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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.

The dynamic capabilities perspective focuses on the ability of an organization to develop its resource base in order to meet environmental expectations. Therefore, it is closely interrelated to the issue of managing the interaction of exploration and exploitation. The competence of continuously optimizing the interaction of exploration and exploitation has been referred to as organizational ambidexterity. Managing this interaction implies resolving a firm's permanent struggle to overcome the barriers related to the right configuration between exploration and exploitation.

By incorporating the concept of combinative capabilities as balancing routines into the conceptualization of ambidexterity we distinguish structural, interaction, and socialization capabilities that are deployed in overcoming these barriers to resource (re)configuration.

Drawing on knowledge management and barriers to resource configuration we expect that the way organizations deploy combinative capabilities to manage the interaction between exploration and exploitation depends on the observed barriers to resource (re)configuration. By combining the constructs of barriers to resource reconfiguration, ambidexterity, and combinative capabilities we intend to gain more insight in the way organizations manage the actual interaction between exploration and exploitation. Our paper will introduce a set of propositions indicating the relationship between ambidexterity, barriers to resource (re)configuration, and combinative capabilities as balancing routines.

Since March (1991) presented his ideas on organizational learning, hundreds of empirical tests have been conducted on relationships among the activities of exploration, exploitation, ambidexterity, and firm performance. Despite continued interest in his ideas, there has not been a systematic assessment of extant research to reveal whether, and to what extent, these activities relate to firm performance. This study uses meta-analysis to take a next step by aggregating results of 117 studies from more than 21,000 firms. I find strong performance effects for exploration and exploitation, but contrary to received theory, I discover ambidexterity yields weaker effects than a focus on either exploration or exploitation. Thus, I leverage these findings to offer future research opportunities.

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.

Contemporary working life highlights the challenge between exploitation and exploration both on a general and a more individual level. Here, we focus on the latter, and connect the critical debate regarding self-management to March's exploitation/exploration trade-off, as this forms a useful theoretical frame to understand how employees make sense of their self-management efforts. The employee is subjected to an individual responsibility to understand and manage an exploration of the self while handling the norms of self-exploitation that a self-management culture creates. Through an empirical study of a large group of management consultants, we explore how they perform and make sense of self-exploitation and self-exploration through three specific discourses: the discourse of workload, the discourse of aspiration, and the discourse of fun. Through these, the consultants try to identify optimal amounts of work, play, and ambition, all while handling the trade-off between self-exploitation and self-exploration. We show how this keeps failing, but how it reappears as a necessary condition for avoiding future failures. In all three discourses, the trade-off therefore presents itself as the problem of as well as the solution to self-management.

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.

Measuring behavior requires research methods that can capture observed outcomes and expose underlying processes and mechanisms. In this chapter, we present a toolbox of instruments and techniques we designed experimental tasks to simulate decision environments and capture behavior. We deployed protocol analysis and text analysis to examine the underlying cognitive processes. In combination, these can simultaneously grasp antecedents, outcomes, processes, and mechanisms. We applied them to collect rich behavioral data on two key topics in strategic management: the exploration–exploitation trade-off and strategic risk-taking. This mix of methods is particularly useful in describing actual behavior as it is, not as it should be, replacing assumptions with data and offering a finer-grained perspective of strategic decision-making.

In contrast to the largely functionalist and apolitical literature which dominates organisational scholarship on exploitation and exploration after March, this paper seeks to complement this view of exploitation and exploration with a Marxist reading which is unwittingly implied by these terms. More specifically, we combine neo-Marxist and paleo-Marxist arguments to more fully understand the conflictual relations that underpin exploitation and exploration in the management of firms. This enables us to address both the objective and subjective dimensions of exploitation and exploration which firms and workers are involved in through the contemporary capitalist labour process. We illustrate this by drawing on a case study of a large Swedish manufacturing firm which sought to improve lean production by systematically helping employees to explore their own lifestyles and possibilities for a healthier and happier life.

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.

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.