The contingent value of exploratory and exploitative learning for new product development performance

This study endeavors to extend research on organizational learning by investigating the complicated effects between exploratory — exploitative learning and new product performance in a single new product project. Specifically, premised on contingency theory the authors investigate the negative nonlinear and interaction effects of project-level exploratory and exploitative learning behaviors on product development performance, and examine internal organizational and external environmental factors to recognize their differential moderating effects between the two learning behaviors and new product performance. Most of the hypotheses are supported based on questionnaire survey results of 253 new product projects. The results indicate that the two type of learning have curvilinear (inverted U-shaped) effects on new product performance, and suggest that product development performance will be enhanced when one learning is at higher level and the other is at lower level. Furthermore, the authors discover that process-based reward, encouragement to take risk, and environment dynamics strengthened the benefits of exploratory on new product performance. On the other hand, the advantages of exploitative learning on new product performance is further enhanced when output-based reward, project development formalization, and environment competitiveness is high. Finally, this study suggests that project managers should pay careful attention to employ the two learning behaviors during new product development.     

Achieving new product success via the synchronization of exploration and exploitation across multiple levels and functional areas

While ambidexterity has been identified as a critical prerequisite for new product success, synchronizing exploration and exploitation in practice represents a multifaceted enigma. Ambidexterity is not in reality limited to a single organizational level, or a specific functional area. Firms become ambidextrous when corporate-level exploratory and exploitative strategies interact with operational-level exploratory and exploitative capabilities across multiple functional areas. Data from a sample of technology-intensive industrial firms using a multi-informant design shows that operational-level exploratory and exploitative product innovation and marketing capabilities allow firms to implement corporate-level exploratory and exploitative strategies in the context of new product development (NPD). Further, the findings reveal that the integration of exploratory product innovation–exploratory marketing and exploitative product innovation–exploitative marketing is significant for the implementation of exploratory and exploitative strategies over deploying each capability in isolation. Finally, we show that the implementation of exploratory and exploitative strategies drives new product success through creating distinct positional advantages to customers in the form of both differentiation and cost efficiency. These positional advantages help to better explain the effects of exploratory and exploitative capabilities on new product market performance.     

Achieving Fit between Learning and Market Orientation: Implications for New Product Performance

Drawing on the learning and market orientation literature, this study examines how responsive and proactive market orientations interact with exploitative and exploratory learning to affect new product performance. Despite advancements in understanding the distinctions between the different types of learning and market orientations, little evidence exists regarding which types of market orientation work best with exploitative or exploratory learning to improve new product performance. Using a sample of 216 high‐tech Canadian firms, the authors find that new product performance is elevated only when exploratory learning is bundled with proactive market orientation. New product performance suffered when exploratory learning was complemented with responsive market orientation and when exploitative learning was complemented with proactive market orientation. Implications for marketing theory and practice are discussed.     

The fit between market learning and organizational capabilities for management innovation

This paper examines how market learning (both explorative and exploitative) interacts with organizational capabilities (technological capabilities and marketing capabilities) to affect management innovation. Drawing upon data from a sample of 272 firms each of which contributed two key informants to the study (resulting in a total of 544 respondents), we find that both exploratory and exploitative market learning have a positive effect on management innovation. The effects of exploratory and exploitative market learning on management innovation are contingent on technological and marketing capabilities. Specifically, technological capabilities enhance the positive effect of exploratory market learning and weaken the positive effect of exploitative market learning on management innovation. Marketing capabilities enhance the positive effect of exploitative market learning and weaken the positive effect of exploratory market learning on management innovation. This study contributes to the literature by integrating organizational learning theory with the absorptive capacity perspective to explain management innovation.     

Examining cross-functional coopetition as a driver of organizational ambidexterity

Despite the growing number of articles on coopetition, research in the area still lacks insights into this phenomenon on an intraorganizational level. Therefore, this study examines the effect of cross-functional, firm-internal coopetition on organizational ambidexterity (i.e., exploitation and exploration) and the moderating role of social cohesion. Drawing on organizational learning theory and analyzing survey data obtained from 392 department heads and project leaders of new product development teams, we demonstrate that cross-functional coopetition has a significant positive effect on exploratory innovation. Moreover, we find support for the moderating influence of social cohesion on the relationship between coopetition and exploitative innovation. These results not only provide valuable insights for managers in the fields of new product development and innovation, they also highlight the need for further research on the dynamic interplay of competitive and cooperative elements within firms.     

