Advertisement

Asia Pacific Journal of Management

, Volume 32, Issue 2, pp 481–503 | Cite as

The differentiating effects of workforce aging on exploitative and exploratory innovation: The moderating role of workforce diversity

  • Jisung Park
  • Seongsu Kim
Article

Abstract

Despite negative predictions about the effects of workforce aging on organizational innovation performance, little systematic research has been conducted on this question. We investigate the differentiating effects of workforce aging by classifying organizational innovation as either exploitation or exploration. More specifically, we suggest that workforce aging positively affects exploitative innovation performance, whereas it negatively influences exploratory innovation performance. Moreover, building on the double-edged effects of diversity, this study examines the moderating role of age diversity in the workforce aging–innovation performance relationship. We predict that the diverse composition in the labor structure contributes only to exploration, not to exploitation. We tested hypotheses using data gathered from a government-sponsored survey of Korean companies—234 firms for exploitative innovation and 166 firms for exploratory innovation. Results revealed that workforce aging had a positive influence on exploitative innovation performance and had an inverted U-shaped relationship with exploratory innovation performance. In addition, age diversity only attenuated the positive workforce aging–exploitative innovation performance relationship. Theoretical and practical implications are also discussed.

Keywords

Workforce aging Organizational innovation Exploration Exploitation Diversity 

Notes

Acknowledgments

We thank the Institute of Management Research and the Institute of Industrial Relations at Seoul National University for financial support.

