Exploration, Exploitation, and Knowledge Management Strategies in Multi-Tier Hierarchical Organizations Experiencing Environmental Turbulence

North American Assoc. for Computational Social and Organizational Science (NAACSOS) Conference, June 2006

6 Pages Posted: 6 Feb 2007 Last revised: 1 Jul 2014

David A. Bray

Harvard University; University of Oxford; National Defense University

Date Written: December 1, 2005

Abstract

James G. March conceived organizational learning as a balance between the exploration of new alternatives and the exploitation of existing competencies in an organization. This study extends March's model to consider exploration and exploitation in a hierarchical organization. First, the effect of additional tiers in a hierarchical organization is analyzed and related to March's original constructs of exploration, exploitation, personnel turnover, and environmental turbulence. Second, the study evaluates additional effects of a knowledge management system that collects and shares knowledge from expert individuals in an organization. This study finds that in the absence of personnel turnover, a knowledge strategy of high exploitation and low exploration for a multi-tiered hierarchical organization reduces the veracity of average individual knowledge levels when compared to alternative strategies. The magnitude of this reduction in veracity increases as the number of tiers in a hierarchical organization increase; flat organizations will see less of a reduction compared to multi-tiered organizations. A weighted least-squares regression performed on a second set of data corroborates this central observation. Cumulative findings have strategic relevance for both organizational theory and the application of knowledge management systems.

Keywords: organizational learning, exploration, exploitation, personnel turnover, environmental turbulence, hierarchical organizations, knowledge management

JEL Classification: D21, D23, D70, D81, D83, O31

Suggested Citation

Bray, David A., Exploration, Exploitation, and Knowledge Management Strategies in Multi-Tier Hierarchical Organizations Experiencing Environmental Turbulence (December 1, 2005). North American Assoc. for Computational Social and Organizational Science (NAACSOS) Conference, June 2006. Available at SSRN: https://ssrn.com/abstract=961043 or http://dx.doi.org/10.2139/ssrn.961043

David A. Bray (Contact Author)

Harvard University ( email )

1875 Cambridge Street
Cambridge, MA 02138
United States

University of Oxford

Oxford
United Kingdom

HOME PAGE: http://www.linkedin.com/in/dbray

National Defense University ( email )

Marshall Hall
300 5th Avenue
Washington, DC 20319-5066
United States

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