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The purpose of this paper is to investigate the performance implications of two major mechanisms for organizational learning (i.e. exploration and exploitation). Exploration refers to firm activities that explore new and novel knowledge, whereas exploitation reflects the extent to which a firm reuses its existing knowledge. The authors predict curvilinear (i.e. an inverted U-shape) relationships between exploration/exploitation and firm performance, respectively. That is, firm performance first increases with exploration/exploitation at a decreasing rate; then, firm performance decreases at an increasing rate after firm performance reaches a maximum point. Furthermore, the authors examine whether the curvilinear relationships are moderated by two types of firm–stakeholder relationships (i.e. firm–employee and firm–customer relationships).

Using the data from National Bureau of Economic Research, US Patent Citations Data File, KLD Research and Analytics Inc. and Compustat series, the authors construct an unbalanced panel data set of 3,070 observations in 554 firms from 1991 to 2006. To test the hypotheses, feasible generalized least squares regression is used.

In consistent with the prediction, the authors find inverted U-shape relationships between exploration/exploitation and firm performance. The authors also find that the curvilinear relationships are moderated by firm–employee relationships. The relationships between exploration/exploitation and firm performance become stronger when firms have better relationships with employees.

The study provides empirical evidence that better firm–employee relationships can strengthen the curvilinear relationships between exploration/exploitation and firm performance. The authors argue that future studies should extend to other stakeholder relationships, using more refined measures, and incorporating the concept of ambidexterity.

The findings suggest that managers should design innovation strategy based on performance implications of exploration/exploitation and that managers should also realize that stakeholder relationships can influence the relationships between exploration/exploitation and firm performance. First, the study shows that although exploration and exploitation can improve firm performance, too much exploration or exploitation is not good for firm performance. Therefore, managers should consider seriously the maximum point of performance that exploration and exploitation can reach and avoid too much exploration or exploitation. Second, firms can invest in firm–employee relationships to gain better performance implications from exploration/exploitation. The study shows that, as firms develop better firm–employee relationship, the relationships between exploration/exploitation and firm performance are stronger and firm performance is likely to reach a higher apex.

The authors find the inverted U-shape relationships between exploration/exploitation and firm performance, moreover, the authors add two contingent factors associated with stakeholders that can help exploration and exploitation contribute more to firm performance.

The purpose of this paper is to explore the role of exploration/exploitation strategies in organizational learning and the impact of strategic leadership on the organizational learning process.

Based on an extensive review of literature, this paper develops propositions encompassing three key elements: exploration/exploitation, strategic leadership and organizational learning.

The propositions inform that tension between exploration and exploitation creates opportunities for organizational learning. Further, leadership styles have a differential effect on the role of exploration/exploitation in organizational learning. Transformational leadership positively impacts the role of exploration in individual and group learning but negatively impacts the role of exploitation in institutionalized learning. Transactional leadership positively impacts the role of exploitation in institutionalized learning but negatively impacts the role of exploration in individual and group learning. The alternate use of transformational and transactional leadership styles can facilitate multilevel organizational learning.

The propositions are the first step toward the development of a theory of exploration/exploitation–organizational learning–strategic leadership. For practitioners, this paper elaborates the role of exploration/exploitation and strategic leadership in multilevel organizational learning. The paper also informs about those leadership styles that are counterproductive in the individual/group and institutionalized learning.

This paper is novel in its contribution because exploration/exploitation, organizational learning and strategic leadership have not been discussed in a unified framework in the previous studies. Further, whereas previous studies discuss “organizational learning” mainly as an organizational-level construct, this paper discusses organizational learning at the individual, group and organizational levels. A discussion of the individual, group and institutionalized learning furnishes rich insights into organizational learning dynamics.

The purpose of this paper is to examine and gain further insight into the potential link between regulatory focus and exploration–exploitation at the individual manager level. More specifically, the authors hypothesised that temporal focus would act as a mediator in the relationship between managers’ regulatory foci and exploration–exploitation activities.

A survey was conducted with 541 managers from the USA. The model was tested using OLS regression models, followed by bootstrapped multiple-mediation analyses.

Managers’ promotion and prevention foci are associated with the extent to which they focus on the past, the present and the future, which is related to managers’ exploration and exploitation activities.

The findings rely on self-report data.

This paper examines the chronic strategic tendencies of managers with different levels of promotion and prevention focus – in particular, the timeframes they are likely to focus on and exploration–exploitation levels they are likely to engage in. In doing so, this paper provides managers a way to detect and overcome their chronic strategic shortcomings.

This paper not only examines the link between regulatory focus and exploration–exploitation at the individual level, but also provides further insights regarding the nature of this relationship. More specifically, by putting forward temporal focus as a mediator of this relationship, this study contributes to the ongoing discussion about the potential link between regulatory focus and exploration–exploitation, and poses new questions for future research.

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.

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.

The purpose of this paper is to understand how digital technologies can help healthcare organisations and improve the exploration-exploitation paradox over time. The authors explore inputs, processes and outcomes of implementing digital transformation programs and advance four testable propositions.

The authors conducted multiple case studies with embedded units of analysis: digital transformation processes; hospitals; and regional healthcare systems. Primary sources come from 107 semi-structured interviews with key informants within 14 Italian hospitals between 2009 through 2011.

