Academic journal article Global Business and Management Research: An International Journal

Organizational Factors for Exploration and Exploitation: A Conceptual Review

Academic journal article Global Business and Management Research: An International Journal

Organizational Factors for Exploration and Exploitation: A Conceptual Review

Article excerpt

Introduction

Researchers classify innovation as two separate set of activities viz. exploration and exploitation. Benner & Tushman (2002) and Jansen (2005) differentiate between 'exploitative Innovations' which involve 'improvements in existing components and architectures and build on the existing technological trajectory' and 'exploratory innovations' which involve 'a shift to a different technological trajectory'. In addition to this way of classification, authors have also indicated another dimension to distinguish between these two activities. Coombs (1996) suggested two sides of R&D activities; Investment mode where these activities are concerned with developing technological capabilities of organizations, and harvesting mode where R&D works with other functions of the organization to exploit special services for customers.

Recently, He and Wong (2004) mention, an explorative innovation strategy to contain 'technological innovation activities targeting new product- market domains and 'exploitative innovation strategy' to contain 'technological innovation activities for ameliorating existing product-market. Authors of the strategic management describe exploration, in terms of competence building (Sanchez, Heene & Thomas, 1996) or competence definition (Floyd & lane, 2000), and exploitation, in terms of competence leveraging (Sanchez et al., 1996) or competence deployment (Floyd & Lane, 2000).

Cavone, Chiesa and Manzini (2000) indicates key characteristics of experimental programmes is a continuous search for new technological solutions and a learning process aiming to enhance the firm's knowledge base and exploitation programme is to create value through current activities and to innovate by exploiting the skills embedded in a firm's human resource and technical systems. Some authors relate these two activities as development and implementation stage of the innovation. First stage is characterized by exploration activities such as risk taking, searching for alternatives (Duncan, 1976), and discovery (Cheng & Van De Ven, 1996), while second stage is characterized by exploitation activities such as testing (Cheng & Van De Ven, 1996), refining and implementing (Duncan, 1976) the innovation. This distinction between experimental and exploitation activities is conceptually different from the traditional classification of R&D activities in research (basic or applied) and product development (Cavone, Chiesa & Manzini, 2000).

Literature background

Conflict between exploration and exploitation activities

Both exploitation and exploration are crucial for ongoing operations of organizations and organizational change (Crossan, Lane & White 1999). However, Christensen (1997) suggested that due to the disruptive nature of the technology; experimenting units must be completely separated from exploiting units. In the Stage models of innovation, (Kanter, 1988) shows that the mix of activities required during the innovation process which varies greatly from stage to stage so as innovative behavior which has been discussed until now idea generating (Waldman & Bass, 1991) extends to a broad range of other types of behavior which combine to result the final innovative outcome. Despite the strategic management thinkers endorse ambivalent capabilities for an organizational excellence, organizational stimulants for exploration and exploitation are of such a conflicting nature that possibility of their co-existence at single space and time is quite perplexed. Both the activities are separated on the basis of location, time and structure within organization. Separation of exploration and exploitation by location can be found in studies on 'structural ambidexterity' (Benner & Tushman, 2003; O'Reilly & Tushman, 2004). Ambidextrous organizational forms are 'composed of highly differentiated but weakly integrated sub-units' (Benner & Tushman, 2003). …

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