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http://ssrn.com/abstract=960273
 
 

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Balancing Exploration and Exploitation through Structural Design: The Isolation of Subgroups and Organization Learning


Christina Fang


New York University (NYU) - Department of Management and Organizational Behavior

Jeho Lee


KAIST Business School

Melissa A. Schilling


New York University (NYU) - Department of Management and Organizational Behavior

August 1, 2008

Organization Science, Vol. 2, No. 3, pp. 625-642, 2010

Abstract:     
The classic tradeoff between exploration and exploitation in organizational learning has attracted vigorous attention by researchers over the last two decades. Despite this attention, however, the question of how firms can better maintain the balance of exploration and exploitation remains unresolved. Drawing on a wide range of research on population and organization structure, we argue that an organization divided into semi-isolated subgroups may help strike this balance. We simulate such an organization, systematically varying the interaction pattern between individuals to explore how the degree of subgroup isolation and inter-group connectivity influences organizational learning. We also test this model with a range of contingency variables highlighted in the management research. We find that moderate levels of cross-group linking lead to the highest equilibrium performance by enabling superior ideas to diffuse across groups without reducing organizational diversity too quickly. This finding is remarkably resilient to a wide range of variance in factors such as problem complexity, environmental dynamism, and personnel turnover.

Number of Pages in PDF File: 49

Keywords: Organization Learning, Organizational structure, Network, Exploration and Exploitation

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Date posted: January 31, 2007 ; Last revised: June 25, 2010

Suggested Citation

Fang, Christina and Lee, Jeho and Schilling, Melissa A., Balancing Exploration and Exploitation through Structural Design: The Isolation of Subgroups and Organization Learning (August 1, 2008). Organization Science, Vol. 2, No. 3, pp. 625-642, 2010. Available at SSRN: http://ssrn.com/abstract=960273 or http://dx.doi.org/10.2139/ssrn.960273

Contact Information

Christina Fang
New York University (NYU) - Department of Management and Organizational Behavior ( email )
44 West 4th Street
New York, NY 10012
United States
Jeho Lee
KAIST Business School ( email )
85 Hoegiro Dongdaemun-Gu
Seoul 130-722
Korea, Republic of (South Korea)
+82 2 958 3678 (Phone)
+82 2 958 3124 (Fax)
HOME PAGE: http://www.kaistgsm.ac.kr
Melissa A. Schilling (Contact Author)
New York University (NYU) - Department of Management and Organizational Behavior ( email )
40 West Fourth Street
New York, NY 10012
United States
212-998-0249 (Phone)
212-995-4235 (Fax)
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