Do stakeholder relationships matter? An empirical study of exploration, exploitation and firm performance

2019 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Xiaoping Zhao ◽  
Feibo Shao ◽  
Chuang Wu
Keyword(s):  
Firm Performance ◽  
Customer Relationships ◽  
Economic Research ◽  
Maximum Point ◽  
Exploration And Exploitation ◽  
Content Type ◽  
Stakeholder Relationships ◽  
Employee Relationships ◽  
Curvilinear Relationships ◽  
Exploration Exploitation

Purpose The purpose of this paper is to investigate the performance implications of two major mechanisms for organizational learning (i.e. exploration and exploitation). Exploration refers to firm activities that explore new and novel knowledge, whereas exploitation reflects the extent to which a firm reuses its existing knowledge. The authors predict curvilinear (i.e. an inverted U-shape) relationships between exploration/exploitation and firm performance, respectively. That is, firm performance first increases with exploration/exploitation at a decreasing rate; then, firm performance decreases at an increasing rate after firm performance reaches a maximum point. Furthermore, the authors examine whether the curvilinear relationships are moderated by two types of firm–stakeholder relationships (i.e. firm–employee and firm–customer relationships). Design/methodology/approach Using the data from National Bureau of Economic Research, US Patent Citations Data File, KLD Research and Analytics Inc. and Compustat series, the authors construct an unbalanced panel data set of 3,070 observations in 554 firms from 1991 to 2006. To test the hypotheses, feasible generalized least squares regression is used. Findings In consistent with the prediction, the authors find inverted U-shape relationships between exploration/exploitation and firm performance. The authors also find that the curvilinear relationships are moderated by firm–employee relationships. The relationships between exploration/exploitation and firm performance become stronger when firms have better relationships with employees. Research limitations/implications The study provides empirical evidence that better firm–employee relationships can strengthen the curvilinear relationships between exploration/exploitation and firm performance. The authors argue that future studies should extend to other stakeholder relationships, using more refined measures, and incorporating the concept of ambidexterity. Practical implications The findings suggest that managers should design innovation strategy based on performance implications of exploration/exploitation and that managers should also realize that stakeholder relationships can influence the relationships between exploration/exploitation and firm performance. First, the study shows that although exploration and exploitation can improve firm performance, too much exploration or exploitation is not good for firm performance. Therefore, managers should consider seriously the maximum point of performance that exploration and exploitation can reach and avoid too much exploration or exploitation. Second, firms can invest in firm–employee relationships to gain better performance implications from exploration/exploitation. The study shows that, as firms develop better firm–employee relationship, the relationships between exploration/exploitation and firm performance are stronger and firm performance is likely to reach a higher apex. Originality/value The authors find the inverted U-shape relationships between exploration/exploitation and firm performance, moreover, the authors add two contingent factors associated with stakeholders that can help exploration and exploitation contribute more to firm performance.

Role of ambidexterity and learning capability in firm performance

2018 ◽  
Vol 48 (4) ◽  
pp. 517-536 ◽  
Author(s):  
Sanjay Dhir ◽  
Swati Dhir
Keyword(s):  
Firm Performance ◽  
Developed Countries ◽  
Two Dimensions ◽  
Survey Method ◽  
Learning Capability ◽  
Content Type ◽  
Multiple Resources ◽  
Managerial Implications ◽  
Managerial Positions ◽  
Exploration Exploitation

Purpose This study aims to comprehend the ambidexterity and organizational learning capability construct in the Indian E-commerce industry context. Design/methodology/approach The survey method was adopted for this study. A survey was circulated among the personnel working in E-commerce companies in India. The focus was on people working in managerial positions and had at least three years of experience in the same industry. Findings This paper investigates the link between two dimensions of ambidexterity, i.e., exploration, exploitation and learning capability in firm performance. The paper also establishes the moderating effect of the learning capability on the two dimensions of ambidexterity and firm’s performance. Research/limitations/implications Our focus was to cover most of the E-commerce companies, yet to generalize the research the analysis needs to be conducted with even more E-commerce companies. Although we took extraordinary care to gather data from multiple resources and discarded the data that was incomplete or was from lower level employees yet, we need a larger sample to establish the causal claim of our model. Practical/implications We reason that learning capability of a firm impacts the two dimensions and firms should focus both on external and internal knowledge to benefit from the ambidexterity efforts. Social/implications Learning capability influences a firm’s performance and has managerial implications. The analysis’ results on the India based ecommerce companies differs from prior research done in more developed countries and other industries. Originality/value No prior research has been done from this perspective in the Indian context, and thus our work opens up new avenues for researchers to look at.Keywords Ambidexterity, Firm performance, Learning capability

