Exploitative Innovation Strategies Research Articles

Common ownership and corporate innovation strategy

It is empirically challenging to test the effect of common ownership on corporate innovation as the observed impact of common ownership on corporate innovation is a net effect due to two offsetting powers: technological spillover and market stealing. This paper tends to mitigate that issue by investigating the impact of common ownership on the strategic features of corporate innovation. We analyze the effect of common ownership on corporate innovation activities using stacked difference-in-differences analyses based on events of financial institutional mergers and acquisitions. We find no significant effect of common ownership on research and development (R&D) expenditures, patent applications, and citations, whereas we find a positive effect of common ownership on exploitative innovation strategy. Our findings suggest that the weak market-stealing effect of exploitative innovation incentivizes common owners to encourage a higher weight of exploitative innovation among innovation outputs. Our study contributes to the current literature in three ways. First, it provides new evidence of the anti-competitive effect of common ownership. Second, it empirically examines competing theoretical predictions of common ownership impacts on corporate innovation. Third, it identifies common ownership as one of the determinants for variations of innovation strategy.

The relative values of big data analytics versus traditional marketing analytics to firm innovation: An empirical study

Although big data analytics (BDA) does enhance innovation performance, it remains unclear whether BDA contributes more or less than traditional marketing analytics (TMA) to firm innovation. This study tests hypotheses based on data collected from multiple sources by using four-wave survey and archival data from 201 firms. The results indicate that BDA has a stronger positive effect on new product development (NPD) performance than TMA, over time. However, TMA, when coupled with exploitative innovation strategy, has a stronger positive effect on NPD performance than if coupled with exploratory innovation strategy. Conversely, BDA, when coupled with exploratory innovation strategy, has a stronger positive effect on NPD performance than if coupled with exploitative innovation strategy.

Research on enterprise innovation modes choice and alternate evolution from ambidextrous perspectives

ABSTRACT This study examines the strategic choices of enterprises regarding exploitative and exploratory innovation, drawing on the ambidextrous innovation theory and using a case analysis of Ningbo Cixing Co., Ltd in China (referred to as ‘Cixing’ for short). The study constructs an evolutionary game model to analyse these choices from a micro perspective. The results of the study suggest that when the costs and opportunity costs associated with exploitative innovation are lower, the growth rate of innovation benefit is higher, and enterprises are more likely to adopt an exploitative innovation strategy. On the other hand, when the costs associated with exploratory innovation are lower, the success rate of innovation is higher, and enterprises are more likely to adopt an exploratory innovation strategy. The study also reveals that enterprises alternate between exploitative and exploratory innovation modes in response to changes in the external environment. This dynamic evolution shows a regular and complementary pattern of quantitative and qualitative change that promotes innovation growth.

Evolutionary Analysis of Knowledge-Based Networks of the Electronic Information Industry from a Dual Innovation Perspective

It provides specific theoretical guidance to enhance the enterprise’s independent innovation capabilities by studying the knowledge utilization and the evolution of innovation under different innovation strategies and revealing the law of innovation path. Based on the data of invention patents of 579 electronic information enterprises from 2010 to 2019, this paper constructs a knowledge-based network based on social network analysis to study the evolution process of density, centrality, and structural holes of knowledge. The evolution analysis of 3360 knowledge-based networks shows that the electronic information industry’s overall knowledge integration capacity is in the middle and lower reaches. The widespread knowledge reliance in the electronic information industry is small, the industry is out of the ‘capacity traps’, and diversified development has gradually become a trend. At the same time, cross-domain knowledge reorganization is increasing. The results show that the overall knowledge reliance degree of enterprises applying an exploitative innovation strategy is deeper than that of enterprises applying an exploratory innovation strategy. The knowledge integration capabilities and cross-domain knowledge reorganization capabilities of enterprises applying exploratory innovation strategies are higher than those of enterprises applying exploitative innovation strategy.