References

  1. Abernathy, W. J., & Clark, K. B. 1985. Innovation: Mapping the winds of creative destruction. Research Policy, 14(1): 3–22.CrossRefGoogle Scholar
  2. Agresti, A. 2007. An introduction to categorical data analysis. New York: Wiley-Blackwell.CrossRefGoogle Scholar
  3. Ahuja, G., & Lampert, C. M. 2001. Entrepreneurship in the large corporation: A longitudinal study of how established firms create breakthrough inventions. Strategic Management Journal, 22(6–7): 521–543.CrossRefGoogle Scholar
  4. Alley, D., & Crimmins, E. 2007. The demography of aging and work. In K. S. Shultz & A. A. Gary (Eds.). Aging and work in the 21st century: 7–23. Mahwah: Lawrence Erlbaum Associates.Google Scholar
  5. Amabile, T. M. 1988. A model of creativity and innovation in organizations. In B. M. Saw & L. L. Cummings (Eds.). Research in organizational behavior, Vol. 10: 123–167. Greenwich: JAI Press.Google Scholar
  6. Amabile, T. M. 1998. How to kill creativity. Harvard Business Review, 76(5): 76–87.Google Scholar
  7. Ancona, D. G., & Caldwell, D. F. 1992. Bridging the boundary: External activity and performance in organizational teams. Administrative Science Quarterly, 37(4): 634–665.CrossRefGoogle Scholar
  8. Andriopoulos, C., & Lewis, M. W. 2009. Exploitation-exploration tensions and organizational ambidexterity: Managing paradoxes of innovation. Organization Science, 20(4): 696–717.CrossRefGoogle Scholar
  9. Argyris, C., & Schon, D. A. 1978. Organizational learning. Reading: Addison-Wesley.Google Scholar
  10. Ashworth, M. J. 2006. Preserving knowledge legacies: Workforce aging, turnover and human resource issues in the US electric power industry. International Journal of Human Resource Management, 17(9): 1659–1688.CrossRefGoogle Scholar
  11. Backes-Gellner, U., Schneider, M. R., & Veen, S. 2011. Effect of workforce age on quantitative and qualitative organizational performance: Conceptual framework and case study evidence. Organization Studies, 32(8): 1103–1121.CrossRefGoogle Scholar
  12. Bae, J., & Lawler, J. J. 2000. Organizational and HRM strategies in Korea: Impact on firm performance in an emerging economy. Academy of Management Journal, 43(3): 502–517.CrossRefGoogle Scholar
  13. Bantel, K. A. 1993. Top team, environment, and performance effects on strategic planning formality. Group & Organization Management, 18(4): 436–458.CrossRefGoogle Scholar
  14. Bantel, K. A., & Jackson, S. E. 1989. Top management and innovations in banking: Does the composition of the top team make a difference?. Strategic Management Journal, 10(S1): 107–124.CrossRefGoogle Scholar
  15. Beier, M. E., & Ackerman, P. L. 2005. Age, ability, and the role of prior knowledge on the acquisition of new domain knowledge: Promising results in a real-world learning environment. Psychology and Aging, 20(2): 341.CrossRefGoogle Scholar
  16. Benner, M. J., & Tushman, M. L. 2003. Exploitation, exploration, and process management: The productivity dilemma revisited. Academy of Management Review, 28(2): 238–256.Google Scholar
  17. Bierly, P., & Chakrabarti, A. 1996. Generic knowledge strategies in the US pharmaceutical industry. Strategic Management Journal, 17(Winter Special Issue): 123–135.CrossRefGoogle Scholar
  18. Binnewies, C., Ohly, S., & Niessen, C. 2008. Age and creativity at work: The interplay between job resources, age and idea creativity. Journal of Managerial Psychology, 23: 438–457.CrossRefGoogle Scholar
  19. Blau, P. M. 1977. Inequality and heterogeneity: A primitive theory of social structure, Vol. 7. New York: Free Press.Google Scholar
  20. Bliese, P. D. 2000. Within-group agreement, non-independence, and reliability: Implications for data aggregation and analysis. In K. J. Klein & S. W. Kozlowski (Eds.). Multilevel theory, research, and methods in organizations: 349–381. San Francisco: Jossey-Bass.Google Scholar
  21. Bloom, D. E., Canning, D., & Finlay, J. E. 2010. Population aging and economic growth in Asia. In T. Ito & A. K. Rose (Eds.). The economic consequences of demographic change in East Asia, NBER-EASE Vol. 19: 61–89. Chicago: University of Chicago Press.CrossRefGoogle Scholar
  22. Bunderson, J. S., & Sutcliffe, K. M. 2002. Comparing alternative conceptualizations of functional diversity in management teams: Process and performance effects. Academy of Management Journal, 45(5): 875–893.CrossRefGoogle Scholar
  23. Cattell, R. B. 1943. The measurement of adult intelligence. Psychological Bulletin, 40(3): 153–193.CrossRefGoogle Scholar
