Exploitation In Organizational Learning Research Articles

The Long March: The quest for valid text-based indicators of exploration and exploitation

Since March outlined the importance of balancing exploration and exploitation in organizational learning, the exploration–exploitation paradigm has received substantial attention in the management literature. Recent studies have used computer-aided text analysis to construct measures of firms’ inclination towards exploration or exploitation, using the original set of keywords proposed by James G. March. We propose a structured series of tests to assess the validity of computer-aided text analysis-based measures and demonstrate that the approach used in prior studies is unlikely to deliver valid indicators. We demonstrate that an alternative approach, which relies on a larger library of keywords, including synonyms of the March keywords and selects only those keywords that are informative and that pass validity tests, delivers valid computer-aided text analysis indicators – both for unstructured (news articles) and structured text-bases (annual reports). Our study contributes to the literature on construct validity and has broader implications for the development of computer-aided text analysis-based indicators in strategy and organization research.

Corporate Hierarchy and Organizational Learning: Member Turnover, Code Change, and Innovation in the Multiunit Firm

This study examines how recombinant innovation is affected by member turnover and organizational learning within a corporate hierarchy. Prior work has overlooked the role of organizational structure in organizational learning, focusing instead on the knowledge provided by individual new hires or on the disruption caused by individual departures. We address this gap by applying March’s [March JG (1991) Exploration and exploitation in organizational learning. Organ. Sci. 2(1):71–87.] mutual learning model to a corporate hierarchy. In doing so, we theorize how the contributions of corporate staff to socializing new employees and to learning from the organizational code may differ from those of the organization’s subunit members. Empirically, we examine the learning effects of aggregate corporate and subunit arrivals and departures on novel recombinant innovation by subunits. Using 24 years of Motorola company directories, we construct membership turnover measures for corporate and subunit employees and exploit patent data to capture recombinant innovation. Our results suggest that, whereas the influx of new ideas through arrivals may be critical, breaking the pattern of inertial behavior through departures is more important for recombinant innovation. Corporate departures matter most for recombinant innovation, a result that reflects not only corporate staff’s slower individual learning from the organizational code but also its ability to update that code more quickly. In supplementary analyses, we find different effects for technical and nontechnical staff and internal and external arrivals, as well as demonstrate the mutual learning mechanism using internal corporate documents to capture code change. Our study has strong implications for theories of organizational learning, strategic human capital, organization design, and innovation. Supplemental Material: The online appendices are available at https://doi.org/10.1287/orsc.2022.1618 .

The Long March: The Quest for Valid Text-Based Indicators of Exploration and Exploitation

Since March (1991) outlined the importance of balancing exploration and exploitation in organizational learning, the exploration-exploitation paradigm has received much attention in the management literature. Recent studies have used content analysis, in particular computer-aided text analysis (CATA), to construct measures of firms’ inclination towards exploration or exploitation, using the original set of keywords proposed by March. Utilizing the series of tests to assess the validity of CATA-based measures proposed in Belderbos et al. (2017), we demonstrate that the approach used in prior studies is unlikely to deliver valid indicators. Our study contributes to the literature on construct validity and has broader implications for the development of CATA-based indicators in management research.

Knowledge Gains and Efficiency Losses: Member Turnover and Organizational Performance

In order for organizations to avoid the fate of becoming rigid and obsolete over time, they need to update their knowledge base in a changing environment. One potential tool for this is member turnover that enables bringing in new knowledge. In this study, we model the effect of member turnover on organizational knowledge over the organizational life course with March’s [March, J. G. 1991. Exploration and exploitation in organizational learning. Organization Science, 2: 71–87] model of mutual learning and extend the estimation to broader organizational performance by including also the negative aspects of turnover, the diminishing internal cohesion and the shortening member tenure. The results show that there is a trade-off between knowledge gains and efficiency losses in the member turnover process. The balance between the positive and negative consequences of the process is also context dependent and changes over the life trajectory of an organization. The present work contributes to employee mobility literature by elucidating the twofold consequences of member turnover and to the studies on organizational aging by taking a temporal view on the process.

Replicating agent-based models: Revisiting March’s exploration–exploitation study

To validate prior agent-based models, public disclosure of model code is necessary, but not sufficient. Conceptual model replication, involving independent reproduction of a model without referring to the originator’s code, is crucial for detecting nonconformity between the publication text and the model implemented. We frame and evaluate four scenarios to expose the shortfalls of replication efforts that use the original study’s program code and neglect the published model description. We identify, evaluate, and offer recommendations regarding disparities between the text and the program code that generated the results reported in March’s classic study of exploration and exploitation in organizational learning. Based on our experience replicating his model, we suggest a two-step method of model verification—beginning with replicating the model from the published description, then turning to the program code of the original implemented model to account for divergent results. Exclusive reliance on either the published model description or the original program code does disservice to theory advancement, because disparities between the original conceptual and implemented models go unaddressed.