A jack-of-all-trades or a master of none: the performance effects of balancing exploration and exploitation within vs across alliance portfolio domains

2018 ◽  
Vol 24 (3) ◽  
pp. 569-587 ◽  
Author(s):  
Christopher R. Penney ◽  
James G. Combs ◽  
Nolan Gaffney ◽  
Jennifer C. Sexton
Keyword(s):  
Firm Performance ◽  
Value Chain ◽  
Fixed Effects ◽  
Empirical Work ◽  
Generalized Least Squares ◽  
Exploration And Exploitation ◽  
Specific Domain ◽  
Alliance Portfolio ◽  
Content Type ◽  
Alliance Portfolios

Purpose Theory predicts that balancing exploratory and exploitative learning (i.e., ambidexterity) across alliance portfolio domains (e.g. value chain function, governance modes) increases firm performance, whereas balance within domains decreases performance. Prior empirical work, however, only assessed balance/imbalance within and across two domains. The purpose of this study is to determine if theory generalizes beyond specific domain combinations. The authors investigated across multiple domains to determine whether alliance portfolios should be imbalanced toward exploration or exploitation within domains or balanced across domains. The authors also extended prior research by exploring whether the direction of imbalance matters. Current theory only advises managers to accept imbalance without helping with the choice between exploration and exploitation. Design/methodology/approach Hypotheses are tested using fixed-effects generalized least squares (GLS) regression analysis of a large 13-year panel sample of Fortune 500 firms from 1996 to 2008. Findings With respect to the balance between exploration and exploitation within each of the five domains investigated, imbalanced alliance portfolios had higher firm performance. No evidence was found that balance across domains relates to performance. Instead, for four of the five domains, imbalance toward exploration related positively to firm performance. Originality/value An alliance portfolio that allows for exploration in some domains and exploitation in other domains appears more difficult to implement than prior theory suggests. Firms benefit mostly from using the alliance portfolio for exploratory learning.

scholarly journals A process for building inter-organizational contextual ambidexterity

2015 ◽  
Vol 21 (5) ◽  
pp. 1140-1161 ◽  
Author(s):  
Rita Lavikka ◽  
Riitta Smeds ◽  
Miia Jaatinen
Keyword(s):  
Domain Knowledge ◽  
Organizational Management ◽  
Development Effort ◽  
Exploration And Exploitation ◽  
Action Research Project ◽  
Content Type ◽  
Step Process ◽  
New Ideas ◽  
Exploration Exploitation ◽  
Common Understanding

Purpose – The purpose of this paper is to discover a three-step process for building contextual ambidexterity into inter-organizational IT-enabled service processes through developmental interventions. Design/methodology/approach – A longitudinal action research project was conducted. The empirical study consisted of three consecutive developmental interventions to support the collaborative development effort of an IT company and its customer network to efficiently serve their present and future customers. The data consists of process modeling and simulation workshop discussions, interviews, observation, and archival data. The development effort was studied for over a year. Findings – The study shows that the three developmental interventions acted as a process for balancing the exploration-exploitation tension in inter-organizational service processes. The sequential interventions facilitated the studied organizations in crossing the inter-organizational knowledge boundaries and creating shared domain knowledge, creating common understanding of the collaborative IT-enabled service processes, and co-developing the coordination mechanisms that are essential for the continuous exploration and exploitation of the new ideas in the future collaborative service processes. These three steps built capacity for the inter-organizational management system to achieve synergies between goals, resources, and activities in the inter-organizational collaboration. Originality/value – The study contributes to the understanding on the process of building inter-organizational ambidexterity. The study presents a three-step process for building inter-organizational contextual ambidexterity into the IT-enabled service processes through developmental interventions. Research on inter-organizational contextual ambidexterity is combined with research on coordination and knowledge management.

