Incidence of exploration and exploitation capabilities in innovation: the role of cultural factors

Abstract

ABSTRACT Prior research has extensively discussed the incidence of exploration and exploitation capabilities on innovation. Theoretically, cultural factors are considered variables that benefit this relationship. However, this rationale has not been evaluated in previous research. The present study examines the moderating role of cultural factors in the relationship between exploration and radical innovation, as well as in the relationship between exploitation and incremental innovation. This was performed by means of Structural Equation Modelling (SEM), using Partial Least Squares (PLS), with data from 251 large Colombian firms that intensively use information and knowledge. The results hereof indicate that exploration and exploitation influence radical and incremental innovation, respectively. This is a novel finding on firms from developing countries, as it is a relationship that has been mainly studied in organisations from developed regions. It was also found that the cultural factor alignment strengthens the relationship between exploitation and incremental innovation. However, the cultural factor adaptability does not benefit the relationship between exploration and radical innovation. These results bridge the existing literature gap on how exploration/exploitation capabilities, cultural factors, and innovation behave as a whole. In addition, these findings are helpful in managerial terms, because they offer a better understanding of the ways in which firms can achieve innovation results.