closely linked in innovation management. Recognizing their interconnection can help develop a comprehensive framework for managing innovation processes (Zhou et al., 2023). Research has shown that both organizational and individual learning activities significantly influence entrepreneurial intentions and innovation performance (Saerom et al., 2022;Shah et al., 2021). ...
The contributions of young entrepreneurs are essential to navigate the challenges of a rapidly changing industry. To encourage more young people to start businesses, it's important to understand what drives entrepreneurial intention. Gender might also play a role in this motivation. This study aims to compare entrepreneurial intentions between male and female students, focusing on their learning activities and knowledge exploration. The research population includes all registered Andalas University students who have completed the compulsory entrepreneurship course. The sample, chosen through convenience sampling, consists of 412 respondents selected based on their availability and ease of access. The usable questionnaires were processed using SmartPLS 4.1.0.6. Multigroup analysis is utilized to know the difference between male and female respondents. The findings show that increasing innovativeness and self-efficacy is key to enhancing students' knowledge exploration and exploitation. Innovativeness benefits all students, while self-efficacy boosts confidence and involvement. Agreeableness helps female students with exploration and both genders with exploitation. There are no significant gender differences in how innovativeness affects these activities, but self-efficacy and agreeableness show notable gender differences. This research emphasizes the need for customized entrepreneurship programs that address gender-specific needs, such as mentorship and access to resources, to boost entrepreneurial intentions for both male and female students. It also highlights the importance of promoting gender equality in these programs.
... The coexistence of synergies and trade-offs is indicative of the dynamism of paradox. In addition, it captures the difficulty of maintaining equilibrium as well as the complexity and nuance of the relationship between intertwined opposites, such as organizing dualities of the exploration-exploitation type (Li et al., 2023;Zhou et al., 2023). How much should an organization exploit what it already knows, against how much it should master what it does not know? ...
This captivating book delves into the complex realm of management and organizational dynamics, focusing on the significance of paradoxes.
From the intricate interplay between social obligations and business missions to the tension between stability and change, this textbook unveils the essence of these enduring contradictions. As organizations evolve, paradoxes become defining features, and illustrative cases of this are included throughout the textbook.
Organizational Paradoxes equips students of organization management, organization change and strategy with an understanding of paradoxes, their philosophical underpinnings and their management in practice.
... Previous research on BDA has also examined how it could affect different aspects of firm performance, such as profitability, return on investment (ROI), and marketing performance, which relates to firms' capacity to attract and retain customers while increasing sales (e.g., Upadhyay and Kumar, 2020;Cadden et al., 2023;Zhou et al., 2023). Although there are signs that BDA and firm performance may be directly related, a better and more complete knowledge of the processes and situational factors that influence this relationship is needed especially from the innovation capability perspective (e.g., Yasmin et al., 2020;Jiang and Liu, 2022;Oesterreich et al., 2022b;Olabode et al., 2022). ...
In today's rapidly changing business landscape, organizations increasingly invest in different technologies to enhance their innovation capabilities. Among the technological investment, a notable development is the applications of big data analytics (BDA), which plays a pivotal role in supporting firms' decision-making processes. Big data technologies are important factors that could help both exploratory and exploitative innovation, which could affect the efforts to combat climate change and ease the shift to green energy. However, studies that comprehensively examine BDA's impact on innovation capability and technological cycle remain scarce. This study therefore investigates the impact of BDA on innovation capability, technological cycle, and firm performance. It develops a conceptual model, validated using CB-SEM, through responses from 356 firms. It is found that both innovation capability and firm performance are significantly influenced by big data technology. This study highlights that BDA helps to address the pressing challenges of climate change mitigation and the transition to cleaner and more sustainable energy sources. However, our results are based on managerial perceptions in a single country. To enhance generalizability, future studies could employ a more objective approach and explore different contexts. Multidimensional constructs, moderating factors, and rival models could also be considered in future studies.
... In this Boolean expression, PSS-related terms are included to capture studies that focused on the development or implementation process of sustainable PSS regarded as sustainable servitisation and consistent with existing reviews (e.g., Lightfoot et al., 2013;Raddats et al., 2019;Zhang and Banerji, 2017). Some additional criteria were included in the initial search for quality and relevance purposes, including limiting the search to peer-reviewed journal papers written in English because they are considered validated knowledge and tend to have the highest impact in the field (Podsakoff et al., 2005;Hanelt et al., 2021;Zhou et al., 2023). Consequently, the search was completed on March 20, 2023, with a sample of 1280 articles identified. ...
Digitalization is causing organizations and their members to reflect and rethink their knowledge bases and needs, as well as organizational forms and means for staying competitive. For professional service firms (PSFs), this is especially challenging as they rely on—and offer their clients—professional expertise that builds on a well-defined domain of knowledge and professional jurisdiction. In this article, we explore how two classic, elite PSFs organize to learn about digital technologies residing outside their organizational and professional boundaries. Building on the literature on ambidextrous learning, we find that they do so by adapting to learn , that is, starting innovation labs aimed at explorative learning. This also enables them to learn to adapt , meaning that they develop abilities to dynamically adapt to contextual changes. Based on our analysis we develop three propositions for what aspects influence how PSFs organize for structural and/or contextual ambidexterity. We contribute to the theorizing of how PSFs can organize to encourage ambidextrous learning and digital innovation while at the same time protecting the professional core and organizational culture and reputation.
Purpose
In a high-tech environment with unsatisfactory innovation results, this research investigates how strategic innovations can be more effectively transferred into the core business, considering the integration challenges within an ambidexterity context.
Design/methodology/approach
Research was conducted in a major Brazilian public biopharmaceutical laboratory using mixed methods: a process-oriented methodology accounting for the significance of project stages and timeline and a grounded theory approach for inductive analysis of discourses during the project transfer to the core business.
Findings
The primary outcome is a conceptual model focused on the innovation transfer process and its redefinition throughout new product development phases. The results demonstrate the organizational and project-level integration practices that enabled the flow of innovation projects into mainstream operations. Mechanisms facilitating access to crucial resources significantly promoted the integration and the transfer.
Research limitations/implications
The company faces the challenges and constraints of the public sector. Including diverse contexts would enhance the results.
Practical implications
The study indicates that stimulating an ambidextrous orientation and leveraging the flexibility of resource exchange processes can significantly promote innovation transfer.
Originality/value
The research shows how a process view affects the transfer of innovations to regular operations, offering a novel approach to managing innovation projects in ambidextrous organizations. It revisits the concept of innovation transfer as an ongoing process rather than a singular event at the end of an innovation project. Finally, the results highlight resource exchange mechanisms essential to balancing exploration and exploitation.
Purpose
This study aims to examine the role of big data marketing capability (BDMC) in shaping firms’ innovation behavior within the context of digital innovation. By defining BDMC and identifying its core dimensions, the study provides a framework for understanding how BDMC moderates the inverted U-shaped relationship between two key types of innovation – explorative and exploitative innovation – and their impact on innovation performance.
