An Examination of Exploration and Exploitation Capabilities: Implications for Product Innovation and Market Performance

Abstract

The authors employ the dynamic capabilities perspective to gain a greater understanding of the conversion of firm resources into exploitation and exploration capabilities and the influence of these firm capabilities on firm outcomes. Specifically, they theorize that marketing and technological resources provide a foundation for the establishment of exploitation and exploration capabilities, respectively, and that these dynamic capabilities influence the degree of product innovation and market performance. The theorized relationships, which the authors examine using a survey of 111 U.S. importers, indicate that marketing resources influence an importer's development of exploitation capabilities, whereas technological resources influence the development of exploration capabilities. Furthermore, the authors find that exploitation capabilities provide a foundation for the development of exploration capabilities. They also find that whereas exploitation capabilities are negatively related to the degree of product innovation, exploration capabilities positively influence both the degree of product innovation and market performance. The authors provide implications for international marketing academics and practitioners.