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Book part
Publication date: 4 August 2014

Guktae Kim and Moon-Goo Huh

Despite the theoretical assumption that balancing exploration and exploitation is important for long-term performance and survival, previous studies have provided few insights…

Abstract

Despite the theoretical assumption that balancing exploration and exploitation is important for long-term performance and survival, previous studies have provided few insights into these relationships because they have focused mainly on the short-term financial performance of organizations. In addition, balancing exploration and exploitation is a critical challenge for small- and medium-sized enterprises (SMEs) that lack the resources, capabilities, and experience necessary to achieving ambidexterity. In this regards, this study empirically explores the relationship between the exploration–exploitation balance and SMEs’ longevity in order to address two important questions from the ambidexterity perspective: (1) How does the balance between exploration and exploitation influence organizational survival? (2) How is the appropriate balance between exploration and exploitation influenced by an organization’s internal and external contexts?

An analysis of 1981–2012 data from the Korean SMEs in IT industry reveals an inverted U-shaped curvilinear relationship between the extent of exploratory innovation and organizational longevity, providing support for the ambidexterity perspective. We further examine the moderating effects of financial slack and environmental dynamism on the relationship between exploratory innovation and organizational longevity. The results indicate that financial slack moderated the exploration–longevity relationship and call for a contingency approach for a better understanding of performance implications of the exploration–exploitation balance.

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Exploration and Exploitation in Early Stage Ventures and SMEs
Type: Book
ISBN: 978-1-78350-655-2

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Book part
Publication date: 10 December 2018

Karl Aschenbrücker and Tobias Kretschmer

The authors examine how firms can achieve organizational ambidexterity, that is, how they can successfully engage in concurrent exploitation of existing competencies and…

Abstract

The authors examine how firms can achieve organizational ambidexterity, that is, how they can successfully engage in concurrent exploitation of existing competencies and exploration of new competencies in their search for new products. Existing research has identified three enablers to manage these fundamentally different activities: temporal separation, structural separation, and the creation of context. Studying the strategic orientation, organization design, and performance of a unique sample of mid-sized German manufacturing firms, the authors find that the controlled interplay of decentralized decision making and formalized processes and goals is another effective means to manage the challenges of pursuing an innovation strategy balancing both exploitative and exploratory activities. The findings of this study suggest that this balanced control constitutes a fourth enabler of ambidexterity.

Book part
Publication date: 12 September 2022

Bill B. Francis, Iftekhar Hasan and Gokhan Yilmaz

This chapter investigates whether core competence of managers and their expansive (vs. specialized) managerial style affects firms' innovative ability, capacity, and efficiency…

Abstract

This chapter investigates whether core competence of managers and their expansive (vs. specialized) managerial style affects firms' innovative ability, capacity, and efficiency. Using exogenous CEO departures as a natural experiment, it establishes a causal link between managerial capability and innovation. Importantly, it reveals that firms with talented managers receive significantly more nonself citations; make significantly lower self-citations and lesser citations to the others, indicating novel and explorative innovation achievements. Also, managers with higher general (specialized) ability are cited more (less) by patents from a wider range of fields. Lastly, career concern is identified as a mechanism linking higher ability and innovation.

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Empirical Research in Banking and Corporate Finance
Type: Book
ISBN: 978-1-78973-397-6

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Book part
Publication date: 4 August 2014

Uriel Stettner, Barak S. Aharonson and Terry L. Amburgey

Despite a growing body of research on exploration and exploitation, scholars have tended to study the phenomena from a narrow perspective mostly within larger, well-established…

Abstract

Despite a growing body of research on exploration and exploitation, scholars have tended to study the phenomena from a narrow perspective mostly within larger, well-established organizations. However, it is still far from obvious how top management within small-to-medium sized enterprises (SMEs) are to address the liability of newness and seek access to resources and capabilities relevant for the pursuit of exploration and exploitation. Resource sourcing and allocation decisions are particularly critical in SMEs and must be aligned with the firm’s fundamental strategic intent and growth model. For example, organizations following a stage model by first developing a domestic market and then expanding globally will require different bundles of resources and capabilities than organizations that are designed to conquer the global arena. Indeed, management systems will likely need to adapt across the firm life cycle such that it can fulfill an explorative function in the earlier stages and an exploitative function in later ones. Hence, early-stage ventures have to master the resource reallocation process which is contingent on their access to capital. Across the firm life cycle, venture capitalists can tap into the growth potential of early-stage ventures is a key factor behind their successful short-term innovative performance as well as long-term survival.