Exploration and Exploitation in Organizational Learning: A Critical Application of the 4I Model

AbstractWhile it is broadly agreed that managers face tensions between exploration of new possibilities and exploitation of existing certainties, there are open questions related to how they can recognize these tensions and distribute resources between the two forms of learning across time and space. The heavily cited 4I Model made significant progress towards addressing these questions, based on the idea that exploration and exploitation unfold differently across organizational levels, with exploration as feed‐forward from the individual towards the organizational level, and exploitation as feedback from the organizational towards the individual level. The authors’ critical application of the model questions this idea, suggesting that exploration and exploitation unfold through similar patterns from the individual level towards the organizational level with iterative feedback loops. This repositioning of the 4I Model affords a detailed understanding of both exploration and exploitation processes as well as the temporal and spatial interactions between them. To demonstrate the utility of this theorizing and to add new insights to the process literature on organizational learning, the authors rely on a longitudinal case study of how a management team engaged in technology‐enabled strategic renewal in a Danish local government organization.

Revisiting James March (1991): Whither exploration and exploitation?

We revisit March’s seminal 1991 article, “Exploration and exploitation in organizational learning”, and analyze the impact it has had on scholarly thinking, providing a comprehensive and structured review of the extensive and diverse research inspired by this publication. We show that although this influence has changed significantly over the years, there are still unexplored opportunities left by this seminal work. Our approach enables us to identify promising directions for future research that reinforce the themes anchored in March’s article. In particular, we call for reconnecting current research to the behavioral roots of this article and uncovering the microfoundations of exploration and exploitation. Our analysis further identifies opportunities for integrating this framework with resource-based theories and considering how exploration and exploitation can be sourced and integrated within and across organizational boundaries. Finally, our analysis reveals prospects for extending the notions of exploration and exploitation to new domains, but we caution that such domains should be clearly delineated. We conclude with a call for further research on the antecedents of exploration and exploitation and for studying their underexplored dimensions.

EXPLORATION AND EXPLOITATION: A 20-YEAR REVIEW OF EVOLUTION AND RECONCEPTUALISATION

The exploration–exploitation tension has been resonated and applied in diverse areas of management research. Its applications have deviated substantially from the scope of organisational learning as originally proposed by March [(1991). Exploration and exploitation in organizational learning. Organization Science, 2(1), 71–87]. Scholars have developed set of definitions, new conceptualisations, and varied applications in rejuvenating the concept; and literatures on this topic seem do not significantly ensure a conclusive picture. It is still also unclear what are the antecedents and following scientific breakthroughs which may have led to the divergence of this construct.This study offers an added value as it becomes the first to apply a bibliometric analysis, combined with fine-grained content analysis to attain a more comprehensive understanding on how the construct of exploration–exploitation have grown and evolved during the last 20 years. We attempt to grasp the structural pattern of citing behaviour and collective understanding among scholars, through conducting in-depth bibliographic review in a complete population of articles on this topic, published in leading journals following March [(1991). Exploration and exploitation in organizational learning. Organization Science, 2(1), 71–87].This study identifies the intellectual base articles which form the basis of the exploration–exploitation and the turning point articles that shift the discussion into different directions.

Discipline versus passion: Collectivism, centralization, and ambidextrous innovation

Can the collectivistic culture of an organization help manage the tension between explorative and exploitative innovation? Though recent studies have suggested contextual approaches to cope with the tension, we still lack an understanding regarding whether organizational culture can be a context vehicle in solving the tension and consequently in enabling ambidextrous innovation. Drawing upon organizational effectiveness theory, we seek to present a collectivistic culture perspective in achieving ambidexterity and aim to settle the nested paradox of innovation in the pair of personal drivers, that is, discipline versus passion. Based on 102 completed survey questionnaires from 60 high-tech clusters in China, we found that creating collectivistic culture within an organization can help alleviate the tension between exploration and exploitation in organizational learning and facilitate ambidextrous innovation within the firm. Moreover, the effect of collectivism on achieving ambidextrous innovation will be weakened in a centralized hierarchy system.

