Extending March's Exploration and Exploitation: Managing Knowledge in Turbulent Environments

17 Pages Posted: 13 Feb 2007 Last revised: 15 Jan 2008

See all articles by David A. Bray

David A. Bray

Harvard University; University of Oxford; National Defense University

Michael Prietula

Emory University - Goizueta Business School

Abstract

We extend March's model of exploration and exploitation to consider how environmental turbulence impacts organizational knowledge in hierarchies of varying size and depth. We then evaluate additional effects of a knowledge management (KM) system that collects and shares knowledge from expert individuals in an organization. We find that in the absence of personnel turnover, a management strategy of high exploitation and low exploration for a multi-tier hierarchical organization, representative of a top-down knowledge management strategy, reduces the accuracy of average individual knowledge levels compared to alternative strategies. The magnitude of this reduction in accuracy increases as the number of tiers in a hierarchical organization increase. Managers operating in a flat organization will see less of a reduction compared to a multi-tier organization. Two weighted-least-squares regressions performed on two additional data sets corroborate this central observation: a bottom-up strategy demonstrates greater resiliency to environmental turbulence than a top-down knowledge management strategy for hierarchical organizations.

Keywords: knowledge-based theory of the firm, knowledge management strategy, environmental turbulence, exploitation, exploration, turnover, flow, bottom-up, top-down

JEL Classification: D21, D23, D70, D83

Suggested Citation

Bray, David A. and Prietula, Michael, Extending March's Exploration and Exploitation: Managing Knowledge in Turbulent Environments. 28th International Conference on Information Systems (ICIS), December 2007. Available at SSRN: https://ssrn.com/abstract=962535 or http://dx.doi.org/10.2139/ssrn.962535

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

Michael Prietula

Emory University - Goizueta Business School ( email )

1300 Clifton Road
Atlanta, GA 30322-2722
United States

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