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Exploration and Exploitation in Early Stage Ventures and SMEs
Type: Book
ISBN: 978-1-78350-655-2

Keywords

Book part
Publication date: 26 October 2021

M. Diane Burton and Charles A. O’Reilly

In one of his most cited works, March (1991) observed that “The basic problem confronting an organization is to engage in sufficient exploitation to ensure its current viability…

Abstract

In one of his most cited works, March (1991) observed that “The basic problem confronting an organization is to engage in sufficient exploitation to ensure its current viability and, at the same time, devote enough energy to exploration to exploration to ensure its future viability” (p. 105). The need to simultaneously pursue exploration and exploitation is a cornerstone of organizational ambidexterity, with the embedded assumption that exploratory ventures require organic management systems and exploitative activities benefit from more mechanistic management systems. The authors argue that this assumption about system alignment is neither well-supported by empirical evidence nor well-grounded in March’s original ideas about exploration and exploitation. The authors review the existing empirical evidence on the management systems that support exploration and exploitation and reveal some of the empirical and conceptual challenges. The authors then share a quasi-experimental study of 49 project teams over an 18-month period where they investigated how components of the management system – formalization, specialization, hierarchy, and leadership – differentially affect project success for explore and exploit projects. The authors find that exploitation projects can succeed under either mechanistic or organic systems, but that exploratory project performance suffers under a mechanistic system. In addition, the authors also find that leadership is the most important determinant of project success or failure. The authors discuss the implications of these results for future studies of organizational ambidexterity and draw attention to some of the underdeveloped ideas in March’s original article that might further advance the field.

Details

Carnegie goes to California: Advancing and Celebrating the Work of James G. March
Type: Book
ISBN: 978-1-80043-979-5

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Book part
Publication date: 4 August 2014

Sukanlaya Sawang, Roxanne Zolin, Judy Matthews and Meriam Bezemer

Business literature reveals the importance of generating innovative products and services, but much of the innovation research has been conducted in large firms and not replicated…

Abstract

Business literature reveals the importance of generating innovative products and services, but much of the innovation research has been conducted in large firms and not replicated in small firms. These firms are likely to have different perspectives on innovation, which means that they will probably behave differently to large firms. Our study aims to unpack how firms in Spatial Information perceive and engage in innovation as a part of their business operation.

To investigate these questions we conduct 20 in-depth interviews of top management team members in Spatial Information firms in Australia.

We find that small firms define innovation very broadly and measure innovation by its effect on productivity or market success. Innovation is seen as crucial to survival and success in a competitive environment. Most firms engage in product and/or service innovations, while some also mentioned marketing, process and organisational innovations. Most innovations were more exploitative rather than exploratory with only a few being radical innovations. Innovation barriers include time and money constraints, corporate culture and Government tendering practices. Our study sheds a light on our understanding of innovation in an under-researched sector; that is Spatial Information industry.

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Exploration and Exploitation in Early Stage Ventures and SMEs
Type: Book
ISBN: 978-1-78350-655-2

Keywords

Book part
Publication date: 22 November 2018

Younggeun Lee and Patrick M. Kreiser

In this chapter, the authors examine the main effect of entrepreneurial orientation (EO) – a firm’s strategic entrepreneurial posture – on balancing exploration and exploitation…