Three complementary paths emerge as fundamental to balance exploratory and exploitatory efforts in healthcare: assets digitalisation within hospitals; digitally based process integration; and disruptive decision-making through analytics. Intra- and inter-path characteristics are discussed to show how digital transformation can both move hospital within the exploration-exploitation space.

By its very nature, this study is exploratory. Notwithstanding the number of cases and interviews, its generalisability is limited.

Digital transformation programs are fundamental to resolve the tensions raised by the exploration-exploitation paradox. Their implementation leads to better performance (cost reductions, quality improvements). A framework is provided for practitioners to make better decisions.

This study sheds new light on how digital technologies are actually adopted and adapted in healthcare contexts. It does it by entailing a longitudinal perspective.

This study aims to build an integrated model for information technology (IT)/information system (IS) team exploration and exploitation innovation in the business-to-business (B2B) enterprise context by empirically investigating the mediating role of tacit-explicit knowledge co-creation and exploring the behavior approach of servant leaders for IT/IS team exploration-exploitation innovation.

The authors' analysis was supported by 182 enterprise-IT/IS teams (403 participants) in Taiwan. The authors used a questionnaire and Structural Equation Model (SEM)-SmartPLS to validate the development model. This study examines IT/IS exploration-exploitation innovation using a combination of quantitative survey research and qualitative case studies.

The specific roles of direct and mediating effects for two innovations of IT/IS team exploration and exploitation were investigated. The findings show a direct effect of knowledge creation (tacit and explicit) on IT/IS team exploration-exploitation innovation. Servant leader behavior positively influences tacit-explicit knowledge co-creation practices, IT/IS team exploration and exploitation. Moreover, knowledge creation (tacit and explicit) successfully mediates the correlation between servant leaders and IT/IS team innovations (for exploration and exploitation).

Managers, IT/IS consultants and enterprises at the executive level are suggested to encourage knowledge co-creation practices, both tacit and explicit to support their IT/IS team innovation. The greater the degree of explicit knowledge (i.e. socialization and internalization) and tacit knowledge creation (i.e. externalization and combination), the greater will be the opportunities for meeting the enterprise-IT/IS team exploration and exploitation innovation goals. The project manager may follow servant leadership behavior to promote effective knowledge co-creation process on the IT/IS team.

This effort contributes to greater and new understanding of how ambidexterity capability, tacit-explicit knowledge co-creation (mediators) and servant leaders for IT/IS team exploration-exploitation innovation in the B2B enterprise context and new foundations for future studies on a cross-enterprise IT/IS team. This research is also the first empirical effort to understand how a servant perspective leadership contributes through the knowledge co-creation process for IT/IS exploration-exploitation innovation.

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.

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.

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.

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.

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.

Although many scholars have found that exploration and exploitation innovation have significantly positive effects on firm performance, it remains to be resolved whether the relationship between the two is still established at different stages of enterprise development and in different competitive contexts. This paper aims to clarify the effect of exploration/exploitation innovation on firm performance in start-ups, and in particular, the mediation role of entrepreneurial orientation (EO) and the moderation role of competitive intensity are tested to explore their disturbing effects on above relationship.

The authors construct a theoretical framework to analyze and verify the relationship between innovation, EO and firm performance. The hypotheses of this paper are put forward by theoretical inference. In addition to test the hypotheses, 143 questionnaires are collected from technology-oriented start-ups in Hefei National University Science Park.

The empirical results show that consistent with previous findings, exploration innovation and exploitation innovation both have positive impact on firm performance; meanwhile, the EO partially mediates the relationship between both innovations and firm performance. What cannot be ignored is that the competition intensity plays a moderation role between EO and firm performance.

The findings reveal that the impact of innovation activities on corporate performance has been disrupted by EO and competition intensity in start-ups. The work of this paper deepens the understanding of the relationship between innovation, EO, external environment and firm performance, which is of guiding significance to the entrepreneurship management of emerging economies.

The purpose of this paper is to contribute to the debate on exploration–exploitation trade-off in the context of new ventures creation, where, particularly at the empirical level, there is a limited understanding of whether and how this trade-off is achieved and how start-ups performances are affected by the way in which they face the exploration–exploitation dilemma.

A qualitative case study approach has been adopted as a methodology to conduct the research. Six Italian innovative start-ups were selected and analyzed through in-depth interviews with founders and data collection to understand whether and how start-ups adopt exploration and exploitation solutions to face critical events in their business lives.

The most evident result of this study is that start-ups adopt more frequently a temporal separation of exploration and exploitation activities as the preferred mode for balancing learning and innovation tension. They do not seem to exhibit a defined or a common path in the way they realize the temporal separation between exploration and exploitation. Instead, they mostly oscillate. The ambidextrous solution is selected in only a few cases and not consecutively. The pre-entry knowledge profile seems to influence the choice of start-ups at the beginning of their lives.

This research has implications for the whole start-up’s ecosystem, comprising incubators/accelerators, advisors, intermediaries, venture capitalists, new venture founders and policymakers. For example, by knowing the typology of knowledge and competence gaps start-ups usually aim to fill when they face particular events, intermediaries (such as incubators) could better plan initiatives and strategies supporting new ventures in the process of growth and stabilization. Furthermore, the venture capitalists can benefit from this research, by planning specific interventions for each critical event based on specific resources and competencies gaps and guiding for more promising start-ups.

This paper presents a novel application of entrepreneurial learning approach in the context of new venture creation. To reach this aim, a classification of exploration/exploitation solutions has been developed.