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Losing Balance: Trade-Offs between Exploration and Exploitation Innovation

Exploration and Exploitation in Early Stage Ventures and SMEs

ISBN: 978-1-78350-655-2, eISBN: 978-1-78350-656-9

ISSN: 1479-067X

Publication date: 4 August 2014


Low labor costs and market access are no longer competitive differentiators; increasingly companies are looking to design and develop new products and services as a crucial source of competitive advantage. As the pressure to innovate increases, so does the tension between shorter-term exploitative development and longer-term exploratory innovation activities. We explore this tension using interview data from software SMEs and venture capitalist firms who invest in technology-driven companies. Findings indicate that, despite firm’s having established solid innovation plans, short-term exploitative demands crowd out their longer-term exploration innovation during the development phase. Agency and resource dependence theories are used to start to explore some of the reasons for this shift. Implications and suggestions for future research are discussed.




The authors would like to acknowledge Scott Latham and Mike Hitt for their helpful comments on a previous version of this document.


Randall, C., Edelman, L.F. and Galliers, R. (2014), "Losing Balance: Trade-Offs between Exploration and Exploitation Innovation", Exploration and Exploitation in Early Stage Ventures and SMEs (Technology, Innovation, Entrepreneurship and Competitive Strategy, Vol. 14), Emerald Group Publishing Limited, Bingley, pp. 97-121.



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