The interplay between firms’ internal and external capabilities in exploration and exploitation

Abstract

Purpose The purpose of this paper is to enrich the explanation of the interplay between internal and external – or district shared – exploration and exploitation capabilities as antecedents of a firm’s radical and incremental innovation. Previous studies do not differentiate between exploration and exploitation in district shared capabilities and how they interact with internal capabilities. Design/methodology/approach The paper uses hierarchical regression analysis to test the quadratic and moderating effects in a sample of 1,019 Spanish firms. Findings Results show an increasingly positive effect on radical innovation of exploration capabilities, enhanced by shared capabilities in exploration. In the case of incremental innovation, the study finds evidence of an increasingly positive influence of exploitation capabilities and a concave relationship of exploration capabilities. Moreover, shared exploitation capabilities weaken the effect of internal exploitation capabilities and also have a direct effect on incremental innovation. Therefore, the two capabilities are interchangeable in the effect they have on incremental innovation. Practical implications Depending on the firm’s innovation strategy, intra-district firms should develop specific capabilities and/or concentrate on adopting the shared capabilities in the destination. Originality/value The study furthers the understanding of the relationship between exploration and radical innovation, and between exploitation and incremental innovation, which is more complex than previously depicted. The study also differentiates between exploration and exploitation in shared capabilities, enriching understanding of the competitiveness of district firms.

Strategic alliances, exploration and exploitation and their impact on innovation and new product development: the effect of knowledge sharing

“…First, processes and structures are improved (Jansen et al, 2009) and thus redundancies averted, as activities come to be designed to more efficiently and effectively achieve, for example, faster production or better quality (He and Wong, 2004). Second, risky experimentation is avoided, which circumvents potential business failure as existing knowledge is relied upon more heavily (Katila and Ahuja, 2002;Camis on et al, 2018). To extend that argument to SME's, exploitation activities become reinforced when the two Alliances on innovation and new product development merging entities both prioritize the allocation of resources to exploitation, since combining existing exploitative knowledge increases efficiency and eliminates redundancies.…”

Ambidexterity, Alliances and Environmental Management System Adoption in Spanish Hotels

“…In this study, exploration and exploitation are based on the scales by Camisón et al [96] and Atuahene-Gima [97], which follow the conceptualization of exploration and exploitation in the seminal paper by March [15], and which have shown their appropriateness for tourism studies [96]. Each scale is calculated through the mean scores of the scale's items to generate composite scores [105].…”

Managers' disruptive innovation activities: the construct, measurement and validity

“…Exploration activities, on the other hand, involve searching for new systems and structures, experimentation on new technologies and markets, rejuvenating norms, etc., which are associated with broadening of the manager's existing knowledge base (Mom et al, 2009). As their characteristics dictate, existing literature link exploration activities with radical innovations while exploitation activities with incremental innovations (Benner and Tushman, 2003;Voss et al, 2008;Maleti c et al, 2014;Camis on et al, 2018). Exploration activities, however, part some parallels with DIA.…”