Why one strategy does not fit all: a systematic review on exploration–exploitation in different organizational archetypes

Abstract

According to the ambidexterity literature, organizations tend to favor either exploration or exploitation activities. However, few studies have elucidated why this imbalance occurs, what the ideal balance is, and how to remedy any disparities between what organizations tend to do and what they should do. This study addresses this paucity by situating these questions in the context of environmental conditions (static or dynamic) and organizational conditions (simple or complex) through a strategic fit paradigm lens. We systematically reviewed 20 years of exploration–exploitation research and developed an empirically grounded, contextually relevant framework that describes four organizational archetypes: the Kangaroo, Lion, Mouse, and Camel archetypes. We found that it often makes sense for organizations to be off-balance and identified the factors that cause imbalance and the strategies that managers can employ to manipulate the exploration–exploitation mix according to their organizations’ specific archetypes. By incorporating all three questions and delineating between organizational archetypes, this systematic review brings together the fragmented literature and provides a novel framework for advancing research and influencing managerial practice.

Appendices

Appendix A

See Tables 5 and 6.

Table 5 Constructs affecting firms’ exploration/exploitation and their relationships with the concept of environmental dynamism

Table 6 Constructs affecting firms’ exploration/exploitation capacity and their relationships with the concept of organizational complexity

Appendix B: Exploration and exploitation definitions

We focus on explorative and exploitative adaptation at the organizational and interorganizational levels of analysis from the standpoint of individual organizations. Explorative adaptation describes distant search, radical change, and the development of new competencies, whereas exploitative adaptation is associated with local search, incremental adaptation, and the refinement of organizations’ existing competencies (Uotila 2018). Explorative adaptation entails a departure from an organization’s current technological trajectories, skills, and capabilities (Lavie and Rosenkopf 2006). Conversely, exploitative adaptation involves the reinforcement of current technological trajectories, skills, and capabilities (Lavie et al. 2010). Lavie et al. (2010) highlighted the differences between exploration by describing Swiss watch manufacturers’ technological transition. A form of exploitation was the transition from hand-wound to automatic watches, as it built on extant mechanical engineering capabilities. In contrast, the emergence of battery-powered watches required exploration from the standpoint of the mechanical energy and spring communities.

Table 7 presents the definitions of exploration and exploitation in different contexts. The table provides a definition of the multifaceted aspects that constitute our definitions of exploration and exploitation and highlights the differences between our study and research based on definitions that do not describe the same phenomena.

Table 7 Definitions of exploration and exploitation in diverse contexts (based on Luger et al. 2018)

Appendix C

See Tables 8 and 9.

Table 8 Summary of the relationships between environmental conditions and exploration–exploitation

Table 9 Summary of the relationships between organizational conditions and exploration–exploitation