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Exploration and exploitation strategies, profit performance, and the mediating role of strategic learning: Escaping the exploitation trap
Author(s) -
Sirén Charlotta A.,
Kohtamäki Marko,
Kuckertz Andreas
Publication year - 2012
Publication title -
strategic entrepreneurship journal
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 5.061
H-Index - 46
eISSN - 1932-443X
pISSN - 1932-4391
DOI - 10.1002/sej.1126
Subject(s) - moderation , profit (economics) , business , strategic management , strategic planning , knowledge management , strategic thinking , industrial organization , marketing , microeconomics , economics , computer science , machine learning
This study focuses on the role of strategic learning as a mediating construct between opportunity‐seeking (exploration) and advantage‐seeking (exploitation) strategies and profit performance. Prior studies argue that the effect of these core elements of strategic entrepreneurship (exploration and exploitation) cannot be fully captured through their direct effects on profit performance, but that this relationship consists of mediating factors. This study proposes that the process of strategic learning, through its intraorganizational elements that enable the dissemination, interpretation, and implementation of strategic knowledge, enables firms to capitalize on the benefits of both exploration and exploitation strategies. Results from 206 Finnish software firms indicate that strategic learning fully mediates the relationship between exploration, exploitation, and profit performance. The result contributes by stressing the importance of strategic learning processes, especially in conjunction with entrepreneurial exploration strategies. Furthermore, the study demonstrates that the effect from exploration to strategic learning is moderated by the level of exploitation. This moderation effect suggests that the strategic learning is limited, being a path dependent capability that favors exploitation over exploration when stretched. However, strategic learning effectively allows both types of strategies to improve profit performance. Copyright © 2012 Strategic Management Society.