EXPLORATION, EXPLOITATION AND SATISFACTION IN SUPPLY CHAIN PORTFOLIO STRATEGY

Abstract

This manuscript addresses a gap in the supply chain literature by shedding light on firm satisfaction from a cooperative relationship portfolio perspective by examining the impact of a partner's choice of an exploration or exploitation relationship strategy. In doing so we examine the impacts of relational exploration (equity investments, export management, joint ventures, licensing agreements, long‐term marketing agreements, new product R&D agreements) and exploitation strategies (JIT alliances, TQM alliances, CPFR, MRP/ERP alliances, process R&D agreements) on small to midsized enterprises. Results support the proposition that firm satisfaction with alliance usage is positively associated with the proportion of exploration oriented agreements in a firm's relationship portfolio, especially for firms in environments characterized by low levels of environmental hostility. However, when environmental hostility is high, the proportion of exploitation oriented relationships in a firm's portfolio is positively associated with the firm's satisfaction with alliance usage. We conclude with multiple directions for future research.