Placing the choice between exploration and exploitation in context: a study of geography and new product development

Beginning with seminal research on organizational learning and continuing with the exploration versus exploitation and regional economics literatures, knowledge search has become central to innovation research. Drawing from these contributions, we examine the impact of a firm's geographic location munificence on benefits received either from exploiting its local knowledge base or from exploring for new knowledge beyond its local geographic boundaries. Results indicate that firm geographic context moderates the relationship between search strategies and new product development. In particular, firms located in munificent geographic locations benefit from geographically localized and international searches, while firms in less munificent geographic locations benefit from balanced and domestic search strategies. Copyright © 2009 Strategic Management Society.