Network Openness and Learning Ambidexterity of New Technology-Based Firms at Incubators

Abstract

For a new technology-based firm, the ability to learn is crucial to their growth process. However, firms constantly face the challenge of maintaining the ambidexterity of two different learning activities, namely learning by exploiting existing competencies and learning through exploring new ones. The purpose of this study is to examine how small technology-based firms at incubators perform both activities. Using the index of network openness, we argue that firms perform ambidexterity by maintaining a balance between a high and low level of network openness. Our first hypothesis was constructed as firms pursuing explorative learning will develop a high level of network openness while those pursuing exploitative learning will develop a low level of network openness. In the second hypothesis, we argue that firms need to balance network openness. Developing too low level of network openness will not add more benefits as the cost for maintaining relationship increases. Similarly, developing too high level of openness may potentially hinder firms’ progress as firms face distractions and difficulties in maintaining a wide variety of relationships. Using the empirical data from new technology-based firms located at the Daresbury SIC, we confirm the hypotheses. The result also found a trend of a curvilinear relationship between network openness and the firms’ performance which confirm the second hypothesis. The overall findings have illustrated how a network has a positive impact on helping small and new technology-based firms perform learning ambidexterity.