Design/methodology/approach
BDMC is conceptualized through five key dimensions: (1) big data-driven specialized marketing capability, (2) big data-driven customer relationship management (CRM) capability, (3) big data-driven channel and alliance management capability, (4) big data-driven brand management capability and (5) big data-driven market information and knowledge capability. A refined measurement scale for BDMC is developed based on these dimensions. Using hierarchical regression analysis and U-shaped tests, this study investigates how BDMC moderates the nonlinear (inverted U-shaped) relationship between explorative and exploitative innovation and innovation performance. Empirical analysis is conducted using data from 151 firms in the Chinese automotive manufacturing industry.
Findings
The results confirm the distinct effects of explorative and exploitative innovation on innovation performance, with these relationships significantly moderated by BDMC. Under experience-driven marketing capability, explorative innovation exhibits a positive linear effect on performance, while exploitative innovation follows an inverted U-shaped pattern. However, with BDMC, the relationship between explorative innovation and performance shifts to an inverted U-shape, while exploitative innovation transitions from an inverted U-shape to a U-shape, highlighting BDMC’s moderating role.
Originality/value
This study advances the literature by clearly defining BDMC, refining its measurement scale and assessing its moderating influence on innovation strategies. It contributes to the behavioral theory of the firm, the capability-based view and digital innovation theory by positioning BDMC as a pivotal capability that shapes firms’ ability to balance explorative and exploitative innovation. The study provides practical insights for firms undergoing digital transformation, offering a strategic framework for leveraging BDMC to enhance innovation performance.
Teams are an important resource that organizations rely on to create (i.e., ideation) and implement (i.e., implementation) innovative ideas. To advance distinct theorizing on ideation, implementation and their transit as crucial but different phases of innovation in teams, we collected qualitative data from 60 individuals working on innovation in teams and analyzed 235 situations critical for ideation and implementation. Our qualitative content analysis resulted in 1460 codes classified into 27 categories, which we analyzed with regard to their relative importance for ideation and implementation in teams. We integrated our results via an abductive approach using existing theory into a process model showing that ideation is driven by information processing and team climate, implementation is driven by action regulation and resources, and the transit phase is driven by a mindset change from deliberation to implementation. The interface between ideation and implementation reveals paradoxes that deserve explicit management.
Purpose
Based on punctuated equilibrium theory and time orientation theory, we investigated the decision-making tendency and regularity of top managers’ short-term orientation regarding the leap between exploration and exploitation under uncertain situations.
Design/methodology/approach
This study conducted an empirical analysis based on a sample of 547 A-share listed companies in Shanghai and Shenzhen Stock Exchanges from 2010 to 2018, utilizing fixed effects models.
Findings
The results show that top managers’ short-term orientation is negatively related to the leap between exploration and exploitation. Economic policy uncertainty plays a positive moderating role between the two. Further heterogeneity analysis shows that in high-tech industries and enterprises with high financing constraints, the positive moderating effect of economic policy uncertainty on the relationship between top managers’ short-term orientation and the leap between exploration and exploitation is more pronounced.
Practical implications
This study has important implications for optimizing the selection of top managers and the formulation of government economic policies in a rapidly changing business environment.
Originality/value
This study introduces the personality trait of short-term orientation, which deserves special attention, into research on the leap between exploration and exploitation, enriching the relevant research on top managers’ decision-making tendencies in the context of economic policy uncertainty and expanding the application scenarios of time orientation theory and punctuated equilibrium theory.
The past decades have seen a growing recognition of a need to develop novel solutions to effectively and efficiently deliver inclusive values to society. However, the evolving literature in innovation management, for example, in the discourse of social innovation or responsible innovation, has yet to produce a consolidated knowledge base for how technologies could be managed for social good. Hence, this systematic review attempts to synthesize relevant literature regarding managing innovation for social good with a particular focus on the critical role technologies play. By doing so, two contributions to knowledge are presented. First, we identify three streams of conceptualization describing managing technological innovation for social good that require further synergies. Second, the findings indicate that the social consequences of technology and technological advancements remain unclear, which we call for a more evident discourse of social impacts and social good in the innovation management field.
This study aimed to assess if individual ambidexterity and organizational performance were symbiotic and how uncommon talent helped teams and businesses achieve unprecedented success among outlets of BB Corp. in a quantitative approach. It also tried to figure out the effects of these practices on business performance, specifically profitability and sustainability. With all the challenges encountered by employees and organizations, there was a need to develop awareness and understanding of how ambidexterity affects organizational performance that keeps individuals guided and performing well. This study used a descriptive causal design. The total population was 100 respondents, and a total enumeration sampling technique was applied. The result showed a significant relationship between the manifestation of Individual Ambidexterity and organizational performance level among employees in BB Corp. It also indicated that in terms of Exploration, the general assessment was interpreted as Fully Manifested, while in terms of Exploitation, it was interpreted as Manifested. In terms of Financial, Operational, and Shareholder Return Performance, these are all interpreted as Good. Exploitation significantly impacts the organizational performance level among employees in terms of Financial and Operational Performance. While in Shareholder Return Performance, exploration and exploitation significantly impact the Organizational Performance. This also indicates that the higher the manifestation of Individual Ambidexterity, the higher the organizational performance. The proposed action plan can address the issues and challenges of individual ambidexterity to enhance employee organizational performance. It served as a basis for management practices once found compelling.
Purpose
How much should existing firms explore while venturing into new businesses? This study builds an organizational learning-based model for corporate entrepreneurship by applying and extending the seminal March (1991) simulation model. This paper aims to analyze the impact of the exploitation-exploration mix (commonality) on organizational knowledge across the short- and long-term.
Design/methodology/approach
The study uses a two-stage stochastic simulation approach to model adaptive processes related to learning within organizations. In Stage 1, an organization with no initial knowledge is allowed to achieve equilibrium against the realities associated with the first business. In Stage 2, a new reality is introduced, corresponding to the new business. The new corporate venture is, then, allowed to achieve a new equilibrium knowledge by varying commonality across time.
Findings
The findings suggest that, in the long term, increasing exploitation builds optimal knowledge only when the new and old businesses are very similar. Organizations where employees learn slowly from the organization (low socialization rate) while the organization learns fast from employees (high organizational learning rate) generate optimal steady-state organization knowledge. However, firms face a temporal dilemma. In the short term, firms with low socialization rates and high organizational learning rates fare worse than other configurations.
Research limitations/implications
Corporate entrepreneurship efforts encompass various conflicts between knowledge sharing and temporality. These conflicts are especially important in technology-driven industries and firms. The study adds a detailed understanding regarding various learning configurations using which firms can respond to new business opportunities and their impact (across time) on knowledge.
Practical implications
The study provides important inputs to managers and academics, alike, on the tricky nature of managing and maximizing corporate entrepreneurship efforts in knowledge-intensive and technology industries. This paper isolates specific firm knowledge-based dilemmas on the optimal approach toward corporate entrepreneurship ventures over time and commonality.
