The Role of Exploration in Firm Survival in the Worldwide Optical Library Market, 1990-1998

Abstract

We investigate how a firm’s involvement in exploration and exploitation activities affects its survival chances. We predict that while the main effect of exploration on organizational longevity is beneficial, the extent of these survival benefits will significantly vary across different organizational types. Firms that are structurally inertial and firms that have resources that can be used as a buffer in difficult times will derive greater survival benefits from exploration than firms that are structurally flexible and lack slack resources that can be used as a buffer. The event history analysis of disbanding rates of all firms that participated in the worldwide optical library market from 1990 through 1998 supports these predictions.