Balancing knowledge exploration and exploitation within and across technological and geographical domains

Abstract

This paper deals with the knowledge exploration-exploitation framework by investigating the performance implications of balancing these two activities within and across domains. Specifically, we focus on firms' strategies for new knowledge searching and acquisition, and analyse how the development of valuable innovations is positively influenced by firms' capability to find a trade-off between knowledge exploration and exploitation within and across technological and geographical domains. The empirical analysis of 5,575 patented biotechnology inventions provides strong support for the proposed theoretical arguments, by revealing that balancing exploration and exploitation is always beneficial. Furthermore, findings demonstrate that balancing across domains produces greater advantages than balancing within domains, since this allows organizational impediments and cognitive constraints in resource allocation to be overcome. © 2014 Operational Research Society Ltd.