Specialisation in technology exploration and exploitation: a systems approach

Rosanna Garcia, Anand Nair and Paul Rummel

International Journal of Business and Systems Research, 2011, vol. 5, issue 1, 1-21

Abstract: Technologically-oriented firms must allocate resources between exploration (research) and exploitation (development) activities. While scholars have emphasised the need for a mix between exploration and exploitation, some firms consciously choose to specialise only in either exploration or exploitation. The reasons for such a strategic posture could be many, including rigidities emanating from resources or routines. While previous studies suggest that an exploration/exploitation mix is necessary for success in an innovation strategy, focused strategies have recently come into research focus. We adopt a methodological approach using case studies combined with an agent-based simulation model in order to learn about the effectiveness of specialisation strategies. The results suggest that an exploration-based specialisation strategy can have a relative advantage over an exploitation-based specialisation strategy, and a balanced strategy is not absolutely necessary to ensure innovation success. We find that as competitive intensity increases, the relative advantage of exploration-based specialisation strategy diminishes.

Keywords: technology exploration; technology exploitation; specialisation; innovation strategies; competition; technologically-oriented firms; complex adaptive systems; agent-based models; resource allocation; systems approaches; R&D; research and development; rigidities; routines; focused strategies; simulation models; balanced strategies; competitive intensity; business; systems research. (search for similar items in EconPapers)
Date: 2011
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