While exploration and exploitation represent two fundamentally different approaches to organizational learning, recent literature has increasingly indicated the need for firms to achieve a balance between the two. This balanced view is embedded in the concept of ambidextrous organizations. However, there is little direct evidence of the positive effect of ambidexterity on firm performance. This paper seeks to test the ambidexterity hypothesis by examining how exploration and exploitation can jointly influence firm performance in the context of firms' approach to technological innovation. Based on a sample of 206 manufacturing firms, we find evidence consistent with the ambidexterity hypothesis by showing that (1) the interaction between explorative and exploitative innovation strategies is positively related to sales growth rate, and (2) the relative imbalance between explorative and exploitative innovation strategies is negatively related to sales growth rate.

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Organizations learn and adapt their aspiration levels based on reference points (prior aspiration, prior performance, and prior performance of reference groups). The relative attention that organizations allocate to these reference points impacts organizational search and strategic decisions. However, very little research has explored this. Therefore, we build a recursive feedback model of learning from organizational experience that explains heterogeneity of attention allocation to the reference points in adaptive aspirations. In a sample of the German magazine industry , we find when early in their life cycle and as they or their parent company age, organizations tend to focus more on their own aspirations; however, when at the verge of bankruptcy, they increase their attention to competitors' performance.

Research summary: Behavioral Theory highlights the crucial role of social comparisons in attention allocation in adaptive aspirations. Yet, both the specification of social reference points and the dynamics of attention allocation have received little scholarly examination. We address performance feedback from two social reference points relative to divisions in multidivisional firms: economic reference point and political reference point. Comparing divisional performance with the two reference points can give consistent or inconsistent feedback, which has important consequences for the dynamics of attention allocation in adaptive aspirations. We find consistent feedback leads to more attention to own experience, while inconsistent feedback results in more attention to the social reference point the focal division underperforms. Results reveal that political reference point plays an important role in determining managerial attention allocation.Managerial summary: This article is based on how goal-based performance of divisions relative to both their relevant external market rivals and sister divisions in multidivisional firms influences corporate resource allocation. As a result, various combinations of performance against the two groups of peers drive the reallocation of divisional management attention. We show that specific attention shifts occur on average as a function of the focal division's performance relative to the marketplace performance and that of sister divisions. directs how organizations learn and adapt (Cyert and March, 1963). The generalized model of performance feedback depends on a satisfactory performance level-referred to as the aspiration level-against which an organization compares its actual performance. According to BTOF (Cyert and March, 1963), organizations adapt their aspirations based on historical comparisons with their own experience (i.e., prior aspiration and prior performance) and social comparisons with others' experience (i.e., others' performance). That is, As a political coalition, this party consists largely of union members, the poor, teachers, single women, government workers, minorities, college professors, and young voters. These groups have different goals and interests on some important issues, but cooperate in a manner that benefits all to some degree.