Exploration and organizational longevity: The moderating role of strategy and environment

This study investigates the effects of exploration and exploitation on organizational longevity. We ask two questions: (1) How does the balance between exploration and exploitation influence organizational longevity? and (2) How is the appropriate balance affected by organizational and environmental contexts? This study conceptualizes exploration and exploitation as two ends of a continuum in terms of innovation context and tests the hypotheses on balancing exploration and exploitation. An analysis of data from the Korean IT industry during 1981–2011 reveals an inverted U-shaped curvilinear relationship between the extent of exploratory innovation and organizational longevity, providing support for the ambidexterity perspective. We further examine the moderating effects of competitive strategy and environmental dynamism on the relationship between exploratory innovation and organizational longevity. The results indicate that differentiation strategy moderated the exploration–longevity relationship and call for a contingency approach for a better understanding of performance implications of the exploration–exploitation balance.