Big Data Capability and Sustainable Competitive Advantage: The Mediating Role of Ambidextrous Innovation Strategy

After the rapid expansion of data variety, velocity and volume, human civilization experienced rapid changes in the period between the “IT” and “Data” ages. Researchers view big data and data capability as new sustainable competitive advantages that enhance the sustainability of organizational development. This paper aims to develop and empirically test a framework that will investigate how big data capability is achieved through exploitative, explorative and ambidextrous modes of innovation strategies, and will also explore how they can, in turn, build firms’ sustainable competitive advantage. Using data from surveys of 229 respondents working in Chinese manufacturing firms, we test the framework using regression and bootstrapped mediation analyses. It also shows how big data capability will make firms more inclined to implement exploitative innovation strategy and construct sustainable competitive advantage, as opposed to explorative innovation strategy; when viewed from an ambidextrous perspective, combined dimension of ambidextrous innovation strategy is found to partially mediate between big data capability and sustainable competitive advantage while balanced dimension of ambidextrous innovation strategy does not. The conclusions are of great significance because they will help firms to deal with challenges that arise in big data applications and digital transformation. The findings offer new insight into the strategic choices of organizational innovations.

Industry Development Tendency and Innovation Strategy Preference of Five Typical Industries under the Background of Low-Carbon Sustainable Development in China

This paper tries to investigate the future development tendency of five typical industries in China and find out whether there exists a different innovation strategy preference between Chinese firms of low- and high-knowledge density industry in the background of low-carbon sustainable development. First, this paper finds that the innovation driven-based trend of industrial development is further accelerated in China. Firms in industries with high knowledge and technology density, such as specialized-supplier, scale-intensive, and science-based industries, are more likely to choose exploratory innovation strategy than exploitative innovation strategy. Firms in industries with low knowledge and technology density like service- and supplier-dominated industries are more likely to choose the exploitative innovation strategy. Second, results indicate that exploratory innovation can bring higher technological innovation performance than exploitative innovation. And the effect of the ambidextrous strategy is better than the single exploitative strategy in industries with high knowledge and technology density like specialized-supplier, scale-intensive, and science-based industries. Third, this paper suggests that innovation strategy preference plays a mediating role between industry type and technology innovation and a moderating effect of knowledge management capacity between innovation strategy and firms’ technology innovation.

Employee domain and non-financial performance: the moderating effect of digital reputation

PurposeThe purpose of this study is to extend existing knowledge in corporate sustainability (CS) and digitalization literature. Innovation strategies (namely, exploration, exploitation and ambidexterity) are used to identify an innovative employee domain that influences a firm’s non-financial performance. Digital reputation – i.e. the set of stakeholders’ sentiments toward the company’s digital footprint – is observed as a moderating variable able to explain where and when the innovative employee domain impacts the non-financial performance.Design/methodology/approachUsing a sample of firms listed on the Fortune 500 list in the period 2015–2018, this study pursued both a qualitative and quantitative analysis. First, content analysis is carried out through a non-financial report-based operational model to operationalize the innovative domain. Second, a regression and moderator analysis are conducted on optimized panel data.FindingsConsistent with previous literature, the results show that the employee domain positively impacts a firm’s non-financial performance. It was found that digital reputation operates as a moderator in this relationship.Originality/valueThis study contributes to the theoretical debate on CS by introducing a new concept relevant to an employee domain of exploration, exploitation and ambidexterity. It enriches the innovation debate by providing a new perspective on how firms can balance exploratory and exploitative innovation strategies in the employee domain to enhance non-financial performance. Finally, it provides a novel definition of digital reputation.

The role of a corporate university in a technology-based company to boost ambidexterity

Based on the concept of organizational ambidexterity, this study presents evidence on the role of Corporate Universities (CU) in the deployment and configuration of capabilities to operationalize corporate strategy. Through a longitudinal case study of ZTE University in China, this paper has been able to verify different theoretical positions about the development of capabilities in a framework of simultaneous exploratory and exploitative innovation strategies and to clearly witness how the CU are dynamically linked with those development. The findings highlight the most relevant capabilities that drive the strategic orientation of the company and distinguishes those that are more likely to be exploited by the company through its CU.

