Exploration and Exploitation Across Three Resource Classes: Market/Customer Intelligence, Brands/Bonds, and Technologies/Processes

Abstract

PURPOSE. Long-run corporate success requires engagement in two types of innovative activities: exploitation and exploration. However, earlier research has focused on exploration and exploitation concerning a firm’s technologies. The purpose of the present article is to explicitly examine exploration and exploitation related to customers and markets. DESIGN/METHODOLOGY/APPROACH. The article is conceptual in nature, based on marketing, strategic management, and organization literatures. FINDINGS. The article explains the logic of exploration-exploitation with respect to two market-related resource classes – (1) the firm’s knowledge of markets and customers (market/customer intelligence)and (2) market actors’ knowledge of and bonds to the firm (brands/bonds) – as viewed in combination with the resource class of (3)technologies, processes, and products technologies/processes). The distinction of these three resource classes enables a three-dimensional conceptualization of the ideal types of a firm’s business development projects, which are seen as combinations of exploration and exploitation of resources across the three classes. The article also introduces the notions of multidimensionality of exploration-exploitation within the resource classes and relativity of resource newness. ORIGINALITY/VALUE. The article explicates how firms can orient their exploration and exploitation strategies not only on the technology dimension but also on the dimensions of market/customer intelligence and brands/bonds. KEYWORDS. Exploration and exploitation, innovation, markets, technology, market-based assets, business development, strategic marketing CATEGORY. Conceptual paper