  24. Chatman, J. A., Polzer, J. T., Barsade, S. G., & Neale, M. A. 1998. Being different yet feeling similar: The influence of demographic composition and organizational culture on work processes and outcomes. Administrative Science Quarterly, 43: 749–780.CrossRefGoogle Scholar
  25. Chin, C.-L., Chen, Y.-J., Kleinmean, G., & Lee, P. 2009. Corporate ownership structure and innovation: Evidence from Taiwan’s electronics industry. Journal of Accounting, Auditing, & Finance, 24(1): 145–175.Google Scholar
  26. Christensen, C. M. 2003. The innovator’s dilemma: The revolutionary book that will change the way you do business. New York: Harper Collins.Google Scholar
  27. Cohen, J., Cohen, P., West, S. G., & Aiken, L. S. 2006. Applied multiple regression/correlation analysis for the behavioral sciences. Mahwah: Lawrence Erlbaum Associates.Google Scholar
  28. Cohen, W. M., & Levinthal, D. A. 1990. Absorptive capacity: A new perspective on learning and innovation. Administrative Science Quarterly, 35(1): 128–152.CrossRefGoogle Scholar
  29. Crepon, B., & Duguet, E. 1997. Estimating the innovation function from patent numbers: GMM on count panel data. Journal of Applied Econometrics, 12(3): 243–263.CrossRefGoogle Scholar
  30. Crossan, M. M., Lane, H. W., & White, R. E. 1999. An organizational learning framework: From intuition to institution. Academy of Management Review, 24(3): 522–537.Google Scholar
  31. Danneels, E. 2002. The dynamics of product innovation and firm competences. Strategic Management Journal, 23(12): 1095–1121.CrossRefGoogle Scholar
  32. Eisenhardt, K. 1989. Making fast strategic decisions in high-velocity environments. Academy of Management Journal, 32(3): 543–576.CrossRefGoogle Scholar
  33. Feldman, D. C., & Kim, S. 2000. Bridge employment during retirement: A field study of individual and organizational experiences with post-retirement employment. Human Resource Planning Journal, 23(1): 14–25.Google Scholar
  34. Frosch, K. H. 2011. Workforce age and innovation: A literature survey. International Journal of Management Reviews, 13(4): 414–430.CrossRefGoogle Scholar
  35. Gupta, A. K., Smith, K. G., & Shalley, C. E. 2006. The interplay between exploration and exploitation. Academy of Management Journal, 32(3): 693–706.CrossRefGoogle Scholar
  36. Hannan, M. T., & Freeman, J. 1984. Structural inertia and organizational change. American Sociological Review, 49(2): 149–164.CrossRefGoogle Scholar
  37. He, Z.-L., & Wong, P.-K. 2004. Exploration vs. exploitation: An empirical test of the ambidexterity hypothesis. Organization Science, 15(4): 481–494.CrossRefGoogle Scholar
  38. Hedberg, B. 1981. How organizations learn and unlearn?. In P. C. Nystrom & W. H. Starbuck (Eds.). Handbook of organizational design: 8–27. London: Oxford University Press.Google Scholar
  39. Hilbe, J. 2007. Negative binomial estimation. Cambridge: Cambridge University Press.CrossRefGoogle Scholar
  40. James, L. R., Demaree, R. G., & Wolf, G. 1984. Estimating within-group interrater reliability with and without response bias. Journal of Applied Psychology, 69(1): 85–98.CrossRefGoogle Scholar
  41. Jansen, J. J. P., Van Den Bosch, F. A. J., & Volberda, H. W. 2006. Exploratory innovation, exploitative innovation, and performance: Effects of organizational antecedents and environmental moderators. Management Science, 52(11): 1661–1674.CrossRefGoogle Scholar
  42. Jehn, K. A., Northcraft, G. B., & Neale, M. A. 1999. Why differences make a difference: A field study of diversity, conflict and performance in workgroups. Administrative Science Quarterly, 44(4): 741–763.CrossRefGoogle Scholar
  43. Kanfer, R., & Ackerman, P. L. 2004. Aging, adult development, and work motivation. Academy of Management Review, 29(3): 440–458.Google Scholar
  44. Kanter, R. M. 1988. When a thousand flowers bloom: Structural, collective, and social conditions for innovation in organization. In B. M. Staw & L. L. Cummings (Eds.). Research in organizational behavior, Vol. 10: 169–211. Greenwich: JAI Press.Google Scholar
  45. Katila, R., & Ahuja, G. 2002. Something old, something new: A longitudinal study of search behavior and new product introduction. Academy of Management Journal, 36(6): 1183–1194.CrossRefGoogle Scholar
  46. Keck, S. L., & Tushman, M. L. 1993. Environmental and organizational context and executive team structure. Academy of Management Journal, 36(6): 1314–1344.CrossRefGoogle Scholar
