– The purpose of this paper is to investigate the longevity implications of exploitation and exploration. It examines the main effect of exploitation, the main effect of exploration, and the interaction effect of exploitation and exploration on organizational longevity.
– This study employs Cox Proportional Hazard Model in analyzing 20-year data from the hard disk drive industry.
– Exploitation, independent of exploration, has a positive impact on organizational longevity. Exploration, independent of exploitation, has a curvilinear impact on organizational longevity. Jointly, exploitation weakens the curvilinear relationship between exploration and organizational longevity.
– This study challenges the dualistic view that exploitation is for “current viability” and exploration is for “future viability.” It suggests that firms need to actively engage in (instead of compromise) both exploitation and exploration in order to prolong their lifespan despite the counter force triggered by the negative dynamics between exploitation and exploration.
– In order to prolong organizational longevity, firms need to fully engage in (but not compromise) their existing product-market domains, actively explore (but not over-explore) their new product-market domain, and to embrace (but not avoid) the tension between exploitation and exploration.
– This study is one of the few that systematically and empirically examined the longevity implications of exploitation and exploration. It adds specificity and precision to the understanding of how exploitation and exploration, independently and jointly, affect organizational longevity.