Analyzing the relationship between exploration, exploitation and organizational innovation

2017 ◽  
Vol 21 (5) ◽  
pp. 1142-1162 ◽  
Author(s):  
Manuel Guisado-González ◽  
Jennifer González-Blanco ◽  
José Luis Coca-Pérez
Keyword(s):  
Panel Data ◽  
Organizational Innovation ◽  
Sample Selection ◽  
Exploration And Exploitation ◽  
Content Type ◽  
Long Run ◽  
Using Data ◽  
Exploration Exploitation ◽  
The Relationship ◽  
Organizational Innovations

Purpose Although most of the literature supports the existence of a substitutive relationship between exploration and exploitation, some authors suggest that this relationship is complementary (ambidexterity), and others argue that there is no relationship. This paper aims to introduce organizational innovation into the analysis and discusses which of these three relationships prevails. Design/methodology/approach Analyses were performed using data from Spanish Technological Innovation Panel for the period 2008-2013. It should be emphasized that the use of panel data is essential in the analysis of the interaction of exploration and exploitation, as exploration only makes sense in the long run. Econometric strategy uses a two-stage selection model, estimated using the Wooldridge’s (1995) consistent estimator for panel data with sample selection. To perform the test, the hypothesis uses the approach of complementarity. Findings The results show that the relationships exploration-organizational innovation and exploitation-organizational innovation are complementary, provided that the analysis is performed on companies that simultaneously carry out exploration and exploitation activities, respectively. This indicates that the achievement of ambidexterity is strongly conditioned by the simultaneous realization of organizational innovations. Practical implications Managers and policymakers should be aware that the simultaneous implementation of exploration and exploitation yields better results when the corresponding organizational innovations are also implemented. Originality/value This paper extends the empirical investigation of the relationship between exploration and exploitation, seen in conjunction with organizational innovation, and using the complementarity approach as a research tool.

Family business succession: impact on supplier relations and customer management

2018 ◽  
Vol 26 (6) ◽  
pp. 1-4 ◽  
Author(s):  
Carol J. Gaumer ◽  
Kathie J. Shaffer
Keyword(s):  
Family Business ◽  
Brand Equity ◽  
Second Generation ◽  
Business Owners ◽  
Customer Relationships ◽  
Content Type ◽  
The Family ◽  
Employee Relationships ◽  
Business Succession ◽  
Family Business Succession

Purpose The purpose of this study is to examine what happens to human relationships when a family business is handed off to the next generation. The second generation, to succeed, must work to nurture and sustain current customer, supplier, and employee relationships so as not to damage existing goodwill. As power is transferred from the founder of the family business to the next generation, organizational issues and the leadership style of the successor take center stage. Design/methodology/approach This is strictly a conceptual paper designed for the practitioner. There is no empirical study therein, only theoretical frameworks to guide practitioners and family business owners. It is meant to be informational with many useful “tips” for family business succession. Findings Relationships with valuable human resources, such as current customers, suppliers, and employees must receive the attention they deserve to avoid negatively impacting organizational brand equity. Failure to nurture supplier relationships can increase costs and access. Neglected customer relationships may cause the loss of key members of these groups, contributing significantly to second-generation business failures. Damaged employee relationships cause expensive turnover, loss in customers, and negative word of mouth. Research suggests that only 30 per cent of businesses survive into the second generation and even less (about 13 per cent) into the third generation (U.S. Census Bureau, 2015). Research limitations/implications The next step would be to test the propositions using both qualitative and quantitative research, beginning with interviews of second-generation family business owners. The interviews would test the successor-generations’ attitudes and behaviors toward established customers, suppliers, and employees. Attitudes would be measured on a Likert scale to explore the perceived importance of current customers, employees, and suppliers to the new owner. Issues of commitment, responsibility, loyalty, friendship, respect, and caring would also be measured to evaluate how relationship-friendly the new owner is. Levels of retention of key stakeholders would then be correlated with the firm’s financial success or failure to see if there is any statistically significant relationship. Practical implications Establishing and maintaining strong trust relationships will socially bond customers, employees, and suppliers to the organization. Introduction of a second generation changes the dynamics of these relationships, so care is critical, as customers, suppliers, and employees become anxious with change. Relationship management is about nurturing customer relationships, honoring supplier arrangements, and developing employees. Consistent care toward trusted human resources creates brand equity (or monetary value). Naturally, family businesses start small and understand the value of each relationship, but as the business passes from the founder to the second generation, these loyal, trusted relationships may be tested. It is up to the successor to assure customers, suppliers, and employees that they are a valued part of the operation. Inability to do this will likely lead to an erosion of the business’ loyal base and may precipitate in failure of the firm for the successor. Social implications The social implications revolve around acceptable human interaction and proper treatment of individuals who are critical to the small family business’ success. As a family business passes from the founder to the second generation, loyal, trusted relationships may be tested. It is up to the successor to assure customers, suppliers, and employees that they are a valued part of the operation. Inability to do this will likely lead to an erosion of the business’ loyal base and may precipitate in failure of the firm for the successor. Originality/value It is original in that it is practitioner-oriented and full of useful tips for the family business owner. None of the information contained therein is novel. It is a consensus or compilation of useful information packaged for a practitioner.