Exploratory learning and exploitative learning in different organizational structures

Although the significant performance implications of exploratory learning and exploitative learning have been well documented, the issue of whether they are complementarities or substitutes still remains a puzzle. This study investigates the relationship between exploratory learning and exploitative learning in different organizational structures. Based on a survey of Chinese firms, we find that exploratory learning and exploitative learning are substitutes when the organizational structure is mechanistic, and they are complementarities when the organizational structure is organic. Overall, this study joins the debate on the relationship between exploratory learning and exploitative learning by connecting different perspectives with the characteristics of organizational structure to offer a more comprehensive understanding on such an issue.     

Organizational Learning Ambidexterity,Strategic Flexibility,and New Product Development

Although organizational ambidexterity has gained momentum in recent innovation research, previous literature still offers a confusing and partial picture about how to leverage ambidexterity for new product development because of two limitations. First, previous research mainly focuses on static resource endowment and thus offers little insight about how firms should dynamically reconfigure resource portfolios to leverage organizational ambidexterity. Second, conceptual confusion on the notion of the balance dimension of organization ambidexterity still exists. This study seeks to explore how firms should dynamically reconfigure resource portfolios to leverage organizational ambidexterity for new product development and to bring greater conceptual clarity to the notion of balance. By extending the static resource assumption, which is central to the extant debate in organizational ambidexterity literature, this research unpacks ambidexterity into a relative exploratory dimension and an interactive dimension. We further investigated the moderating effect of resource flexibility and coordination flexibility on the impacts of the two dimensions on new product development performance. Based on the dynamic resource management view and organizational learning theory, we proposed six hypotheses and collected data from 213 firms through a survey to examine the hypotheses. Our results indicate that relative exploratory dimension and interactive dimension have different effects on new product development. Specifically, the relative exploratory dimension has an inverse U‐shaped effect on new product development while the interactive dimension has a positive effect. Furthermore, we find that resource flexibility and coordination flexibility have positive moderating effects on the relationships between the two dimensions of ambidexterity and new product development performance. Our study contributes to the ambidexterity research in three ways. First, from a dynamic resource management view, this study extends previous ambidexterity research from a static view to a dynamic view by exploring the moderating effects of resource flexibility and coordination flexibility. Second, we extend the understanding on ambidexterity by bringing greater conceptual clarity to the notion of balance. Third, this research provides new evidence on the effects of ambidextrous learning on new product development performance in transition economy such as China, where ambidextrous learning is crucial for firms to adapt to a dynamic environment.     

Market Vision and Market Visioning Competence: Impact on Early Performance for Radically New,High‐Tech Products*

Having the “right” market vision (MV) in new product scenarios involving high degrees of uncertainty has been shown to help firms achieve a significant competitive advantage, which can ultimately lead to superior financial results. Despite today's increased rate of radical innovation, and hence the importance of effective vision, relatively little research has been undertaken to improve our understanding of this phenomenon. The exploratory and empirical investigation undertaken herewith responds to this research gap by focusing on MV and its precursor, market visioning competence (MVC), for radically new, high‐tech products. MV is a clear and specific mental model/image that organizational members have of a desired and important product‐market for a new advanced technology, and MVC is a set of individual and organizational capabilities that enable the linking of advanced technologies to a future market opportunity. Based on samples of high‐tech firms involved in early technology developments, the measurement study indicates that five factors comprise MV (i.e., clarity, magnetism, specificity, form, and scope) and that four factors underlie MVC (i.e., networking, idea driving, proactive market orientation, and market learning tools). Structural equation modeling is used to demonstrate that MVC significantly and positively impacts MV and that each of these constructs significantly and positively influences certain aspects of early performance (EP) in new product development. This is the first empirical study to develop a comprehensive set of scales to measure these constructs and then to combine them in a model by which to examine their interrelationships.     