Unpacking the drivers of emerging market firms’ international joint venture formation: The interplay between technological innovation strategies and home- and host-institutional pressures

We explore how the different innovation strategies influence the propensity of emerging market firms with state ownership (FSOs) to form international joint ventures (IJVs). We argue that the different types of innovation strategies employed by emerging market FSOs affect the likelihood that they form IJVs differently. We propose that FSOs pursuing an explorative innovation strategy are more likely to engage in IJVs, whereas those that employ an exploitative innovation strategy are less likely to form IJVs. Additionally, using the institution-based lens, we further propose that the contributions of the different innovation strategies of FSOs to form IJVs are shaped positively by the different levels of home- and host-country institutional pressures. Using 364 Chinese FSOs, we test our hypotheses and find strong support for our arguments. Our study contributes to the literature by offering an important theoretical bridge between the exploration–exploitation framework and the institution-based perspective in the context of emerging market FSOs.

Fostering Ambidextrous Innovation Strategies in Large Infrastructure Projects: A Team Heterogeneity Perspective

In emerging economies, infrastructure projects are in full swing. There is a wealth of replicable experience for exploitation. Simultaneously, more technologies and methodologies require further exploration. This makes fostering ambidextrous innovation strategies (i.e., the tradeoff between exploitative and exploratory innovation strategies) a common and vital practical issue. Large infrastructure projects are unique one-off endeavors but have somewhat repetitive and persistent characteristics. It is a particular “intermediate” form between temporary projects and permanent organizations. Previous research on fostering ambidextrous innovation strategies cannot simply be replicated in large infrastructure projects. To address this issue, this article investigates the relationship between team heterogeneity and ambidextrous innovation strategies and also the role of team learning and identification in large infrastructure projects. Data were collected from 269 responses from 31 large infrastructure project delivery teams in China. The findings show that team heterogeneity has a positive linear effect on exploratory and ambidextrous innovation strategies and an inverted U-shaped effect on exploitative innovation strategies; team heterogeneity can better foster ambidextrous innovation strategies through improving team learning; the moderating role of team identification in the overall mechanism differs from the usual assumptions in permanent organizations. Overall, this article extends the existing ambidexterity research in the “intermediate” form between temporary projects and permanent organizations. It provides insights and guidance on fostering ambidextrous innovation strategies in large infrastructure projects.

Top Management Team Quality and Innovation in Venture-Backed Private Firms and IPO Market Rewards to Innovative Activity

Using hand-collected data on top management team human capital (“top management quality”) of a large venture-backed private firm sample, we analyze the relation between top management team quality and pre-initial public offering (IPO) innovation productivity and the relation between pre-IPO innovation productivity and IPO market valuations. We hypothesize that firms with higher quality top management teams invest more in innovative projects and select better projects, yielding higher innovation productivity; pursue explorative rather than exploitative innovation strategies; and hire more high quality inventors. Finally, we hypothesize that IPO market rewards more innovative private firms with higher IPO firm valuations. The evidence supports these hypotheses.

Entrepreneurial passion and a firm’s innovation strategies

ABSTRACT Drawing upon the role of affect in the entrepreneurship model and the broaden-and-build theory of positive emotions, this study surveyed 195 entrepreneurs in Vietnam and found that entrepreneurial passion has a positive effect on a firm’s exploratory innovation strategies and a complex inverted U-shaped effect on the exploitative innovation strategies. These results extend the literature on entrepreneurial emotions and underscore the need to depart from the simplistic linear association between entrepreneurial passion and firm-level indicators. Furthermore, this study enriches our understanding of three types of entrepreneurs’ social identities by supporting their contingent effects on the links between passion and innovation strategies.

