Dynamic resource allocation for exploitation and exploration with ambidexterity: Logical mechanism and simulations

Abstract

Strategy and organizational theorists have emphasized the importance of balancing exploitation and exploration for organizations’ sustainable success in regards to organizational learning and adaptation. However, few researchers have addressed the mechanisms or criteria in regards to an organization’s resource allocation for exploitation and exploration with an ambidextrous balance, although previous researchers agree that exploitation and exploration are important for organizational success and that a balance between the two should be achieved in order to obtain sustainable competitiveness. The main purpose of this research is to make a logical argument on how team creativity evolves from the creativity revelation processes through knowledge creation by balancing exploitation and exploration. Specifically, this research presents a new logical mechanism to allocate a team’s limited resources to exploitation and exploration, keeping a balance between the two activities. We prove the validity of the proposed logical mechanism by conducting longitudinal simulations.