Five Footnotes to Exploration and Exploitation in Organizational Learning

This study proposes five footnotes to exploration and exploitation in organizational learning. The aim is to achieve 1) an information-based reconceptualization to extend the scope of exploration and exploitation phenomena; 2) an integrated perspective on the distinction between exploration and exploitation; 3) a multi-domain multilevel taxonomy to specify the locus of exploration and exploitation; 4) a reference-based reoperationalization to advance the understanding of the essence of exploration and exploitation; and 5) change-based measurements to facilitate future empirical research on exploration and exploitation. The arguments are based on a critical review of the growing literature on exploration and exploitation in the 20-year period from 1991 to 2010. This study borrows fundamental concepts in sciences to explain the essence of exploration and exploitation and uses simulation to demonstrate their various measurements. The perspectives initiated in this study have significant implications for future multilevel and longitudinal research on exploration and exploitation. The multi-domain multilevel taxonomy built in this study has implications for balance and ambidexterity debate in the literature.

Performance in franchising: the effects of different management styles

Various theoretical approaches uphold the relevance of the relationship between the form of management and performance. Different management styles influence the relationships of agencies [Jensen, M.C. (1998). Foundations of organizational strategy. Cambridge, MA: Harvard University Press], the cost of governing transactions [Williamson, O.E. (1985). The economics institutions of capitalism: Firms, markets, relational contracting. New York, NY: Free Press], and the allocation of resources between the exploitation and exploration of activities [March, J.G. (1991). Exploration and exploitation in organizational learning. Organization Science, 2(1), 71–87], and this is manifested in firm performance. In light of these assumptions, this article presents an empirical verification of the relationship between the management of franchises and their performance, examining how different styles of management on the part of franchisers over their franchisees have significant effects on the growth and profits of franchiser firms.

Learning, Imitation, and the Use of Knowledge: A Comparison of Markets, Hierarchies, and Teams

We use computer simulation to study how different allocations of decision rights give rise to different organizational abilities to maintain and act upon accurate maps of a changing environment. We compare the performance of three archetypal organizational forms as we vary the dynamism and complexity of the environment and the rates at which individuals can observe the environment and imitate each other. We find that teams in which actions are based on plurality votes excel when the task is relatively easy—that is, the ability of individual members to observe the environment is high compared to the environment's dynamism and size. Markets in which all agents act independently perform well when the task is difficult and the agents can easily imitate each other. Hierarchies in which agents in the upper echelons impose actions on their subordinates outperform the other two forms when the agents' abilities to observe the environment are heterogeneous, the task is difficult, and imitation among the agents is moderate. The analysis has implications for the relationship between centralization and the notions of exploitation and exploration in March's influential work [March JG (1991) Exploration and exploitation in organizational learning. Organ. Sci. 2(1):71–87].

The Search for New Alternatives: How Human Agents Balance Exploration and Exploitation in Complex Tasks

Balancing exploration and exploitation in organizational learning entails decisions about whether and where to search for new alternatives. We report the results from a laboratory experiment that sheds light on how individual decision-makers balance exploration and exploitation in search tasks. We show that the decision whether to search is governed by different behavioral regularities than the decision where to search for a new alternative. Positive performance feedback tends to motivate more sustained exploration of the search space, while at the same time constraining search to the neighborhood of an existing alternative. An explanation for this apparently contradictory finding is that both decisions are influenced by different aspirations. The decision about whether to search is driven by aspirations about what is attainable. Positive feedback shifts aspirations upwards, thereby prolonging exploration. In contrast, where to search is governed by a simple aspiration of performance improvement, and positive feedback tends to promote exploitation by narrowing down refinement search to a particular region of the search space. We discuss the implications of our research for organizational learning and computational models of adaptation.

Exploration and exploitation in organizational learning

- This paper considers the relation between the exploration of new possibilities and the exploitation of old certainties in organizational learning. It examines some complications in allocating resources between the two, particularly those introduced by the distribution of costs and benefits across time and space, and the effects of ecological interaction. Two general situations involving the development and use of knowledge in organizations are modeled. The first is the case of mutual learning between members of an organization and an organizational code. The .second is the case of learning and competitive advantage in competition for primacy. The paper develops an argument that adaptive processes, by refining exploitation more rapidly than exploration, are likely to become effective in the short run but self-destructive in the long run. The possibility that certain common organizational practices ameliorate that tendency is assessed.