Reduced to the max: firm performance and organizational ambidexterity research

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Norman Meisinger ◽  
Manfred Moldaschl
Keyword(s):  
Firm Performance ◽  
Future Research ◽  
Organizational Ambidexterity ◽  
Performance Measurements ◽  
Methodological Issues ◽  
Exploration And Exploitation ◽  
Content Type ◽  
Conceptual Clarity ◽  
Core Questions ◽  
Short Essay

PurposeFor nearly three decades, numerous scholars have searched for a robust relationship between firm performance and organizational ambidexterity—so far with questionable results. The aim of this short essay is thus to critically examine the performance of applied performance measurements.Design/methodology/approachAfter discussing methodological issues and revealing a conceptually neglected “level” distinction in organizational ambidexterity studies, we contribute to conceptual clarity as to whether exploration and exploitation ought to be conceived as continuous or orthogonal.FindingsFirst, even if the dichotomy of exploration and exploitation is orthogonally conceptualized, at least one trade-off, either on the level of the explanans or the level of the explanandum, can be bypassed but cannot conceptually be denied. Second, we conclude that explaining overall firm performance with the relation of just two variables (exploration and exploitation)—referring to the inherently conflicting title of this paper, “Reduced to the Max”—is a hazardous endeavor.Research limitations/implicationsBased on these insights, future research may benefit from studying organizational ambidexterity and firm performance more qualitatively and paying more attention to the declared level distinction.Originality/valueThe paper reveals a crucial neglect of level and provides an answer to one of the core questions of organizational ambidexterity research: that of continuity vs orthogonality.

How does collaboration between universities and R&D firms influence performance?

2019 ◽  
Vol 57 (9) ◽  
pp. 2436-2476 ◽  
Author(s):  
Jun-You Lin
Keyword(s):  
Academic Performance ◽  
Firm Performance ◽  
Financial Performance ◽  
Economic Research ◽  
Supporting Evidence ◽  
National Bureau ◽  
Knowledge Stock ◽  
Content Type ◽  
Positive Effect

Purpose How does university-firm collaboration affect the performance of both universities and firms? The purpose of this paper is to evaluate university-firm collaborations aimed at expanding the treatment effects of collaboration ambition on university academic performance as well as collaboration ambition focused on the firm’s production of innovation and financial performance for the top 110 US universities and the top 200 US R&D performing firms. Design/methodology/approach “Two studies, based on the three archival data sets (National Bureau of Economic Research-Rensselaer Scientific Papers Database and the Harvard Dataverse Network (DVN) US Patent Citations database and Compustat database), are undertaken in the top 110 US universities and the top 200 US R&D performing firms.” The study introduces a theoretical model that explicitly addresses collaboration diversity, number of collaborations, knowledge stock and the endogeneity problem that is generated by self-selection of collaboration ambition in university and firm’s performance. Findings The results suggest that the effects of adopting proactive collaboration decision on academic performance are insignificant in the firm subsample. However, more interestingly, the authors find supporting evidence of the negative impact of collaboration on university groups. The authors also find that collaboration diversity, knowledge stock and collaboration ambition lead to stronger firm performance but the number of collaborations is smaller on firm performance. Furthermore, the authors find that collaboration ambition moderates the positive effect of the number of collaborations on firm performance. Practical implications University-firm collaboration is a multifaceted relationship, suggesting that the empirical analysis can be interpreted through the university and the firm view to enhance the understanding of the collaboration for performance creation. This study articulates the positive role of collaboration diversity, knowledge stock and collaboration ambition and the negative role of the number of collaborations on university-firm collaboration in terms of university and firm performance. Moreover, proactive collaboration ambition has the positive effect of a higher number of collaborations on firm performance. The authors conclude that policy should refrain from overly focusing on collaboration diversity, number of collaborations, knowledge stock and collaboration ambition, and the authors consider the interactions between the number of collaborations and collaboration ambition on university-firm collaboration when discussing their effects on mutual performance. Originality/value This study demonstrates the effects of university-firm collaboration on academic performance. In addition, the authors discuss the factors that influence collaboration to help the firm to increase its innovation and financial performance. Therefore, it would be interesting to see simultaneously how university-firm collaboration affects the performance of both partners.

