Achieving Excellence in Exploration and Exploitation by Matching Appropriate Resources

Abstract

Exploration and exploitation are two fundamental activities for a firm's long-term success. Based on a panel data of 125 high technology firms collected using a text mining technique, this study shows a three-stage “horizontal S” relationship between exploration and firm performance. Further, this study reveals that it is critical to align appropriate type of resources between exploration and exploitation. Different type of resources each has its own unique way of benefiting or hampering a firm's exploration and exploitation activities. In particular, absorbed slack resource facilitates exploitation but impairs exploration, while unabsorbed slack resource facilitates exploration.