Abstract
The importance of external knowledge acquisition for innovation by firms is well established. In particular, there has been an increasing focus on the two distinct modes of firms’ external search strategies, which have a differential effect on their learning and innovation: search breadth and depth. By applying organizational ambidexterity lens, we hypothesize that pursuing high levels of both external search strategies is beneficial to achieve a balance between exploitative and explorative innovation, which, in turn, has a positive impact on the firm’s innovation performance. We also hypothesize that, even among the firms that maintain high levels of both search strategies, firms with higher absorptive capacity better achieve a balance between both modes of innovation, thereby producing higher performance. The findings on a multi-industry sample of Koran manufacturing firms confirm our hypotheses and imply that it is essential for firms to develop capabilities for different modes of external search activities in conjunction with internal absorptive capacity for superior innovation performance.
Highlights
The literature on organizational ambidexterity emphasizes that the sustainability and superior performance of a firm depends on its ability to achieve a balance between exploitative innovation aimed at refining existing products for the current market and explorative innovation aimed at introducing new products for the future market—which we term “ambidexterity in innovation” [1,2,3]
Extending the argument made in Hypothesis 3, we further suggest that it is through a close balance of exploitative and explorative innovation that the positive effect of pursuing high levels of both search activities on the firm’s innovation performance can be achieved
The results of Model 1 reveal that, among other control variables, FIRM SIZE (b = 0.460, p < 0.01) and absorptive capacity measured by R and D intensity (b = 0.405, p < 0.001) have significant positive relations with firms’ innovation performance
Summary
The literature on organizational ambidexterity emphasizes that the sustainability and superior performance of a firm depends on its ability to achieve a balance between exploitative innovation aimed at refining existing products for the current market and explorative innovation aimed at introducing new products for the future market—which we term “ambidexterity in innovation” [1,2,3]. Given the growing interest in ambidexterity, the most prominent body of studies has long focused on firms’ learning activities as organizational antecedents of balancing the two types of innovation [4,5,6]. Scholars in this field have devoted to investigating how organizations can simultaneously pursue high levels of both exploitative and explorative learning activities despite their conflicting nature—which we term “ambidexterity in learning”. Scholars confine a firm’s external search activities to explorative learning by assuming that firms’ exploitative learning occurs within an organization via repeated use of prior knowledge accumulated by the firm. Given such importance of external exploitative learning, exploitative learning exclusively relying on the internal knowledge to the exclusion of external one may not be sufficient to improve performance in the current market
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