This article examines a fundamental characteristic of modem organizations: the dynamics of exploitation and exploration in intra- and interorganizational learning processes. Exploitation is about creating reliability in experience, and thrives on productivity and refinement. Exploration is concerned with creating variety in experience, and thrives on experimentation and free association. The findings of a case study on product development within a leading Scandinavian software producer and its interorganizational collaborations with business partners suggest how experiential learning processes of exploitation and exploration within the organizations concerned generate interorganizational exploitation and exploration. Conversely, the data suggest how exploitation and exploration between the organizations generate intraorganizational exploitation and exploration. A conceptual framework describing the nature of such learning dynamics is proposed. This framework emphasizes that experiential learning is a driving force behind much intra- and interorganizational change in the form of transformations between exploitation and exploration.
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