The role of absorptive capacity and innovation strategy in the design of industry 4.0 business Models - A comparison between SMEs and large enterprises

Technological innovations often lead to redesigns in the business models of established companies, requiring them to incorporate new external knowledge into internal activities. Against this background, this study integrates the concepts of business model design, absorptive capacity, and innovation strategy into a novel research model, which analyzes the redesign of established business models in response to the emergence of Industry 4.0. Industry 4.0, also known as the Industrial Internet of Things, constitutes a contemporary research context that is highly relevant for corporate practice but scarcely regarded in management literature until now. The article contains an analysis of data from 221 German industrial enterprises, conducted through structural equation modeling, with separate data for small and medium-sized enterprises (SMEs) and large enterprises. First, the results indicate that the acquisition, assimilation, transformation, and exploitation of knowledge from the environment enable companies to engage in both exploratory and exploitative innovation strategies. Furthermore, the paper includes an evaluation of the role of exploratory and exploitative innovation strategies that reflects in efficiency-centered and novelty-centered business model designs. The distinct characteristics differentiating SMEs from large enterprises are also explained. The implications of absorptive capacity on innovation strategies, which influence the redesign of extant business models, are discussed from a research and managerial perspective.

Blaze New Trails for Others to Follow: Evidence from Scanner Data

Tracking more than 100 billion weekly transactions of two million products at the barcode level from 2007 to 2017, we identify and categorize new products as pioneers, followers and improvers to study corporate exploratory and/or exploitative innovation strategies. Firms introducing “pioneer” products are associated with greater future profitability and stock returns than those introducing “improver” and “follower” products. Price elasticity of demand explains pioneering (exploratory) innovation’s operating success. Meanwhile, limited investor attention accounts for pioneering firms’ superior stock performance. We exploit two exogenous shocks to firms’ new product development decisions to address endogeneity concerns.

Incentive Mechanism of R&D Firms’ Collaborative Innovation Based on Organisational Ambidexterity

From the perspective of organizational ambidexterity, we consider the choice of innovation strategy among R&D firms. By building on contractual arrangements and employing a dynamic game model, we focus on the incentive mechanism of R&D Firms’ collaborative innovation and analyze incentive contracts of benefits distribution and cost-sharing when two firms conduct market-driven innovation (exploitative innovation) strategy and technological research-driven innovation (exploratory innovation) strategy respectively, and collaborate for innovation with each other. We also discuss the influence of exploratory and exploitative innovation effects on decision-making of R&D firms regarding whether to choose collaborative innovation under different incentive contracts. The results show that the effects of exploratory innovation acts as the intrinsic motivation of collaborative innovation while exploratory innovation could be improved to some degree by exploitative innovation. In addition, both investment levels of exploratory and exploitative innovation would decrease (increase) when innovation cost (innovative efficiency) increases. Moreover, compared with a benefit-distribution contract, cost-sharing contracts would not only lead exploitative innovation to realize optimal revenue, but also provide incentives for exploratory innovation more effectively.

Fit between Organizational Culture and Innovation Strategy: Implications for Innovation Performance

Although prior studies have indicated the interrelationships between specific types of innovation strategy and specific elements of organizational culture, few studies simultaneously evaluate the relationship between the two multi-dimensional constructs in holistic perspective. Based on configuration theory, we conceptualize fit as ‘profile deviation’, and investigate the fit between an organization’s culture and its innovation strategy. Data were collected from 183 Chinese organizations. We examine the hypothesis that greater fit between organizational culture and innovation strategy encourages superior innovation speed and innovation quality. Our results provide evidence that in the group of organizations exhibiting either exploratory or exploitative innovation strategy, the more similar the organizational culture configurations are to those of the top performers, the higher their innovation speed and innovation quality are. In the group of organizations exhibiting ambidextrous innovation strategy, the fit between organizational culture and innovation strategy is insignificantly associated with innovation speed and innovation quality. Implications for applying the culture–strategy fit in innovation management are discussed.

Identifying the focal role of top management paradoxical cognition in ambidextrous firms

