Managing the tensions between exploration and exploitation: The role of time

Research SummaryOrganizational ambidexterity reflects an organization's capacity to balance the pursuit of exploration and exploitation. Although the role of time has been central to ambidexterity theory, studies incorporate time in myriad ways, leading to an unclear understanding of how different aspects of time influence the relationship between ambidexterity and performance. We conduct a meta-analysis of 52 studies involving more than 13,000 organizational observations and find that the performance effects of ambidexterity are stronger among older firms and firms that simultaneously balance exploration and exploitation throughout the organization. However, we also find that the ambidexterity-performance relationship is weaker when ambidexterity is measured dynamically and when linked to long-term performance. Managerial SummaryAlthough academics have long espoused that firms should balance investments between exploration and exploitation activities because doing so improves firm performance, little research has explicitly modeled the role of time in this balance. We combined all known evidence to assess the role of time on balancing and performance. The two key takeaways for entrepreneurs and managers are that, on average, balancing leads to stronger financial performance for (a) older organizations and (b) firms that simultaneously balance activities throughout the organization. Managers may not see the strongest benefits from such a balance when attempting to influence long-term performance or when this balance occurs at different times or places inside the organization.