Abstract: A principal concern in strategy is resource allocation decisions. Innovation investment choices are particularly difficult since these have an uncertain yet long term effect on performance. Scholars have examined resource allocation decisions associated with two modes of innovation: exploitation and exploration. Exploration is reflected by such organizational activities as experimentation and radical changes to processes and/or products. Exploitation activities include refinement and incremental changes. Prior research found that allocating resources for innovation has a positive effect on the firm’s returns (Hall & Kramarz, 1998). Despite the importance of innovation to firm value, the effect of innovation on initial public offerings (IPO) has received limited empirical study. We still lack an understanding of the idiosyncratic effects that exploration and exploitation innovation has on initial firm value.

Abstract: In this paper, we build on an in-depth, comparative case study of eight e-business initiatives carried out by two major insurance corporations to investigate how large, incumbent firms adress the exploration-exploitation paradox in the organization of technology-driven innovation projects. Its primary distinctions from prior research lie in (i) a systematic investigation of links between project organization and performance, (ii) a multilevel perspective that incorporates middle and operating managers’ role in balancing the paradox, and, (iii) a pragmatic perspective on the situated enactment and negotiation of the project-parent firm interface that complements existing behavioral views of boundedly rational design choices.

Abstract: In this study we show how the effect of relational embeddedness on explorative and exploitative innovation is differentially mediated by tacit and explicit knowledge. We argue that firms can achieve explorative innovation performance by stimulating the transfer of tacit knowledge through relation embeddedness. In our empirical application, we find that tacit knowledge has a strong explanatory effect on explorative and exploitative innovation, while the effect of explicit knowledge on both innovation types was found to be absent. We draw implications for the nature of organizational knowledge and discuss the importance of ‘rich media’, like relational embeddedness, to transfer knowledge in situations of imperfect cognitive overlap between sender and receiver.

Abstract: The present article examines the link between a firm’s organizational context and its capacity to be ambidextrous in terms of innovation. Although the management practices underlying context have a profound effect on innovation, their impact has not previously been investigated. Nor has research looked empirically at the individual competences that should be developed in order to favour specific types of innovation. Using a dataset of 174 firms, the present study shows that firms pursuing exploration and exploitation strategies in terms of innovation should adopt long-term oriented practices that favor risk taking and creativity, thus creating an appropriate organizational context. Competence management was found to have a strong moderating effect on the link between organizational context and innovation ambidexterity. Implications include the need to look at how management may increase innovation ambidexterity, and to chose appropriate combinations of competences and organizational context.