Originality/value
The study extends March’s seminal 1991 study on a single business to corporate entrepreneurship settings using a set of stochastic simulations. In doing so, the study adds to the corporate entrepreneurship as well as knowledge management literatures. This paper explores various scenarios emerging from time, organizational code commonality and match between business realities and arrive at optimal knowledge configurations for each scenario.
Purpose
The paper investigates how visibility, information technology and innovation management impact sustainability performance. It proposes a framework explaining the role of visibility in driving firms' sustainable performance and the relevance of innovation management and information technologies in enhancing organisational visibility. This study intends to add to the discussion within the management literature about the potential of innovation management to drive sustainability. It seeks to provide insight into the practices that small and medium-sized enterprises (SMEs) can adopt to improve their sustainable performance.
Design/methodology/approach
Using empirical methods, the study investigates SMEs in central Mexico. The demographic information in the dataset includes 15 years as an average length of service from firms. Of the surveyed firms, 70% were from the manufacturing sector and 30% were from the service sector, as these are the most representative sectors of the productive region. A variance-based structural equation model approach was used to test the hypotheses, processed with the partial least squares (PLS) regression method.
Findings
The research results show that visibility significantly impacts sustainability performance. Innovation management has a higher influence on visibility than information technologies, emphasising the need to improve the quality of information in firms, not just the tools. The findings support managers in comprehending the crucial importance of visibility in aiding firms to achieve higher sustainability performance.
Research limitations/implications
The study only examined a sample of Mexican SMEs; therefore, the findings' generalizability must be considered within this context. Secondly, the survey only focused on services and manufacturing firms and a more detailed analysis of the sector could provide further clarity on the relationships between variables. As a result, future research should consider these limitations and explore additional contexts to improve the overall understanding of the topic. Moreover, the scale used to measure the variables was adapted from other researchers with similar context research and reflective variables.
Practical implications
The results provide helpful information for SME managers about the importance of focusing on innovation management processes and employing information technologies as crucial managerial strategies. This will aid in increasing visibility and supporting the development of sustainability performance in firms.
Social implications
The world red-code, among others, with climate change and social gaps, has generated the need to contribute to sustainable development, and it has mobilised people on all levels all over the world for the simple purpose of preserving life. Therefore, society, as a crucial group that affects and is affected by this red-code situation, should act in favour of visibility, the use of high-quality information (e.g. transparent, accessible and relevant) and information technologies to promote sustainable practices. This could mean that society should be prepared to incorporate new capabilities and spaces to interchange knowledge as a participatory community that can contribute to better sustainable dynamics that could expand its participation in public decisions. Also, the government should encourage digital democracy (e.g. develop social participation platforms), opening and harmonising rules and mechanisms combining high-quality information with IT to provide flexible and adequate services that support sustainable development, such as efforts towards constructing sustainable and smart cities.
Originality/value
This study explores how innovation management can drive firms' sustainability performance, which is crucial for improving competitiveness. The question of how to enhance sustainability performance through managerial drivers is a critical one. This study empirically investigates the nexus of visibility and sustainability performance, innovation management and information technology with visibility.
This epilogue brings us to reflect on what this book has brought to the table for European perspectives and what it means for research into innovation management.
This meta-analysis examines the conditions under which structural and contextual approaches help balance exploration and exploitation. Drawing on heterogeneous samples of prior ambidexterity studies, we apply moderated meta-analytic regression methods to 33,492 organizations sampled in 114 primary studies from 1991 to 2017 to test a contingency model. Our findings suggest that structural separation helps firms of all sizes to balance exploration and exploitation, and that structural separation is more conducive for balancing exploration and exploitation in high technology environments. Also, avoiding a structural separation approach benefits service firms. As research on ambidexterity enters the maturity stage we discuss the implications for future theory development, methodology, and for managers interested in developing ambidextrous organizations.
We aim to address inconsistencies in the research literature on whether exploration and exploitation compete with or complement each other in their effect on radically innovative team outcomes. This study takes into consideration the moderating effect of team learning behavior, which includes seeking or providing feedback, sharing information and elaborating task-relevant information, and team promotion focus, which refers to the motivation for innovation. Using results obtained from 108 research and development teams from six high-tech organizations, our findings show two ways to achieve radical innovation performance. Both are characterized by a high level of exploration; however, the level of exploitation and of learning behavior in each of them is either high or low. Against our expectations, promotion focus does not modify the effect of exploration and exploitation on radical innovation performance. While promotion focus is usually assumed to be positively associated with team innovation, we counterintuitively show that when the level of exploration is high, a low (compared to high) level of promotion focus leads to increased radical innovation.
Over the years, researchers in psychological science have documented and investigated a host of powerful cognitive fallacies, including hindsight bias and confirmation bias. Researchers themselves may not be immune to these fallacies and may unwittingly adjust their statistical analysis to produce an outcome that is more pleasant or better in line with prior expectations. To shield researchers from the impact of cognitive fallacies, several methodologists are now advocating preregistration—that is, the creation of a detailed analysis plan before data collection or data analysis. One may argue, however, that preregistration is out of touch with academic reality, hampering creativity and impeding scientific progress. We provide a historical overview to show that the interplay between creativity and verification has shaped theories of scientific inquiry throughout the centuries; in the currently dominant theory, creativity and verification operate in succession and enhance one another’s effectiveness. From this perspective, the use of preregistration to safeguard the verification stage will help rather than hinder the generation of fruitful new ideas.
Do creativity methods consistently produce a significant net effect on innovation? Are the impacts of creativity methods related to operating context? Based on an ambidexterity perspective, we examine the effectiveness of different creativity methods on overcoming the tensions of the innovation process at individual and team levels. Drawing on European Union Community Innovation Survey (CIS2010) data collected from 23,537 firms, we estimate causal effects of creativity on innovation through a multivalued treatment effect methodology. Our results show that implementing ambidexterity in creativity methods increases the firm´s propensity to innovate and to introduce a market novelty. However, the effect on firm turnover is not always clear. Also, we detect that ambidexterity is more effective in firms that are large in size, have high levels of R&D investment and operate in manufacturing sectors. We discuss the implications of these findings for practice and for future research.
A common organizational response to the recognition of complexity is the consolidation of collaborative work forms. In the oil and gas industry, developments in communication and automation technologies have enabled the implementation of collaborative environments called integrated operations (IO). The IO concept is usually described as the integration of people, work processes and technology with the goal of facilitating decision-making and process optimization. This study contributes to the study of the knowledge dimension of IOs by investigating the exploitation of existing practices and the exploration of new possibilities in complex adaptive processes. Data collected through observations of practices reveal changes in patterns of interaction among oil platform operators relocated to an IO facility and the emergence of a complex interplay between exploitation and exploration. Rather than a spatial or temporal separation between the two processes, the findings illustrate an organic relation between exploration and exploration in the context of uncertainty and local adaptations in oil production. The discussion of findings provides elements to reflect upon knowledge management in the oil and gas industry.
