Competence-based Exploration for Innovation : Evidence from Established Firms

Exploration and exploitation have become dominant terms in organizational analyses of technological innovation. Despite the prominent application of the terms in different research streams, there is serious ambiguity regarding the definition of the terms which is partly evoked by the scarce empirical insights especially on the micro level of analysis. While there is a consensus that exploration and exploitation both involve some kind of learning, it is unclear how firms engage in both activities in order to develop technological innovations. A more profound understanding of these concepts has implications for the question if exploration and exploitation competing or complementary activities and thus how firms can achieve a balance between them. Based on a qualitative multiple case approach, we investigate how established market leaders from different industries engage in exploration aimed at the development of new products and technological innovations. The findings show that the firms' exploration approach builds on existing technological know-how which serves as a springboard for the development of new technological competencies. The findings suggest that exploration and exploitation are two mutually dependent activities and that exploration may be more about intelligent knowledge recombination than the distant search for new knowledge.