Abstract

In this chapter, the authors examine the main effect of entrepreneurial orientation (EO) – a firm’s strategic entrepreneurial posture – on balancing exploration and exploitation in the form of organizational ambidexterity. Resource-constrained firms face an imperative to conduct innovative activities, survive hostile environments, and compete with larger and more resource-rich firms. The authors contend that firms can address these potential impediments through achieving ambidexterity via dynamic capabilities, firm-specific resources, and institutional factors. Specifically, The authors review the EO and ambidexterity literatures and summarize extant arguments related to the relationship between EO, exploration, and exploitation. The authors also discuss the most prominent scales and measures of EO, exploration, and exploitation. Moreover, the authors discuss operationalizational challenges that should be considered when conducting EO–ambidexterity research and suggest future research directions by specifying an agenda outlining useful theoretical perspectives and various contingencies that may influence the EO–ambidexterity relationship.

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The Challenges of Corporate Entrepreneurship in the Disruptive Age
Type: Book
ISBN: 978-1-78754-443-7

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Book part
Publication date: 4 August 2014

Anna Sabidussi

This chapter investigates how small- and medium-sized enterprises and large firms decide the sourcing strategies to explore and exploit. This study adopts a qualitative…

Abstract

This chapter investigates how small- and medium-sized enterprises and large firms decide the sourcing strategies to explore and exploit. This study adopts a qualitative methodology and reports on the insights derived from interviews with 35 companies and 2 experts. A series of propositions are derived, and these propositions are used to propose a height–distance view of exploration and exploitation. The implications for theory and managerial practice are presented in the concluding remarks.

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Exploration and Exploitation in Early Stage Ventures and SMEs
Type: Book
ISBN: 978-1-78350-655-2

Keywords

Book part
Publication date: 4 August 2014

M. Laura Frigotto, Graziano Coller and Paolo Collini

Exploration and exploitation comprise one of the most well-known constructs in management and organization studies. However, there are three gaps in the extant literature on this…

Abstract

Exploration and exploitation comprise one of the most well-known constructs in management and organization studies. However, there are three gaps in the extant literature on this topic. First, these studies focus mainly on large organizations and neglect small and medium-sized enterprises (SMEs) and new ventures. Second, when adopting a longitudinal perspective, the research typically consists of cross-sectional studies that fail to capture evolution. Third, the research focuses more on the role of antecedents and mediators of strategies that pursue exploration and exploitation than on the practices that embody such goals. In this chapter, we address these three gaps and complement the previous literature with a study of the growth of an SME from start-up to sale over a 19-year period (1993–2011). We depict the evolution of exploration and exploitation over time through an analysis of management system practices that employs a longitudinal perspective. We analyze the different roles that management systems have played in various stages of the growth paths of the organization. We show that the role of management systems in shaping exploration and exploitation only loosely depends on the design of these systems. The same management systems can fulfill an explorative function in one stage and an exploitative function in another, depending on how such systems are used. Conversely, across stages, the role of management systems typically changes from exploration to exploitation.

Details

Exploration and Exploitation in Early Stage Ventures and SMEs
Type: Book
ISBN: 978-1-78350-655-2

Keywords

Book part
Publication date: 4 February 2008

Justin J.P. Jansen

The competitive arena in business environments has changed in many ways. The globalization of markets, rapid technological change, shortening of product life cycles, and the…

Abstract

The competitive arena in business environments has changed in many ways. The globalization of markets, rapid technological change, shortening of product life cycles, and the increasing aggressiveness of competitors require firms to respond flexibly and rapidly (Grant, 1996; Volberda, 1996). Not just fast-moving, high-tech industries have been facing these changes; even industries that were supposed to be stable are heating up (D’Aveni, 1994). As competition intensifies and the pace of change accelerates, firms are increasingly confronted with a tension between exploiting existing competences and exploring new ones (Floyd & Lane, 2000; Levinthal & March, 1993; March, 1991). Firms seek to adapt to environmental changes, explore new ideas or processes, and develop new products and services for emerging markets. In addition, they need stability to leverage current competences and exploit existing products and services (Benner & Tushman, 2003; Sanchez & Heene, 1996).

Details

Advances in Applied Business Strategy
Type: Book
ISBN: 978-1-84950-520-8

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