Abstract
Purpose – The purpose of this study is to investigate the relationships between exploratory/exploitative
innovation and employee creativity in the Chinese context and how these two relationships can be moderated
by an important cultural dimension – collectivism.
Design/methodology/approach – A theoretical framework was developed to explore the relationships
between exploratory/exploitative innovation, employee creativity and collectivism. Data were collected by
sending out surveys to managers and employees in various industries in mainland China. Hypotheses were
tested using hierarchical regressions.
Findings – The results show that both exploratory innovation and exploitative innovation are positively
related to employee creativity. Furthermore, collectivism negatively moderates the effects of both types of
innovation on employee creativity, despite its positive main effect.
Originality/value – This study explores the relationship between organizational innovation and
individual employee creativity in the Chinese context. This paper empirically analyzes the moderating effect
of collectivism in the relationship between organizational innovation and employee creativity. It also indicates
the factors inherent in Chinese culture that influence innovation and gives explanations from education,
subordinate relation, etc.
James G. March has published his seminal work ‘Exploration and Exploitation in Organizational Learning’ in 1991. We revisit March’s article and analyze the impact it has had on scholarly thinking, providing a comprehensive and structured review of the extensive and diverse research inspired by this publication. Unlike previous reviews on the topic, we combine bibliometric analysis and machine-based text mining to portray a picture of the evolving landscape of this article’s influence. We show that although this influence has changed significantly over the years, there are still unexplored opportunities left by this seminal work. Our approach enables us to identify promising directions for future research that reinforce the themes anchored in March’s (1991) article. In particular, we call for reconnecting current research to the behavioral roots of this article and uncovering the microfoundations of exploration and exploitation. Our analysis further identifies opportunities for integrating this framework with resource-base theories, and considering how exploration and exploitation can be sourced and integrated within and across organizational boundaries. Finally, our analysis reveals prospects for extending the notions of exploration and exploitation to new domains, but we caution that such domains should be clearly delineated. We conclude with a call for more research on the antecedents of exploration and exploitation and for studying their underexplored dimensions.
Purpose
The purpose of this study is to assess the effect of technological, organizational and environmental factors on innovation ambidexterity and its influence on the performance of manufacturing small- and medium-sized enterprises (SMEs) as well as the moderating effect environmental dynamism on this relationship.
Design/methodology/approach
Drawing on the Technology–Organization–Environment theory and the Knowledge-Based View, this paper develops an integrative research model, which analyzes the network of relations using covariance-based structural equation modeling on a data set of 429 Spanish SMEs.
Findings
The results show that information technology capability, knowledge management capability and environmental dynamism are positively associated with innovation ambidexterity. In addition, environmental dynamism is found to strengthen the positive effect of innovation ambidexterity on firm performance.
Practical implications
The study findings support the idea that innovation can be developed in an ambidextrous manner within a single SME as long as the firm is capable of creating a suitable organizational context and giving a prompt response to changes in the business environment.
Originality/value
Although many studies have highlighted that being ambidextrous is more challenging for SMEs than for their larger counterparts, the vast majority of studies has been conducted in large companies. This paper extends prior literature by analyzing antecedents and outcomes of innovation ambidexterity in manufacturing SMEs.
Using conservation of resources theory, we challenge traditional unity of command models of leadership and propose that a dual‐leadership framework can serve as a potential solution to the inherent challenges of innovation. Leading for innovation demands are depicted as uniquely disparate from other forms of leadership, resulting in several types of conflict and resource depletion for individual leaders. We contend that this exploration–exploitation role conflict and the resulting need to manage incongruent role identities produce stress, strain, and resource depletion that in turn hamper innovative goal achievement for both a single leader directly and via subordinates more indirectly. We propose, however, that as an extension of the resource investment tenet of the conservation of resources theory, a dual‐leadership approach may alleviate many of these challenges for innovation. Specifically, the addition of a second leader can add resources to innovation and in turn decrease the role conflict inherent in managing the generation and implementation of creative ideas. Limitations and areas for future research are offered.
Organizational ambidexterity has been established as an important antecedent of organizational innovation and performance. Recently, researchers have started to argue that ambidexterity is not only essential at the organizational, but also at the individual level. Thus, to be innovative, individuals need to engage in both explorative and exploitative behaviors. However, questions remain regarding the optimal balance of explorative and exploitative behaviors and how ambidexterity can be operationalized. At the organizational level, most empirical research utilized either the difference between, or the product of, exploration and exploitation. In this article, we criticize these approaches on conceptual and methodological grounds and argue for an alternative operationalization of ambidexterity: polynomial regression and response surface methodology. In two diary studies with daily and weekly data, we demonstrate the advantages of this approach. We discuss implications for ambidexterity research and innovation practice.
This paper reports an in-depth qualitative study about innovation work in the Swedish video game industry. More specifically, it focuses on how video game developers are building ambidextrous capabilities to simultaneously addressing explorative and exploitative activities. The Swedish video game industry is a particularly suitable case to analyze ambidexterity, due to it’s extreme market success and continuous ability to adapt to shifts in technologies and demands. Based on the empirical data, three ambidextrous capabilities are pointed out as particularly valuable for video game developers; (1) the ability to separate between a creative work climate and the effectiveness in project organizing; (2) the balancing of inward and outward ideation influences, and (3) the diversity in operational means and knowledge paired with shared goals and motivations, derived from the love of video games and video game development.
Based on the resource-based view (RBV) and the dynamic capabilities (DC) approach, in this work we carry out a thorough literature review in order to identify which organizational actions and resources act as the main antecedents of exploration and exploitation. Also, by using the cognitive maps technique, we analyse to what extent these antecedents are present in managers' cognitive maps when they develop exploration or exploitation strategies, as well as when they try to develop radical and incremental innovations. Our results show that, firstly, managers develop cognitive maps that match our theoretical proposals about the organizational resources and capabilities that can lead to exploitation and exploration. Secondly, regarding innovation, although the antecedents of exploitation are used by managers as the way towards incremental innovation, some antecedents of exploration are expected to facilitate not only radical but also incremental innovations. These results provide interesting points for reflection on the topics addressed and lead us to conclude that the antecedents of exploration and exploitation should not be seen as separate ways towards different types of innovation, but as sets of resources on which to build configurations that facilitate radical or incremental innovation.
Purpose
– The purpose of this paper is to address the paradox that individuals face in seeking to both generate new ideas and be committed to delivering standardised processes in a creative industry. The authors explore this tension in order to better understand how synergistic benefits are reaped at the intersection of these competing demands.
Design/methodology/approach
– The paper adopts a longitudinal case study approach inside a global media organisation in the creative industries sector. Data derived from participant observations, manager interviews, administered survey instruments, and archival documentation.
Findings
– The authors find that creative organisations experience explore/exploit paradoxes which are nested at three levels: knowledge, learning and motivation. Further, the authors find that managers are able to respond to competing tensions through organisational processes that allow differentiation/integration simultaneously. These management responses are supported and sustained by both structural and contextual organisational forms.