The Impact of Market Orientation, Product Advantage, and Launch Proficiency on New Product Performance and Organizational Performance

Some scholars have suggested recently that a market‐oriented culture leads to superior performance, at least in part, because of the new products that are developed and are brought to market. Others have reinforced this wisdom by revealing that a market‐oriented culture enhances organizational innovativeness and new product success, both of which in turn improve organizational performance. These scholars do not reveal, however, through which new product development (NPD) activities a market‐oriented culture is converted into superior performance. To determine how critical NPD activities are for a market‐oriented firm to achieve superior performance, our study uses data from 126 firms in The Netherlands to investigate the structural relationships among market orientation, new product advantage, the proficiency in new product launch activities, new product performance, and organizational performance. We focus on product advantage—because product benefits typically form the compelling reasons for customers to buy the new product—and on the launch proficiency—as the launch stage represents the most costly and risky part of the NPD process. Focusing on the launch stage also is relevant because it is only during the launch that it will become evident whether a market orientation has crystallized into a superior product in the eyes of the customer. The results provide evidence that a market orientation is related positively to product advantage and to the proficiency in market testing, launch budgeting, launch strategy, and launch tactics. Product advantage and the proficiency in launch tactics are related positively to new product performance, which itself is related positively to organizational performance. Market orientation has no direct relationship to new product performance and to organizational performance. An important implication of our study is that the impact of a market orientation on organizational performance is channeled through the effects of a market orientation on product advantage and launch proficiency; subsequently through the effects of product advantage and the proficiency in launch tactics on new product performance; and finally through the effect of new product performance on organizational performance. These channeling effects are much more subtle and complex than the direct relationship of market orientation on organizational performance previously assumed. Another implication of our study is that the impact of a market orientation on performance occurs through the launch activities rather than being pervasive to all organizational processes and activities. A reason for this finding may be that NPD is the one element of the marketing mix that predominantly is the responsibility of the firm, whereas promotion and distribution often are in control of organizations outside the firm (e.g., advertising agencies, major retailers) and whereas the channel or the market often dictates the price. Both implications provide ample opportunities for further research on market orientation and NPD.     

Managerial ties,organizational learning,and opportunity capture: A social capital perspective

From a social capital perspective, this article investigates how entrepreneurs in new ventures utilize their managerial ties (consisting of ties with other firms and ties with government) to capture opportunity. We also explore the moderating role of organizational learning (via exploratory learning and exploitative learning) in this process. Drawing on a sample of 159 new ventures, we find that ties with other firms have a stronger positive effect on opportunity capture than ties with government. We also find that organizational learning moderates the relationship between managerial ties and opportunity capture. Overall, our contributions center on an integrated view of organizational learning, social relationships, and opportunity capture.     

Leveraging the benefits of exploratory learning and exploitative learning in NPD: the role of innovation field orientation

Scholars have increasingly noted that firm-level capabilities may be crucial for resolving the dilemmas resulting from either high exploratory or high exploitative learning. However, our current understanding of this issue remains limited. Innovation field orientation is a firm-level capability to strategically structure dispersed innovation efforts and reconfigure resources on them, and may help a firm leverage the benefits of distinctive learning strategies. Based on this idea, this paper investigates innovation field orientation and examines how its capacities (the specification, establishment of focus areas, and stimulation of synergies) influence the performance of high exploratory/exploitative learning. Our findings suggest that the capacities of innovation field orientation moderate the effects of exploratory and exploitative learning on new product program performance, and clarify how innovation field orientation enables organization to leverage the benefits of high exploratory/exploitative learning and address their disadvantages.     

A dynamic capabilities-based framework of organizational sensemaking through combinative capabilities towards exploratory and exploitative product innovation in turbulent environments

This study develops a dynamic capabilities-based framework of organizational sensemaking through combinative capabilities towards exploratory and exploitative product innovation. Organizational sensemaking helps organizations develop cognitive maps of turbulent environments through its construction of shared interpretations of environmental changes. We argue, however, that successful exploratory and exploitative product innovation are not guaranteed by organizational sensemaking alone, but instead depend on how firms' capabilities synergistically combine and transform knowledge resources. Organizational sensemaking and combinative capabilities are together positioned as important dynamic capabilities. The dynamic capabilities-based framework is applied to explain why and how organizational sensemaking determining superior exploratory and exploitative product innovation in turbulent environments is realized by combinative capabilities. Furthermore, the paper examines the differential effects of combinative capabilities on the firm's exploratory versus exploitative product innovation. Firms can better understand how to leverage different type of combinative capabilities for optimal outcomes.     

