This dissertation aims at contributing to the literature of organizational learning and organizational change. More specifically, this dissertation focuses on three fundamental issues of exploitation and exploration: the relationship between exploitation and exploration, the balance of exploitation and exploration, and the performance implications of exploitation and exploration. This dissertation comprises of a literature review and three essays. The first essay focuses on the question - what the relationship between exploitation and exploration is. While extant literature argues that exploitation inhibits exploration, this essay proposes that exploitation can also facilitate exploration in some circumstances. Based on analyses of 892 organization-year observations on new product development, this essay finds that exploitation can facilitate exploration if firms engage in active or multi-market-segment exploitation. The second essay investigates how to balance exploitation and exploration. It argues that the timing and sequencing of exploitation and exploration are of essence in balancing exploitation and exploration. Consistent with this proposition, the results show that firms that start exploration in the late or post stage of exploitation do worst, those that start exploration in the early stage of exploitation enjoy only moderate success, but firms that start exploration in the middle stage of exploitation do best. The third essay examines the performance implications of exploitation and exploration. It proposes that, when exploitation competes against exploration, excessive exploitation will lead to superior performance in the short-term, but inferior performance in the long run, and excessive exploration will result in inferior performance in both short term and long run. Alternatively, when exploitation facilitates exploration, this essay proposes that excessive exploitation will result in superior performance in both short term and long run, and excessive exploration will exert no impact on firms' short-term performance, but will lead to superior performance in the long run. Empirical results demonstrate that it is through intensive exploitation that firms activate positive dynamics between exploitation and exploration, so that superior firm performance is sustained in both short term and long run.

Last modified

• 08/30/2018

Creator

• Ming Piao

DOI

• https://doi.org/10.21985/N2P136

Subject

• Management and Organizations

Keyword

• exploitation
• balance
• exploration
• performance
• relationship

Date created

• 2007-12-11

Resource type

• Dissertation

Rights statement

• In Copyright