Exploration and Exploitation in Early Stage Ventures and SMEs

This volume of Technology, Innovation, Entrepreneurship and Competitive Strategy seeks to enhance our understanding of the implications of Exploration and Exploitation activities in early-stage ventures and SMEs. The various contributions explore how organizations engage the general paradox of having to balance their exploration and exploitation activities. This paradox may intensify in such firms as they generally lack an abundance of resources and capabilities driving them away from balancing these activities and towards either exploration or exploitation. Despite a growing body of research on exploration and exploitation, scholars have tended to study the phenomena from a narrow perspective mostly within larger, well-established organizations. However, it is still far from obvious how top management within Small-to-medium sized enterprises (SMEs) are to address the liability of newness and seek access to resources and capabilities relevant for the pursuit of exploration and exploitation. Resource sourcing and allocation decisions are particularly critical in SMEs and must be aligned with the firm's fundamental strategic intent and growth model. For example, organizations following a stage-model by first developing a domestic market and then expanding globally will require different bundles of resources and capabilities than organizations that are designed to conquer the global arena. Indeed, management systems will likely need to adapt across the firm life-cycle such that it can fulfill an explorative function in the earlier stages and an exploitative function in later ones. Hence, early-stage ventures have to master the resource re-allocation process which is contingent on their access to capital. Across the firm life-cycle, venture capitalists can tap into the growth potential of early-stage ventures, a key factor behind their successful short-term innovative performance as well as long-term survival.