The effect of social capital on local suppliers’ exploitative and exploratory learning in global buyer–supplier relationships: the moderating role of contract specificity

Drawing on the theories of social capital (SC) and organizational learning, a contingency theoretical framework that examines the impact of structural, relational, and cognitive SC on local suppliers’ exploitative and exploratory learning in the context of global buyer–supplier (GBS) relationships in China was developed. The extent to which the impact is moderated by the contract specificity between the buyer and supplier is also examined. The empirical results show significant positive impacts of structural and relational SC on local suppliers’ exploitative learning but significant negative impacts on local suppliers’ exploratory learning. More specifically, contract specificity strengthens the positive effects of all three dimensions of SC on exploitative and the negative effects of structural SC and relational SC on exploratory learning. They put forward several potential implications for practicing managers and policymakers.     

The Relationships between Resource Configurations and Launch Strategies in Taiwan's IC Design Industry: An Exploratory Study

Within the last decade, the link between launch strategies and new product performance has been widely investigated. However, the relationship between resource configurations and launch strategies has received little attention. This study endeavors to fill that void by examining the relationships between resource configurations and launch strategy selections. In addition, this study investigates the moderating effects of market growth and competitiveness on the relationship between resources and launch strategies. Drawing on contingency theory and strategic studies, this study proposes that resource contingencies affect changes in launch strategies. This study also suggests that market characteristics play a contingent role in the relationships between the configurations of resources and launch strategy choices. Based on extensive studies reporting on market characteristics and their links to strategies, this study proposes that two market characteristics—market growth and competitiveness—are relevant for launch strategy decision making. Taiwan's integrated circuit (IC) design industry has been used as the analytical sample, as it has been identified as a promising sector for new product development. Based on the result of investigating 90 firms, four resource configurations are identified: (1) strategic and organizational abilities; (2) technological capabilities; (3) societal assets and goodwill; and (4) physical assets. Furthermore, two different launch strategies—innovative and product advantage and cost oriented—also are discovered. The results from a seemingly unrelated regression model reveal that technological capabilities and societal assets and goodwill contribute to the variation in the firms' choices of launch strategies. This study further conducted the simple slope analysis to observe the effect of the technological capabilities on the innovative and product advantage strategy under different levels of the market growth rate. The results interestingly showed that firms with technological capabilities demonstrated different degree of tendencies in employing this strategy in alignment with various market growth rates. The finding sheds some lights on the moderating role market characteristics play on the relationships between resource configurations and launch strategy selections. Academic implications and suggestions for practitioners also are provided.     

The Role of Market and Technical Information Generation in New Product Development

Firms are investing an increasing amount of time and resources to gather information about market and technology in new product development (NPD). Yet there is a lack of consistent understanding of whether such costly information generation activities can improve product outcomes. More importantly, it is unclear how the benefit of market information and technical information generation may differ and how they may jointly impact new product performance. This study examines the role of market and technical information generation in NPD in three ways: (1) It contrasts the effects of market and technical information generation on product outcomes; (2) it identifies conditions that moderate the effects of market and technical information generation and further investigates how the moderating effects differ for these two types of activities; and (3) it examines the joint effect of market and technical information generation to understand potential synergies between them. Using survey data at the NPD project level, we find that market information generation has an inverted U‐shaped effect on new product advantage, whereas the effect of technical information generation follows a U‐shape. Furthermore, these effects are moderated differently by two conditions: a firm’s R&D intensity that influences NPD projects’ need for different types of information, and the use of multidisciplinary teams that affects the degree to which information can be shared and utilized to improve product design. The findings provide important implications for organizational learning and shed light on how to manage information generation activities to achieve NPD success.     

