Article | Academy of Management Best Paper Proceedings | 2005

Increasing Exploration: Evidence from International Expansion

by Juan Alcacer, Heather Berry and Wilbur Chung

Abstract

While firms balance exploitation and exploration to maximize profits, specifics of how firms pursue this balance are scarce. We focus on how firms increase their exploration after obtaining greater capabilities and experience via sequential international expansion. Using Japanese manufacturing firms' investment into the US, we find that more experience and experience in locations thick with indigenous R&D activity leads firms to pursue greater exploration by adding their own R&D activity. Interestingly, the influence of location is differential; while firms that are more technically advanced are unaffected, less technically advanced firms tend to add their own R&D activity after gaining experience in locations with high indigenous R&D activity. The results suggest that technically lagging firms may leverage host country technical activity to strategically catch up with their more technically advanced competitors.

Keywords: Price Bubble; Growth and Development Strategy; Growth Management; Industry Growth; Research and Development; Profit; Organizational Change and Adaptation; Knowledge Use and Leverage; Disruptive Innovation; Five Forces Framework; SWOT Analysis; Duopoly and Oligopoly; Manufacturing Industry; Japan; United States;

Citation:

Alcacer, Juan, Heather Berry, and Wilbur Chung. "Increasing Exploration: Evidence from International Expansion." Academy of Management Best Paper Proceedings (2005): D1–D6.