Managers' Exploration and Exploitation Activities: The Influence of Organizational Factors and Knowledge Inflows

In order to be successful over time, firms in a dynamic environment are challenged to explore new possibilities to achieve congruence with the changing business environment, and to exploit old certainties to secure efficiency benefits. However, both researchers and managers struggle to understand how firms may manage and organize exploration and exploitation.

This study delivers a contribution by investigating managers’ exploration and exploitation activities, and by developing and testing hypotheses on the influence of organizational factors and managers’ knowledge inflows on managers’ exploration and exploitation activities.

Results indicate that organizational factors not only directly influence managers’ exploration and exploitation activities, but also indirectly through their influence on managers’ knowledge inflows; i.e. knowledge inflows mediate the relationship between organizational factors and exploration and exploitation at the manager level.

We contribute to current literature on exploration and exploitation and to management practice by focusing on the manager level of analysis, by adding the importance of knowledge flow configurations to the literature on the impact of organizational factors on exploration and exploitation, and by illustrating, which, and how, configurations of organizational factors enable or inhibit managers to respond to particular ways by which firms may combine exploration and exploitation.

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Olga Novikova

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