Uncertainty avoidance and the exploration-exploitation trade-off

Abstract

Uncertainty Avoidance and the Exploration-Exploitation Trade-off AbstractPurpose -This study investigates how a firm's uncertainty avoidance -as indicated by the headquarters' national culture -impacts firm performance by affecting exploratory (product innovation) and exploitative (brand trademark protection) activities. It aims to show that firms characterized by high levels of uncertainty avoidance may be less competitive in the exploratory product development stage, but may be more competitive in the exploitative commercialization stage by producing more durable brands. Findings -Results show that uncertainty avoidance lowers the rate of product innovation, but helps firms to appropriate more value by greater protection of their brands. Uncertainty avoidance thus creates an exploration-exploitation trade-off.Practical Implications -This study provides useful insights for managers regarding where to locate a firm's front-end development (product innovation) activities and commercialization (brand trademarking protection) activities.Originality/value -This is the first study to demonstrate the influence of a cultural trait on both explorative and exploitative stages simultaneously. As a methodological contribution, it shows how objective, longitudinal brand trademark data can be used to analyze the long-term impact of marketing activities on firm performance.

Culture values and entrepreneurial innovativeness: A comparative study of Malaysian ethnic entrepreneurs

“…Several cross-cultural researchers have examined the influence of national culture on innovative practices of firms (Broekhuizen et al, 2017;Shane, 1993;Zhu et al, 2018). Studies find innovative practices that differ across countries can be explained by the manifestation of national culture within a country's firms.…”

“…To the best of our knowledge, this study is the first academic endeavor to investigate the influence of all six cultural values on EI among Malaysian Chinese, Malay, and Indian entrepreneurs in a systematic and comparative manner. Such systematic analysis enabled us to paint a fuller picture of how national cultural values influence SMEs' innovation and specifically the innovative activities of their entrepreneurs (Broekhuizen et al, 2017;Tian et al, 2020;Watts et al, 2020;Zhu et al, 2018). The novelty of this study may be further enhanced because we also offer insights to researchers and practitioners through a fine-grained analysis of three different ethnic groups in their EI.…”

“…National culture has been widely investigated for its unique impact on creativity-related themes particularly in terms of innovativeness, a process through which firms implement new ideas into practice (Broekhuizen et al, 2017;Tian et al, 2018;Zhu et al, 2018). Specifically, researchers have focused on different cultural dimensions of Hofstede's model (Hofstede, 1980;G.…”

The Influence of National Culture on New Product Creativity

“…Therefore, new products cause higher uncertainty than do existing products. Members in high-UA societies consider novel and innovative things as dangerous and suspicious and hence, resist them, while members in low-UA societies are more open to change and new ideas (Efrat, 2014;Broekhuizen, Giarratana, Torres, 2017). Therefore, it is reasonable to assume that consumers are less confident regarding changes in creative new products in a high-UA society and thus refrain from activities involving creative products.…”

Resource partitioning and strategies in markets for technology

“…He explains the success of IBM in the personal computer not with IBM's technological superiority but with IBM's legitimacy "with corporate clients who had previously invested in IBM's mainframe computers" (p. 1221). In an industry like security software, Broekhuizen et al (2017) have shown the importance of firm names as anchors of company reputation and legitimacy, especially in terms of resilience and soundness. As we mentioned, by resorting to arms' length contracts, a specialist can focus on customization, obtain financial resources, and maintain its identity while leveraging the applicability of its technology to other product domains.…”