Balancing Exploration and Exploitation through Structural Design: The Isolation of Subgroups and Organization Learning

The classic tradeoff between exploration and exploitation in organizational learning has attracted vigorous attention by researchers over the last two decades. Despite this attention, however, the question of how firms can better maintain the balance of exploration and exploitation remains unresolved. Drawing on a wide range of research on population and organization structure, we argue that an organization divided into semi-isolated subgroups may help strike this balance. We simulate such an organization, systematically varying the interaction pattern between individuals to explore how the degree of subgroup isolation and inter-group connectivity influences organizational learning. We also test this model with a range of contingency variables highlighted in the management research. We find that moderate levels of cross-group linking lead to the highest equilibrium performance by enabling superior ideas to diffuse across groups without reducing organizational diversity too quickly. This finding is remarkably resilient to a wide range of variance in factors such as problem complexity, environmental dynamism, and personnel turnover.

Information Technology and Organizational Learning: An Investigation of Exploration and Exploitation Processes

This study investigates the effects of information technology (IT) on exploration and exploitation in organizational learning (OL). We use qualitative evidence from previously published case studies of a single organization to extend an earlier computational model of organizational learning (March 1991) by introducing IT-enabled learning mechanisms: communication technology (e-mail), knowledge repositories of best practices, and groupware. We find that each of these IT-enabled learning mechanisms enable capabilities that have a distinct effect on the exploration and exploitation learning dynamics in the organization. We also find that this effect is dependent on organizational and environmental conditions, as well as on the interaction effects between the various mechanisms when used in combination with one another. We explore the implications of our results for the use of IT to support organizational learning.

Balancing Exploration and Exploitation Through Structural Design: The Isolation of Subgroups and Organizational Learning

The classic trade-off between exploration and exploitation in organizational learning has attracted vigorous attention by researchers over the last two decades. Despite this attention, however, the question of how firms can better maintain the balance of exploration and exploitation remains unresolved. Drawing on a wide range of research on population and organization structure, we argue that an organization divided into semi-isolated subgroups may help strike this balance. We simulate such an organization, systematically varying the interaction pattern between individuals to explore how the degree of subgroup isolation and intergroup connectivity influences organizational learning. We also test this model with a range of contingency variables highlighted in the management research. We find that moderate levels of cross-group linking lead to the highest equilibrium performance by enabling superior ideas to diffuse across groups without reducing organizational diversity too quickly. This finding is remarkably resilient to a wide range of variance in factors such as problem complexity, environmental dynamism, and personnel turnover.

The Forgotten Function of Forgetting: Revisiting Exploration and Exploitation in Organizational Learning

Zusammenfassung Die computerbasierte Simulation ist zu einer weithin akzeptierten Methodik in den Sozialwissenschaften avanciert, insbesondere in der Organisationsforschung. In diesem Beitrag replizieren wir zunächst eine computerbasierte Simulation aus dem Bereich des organisationalen Lernens von James G. March. Im Anschluss daran modifizieren und erweitern wir die Replikation unter Rückgriff auf die Theorie sozialer Systeme Niklas Luhmanns. Während Marchs ursprüngliches Simulationsmodell vor allem die Konzepte Wissen und Lernen in den Blick nimmt, ergänzen wir das Modell um das Luhmannsche Konzept des Gedächtnisses, hier verstanden als ein fortlaufendes Diskriminieren zwischen Vergessen und Erinnern. Im Lichte dessen kann gezeigt werden, dass Vergessen für Organisationen als Quelle dynamischer Instabilität dient. Es verhindert die Lähmung aufgrund einer inkonsistenten Organisationsgeschichte und wird somit zur ermöglichenden Bedingung neuer Irritabilität und folglich Lernens.

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

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.

Book Review

1. Introduction. 2. Understanding How Decisions Happen in Organizations. 3. Continuity and Change in Theories of Organizational Action. 4. Institutional Perspectives on Political Institutions (with Johan P. Olsen). 5. Organizational Learning (with Barbara Levitt). 6. The Evolution of Evolution. 7. Exploration and Exploitation in Organizational Learning. 8. Learning from Samples of One or Fewer (with Lee S. Sproull, and Michal Tamuz). 9. Adaptive Co--ordination of a Learning Team (with Pertti H. Lounamma). 10. The Future, Disposable Organizations, and the Rigidities of Imagination. 11. The Myopia of Learning (with Daniel A. Levinthal). 12. Wild Ideas: The Catechism of Heresy. 13. Variable Risk Preferences and Adaptive Aspirations. 14. Variable Risk Preferences and the Focus of Attention (with Zur Shapira). 15. Learning to Be Risk Averse. 16. Model Bias in Social Action. 17. Organizational Consultants and Organizational Research. 18. Organizational Performance as a Dependent Variable (with Robert I. Sutton). 19. Science, Politics, and Mrs. Gruenberg. 20. Education and the Pursuit of Optimism. 21. A Scholara s Quest.