Investigating the Drivers of Innovation and New Product Success: A Comparison of Strategic Orientations*

The notion of producing innovations and achieving new product success has received a great deal of attention. Though many have investigated these effects in marketing and various fields within management, there has been little cross‐fertilization between fields of study to explain the basis for this superior performance. Though research has examined the resource‐based view (RBV) and market orientation individually, none has evaluated and compared their effect on firm innovation and new product success in one study. Furthermore, although empirical work has been conducted between market orientation and organizational learning, comparatively less research has been conducted to evaluate the relationship between organizational learning and the RBV to examine their combined effects on a firm's ability to innovate and succeed. Subsequently, the purpose of the present article is to investigate whether a focus on the customer (i.e., market orientation) or the firm (i.e., RBV) will drive the ability to (1) innovate within the firm and (2) succeed in terms of new product success, financial performance, market share, and customer value. The present article examines the relationship between organizational learning and the RBV and market orientation. It presents an empirically testable framework that investigates the relationship that RBV and market orientation have with performance outcomes. Data were collected from 249 senior executives. LISREL was applied to evaluate the relationships. Confirmatory factor analysis and related techniques were applied to assess the robustness of the measures used. Findings show that organizational learning is strongly associated with market orientation, which in turn impacts various performance outcomes including customer value. The RBV had a significant relationship with new product success. These results suggest that managers seeking innovation and new product success should focus less on the provision of customer value. Instead they should look toward developing their resources within the firm, including investing in human resources, to ultimately provide value to the firm. Findings indicate that this unique offering—innovations—will have an indirect effect on customer value and financial performance. In contrast, those in pursuit of positive financial performance and customer value should focus on the development of market orientation. Even though this will not necessarily lead to the development of innovative processes and new product success according to the present study, this approach may lead to a greater market share in the long term. This article reviews theoretical and managerial implications in more depth, providing an impetus for further research.     

Market Orientation and R&D Effectiveness in High‐Technology Firms: An Empirical Investigation in the Biotechnology Industry*

There seems to be lack of consensus among informed scholars about the importance a of market orientation for high‐technology firms. This paper gives a comprehensive review of existing empirical studies on the relationship between market orientation and innovation performance and pinpoints two limitations in this research stream that might be at the origin of such controversy. First, extant research often overlooked key innovation outcomes for high‐technology firms, such as those related to research and development (R&D) performance. Second, organizational conditions that can ensure an optimal integration of market knowledge in the innovation process have been less analyzed in the case of these firms. Against this background, the present study contributes to the literature by providing a test of the effect of market orientation on R&D effectiveness and the moderating role of knowledge integration in this relationship, using a sample of Italian biotechnology firms. The study's objectives are addressed in two steps. The first one consists of an in‐depth qualitative study based on semistructured interviews in five biotechnology firms. The second step consists of a follow‐up survey of 50 biotechnology firms. Results from hierarchical multiple regression analysis show that the different dimensions of a market orientation have diverse effects on R&D effectiveness of high‐technology firms: whereas interfunctional coordination has a positive main effect, the effect of customer orientation is moderated by knowledge integration, and competitor orientation has no effect on R&D effectiveness. Post hoc analyses also show two additional results involving a broader set of dependent variables. First, R&D effectiveness mediates the effects of customer orientation and interfunctional coordination on organizational performance. Second, market orientation does not appear to significantly affect R&D efficiency. The present study contributes to current literature in two main respects. First, it adds to previous work on market orientation and innovation by proposing a new dependent variable—R&D effectiveness—which offers a better perspective to understand the impact of market orientation on innovation performance in high‐technology contexts. Second, while part of the current debate on the role of market orientation in high‐tech markets seems to be polarized by positions that sustain its potential drawbacks or, on the contrary, its advantages, this study's findings on the moderating role of knowledge integration shed light on important contingency factors, such as organizational capabilities. The authors discuss the study's limitations and provide directions for future research.     

Supportiveness of Organizational Climate, Market Orientation, and New Product Performance in Chinese Firms

