Managing and Organizing Concurrent Knowledge Exploration and Exploitation

Both in theory and in practice insight is limited about how firms in dynamic environments could organize to manage concurrently the strategic processes of exploring new knowledge and exploiting existing knowledge. To contribute to this issue, a conceptual framework is developed which considers the ability to exchange knowledge across organization-units within a firm as a prerequisite to achieve both the goals of exploring and exploiting organizational knowledge. This framework shows how awareness and interest towards exchanging knowledge across units, internal knowledge transfer mechanisms, prior knowledge of the organization units and their organization form, influence the processes of exploration and exploitation within the firm. The conceptual framework and the propositions are illustrated by two case studies of Novartis, one of the leading European life-science companies. The first case is about exchanging knowledge between Novartis’ divisions in the actual organization context. The second case is about an experiment of Novartis’ top management to stimulate the horizontal exchange of knowledge via the company’s intranet. These two contexts of ‘organizationenabled’ and ‘web-enabled’ knowledge exchange appear to be complementary. While in the first case mainly the exploration of new knowledge is stimulated by exchanging tacit knowledge, the second case is more conducive to exploiting existing knowledge by exchanging explicit knowledge. As such, the conceptual framework and cases give insight into (1) possibilities about how firms could organize to deal with the tension between knowledge exploration and exploitation, (2) how managing the organizational antecedents of horizontal knowledge exchange can contribute to changing a firm’s actual mixture of exploration/ exploitation processes into a more desired mixture, and (3) about the possible role of IT in this respect.