Exploration and Exploitation Capabilities

Background

Strategic decisions are closely related to the choice of how much to invest in different activities, and for exploration and exploitation to be achieved, different resources, processes, skills, and even organizational structures are required. In his seminal paper, March (1991) suggests that the activity of exploration is related to searching, experimenting with new alternatives, and taking risks, whereas exploitation refers to refining, efficiency, implementation, and selection. The change proposed from the Organizational Learning perspective is the need to strike a balance between the two activities (Bontis, Crossan, & Hulland, 2002), rather than forcing the organization to choose between channeling more resources toward one activity or the other. Since the publication of March’s paper, the two concepts have been widely analyzed in strategic management, innovation, organizational learning, and other literatures, from different perspectives and considering different meanings.

Table 1 outlines a number of studies that analyze different aspects of exploration and exploitation. It reveals how the definitions and measurement methods adopted vary widely from one study to another.