Most knowledge development efforts in new product development have focused on Western economies and companies. However, due to its size, rapid growth rate, and market reforms, China has emerged as an important new context for new product development. Unfortunately, current understanding of the factors associated with new product success in China remains limited. We address this knowledge gap using mixed methods. First, we conducted 19 in‐depth interviews with managers involved in new product development in 11 different Chinese firms. The qualitative fieldwork indicated that firm behaviors and employee perceptions consistent with the phenomena of market orientation and the supportiveness of organizational climate both are viewed as important drivers of the new product performance of Chinese firms. Drawing on the marketing, management, and new product development literature this study develops a hypothetical model linking market orientation, supportiveness of organizational climate, and firms' new product performance. Direct relationships are hypothesized between both market orientation and supportiveness of organizational climate and firms' new product performance, as well as a relationship between supportiveness of organizational climate and market orientation. Data to test the hypothetical model were collected via an on‐site administered questionnaire from 110 manufacturing firms in China. The hypothesized relationships are tested using structural equation modeling. Results indicate a positive direct relationship of market orientation on firms' new product performance, with an indirect positive effect of supportiveness of organizational climate via its impact on market orientation. However, no support is found for a direct relationship between the supportiveness of a firm's organizational climate and its new product performance. These findings are consistent with resource‐based view theory propositions in the marketing literature indicating that market orientation is a valuable, nonsubstitutable, and inimitable resource and with similar propositions in the management literature concerning organizational culture. However, this study's findings also indicate that in contrast to a number of organizational culture theory propositions and empirical findings in some consumer service industries, the impact of organizational climate on firm performance in a new product context is indirect via the firm's generation, dissemination, and responsiveness to market intelligence. These results suggest that an effort to improve firms' new product performance by enhancing the flow and utilization of market intelligence is an appropriate allocation of resources. Further, this study's findings indicate that managers should direct at least some of their efforts to enhance a firm's market orientation at improving employee perceptions of the supportiveness of the firm's management and of their peers. This study indicates a need for further research concerning the role of different dimensions of organizational climate in firms' new product processes.     

Product Change Intensity, Product Advantage, and Market Performance: An Empirical Investigation of the PC Industry

Product change decisions, such as the frequency of new product introductions, can impact product performance characteristics, sales, and market share of several generations of products and, therefore, a firm's long‐term survival and growth. The purpose of this study was to explore the impact of a firm's product change frequency, also referred to as product change intensity. A conceptual model linking a firm's product change intensity to its product advantage—and, in turn, to its market performance—with strategic product change orientation and technology competence as moderating effects, was used as a foundation for the study's hypotheses. These were tested using hierarchical and linear regressions, based on survey data collected from 55 U.S. companies in the personal computer (PC) industry. The analysis confirmed that a PC firm's product rate of change is positively associated with its product advantage and that its product advantage, in turn, is positively associated with its market share and growth performance. However, the hypothesized moderating effects were not confirmed. Rather, a firm's product change orientation and its level of technology competence are more likely to have a direct impact on product advantage. The implications of these findings are that, in general, firms that release new products frequently will have them viewed more favorably by the market than products with lower change intensities. Also, firms with higher levels of competence in the product technology domain tend to create products with greater market attraction. Finally, more radical changes to PC product architectures may pay off better than relatively minor changes. These results may not apply to other industries due to the specific design of personal computers and the nature of this fast‐paced market. Neither do the findings necessarily apply to all firms regardless of those firms' specific product and market strategies. More research is necessary to understand how a firm's adopted strategy, and the industry in which it operates, affect the relationships demonstrated in this study.     

How Do Transformational Leaders Promote Exploratory and Exploitative Innovation? Examining the Black Box through MASEM

Understanding how firms can promote exploratory and exploitative innovations is of high interest for both scholars and practitioners. Although a substantial body of research has emphasized that top management's transformational leadership is crucial to innovation, the mechanisms through which strategic leaders influence these distinct types of innovations remain unclear. Building on upper echelon and social learning theory, this study develops and empirically examines a model that investigates the mediating roles of three distinct strategic orientations (market, learning, and entrepreneurial orientation) on the relationship between transformational leadership and exploratory and exploitative innovation. Using meta‐analytic methods combined with structural equation modeling, this study integrates findings from separate research streams, covering over 15 years of research, and using a sample of 215 effect sizes from 75 studies. The results from the partial mediation model reveal that transformational leaders play a key role in creating these specific strategic orientations which, in turn, support different innovation outcomes. Specifically, the findings indicate that transformational leaders promote exploitative innovations predominantly by building a market orientation, whereas they foster exploratory innovations by stimulating an entrepreneurial and a learning orientation. Hence, this study extends upper echelon research by uncovering the different mechanisms through which transformational leaders promote exploratory and exploitative innovations as it theoretically identifies and empirically validates the unique mediating roles of three specific strategic orientations. The results thus provide valuable insights for the challenging management of exploratory and exploitative innovations, as they provide a “guiding map” which reveals how transformational leaders from the top may use specific orientations to foster these distinct types of innovations.