Abstract
Firms should deploy exploration and exploitation to foster organizational adaptation. Previous research on exploration and exploitation lacked a focus on disruption implications in different contexts. This study aims to empirically test a moderation model including disruption events, exploration, exploitation, and organizational adaptation and enable a deeper understanding of organizational learning and innovation theory to yield competitive advantage and sustainability of innovative firms. Our results reveal that exploration is more effective during outside disruption events. The results do not support the concept that exploitation is more effective during inside disruptions. Disruptions also moderate the combined effect of exploration and exploitation. Although they are generally complementary in facilitating organizational adaptation, a singular focus on either exploration or exploitation is as effective as is combining exploration and exploitation during inside and outside disruption events. The results of an event study using seven Chinese international firms, including Alibaba, Meituan, Dianping, Baidu, Beibei, TP-link, and Maxio, provided 132 completed and usable questionnaires that supported our hypotheses. Our study contributes to a better understanding of disruption, exploration, exploitation, and related performance implications.
Highlights
We argue that exploration and exploitation are the core resources that foster organizational adaptation, and disruption as a shift parameter moderates the relationship between exploration and exploitation learning with organizational adaptation for several reasons (Engman, 2019)
How do exploration and exploitation affect organizational adaptation (OA) in the context of inside and outside disruption events? As previously noted, the bulk of the literature on organizational learning emphasized that exploration and exploitation have significant importance for performance in the short and long terms
This study developed a dynamic environment variable for an organization’s inside and outside exploration and exploitation, which is more specific and systematic than previous research
Summary
Firms need to continuously exploit and explore to remain competitive in both the short and long term (March 1991). Few studies on the relationship between exploration, exploitation, and organizational adaptation, focus on the influence of the context, including whether it is disruptive. Studies on organizational learning generally show that learning from experience benefits organizational performance over time (Argote, 1999), other research suggests that knowledge accumulated from experience sometimes creates rigidities that disrupt learning and harm performance (Leonard-Barton, 1992). These and other examinations of organizational learning tend to focus on disruptive innovation and technology. Relatively few studies examine how organizational learning affects organizational adaptation in a specific context with or without disruption (Piao and Zajac, 2016; Paruchuri and Awate, 2017)
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