  47. Kim, S. 2003. The impact of research productivity on early retirement of university professors. Industrial Relations, 42(1): 106–25.Google Scholar
  48. Kim, S. Y. 2012. Transitioning from fast-follower to innovator: The institutional foundations of the Korean telecommunications sector. Review of International Political Economy, 19(1): 140–168.CrossRefGoogle Scholar
  49. Kim, S., & Feldman, D. C. 1998. Healthy, wealthy, or wise: Predicting actual acceptances of early retirement incentives at three points in time. Personnel Psychology, 51(3): 623–642.CrossRefGoogle Scholar
  50. Kim, S., & Feldman, D. C. 2000. Working in retirement: The antecedents of bridge employment and its consequences for quality of life in retirement. Academy of Management Journal, 43(6): 1195–1210.CrossRefGoogle Scholar
  51. Korea Ministry of Labor. 2012. An investigation of employment and labor conditions. KOSIS Database. Daejeon: Statistics Korea.Google Scholar
  52. Korea National Statistical Office. 2001. Future population projection. Daejeon: Statistics Korea.Google Scholar
  53. Kozlowki, S. W. J., & Klein, K. J. 2000. Multilevel theory, research, and methods in organizations: Foundations, extensions, and new directions. San Francisco: Jossey-Bass.Google Scholar
  54. Lant, T. K., & Mezias, S. J. 1992. An organizational learning model of convergence and reorientation. Organization Science, 3(1): 47–71.CrossRefGoogle Scholar
  55. Leibold, M., & Voelpel, S. 2007. Managing the aging workforce: Challenges and solutions. New York: Wiley.Google Scholar
  56. Leonard-Barton, D. 1992. Core capabilities and core rigidities: A paradox in managing new product development. Strategic Management Journal, 13(S1): 111–125.CrossRefGoogle Scholar
  57. Li, Y., Vanhaverbeke, W., & Schoenmakers, W. 2008. Exploration and exploitation in innovation: Reframing the interpretation. Creativity and Innovation Management, 17(2): 107–126.CrossRefGoogle Scholar
  58. Louis, M. R., & Sutton, R. I. 1991. Switching cognitive gears: From habits of mind to active thinking. Human Relations, 44(1): 55–76.CrossRefGoogle Scholar
  59. March, J. G. 1991. Exploration and exploitation in organizational learning. Organization Science, 2(1): 71–87.CrossRefGoogle Scholar
  60. Meyer, A. 1982. Adapting to environmental jolts. Administrative Science Quarterly, 27(4): 515–537.CrossRefGoogle Scholar
  61. Meyer, J. 2008. Older workers and the adoption of new technologies. ZEW discussion paper no. 07-050[rev.], Centre for European Economic Research, Mannheim.Google Scholar
  62. Milliken, F. J., & Martins, L. L. 1996. Searching for common threads: Understanding the multiple effects of diversity in organizational groups. Academy of Management Review, 21(2): 402–433.Google Scholar
  63. Nerkar, A. 2003. Old is gold? The value of temporal exploration in the creation of new knowledge. Management Science, 49(2): 211–229.CrossRefGoogle Scholar
  64. Ng, T. W., & Feldman, D. C. 2010. The impact of job embeddedness on innovation-related behaviors. Human Resource Management, 49(6): 1067–1087.CrossRefGoogle Scholar
  65. Ng, T. W., & Feldman, D. C. 2013. A meta-analysis of the relationships of age and tenure with innovation-related behaviour. Journal of Occupational and Organizational Psychology, 86(4): 585–616.Google Scholar
  66. Niessen, C., Swarowsky, C., & Leiz, M. 2010. Age and adaptation to changes in the workplace. Journal of Managerial Psychology, 25(4): 356–383.CrossRefGoogle Scholar
  67. Nonaka, I. 1994. A dynamic theory of organizational knowledge creation. Organization Science, 5(1): 14–37.CrossRefGoogle Scholar
  68. O’Reilly, C. A., Caldwell, D. F., & Barnett, W. P. 1989. Work group demography, social integration, and turnover. Administrative Science Quarterly, 34(1): 21–37.CrossRefGoogle Scholar
  69. O’Reilly, C., Snyder, R., & Boothe, J. 1993. Effects of executive team demography on organizational change. In G. P. Huber & W. P. Glick (Eds.). Organizational change and redesign: 147–175. New York: Oxford University Press.Google Scholar
  70. O’Reilly, C. A., & Tushman, M. L. 2004. The ambidextrous organization. Harvard Business Review, 82(4): 74–83.Google Scholar
  71. Organization for Economic Co-operation and Development. 2011. Society at a glance: OECD social indicators, 2011th ed. Paris: OECD.Google Scholar
  72. Pelled, L. H., Eisenhardt, K. M., & Xin, K. R. 1999. Exploring the black box: An analysis of work group diversity, conflict and performance. Administrative Science Quarterly, 44(1): 1–28.CrossRefGoogle Scholar
