Exploration and Exploitation on Two Dimensions: Product/Technology and Customer/Market

Abstract

It is increasingly viewed that in order to have sustained performance and success, firms should engage in two types of innovative activities: exploitation and exploration. However, while focusing on exploration and exploitation concerning a firm’s technologies, earlier research has treated exploration and exploitation related to customers and markets rather implicitly. This article pays explicit attention to innovation forms of exploration-exploitation not only on product/technology dimension but also on customer/market dimension. We clarify the potential role of exploration-exploitation on the customer/market dimension and how this combines to exploration-exploitation on the product/technology dimension. Accordingly, we present a twodimensional matrix implying that in order to have sustained performance and success, a firm should simultaneously engage in different forms of innovation specified in various cells around the matrix – and not to treat the different forms as alternatives with engagement only in one or two.