PurposePast studies have associated top management’s paradoxical cognition and actions with the ambidextrous performance of firms. Compared to large firms, the top management members of small firms play a focal role in resolving the paradoxical tensions of explorative and exploitative innovation strategies. Anchored in the upper echelons perspective, the purpose of this paper is to explore the influences of two top management team (TMT) processes on organizational ambidexterity: TMT behavioral integration and TMT involvement in small and medium enterprises (SMEs).Design/methodology/approachThe research is set in the context of 78 hi-tech SMEs across IT, biotech, and electronics industry. Multiple responses were collected from each firm. The authors used hierarchical regression analysis to test the hypotheses.FindingsThe findings from this paper demonstrate that the process of TMT behavioral integration enhances organizational ambidexterity. However, the results show that neither the top management’s involvement, nor the interaction of the top management’s involvement with the behavioral integration of a TMT, enhances organizational ambidexterity.Research limitations/implicationsThe limited examination of two TMT processes has restricted the scope of this paper. The study has also been unable to measure paradoxical cognition in the TMT objectively and without proxy measures.Originality/valueThe results from this study add to the existing literature on paradoxical cognition, ambidexterity, and behavioral integration. The results from this study also lend support to the upper echelons perspective. Further, the findings from this paper present significant practical implications by throwing light on the senior team processes necessary for small ambidextrous firms in emerging economies. The volatile and rather unpredictable nature of emerging economies underscore the relevance of examining the facilitating conditions of small ambidextrous firms in these countries.

Explorative or Exploitative? How Local Firms Respond to FDI Presence by Innovation Adaptation

It is well recognized that inbound foreign direct investment (FDI) can influence local firms through both positive externalities (i.e., the spill-over effect) and negative crowding-out (i.e., the competition effect). However, the strategic responses of local firms to foreign entries are far less explored. In this study, we investigate how local firms adapt their explorative and exploitative innovation strategies in response to the environmental changes led by FDI presence, drawing on the attention-based perspective. In particular, through the spill- over effect, local firms increase exploitative innovation as a response to FDI presence, while decreasing their explorative innovation. This is because more technological possibilities may arise from foreign entries, and these, in turn, provide more learning or imitation opportunities for local firms to exploit, while substituting their own explorative efforts. In contrast, however, intensified competitive pressures led by foreign entries can push local firms ...

Strengthening organizational ambidexterity with top management team mechanisms and processes

Organizational ambidexterity is the organizational capability to simultaneously pursue explorative and exploitative innovation strategies. Studies have examined the Top Management Team (TMT) actions and decisions with the ambidextrous orientation of a firm. Further, studies have also shown that a behaviourally integrated TMT is positively associated with organizational ambidexterity. However, there has been limited research examining the antecedents to the behaviourally integrated TMT. Anchored in the upper echelons perspective, we have examined the influence of TMT processes and mechanisms on organizational ambidexterity. The TMT is observed to positively influence ambidexterity by enhancing the firm’s ability to meet the differentiation-integration challenges, and by facilitating the effective deployment of ambidextrous Human Resource (HR) architectures for employee learning. Thereby, this investigation examines the effect of TMT processes and mechanisms in enabling structural as well as contextual ambidexterity. The results from a sample of 78 hi-tech Small and Medium Enterprises (SMEs) across different industries were analysed using partial least squares structural equation modelling. We find the mediating role of TMT behavioural integration in the effect of TMT connectedness and TMT cross-functional interfacing mechanisms on organizational ambidexterity. However, our results show that rewards contingent on organizational performance do not motivate the TMT members to facilitate organizational ambidexterity. The results from this study lend support to the upper echelons perspective and add to two distinct streams of literature namely organizational ambidexterity and behavioural integration.

A Knowledge-Based Framework of Innovation Strategy: The Differential Effect of Knowledge Sources

Using an exploration–exploitation framework, this study examines how firms’ innovation strategies rely on different knowledge sources (own-generated, bought-in, and codeveloped) that affect innovation performance. It utilizes data from the 2008 Community Innovation Survey covering 9054 sample firms from 14 European countries. Results derived from multiple-method empirical analysis indicate that investments into acquiring different knowledge sources will generate different values, depending on key contextual factors. In particular, we find that for firms following explorative innovation strategy (focused on developing new products, processes, and technologies), investments in own-generated and bought-in knowledge will improve innovation performance, whereas for those following exploitative innovation strategy (focused on refining existing products, processes and technologies), only investments in bought-in knowledge will create a positive impact on innovation performance. Additionally, firms that simultaneously pursue both exploration and exploitation (ambidextrous innovation strategy) will have maximal innovation performance by investing into all three types of knowledge sources. This study hence contributes new insights regarding the strategic choice of knowledge source.