Originality/value
– First, the authors provide a clearer theoretical explanation of paradox in creative organisations by accounting for competing demands to explore and exploit through nested tensions. Second, the authors extend the understanding of management responses to these paradox by showing how managers balance both demands simultaneously rather than cumulatively over time, thereby offering insight into how managers behave over time. Third, the authors outline the supporting role of organisational form in sustaining management responses within creative organisations at the same time in order to reap synergistic benefits.
Purpose
– This paper aims to investigate the effects of service innovation exploration – exploitation on financial performance through the delivery of quality services. Additional emphasis is also given to examining the extent to which employee empowerment and slack resources enhance or suppress the performance benefits of service firms engaging in service innovation exploration versus exploitation.
Design/methodology/approach
– Data were drawn from a multi-informant survey of service firms using a drop-and-collect approach. The survey gathered data from managers, customer service employees and customers to test the hypotheses.
Findings
– The results show that excelling at both exploitative and exploratory innovation helps enhance the quality of services, which, in turn, yield superior financial performance. Further, empowering employees enhances the relationship between exploratory and exploitative service innovation and service quality. We also show that the extent managers’ perceived their market to be competitive influences in the pursuit of high levels of both service innovation exploration and exploitation and that this relationship is impacted by the extent they believe they have available slack resources.
Practical implications
– The findings suggest that service firms need to pursue both exploitation and exploration at high levels simultaneously and empower their employees to stay ahead of competitors in delivering quality services, which ultimately contributes to the achievement of superior financial outcomes. Also, the findings highlight the importance of employee empowerment, market competitiveness and slack resources in the pursuit of high levels of both service innovation exploration and exploitation.
Originality/value
– These findings and our theory indicate that this study is the first to empirically examine organizational ambidexterity in the context of service innovation exploration – exploitation adopting the principles of combined and balanced innovation. The study provides insights into the critical role of customers’ perceptions of service quality in contributing to firms’ financial performance. Our insights are unique in that the study incorporates managers, employees and customers in an integrated service innovation model.
In a U.S. sample of nonprofit professional theaters, we examine how slack resources interact with environmental threat appraisal to influence product exploration and exploitation. We find systematic variation depending on the extent to which a resource is rare and absorbed in operations, and the extent of perceived environmental threats. Absorbed, generic resources are associated with increased exploitation and decreased exploration. Unabsorbed resources, both generic and rare, result in higher exploration and lower exploitation, but only when perceived environmental threat is high. Overall,results reveal pragmatic decision making balancing the benefits of superior strategic position against the risks of jeopardizing viability.
Since March's 1991 seminal article, exploration and exploitation have been extensively studied in the areas of organisational learning, strategic renewal, and technological innovation [Li et al.(2008)]. However, much of the research has focused on exploration as science-based and exploitation as technology-based. This current research effort utilises a unique database to examine the phenomena only in the science arena. The results are that exploration efforts lead to science outcomes, and that both exploration and exploitation efforts have a positive impact on technological outcomes. The managerial implications of these findings are discussed.
The exploration–exploitation tension has been resonated and applied in diverse areas of management research. Its applications have deviated substantially from the scope of organisational learning as originally proposed by March [(1991). Exploration and exploitation in organizational learning. Organization Science, 2(1), 71–87]. Scholars have developed set of definitions, new conceptualisations, and varied applications in rejuvenating the concept; and literatures on this topic seem do not significantly ensure a conclusive picture. It is still also unclear what are the antecedents and following scientific breakthroughs which may have led to the divergence of this construct.
This study offers an added value as it becomes the first to apply a bibliometric analysis, combined with fine-grained content analysis to attain a more comprehensive understanding on how the construct of exploration–exploitation have grown and evolved during the last 20 years. We attempt to grasp the structural pattern of citing behaviour and collective understanding among scholars, through conducting in-depth bibliographic review in a complete population of articles on this topic, published in leading journals following March [(1991). Exploration and exploitation in organizational learning. Organization Science, 2(1), 71–87].
This study identifies the intellectual base articles which form the basis of the exploration–exploitation and the turning point articles that shift the discussion into different directions.
Dynamic capabilities have been proposed as a useful way to understand how organizations are able to adapt to changes in technology and markets. Organizational ambidexterity the ability of senior managers to seize opportunities through the orchestration and integration of existing assets to overcome inertia and path dependence, is a core dynamic capability. While promising, research on dynamic capabilities and ambidexterity has not yet been able to specify the specific mechanisms through which senior managers are actually able to reallocate resources and reconfigure assets to simultaneously explore and exploit. Using interviews and qualitative case studies from thirteen organizations, this article explores the actions senior managers took to implement ambidextrous designs and identify which ones helped or hindered them in their attempts. A set of interrelated choices of organization design and senior team process determine which attempts to build ambidextrous organizations are successful.
As a potential theory, the elemental resource-based view (RBV) is not currently a theoretical structure. Moreover, RBV proponents have assumed stability in product markets and eschewed determining resources' values. As a perspective for strategic management, imprecise definitions hinder prescription and static approaches relegate causality to a "black box." We outline conceptual challenges for improving this situation, including rigorously formalizing the RBV, answering the causal "how" questions, incorporating the temporal component, and integrating the RBV with demand heterogeneity models.
Balancing exploration and exploitation is a critical challenge that is particularly difficult for smaller, nascent organizations that lack the resources, capabilities, and experience necessary to successfully implement ambidexterity. To better understand how small and medium-sized enterprises achieve ambidexterity, we develop theoretical arguments that link organizational performance to strategic combinations of exploration and exploitation in both product and market domains We test the hypotheses with a longitudinal study in a dynamic industry that combines objective measures of competition, firm size, age, and revenue performance with self-reported measures of product and market exploration and exploitation. The empirical results offer new insights with respect to several tensions at the heart of the ambidexterity challenge: (1) pure strategies that combine product exploration with market exploration or product exploitation with market exploitation have complementary interaction effects on revenue, (2) cross-functional ambidexterity combining product exploitation with market exploration also exerts complementary interaction effects on revenue, (3) product ambidexterity has positive effects on revenue for older and larger-but not younger and smaller-firms, and (4) market ambidexterity has positive effects on revenue for larger-but not smaller, younger, or older-firms. Two ambidexterity paradoxes emerge: (1) larger, older firms have the resources, capabilities, and experience required to benefit from a product ambidexterity strategy, but larger, older firms are less likely to implement product ambidexterity; and (2) only larger firms have the resources and capabilities required to benefit from a market ambidexterity strategy, but developing and sustaining market ambidexterity is necessary to drive long-term growth.
The organizational ambidexterity literature conceptualizes exploration and
exploitation as conflicting activities, and proposes separation-oriented approaches to
accomplish ambidexterity; namely, structural and temporal separation. We argue that
viewing ambidexterity from the lens of paradox theory enables us to move beyond
separation-oriented prescriptions towards synthesis or transcendence of paradoxical
poles; as well as towards longitudinal explorations of how paradoxical poles
dynamically interrelate over time. In this way, the conceptual repertoire of
ambidexterity theory is enriched and empirical research can more closely and
pragmatically track practice.
