Strategic Temporal Transitions: Performance Implications of Exploration and Exploitation Transition

Abstract

Prior research presents mixed findings on the impact of temporal shifting between exploration and exploitation on organizational performance. Our study seeks to further clarify these effects and explore the moderating role of environmental scarcity. By analyzing 1,247 firm-year observations from publicly traded U.S. high-tech firms (2009–2014), we find that temporal transitioning from exploitation to exploration negatively affects firm performance, whereas time shifting from exploration to exploitation has a positive impact. Moreover, environmental scarcity intensifies the negative performance consequences of moving from exploitation to exploration. Our findings contribute to the literature on organizational ambidexterity and learning.