Exploitation and exploration learning and the development of organizational capabilities: A cross-case analysis of the Russian oil industry

Abstract

We use a cross-case analysis of four Russian oil majors to develop a framework explaining the relationship between exploitation and exploration learning, and the development of organizational capabilities in transition economies. Our research explains how the changing top management style influences organizational learning over time. In the first stage of organizational transformation an authoritarian management style initiates a break with the administrative heritage of the organization to facilitate exploitation learning and the development of operational capabilities. These are required for survival in the new conditions of a market economy. In the second stage a more participatory management style fosters exploration learning and the development of strategic flexibility, required for sustainable competitive advantage. We demonstrate that exploitation and exploration learning do not coexist in the initial stages of transformation but are sequential. We found that the western-derived constructs of organizational learning add to our understanding of the process of organizational transformation in a transition context. Our study of the Russian oil industry also provides new ways to think about the processes of organizational learning in western companies, particularly large bureaucratic ones, anchored in their administrative heritage and needing to undergo organizational transformation. K E Y WO R D S change exploration learning learning organizational theory top management transition economies 1 4 9 3 Human Relations

The relationship between exploration and exploitation strategies, manufacturing flexibility and organizational learning: An empirical comparison between Non-ISO and ISO certified firms

“…Corso and Pellegrini (2007) conclude that the way of working is improved by giving the worker a free path and that material handling flexibility is the dimension related to the worker (Koste & Malhotra, 1999), justifying the external search for new knowledge through material handling flexibility, that is, exploration. Further, Dixon et al (2007) proposes improvement through the principle of teamwork, which explains the exploitation of abilities, through research on new ways of working, the creation of new modes of working for both the worker and his/her colleagues, and the freedom that the worker receives from his or her superiors, fostering continuous innovation in the organization. Human resources practices are also stimulated in the 2000 version (Bayo-Moriones et al, 2011, Dobb, 2004and Kuo et al, 2009, as the third principle establishes that, "People at all levels are the essence of an organization and their full involvement enables their abilities to be used for the organization's benefit" (ISO, 2012).…”

“…This is the case for improved process management in ISO 2000 and improved production processes, which are proposed by Koste et al (2004) to justify the relationship between machine flexibility and exploration and exploitation strategies. The same occurs for the dimension of routing flexibility with human resource management and employee involvement, using employees' knowledge and empowering employees (Corso andPellegrini, 2007 andDixon et al, 2007); as well, material handling flexibility is related to continuous improvement and finding new alternatives to produce (March, 1991) or eliminating redundancies (Levinthal & March, 1993). Following the line of argument established in this study, the environment created by ISO 9001:2000 certified organizations contributes, to a greater extent than that of non-certified organizations, to the relationship between dimensions of manufacturing flexibility and exploration and exploitation strategies.…”

“…Material handling flexibility has been considered one of the most important dimensions in the literature, based on its indication of improvement delivery times (Sawhney, 2006). This dimension enables the employee to work according to his or her knowledge and to exploit the capacity to adapt to what the machine needs or requires of him/her (Dixon et al, 2007), associated with exploitative behaviours. On the other hand, this change involves investigating new forms of work, which is, creating new ways of working for the worker and co-workers within the freedom granted by superiors.…”

“…Dixon et al (2007) defines it as "the ability to assimilate and apply new knowledge to adapt to new conditions". Previous measures differ widely in their assumptions, procedures and objectives.…”

“…In fact, creating a learning context for the organization will increase the possibility for obtaining further competitive advantages (Senge, 1992). The literature has demonstrated the fundamental role that exploration and exploitation strategies play in organizational learning (Dixon et al, 2007, Gupta et al, 2006and March, 1991.…”