Exploitative-explorative strategy in IJVs: moderating role of partner competition and coordination

Abstract

Despite the proliferation of research on firms' exploitative and explorative innovation strategies, extant research focus remains to be limited to an independent entity; under-examined is how specific attributes of International Joint Ventures (IJVs), an unique organization form, shape the relationship between innovation strategies and performance. Drawing on the exploitation/exploration paradigm and literature on partner relational dynamics, we develop a framework suggesting that IJV partners' competition and coordination significantly influence the efficacy of innovation strategies on innovation performance, mainly through their influence on resource allocation and utilization. Empirical tests on a sample of 198 IJVs in China support the proposed framework. We find that the effectiveness of exploitative and explorative strategies is contingent on partner competition and coordination. In particular, exploitative strategy will be effective under high partner control asymmetry, high market similarity, and high contractual coordination. In contrast, explorative strategy will be effective under low control asymmetry, low contractual coordination, and high relational coordination. Our study provides novel insights into how to manage IJVs' innovation strategies in the context of IJVs.