A network-based model of exploration and exploitation

Pieter den Hamer and Koen Frenken

Journal of Business Research, 2021, vol. 129, issue C, 589-599

Abstract: We propose a new model of exploration and exploitation, in which firms rely on local search for exploitation and on imitation for exploration. We assume that firms imitate the knowledge base of successful competitors, with imitation errors taking place depending on the social distance between the imitating firm and imitated firm in the network. The key model outcome, consistent with earlier empirical findings, holds that successful imitation generally occurs at an intermediate level of cognitive proximity because imitation at high cognitive distance is too error-prone, while for imitation at low cognitive distance there are typically no firms to imitate. A second outcome holds that social and cognitive proximity are substitutes. The model further shows that exploration by imitation is more beneficial in highly complex industries than in less complex industries, and that small-world networks yield the highest benefits for collective learning.

Keywords: Complexity; NK-model; Proximity; Small-world (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0148296319308070
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:jbrese:v:129:y:2021:i:c:p:589-599

DOI: 10.1016/j.jbusres.2019.12.040

Access Statistics for this article

Journal of Business Research is currently edited by A. G. Woodside

More articles in Journal of Business Research from Elsevier
Bibliographic data for series maintained by Catherine Liu ().