(Cyert and March, 1963; Tushman and O’Reilly, 1996; Pyka, 2015).
In this paper, we associate exploitation and exploration by firms with, respectively,
(i) microeconomic management of their daily production and sales & procurement
operations in creating immediate value with existing products, and (ii)
management of research & development activities in creating new products to
generate value in the future. The managerial decisions in both daily operations as
well as innovation activities are characterized by different sorts of uncertainty
(largely due to bounded rationality) and by inefficiencies, non-optimal allocations,
and market failures that are (partly) caused by those uncertainties. Particularly in
situations characterized by