Balancing Market Exploration and Market Exploitation in Product Innovation: A Contingency Perspective

International Journal of Research in Marketing, 32(3).

47 Pages Posted: 20 Jul 2016

See all articles by Haisu Zhang

Haisu Zhang

New Jersey Institute of Technology

Fang Wu

University of Texas at Dallas

Anna Shaojie Cui

University of Illinois at Chicago - College of Business Administration

Date Written: 2015

Abstract

This paper examines three different ways to balance market exploration and market exploitation in product innovation. First, following the knowledge-based view, we examine whether market exploration and market exploitation have differential effects on various new product outcomes based on their different learning mechanisms. We find that market exploration facilitates new product innovativeness, whereas market exploitation is more beneficial for new product development speed. This indicates that market exploration and market exploitation influence new product financial performance via distinct paths. Second, we examine the interaction between market exploration and market exploitation on new product outcomes. Our findings indicate that the joint effects of market exploration and market exploitation reduce new product development speed but have no significant impact on new product innovativeness. Third, we examine the contingent role of customer need tacitness in influencing the effects of market exploration and market exploitation. Our results show that customer need tacitness strengthens the effects of market exploration on both new product innovativeness and new product development speed. In contrast, it weakens the effect of market exploitation on new product innovativeness, and has no significant influence on new product development speed. Our results provide specific guidelines for managers regarding how to achieve a balance between market exploration and market exploitation in product innovation.

Keywords: Market Exploration, Market Exploitation, Customer Need Tacitness, New Product Innovativeness, New Product Development Speed, New Product Financial Performance

Suggested Citation

Zhang, Haisu and Wu, Fang and Cui, Anna Shaojie, Balancing Market Exploration and Market Exploitation in Product Innovation: A Contingency Perspective (2015). International Journal of Research in Marketing, 32(3).. Available at SSRN: https://ssrn.com/abstract=2811842

Haisu Zhang

New Jersey Institute of Technology ( email )

University Heights
Newark, NJ 07102
United States

Fang Wu

University of Texas at Dallas ( email )

2601 North Floyd Road
Richardson, TX 75083
United States

Anna Shaojie Cui (Contact Author)

University of Illinois at Chicago - College of Business Administration ( email )

601 South Morgan Street
11th Floor
Chicago, IL 60607
United States

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