  73. Posthuma, R. A., & Campion, M. A. 2009. Age stereotypes in the workplace: Common stereotypes, moderators, and future research directions. Journal of Management, 35(1): 158–188.CrossRefGoogle Scholar
  74. Raisch, S., Birkinshaw, J., Probst, G., & Tushman, M. L. 2009. Organizational ambidexterity: Balancing exploitation and exploration for sustained performance. Organization Science, 20(4): 685–695.CrossRefGoogle Scholar
  75. Roger, M., & Wasmer, M. 2009. Heterogeneity matters: Labor productivity differentiated by age and skills. National Institute of Statistics and Economic Studies, 4: 1–37.Google Scholar
  76. Rouvinen, P. 2002. Characteristics of product and process innovators: Some evidence from the Finnish innovation survey. Applied Economics Letters, 9(9): 575–580.CrossRefGoogle Scholar
  77. Samsung Research Institute. 2011. The characteristics of the new generation and the ways to manage them. SERI Issue paper no. 1–100, Seoul.Google Scholar
  78. Shane, S. 2000. Prior knowledge and the discovery of entrepreneurial opportunities. Organization Science, 11(4): 448–469.CrossRefGoogle Scholar
  79. Starbuck, W. H. 1983. Organizations as action generators. American Sociological Review, 48(1): 91–102.CrossRefGoogle Scholar
  80. Tsui, A. S., Egan, T. D., & O’Reilly, C. A. 1992. Being different: Relational demography and organizational attachment. Administrative Science Quarterly, 37: 549–579.CrossRefGoogle Scholar
  81. Tushman, M. L., & O’Reilly, C. A. 2002. Winning through innovation: A practical guide to leading organizational change and renewal. Cambridge: Harvard Business Press.Google Scholar
  82. Tushman, M. L., & Romanelli, E. 1985. Organizational evolution: A metamorphosis model of convergence and reorientation. In L. L. Cummings & B. M. Staw (Eds.). Research in organizational behavior, Vol. 7: 171–222. Greenwich: JAI Press.Google Scholar
  83. Tziner, A., & Eden, D. 1985. Effects of crew composition on crew performance: Does the whole equal the sum of its parts?. Journal of Applied Psychology, 70(1): 85–93.CrossRefGoogle Scholar
  84. Uotila, J., Maula, M., Keil, T., & Zahra, S. A. 2009. Exploration, exploitation, and financial performance: Analysis of S&P 500 corporations. Strategic Management Journal, 30(2): 221–231.CrossRefGoogle Scholar
  85. Van de Ven, A. H. 1986. Central problems in the management of innovation. Management Science, 32(5): 590–607.CrossRefGoogle Scholar
  86. Verworn, B. 2009. Does age have an impact on having ideas? An analysis of the quantity and quality of ideas submitted to a suggestion system. Creativity and Innovation Management, 18(4): 326–334.CrossRefGoogle Scholar
  87. Verworn, B., & Hipp, C. 2009. Does the aging workforce hamper the innovativeness of firms? (No) evidence from Germany. International Journal of Human Resources Development and Management, 9(2): 180–197.CrossRefGoogle Scholar
  88. Wagner, W. G., Pfeffer, J., & O’Reilly, C. A. 1984. Organizational demography and turnover in top-management group. Administrative Science Quarterly, 29(1): 74–92.CrossRefGoogle Scholar
  89. Wiersema, M. F., & Bantel, K. A. 1993. Top management team turnover as an adaptation mechanism: The role of the environment. Strategic Management Journal, 14(7): 485–504.CrossRefGoogle Scholar
  90. Williams, K. Y., & O’Reilly, C. A. 1998. Demography and diversity in organizations: A review of 40 years of research. In B. M. Staw & L. L. Cummings (Eds.). Research in organizational behavior, Vol. 20: 77–140. Greenwich: JAI Press.Google Scholar
  91. Williams, R. J., Hoffman, J. J., & Lamont, B. T. 1995. The influence of top management team characteristics on M-form implementation time. Journal of Managerial Issues, 7(4): 466–480.Google Scholar
  92. Wofford, J. C. 1994. An examination of the cognitive processes used to handle employee job problems. Academy of Management Journal, 37(1): 180–192.CrossRefGoogle Scholar
  93. Yeatts, E., Folts, W. E., & Knapp, J. D. 1999. Older worker’s adaptation to a changing workplace: Employment issues for the 21st century. Educational Gerontology, 25(4): 331–347.CrossRefGoogle Scholar
  94. Zenger, T. R., & Lawrence, B. S. 1989. Organizational demography: The differential effects of age and tenure distributions on technical communication. Academy of Management Journal, 32(2): 353–376.CrossRefGoogle Scholar

Copyright information

© Springer Science+Business Media New York 2015

Authors and Affiliations

  1. 1.Graduate School of BusinessSeoul National UniversitySeoulSouth Korea

Personalised recommendations