Academic journal article Innovation: Organization & Management

Shaping the Firm's External Search Strategy

Academic journal article Innovation: Organization & Management

Shaping the Firm's External Search Strategy

Article excerpt

In their knowledge search for innovation, firms frequently try to extend their organizational boundaries to access multiple actors (Laursen & Salter, 2006; Rosenkopf & Nerkar, 2001). External partners, such as suppliers, customers, universities, research centers and industry com- petitors have been suggested as relevant in the search for innovative ideas (Faems, Van Looy, & Debackere, 2005; Sánchez-González & Herrera, 2010). Among other reasons, learning from external sources has been considered essential for accessing new ideas, developing a broader knowl- edge base and increasing the firm's flexibility and adaptation (Bierly & Daly, 2007). External knowl- edge is considered as contributing to innovation activity (Faems et ah, 2005; Li & Wu, 2010).

Work on knowledge search has provided insights into the different performance of firms by investigating search strategies (Laursen & Salter, 2006; Rothaermel & Deeds, 2004). Many of these studies draw on March's (1991, p. 85) definition of exploration and exploitation ' the essence of exploi- tation is the refinement and extension of existing competencies, technologies and paradigms ..., whereas the essence of exploration is experimenta- tion with new alternatives.' Much of this work is embedded in the firm alliance literature and analy- ses exploration and exploitation in inter-firm col- laborations. Koza and Lewin (1998) suggest that the reason for entering an exploration alliance is the desire to discover new opportunities, while an exploitation alliance involves the maximization of joint assets. Empirical studies often proxy explor- ative alliances by the function of R&D and asso- ciate exploitative alliances with manufacturing, marketing and other functions (Park, Chen, & Gallagher, 2002). Faems et al. (2005) extend this concept to other type of collaborations and show that scientific institutions focus on the develop- ment of new technologies, that is, they are ' explo- ration oriented,' while agents such as suppliers and customers focus on optimizing existing core com- petences, that is, they are 'exploitation oriented.'

However, despite the existent rich insights into exploitative and exploratory search strategies most of the empirical evidence is based on dif- ferent firm performances related to search efforts and few studies analyze their determinants. There are some that focus on identifying the industry conditions that seem to promote particular exter- nal search strategies (Beckman, Haunschild, & Phillips, 2004; Park et al., 2002; Sidhu, Volberda, & Commandeur, 2004). Park et al. (2002) go beyond environmental factors and highlight the relevance of the firm's resource endowments for the decision to pursue an exploitation or explo- ration strategic alliance. From an information processing perspective, the study by Sidhu et al. (2004) highlights managerial intentions as a determinant of explorative search. However, despite the latter contributions, there is no study analyzing the specific mechanisms that drive orga- nizational structures and determine exploitative or explorative oriented external search.

Studies in organizational learning refer to alter- native organizational structures, such as decen- tralized versus centralized and organic versus mechanistic structures, in the decision to pursue an exploitative or explorative strategy (Csaszar, 2012; Siggelkow & Levinthal, 2003). However, they focus on the firm's organizational boundar- ies rather than the mechanisms related to these types of activity in inter-firm relationships (Lavie & Rosenkopf, 2006). Absorptive capacity stud- ies analyze the antecedents to external knowledge acquisition especially organizational determinants (Jansen, Van den Bosch, & Volberda, 2005; Vega- Jurado, Gutiérrez-Gracia, & Fernández-de-Lucio, 2008). However, strategic differences in the exter- nal knowledge acquired have not been investigated.

This study considers environmental con- text, technological resources and organizational structure as important determinants of the firm's search strategy and contributes by extending the work on innovative search and by providing addi- tional insights for absorptive capacity and organi- zational learning theories. …

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