Can the collectivistic culture of an organization help manage the tension between explorative and exploitative innovation? Though recent studies have suggested contextual approaches to cope with the tension, we still lack an understanding regarding whether organizational culture can be a context vehicle in solving the tension and consequently in enabling ambidextrous innovation. Drawing upon organizational effectiveness theory, we seek to present a collectivistic culture perspective in achieving ambidexterity and aim to settle the nested paradox of innovation in the pair of personal drivers, that is, discipline versus passion. Based on 102 completed survey questionnaires from 60 high-tech clusters in China, we found that creating collectivistic culture within an organization can help alleviate the tension between exploration and exploitation in organizational learning and facilitate ambidextrous innovation within the firm. Moreover, the effect of collectivism on achieving ambidextrous innovation will be weakened in a centralized hierarchy system.
The ambidexterity theory of leadership for innovation proposes that leaders' opening and closing behaviors positively predict employees' exploration and exploitation behaviors, respectively. The interaction of exploration and exploitation behaviors, in turn, is assumed to influence employee innovative performance, such that innovative performance is highest when both exploration and exploitation behaviors are high. The goal of this study was to provide the first empirical test of these hypotheses at the individual employee level. Results based on self-report data provided by 388 employees were consistent with ambidexterity theory, even after controlling for employee reports of their leaders' transformational and transactional leadership behaviors as well as employees' openness to experience, conscientiousness, and positive affect. The findings extend previous research on ambidexterity at the team and organizational levels and suggest a possible way for leaders to enhance employee self-reported innovative performance.
Research suggests the firm's structural and contextual attributes that foster ambidexterity, but theory and testing on their combined effects on knowledge creation, ambidexterity and financial performance remain rather poor. By using a theoretical perspectives built on organisation design and the knowledge-based view of the firm, this article takes into consideration firms' exploration attainments and exploitation initiatives in relation to both their ability to create knowledge in innovation processes and their capacity to apply it into product innovation. Using data from a survey on 112 hi-tech firms in Italy, results show that organisational context attributes influence firm's degree of ambidexterity in knowledge creation in the innovation processes, but it does not have a direct influence on the actual degree of ambidexterity in innovation development. A fundamental condition to ambidexterity in innovation development is the structural separation of exploration and exploitation innovation initiatives. Specifically, we found that structural separation of these initiatives within the organisation directly affects ambidexterity and leads to higher sales growth than when firms achieve ambidexterity through an appropriate organisational context solely. These findings provide a rich explanation of the way firms develop ambidexterity and can obtain superior economic performance from it.
This study investigates how firm age and environmental adversity influence exploration and exploitation and whether the balance between them increases new product development. We also examine if new product development in new and mature firms leads to equivalent growth rates. Empirical results obtained from a survey of small- and medium-sized technology-based manufacturing firms in Korea show that while relative exploration generally remains lower in mature firms than in new firms, it more rapidly increases in mature firms when they operate in adverse environments. Interestingly, our results show that mature firms achieve lower growth rates through new product development than new firms in adverse environments. These empirical findings advance our understanding of the age-dependent antecedents and consequences of new product development.
The chapter describes archetypes of literature reviews and quality criteria
We tailor theory on the relative performance implications of exploration, exploitation, and ambidexterity to the unique characteristics of small and medium-sized enterprises (SMEs). First, as SMEs’ limited resources make it unclear whether ambidexterity is superior to exploration or exploitation in SMEs, we investigate their relative effects on SME performance. Second, as SMEs’ resource and particularly knowledge constraints make property rights protection (PRP) pertinent to these firms, we examine PRP as a moderator. Consistent with our hypotheses, meta-analytical evidence from 5,488 SMEs across 34 studies suggests that: (1) ambidexterity has a less positive relationship with SME performance than both exploration and exploitation and (2) PRP decreases the positive relationship between exploration and SME performance. Unexpectedly, PRP decreases the positive relationship between exploitation and SME performance. Building on our findings, we develop a roadmap for SME-specific research, focusing on sequential switching between exploration and exploitation and contingency factors of the direct relationships.
Purpose
This study aims to fill three theoretical gaps in previous literature on exploration and exploitation: the relationship between exploration and exploitation is inconclusive; the influences of exploration and exploitation on firm performance are not consistent; and no empirical studies have integrated the antecedents of exploration and exploitation from the different research fields.
Design/methodology/approach
The study conducted a meta-analysis to quantitatively synthesize 143 studies with 257 independent samples to understand the relationship between exploration and exploitation and their consequences and antecedents.
Findings
The results show that exploration and exploitation are positively correlated with each other, and both of them can boost firm performance. Moreover, firm capabilities, firm size, firm age, competitive intensity, market orientation and entrepreneurial orientation positively influence exploration, and firm resources, firm capabilities, firm size, firm age, market orientation and entrepreneurial orientation positively influence exploitation. Competitive intensity negatively influences exploitation. Surprisingly, market turbulence does not significantly influence exploration or exploitation.
Originality/value
The results not only contribute to the theories by reconciling the inconsistent results but also provide insight for firms with guidance about under what conditions they should use what strategies.
The evolution of industry has recently attracted the attention of scholars studying the relationships between exploration and exploitation strategies and innovation performance. Surprisingly, although extant research has already acknowledged its multidimensional character, it has only been analyzed in an aggregate fashion. In this paper, we distinguish two components of the evolution of industry, the pace of market evolution and the pace of technology evolution, and we elaborate on their different impacts in the context of exploration and exploitation strategies. More precisely, we argue that while a rapid pace of technology evolution has opposite impacts on the relationships between exploration (positive), exploitation (negative) and innovation performance, a rapid pace of market evolution positively affects both exploration and exploitation. Our findings provide substantial support for our prediction using a large panel of Spanish innovating firms for the period 2008–2012.
Purpose
The purpose of this paper is to enrich the explanation of the interplay between internal and external – or district shared – exploration and exploitation capabilities as antecedents of a firm’s radical and incremental innovation. Previous studies do not differentiate between exploration and exploitation in district shared capabilities and how they interact with internal capabilities.
Design/methodology/approach
The paper uses hierarchical regression analysis to test the quadratic and moderating effects in a sample of 1,019 Spanish firms.
Findings
Results show an increasingly positive effect on radical innovation of exploration capabilities, enhanced by shared capabilities in exploration. In the case of incremental innovation, the study finds evidence of an increasingly positive influence of exploitation capabilities and a concave relationship of exploration capabilities. Moreover, shared exploitation capabilities weaken the effect of internal exploitation capabilities and also have a direct effect on incremental innovation. Therefore, the two capabilities are interchangeable in the effect they have on incremental innovation.
Practical implications
Depending on the firm’s innovation strategy, intra-district firms should develop specific capabilities and/or concentrate on adopting the shared capabilities in the destination.