Do new ventures explore, exploit or both? A case-based analysis of six innovative Italian start-ups

2019 ◽  
Vol 25 (7) ◽  
pp. 1515-1536 ◽  
Author(s):  
Pierluigi Rippa ◽  
Cristina Ponsiglione ◽  
Anca Bocanet ◽  
Guido Capaldo ◽  
Giuseppe Zollo
Keyword(s):  
New Ventures ◽  
New Venture ◽  
Venture Capitalists ◽  
Exploration And Exploitation ◽  
Temporal Separation ◽  
Trade Off ◽  
Content Type ◽  
Start Ups ◽  
Exploration Exploitation ◽  
The Way

Purpose The purpose of this paper is to contribute to the debate on exploration–exploitation trade-off in the context of new ventures creation, where, particularly at the empirical level, there is a limited understanding of whether and how this trade-off is achieved and how start-ups performances are affected by the way in which they face the exploration–exploitation dilemma. Design/methodology/approach A qualitative case study approach has been adopted as a methodology to conduct the research. Six Italian innovative start-ups were selected and analyzed through in-depth interviews with founders and data collection to understand whether and how start-ups adopt exploration and exploitation solutions to face critical events in their business lives. Findings The most evident result of this study is that start-ups adopt more frequently a temporal separation of exploration and exploitation activities as the preferred mode for balancing learning and innovation tension. They do not seem to exhibit a defined or a common path in the way they realize the temporal separation between exploration and exploitation. Instead, they mostly oscillate. The ambidextrous solution is selected in only a few cases and not consecutively. The pre-entry knowledge profile seems to influence the choice of start-ups at the beginning of their lives. Practical implications This research has implications for the whole start-up’s ecosystem, comprising incubators/accelerators, advisors, intermediaries, venture capitalists, new venture founders and policymakers. For example, by knowing the typology of knowledge and competence gaps start-ups usually aim to fill when they face particular events, intermediaries (such as incubators) could better plan initiatives and strategies supporting new ventures in the process of growth and stabilization. Furthermore, the venture capitalists can benefit from this research, by planning specific interventions for each critical event based on specific resources and competencies gaps and guiding for more promising start-ups. Originality/value This paper presents a novel application of entrepreneurial learning approach in the context of new venture creation. To reach this aim, a classification of exploration/exploitation solutions has been developed.

scholarly journals Uncertainty avoidance and the exploration-exploitation trade-off

2017 ◽  
Vol 51 (11/12) ◽  
pp. 2080-2100 ◽  
Author(s):  
Thijs L.J. Broekhuizen ◽  
Marco S. Giarratana ◽  
Anna Torres
Keyword(s):  
Firm Performance ◽  
Product Innovation ◽  
Development Stage ◽  
Uncertainty Avoidance ◽  
Trade Off ◽  
Content Type ◽  
Innovation Activities ◽  
Trademark Protection ◽  
Long Term Impact ◽  
Exploration Exploitation

Purpose This study aims to investigate 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. Design/methodology/approach The study uses data from US Software Security Industry (SSI) trademarks, registered by firms from 11 countries during 1993–2000, that provide 2,911 trademarks and a panel of 18,213 observations. It uses the SSI database to identify the number of product innovations introduced by firms. 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.

A meta-analytic study on exploration and exploitation

2020 ◽  
Vol 35 (1) ◽  
pp. 97-115 ◽  
Author(s):  
Xiaofeng Shi ◽  
Lixun Su ◽  
Annie Peng Cui
Keyword(s):  
Firm Performance ◽  
Market Orientation ◽  
Firm Size ◽  
Entrepreneurial Orientation ◽  
Firm Age ◽  
Exploration And Exploitation ◽  
Firm Capabilities ◽  
Content Type ◽  
Size Firm ◽  
The Relationship

Purpose This study aims to fill three theoretical gaps in previous literature on exploration and exploitation: the relationship between exploration and exploitation is inconclusive; the influences of exploration and exploitation on firm performance are not consistent; and no empirical studies have integrated the antecedents of exploration and exploitation from the different research fields. Design/methodology/approach The study conducted a meta-analysis to quantitatively synthesize 143 studies with 257 independent samples to understand the relationship between exploration and exploitation and their consequences and antecedents. Findings The results show that exploration and exploitation are positively correlated with each other, and both of them can boost firm performance. Moreover, firm capabilities, firm size, firm age, competitive intensity, market orientation and entrepreneurial orientation positively influence exploration, and firm resources, firm capabilities, firm size, firm age, market orientation and entrepreneurial orientation positively influence exploitation. Competitive intensity negatively influences exploitation. Surprisingly, market turbulence does not significantly influence exploration or exploitation. Originality/value The results not only contribute to the theories by reconciling the inconsistent results but also provide insight for firms with guidance about under what conditions they should use what strategies.

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