Exploration and exploitation revisited: Extending March's model of mutual learning

Abstract

A system of actors, appropriately organized, is able to learn even in situations where individuals in isolation cannot. This was one of the most important, though seldom emphasized, insights of March's paper [March, J. G. (1991). Exploration and exploitation in organizational learning. Organization Science, 2(1), 71–87]. The present paper builds on March's original simulation and incorporates a number of different real-world organizational features. The results suggest that unconstrained experimentation is of great benefit to organizational learning, although it should not be carried to excess. Low levels of turnover in personnel are beneficial and mitigate the problem of high socialization March noted in 1991. Inclusion in the policy-making elite should be predicated on performance rather than seniority and on shorter rather than longer individual performance histories, particularly when environments are changing rapidly. Finally, erring on the side of stringency in selecting members of the organization for the policy-making elite is better than erring toward laxity.