Originality/value
The study furthers the understanding of the relationship between exploration and radical innovation, and between exploitation and incremental innovation, which is more complex than previously depicted. The study also differentiates between exploration and exploitation in shared capabilities, enriching understanding of the competitiveness of district firms.
Individuals are considered the frontline that allows firms to learn from external sources. However, a firm can only benefit from individual efforts if it understands to what extent the dimensions of individual-level absorptive capacity are related to its innovation strategy. A firm's innovation strategy is characterized by the notions of exploration and exploitation, which result in either radical or incremental innovation. This study examines the driving factors of individual-level absorptive capacity regarding a firm's exploration versus exploitation strategy. Using quantitative data from 104 individuals, partial least squares structural equation modeling (PLS-SEM) analysis was conducted, verifying individuals' competencies in identifying external knowledge as a trigger for both exploratory and exploitative innovation. Consequently, these specific abilities also contribute to organizational ambidexterity. Furthermore, the results show the dichotomous contribution of individual competencies in assimilating external knowledge. While exploratory innovation thrives with individual assimilation efforts, realization of exploitative innovation is not significantly related to these efforts. Ultimately, individuals' competencies in utilizing external knowledge are significantly related to neither exploratory nor exploitative innovation. Moreover, this study provides means for managers to systematically position individuals in the external search process.
How much of innovation is inspiration, and how much is hard work? The answer lies somewhere in the middle, says management thinker Peter Drucker. In this HBR classic from 1985, he argues that innovation is real work that can and should be managed like any other corporate function. Success is more likely to result from the systematic pursuit of opportunities than from a flash of genius. Indeed, most innovative business ideas arise through the methodical analysis of seven areas of opportunity. Within a company or industry, opportunities can be found in unexpected occurrences, incongruities of various kinds, process needs, or changes in an industry or market. Outside a company, opportunities arise from demographic changes, changes in perception, or new knowledge. There is some overlap among the sources, and the potential for innovation may well lie in more than one area at a time. Innovations based on new knowledge tend to have the greatest effect on the marketplace, but it often takes decades before the ideas are translated into actual products, processes, or services. The other sources of innovation are easier and simpler to handle, yet they still require managers to look beyond established practices, Drucker explains. The author emphasizes that innovators need to took for simple, focused solutions to real problems. The greatest praise an innovation can receive is for people to say, "That's so obvious!" Grandiose ideas designed to revolutionize an industry rarely work. Innovation, like any other endeavor, takes talent, ingenuity, and knowledge. But Drucker cautions that if diligence, persistence, and commitment are lacking, companies are unlikely to succeed at the business of innovation.
For long-term survival, companies must master both exploitative and explorative knowledge processes in new product creation (NPC). Cognitive ambidexterity refers to the NPC team's ability to successfully combine exploration and exploitation. However, insights on how cognitive ambidexterity is achieved in NPC processes are scarce. This study adopts one promising approach, the use of analogies and analogical thinking, as knowledge processes that help to achieve cognitive ambidexterity in NPC. The first empirical results in this paper confirm that the utilization of near, medium-far, and far analogies in NPC processes facilitates the development of both radically and incrementally new products. The results show that creation of favorable conditions for analogies to born, team composition and configuration matter when pursuing utilization of analogies for cognitive ambidexterity. Copyright
We develop a contingency view of process management's influence on both technological innovation and organizational adaptation. We argue that while process management activities are beneficial for organizations in stable contexts, they are fundamentally inconsistent with all but incremental innovation and change. But dynamic capabilities are rooted in both exploitative and exploratory activities. We argue that process management activities must be buffered from exploratory activities and that ambidextrous organizational forms provide the complex contexts for these inconsistent activities to coexist.
The regional innovation systems (RISs) approach has become influential in analysis of innovation processes and the development of public policy. Much of the contemporary RIS literature, however, has adopted a structural, functional, effectiveness or triple helix analytical approach. This study enriches our understanding of RISs in East Asia by considering an alternative novel perspective at the RIS level: an exploration–exploitation approach. Though often used at the firm-level, we argue that it may also provide an alternative lens through which to understand the evolution of China's RISs. To this end we construct a provincial entropy index and use K-means to categorize provinces into explorative, exploitative and balanced RISs and their evolution between 1986 and 2011. Our findings contribute to the literature on China's RISs by illustrating in greater detail the persistence of certain RISs across many of China's provinces, as well as the dramatic step changes towards exploitative systems in others.
Previous studies have provided valuable insights into how environmental and organizational factors may influence levels of explorative and exploitative innovation in firms. At the same time, scholars suggest that individual characteristics, such as cognitive and behavioural inclinations of top executives, might also have significant impact on the ability of a firm to engage in explorative and exploitative activities. The importance of the CEO is of interest, especially in medium-sized companies, where the CEO appears to be most influential. Very few studies, however, have quantitatively examined the relationship between individual characteristics of top managers and firm-level exploration and exploitation. Most of the existing research focuses on observable managerial characteristics and the composition of top management teams. Therefore, some important psychological issues may have been bypassed. This study complements prior research in two fundamental ways. First, whereas previous studies focus on extrinsic organizational factors that influence individual exploration and exploitation, we rely on insights from cognitive psychology to hypothesize a relationship between intrinsic factors (i.e., cognitive style) and individuals' tendency for exploration versus exploitation. Second, whereas existing research remains silent on the implications of individual CEO characteristics for firm performance, we hypothesize a relationship between CEOs' tendency for exploration or exploitation and firm-level innovation performance.
Research Summary: R&D-based exploration and exploitation are necessary in order for firms to have sustainable competitive advantage. Yet transitioning between these orthogonal types of R&D is considered profound organizational change. Building upon recent research showing that compact, significant changes in R&D expenditure is an antecedent to the transition between explorative and exploitative R&D, I show that this leap between exploration and exploitation is quite hazardous. The magnitude of changes in R&D expenditure, whether increases or decreases, is positively associated with organizational failure. Firms maintaining higher levels of absorptive capacity are more capable of surviving the leap from R&D-based exploitation to exploration, and firms that do not use reductions in R&D expenditure to manipulate short-term earnings performance are more likely to survive the leap from exploration to exploitation.
Managerial Summary: In order to survive and thrive, innovative companies must be able to exploit their existing competencies, and to explore for new ones once those current competencies decline in value. However, transiting from one form of innovation to the other is difficult, because the skills required to explore are fundamentally opposed to those required to exploit. In this paper, I describe how difficult this leap between exploration and exploitation can be. I show that the move between R&D-based exploration and exploitation is related to organizational failure. In addition, firms that are superior learners are more likely to survive the leap from exploitation to exploration, and firms that are not cutting R&D expenditure to manipulate earnings are more likely to survive the leap from exploration to exploitation.
This study investigates the effects of innovation on firm survival. We conceptualise the innovation type as exploration and exploitation and test the hypotheses on balancing these two contradictory innovation activities. We further explore the congruence between a firm's competitive strategy and its innovation activities because the strategy can influence the way in which a firm deploys its resources to innovation activities. An analysis of 255 Small and Medium-sized Enterprises (SMEs) in Korean IT industry indicates that (1) the extent of exploratory innovation has inverted U-shaped relationship with firm survival, providing support for the ambidexterity perspective; (2) the differentiation strategy moderates the exploratory innovation - firm survival relationship. These findings contribute to the organisational ambidexterity literature. First, the study provides clear empirical evidence that the exploration-exploitation balance plays an important role in the SMEs’ survival. Despite the theoretical assumption and common belief that balancing exploration and exploitation is important for long-term performance and survival, most empirical studies have focused mainly on the short-term financial performance outcomes. Second, the results suggest a need for a good fit between a firm's competitive strategy and its innovation orientations, providing a contingency approach to underscore the effectiveness of a firm's exploratory and exploitative innovation under different contexts.
This article reflects on our 2003 article, "Exploitation, Exploration, and Process Management: The Productivity Dilemma Revisited, " which received the Academy of Management Review's Best Article Award in 2003 and Decade Award in 2013. We consider the context within which we wrote the original article, with particular reference to the theoretical, empirical, and managerial problems salient at that time, and comment on the likely reasons the article has had a sustained influence in the field. Looking forward, we first ask whether the paradoxes and inconsistencies we discussed are still fundamental organizational challenges, and then go further to consider ways the domain of innovation itself has changed. We suggest that because of fundamental shifts in communication and information processing costs and the increasing modularity of products and services, the nature and locus of innovation have changed over the past decade. These secular trends have profound implications for our theories of innovation and organizations. Our extant theory and research are increasingly uncoupled from the phenomena. We would be well served to revisit the nature, locus, and basic processes of innovation.
Theorists have often acknowledged the importance of equifinality in organization design, and, in recent years, several studies have demonstrated the concept empirically. This article exposes the assumptions regarding function and structure that underlie contingency theory and develops a functional equivalence view of design. By examining the degree of conflict in functional demands together with the latitude of structural options available, we reveal and describe three different types of equifinality: suboptimal, tradeoff, and configurational. The functional equivalence approach implies a different agenda and emphasis for research on structure and design and has normative implications for how managers should design to achieve performance.
Organizations evolve through periods of incremental or evolutionary change punctuated by discontinuous or revolutionary change. The challenge for managers is to adapt the culture and strategy of their organizations to its current environment, but to do so in a way that does not undermine its ability to adjust to radical changes in that environment. They must, in other words, create an ambidextrous organization—one capable of simultaneously pursuing both incremental and discontinuous innovation.
In order to leverage organizational learning, scholars have already defined but are still discussing the interpretation of two different learning types, exploration and exploitation. Exploring new frontiers across knowledge domains and maintaining the balance with exploiting the existing knowledge is critical for the prosperity of an organization. The spatial dimension of organizational learning considers that proximity of employees has an influence on their learning activities, but from a rather macro perspective without taking workspace design into account. We account for these issues by examining the impact of workspace design on knowledge exploration and exploitation on the micro level at distinct stages along the value chain (i.e., the research, development and project market team unit) of Novartis, a pharmaceutical company. In a longitudinal study, employees of the three cases have been interviewed and observed over the course of three years, before and after workspace redesign. With the change from a cellular to an open workspace, employees become closer and highly visible to each other, which influences knowledge work. As the cases occurred sequentially in time, design principles were derived. The findings suggest that exploitation is supported by workspace design that leads to high proximity inducing faster feedback cycles and first-hand information. Exploration, however, is supported by workspace design that leads to high visibility triggering more cross-functional interactions and thereby the variability of knowledge. The later the stage in the research and development process, the higher the need for balanced learning activities. This balance is well reflected in a ‘multi-space’ workspace consisting of shared meeting areas, quiet zones, central staircases and integrated laboratories and desk areas.
Some researchers have proposed that practices facilitating learning and knowledge transfer are particularly important to innovation. Some of the practices that researchers have studied include how organizations collaborate with other organizations, how organizations promote learning, and how an organization's culture facilitates knowledge transfer and learning. And while some have proposed the importance of combining practices, there has been a distinct lack of empirical studies that have explored how these practices work together to facilitate learning and knowledge transfer that leads to the simultaneous achievement of incremental and radical innovation, what we refer to as innovation ambidexterity ( IA ). Yet, a firm's ability to combine these practices into a learning capability is an important means of enabling them to foster innovation ambidexterity.
In this study, learning capability is defined as the combination of practices that promote intraorganizational learning among employees, partnerships with other organizations that enable the spread of learning, and an open culture within the organization that promotes and maintains sharing of knowledge. This paper examines the impact of this learning capability on innovation ambidexterity and innovation ambidexterity's effect on business performance. The resource‐based view ( RBV ) of the firm is used to develop a conceptual foundation for combining these practices. This study empirically examines whether these practices constitute a learning capability by analyzing primary data gathered from 214 T aiwanese owned strategic business unit ( SBUs ) drawn from several industries where innovation is important.
The results of this study make four important contributions. First, they demonstrate that the combination of these practices has a greater impact on innovation ambidexterity than any one practice individually or when only two practices are combined. Second, the results demonstrate a relationship between innovation ambidexterity and business performance in the form of revenues, profits, and productivity growth relative to competitors. Third, the results suggest that innovation ambidexterity plays a mediating role between learning capability and business performance. That is, learning capability has an indirect impact on business performance by facilitating innovation ambidexterity that in turn fosters business performance. This study also contributes to our understanding of ambidexterity literature in a non‐ W estern context, i.e., T aiwan.
Ambidextrous organizations succeed both in incremental and discontinuous innovation. However, there is little direct empirical evidence on how managers implement the principles of the “ambidextrous organizations” theory to dynamically align the structure and culture of ambidextrous organizations. Our study does not focus on analyzing the factors that give rise to organizational ambidexterity but focuses on analyzing whether the factors suggested by prior theorizing on “ambidextrous organizations” are implemented by managers in their daily practice as suggested by prior theorizing. Accordingly, this study does not investigate the traditionally conceptualized gap between academic theorizing and managerial practice since “ambidextrous organizations” theory can be characterized as rigorous and relevant. We investigate whether the “ambidextrous organizations” theory is implemented as suggested by prior theorizing and whether successful implementation is subject to managing in the way that scholars' prior theorizing suggests. Based on qualitative and quantitative data from two longitudinal case studies, we find that managers overlooked the process dimension in evaluating the required degree of ambidexterity. Furthermore, the organizational structure and culture for incremental innovation did not differ from the structure and culture for discontinuous innovation alongside the expected dimensions. Finally, the discontinuous innovation business unit had to be reintegrated to ensure sustained growth. During the reintegration processes, organizational capabilities mutated. We linked our findings on the processes and performativity of ambidextrous organizing to extant theories and developed the rationale for the observed novel phenomena of innovation myopia, second-order competency traps, and capability mutations.