Exploration and Exploitation Strategies in Industrial R&D

Abstract

This paper discusses four types of strategic decisions in technology management in established firms. We argue that more attention, both from a theoretical and an empirical perspective, should be paid to the strategic solutions which are implemented as a consequence of such decisions, as well as to the various types of interactions between strategic decisions and organizational solutions in industrial R&D. Here we apply management concepts derived from the industrial dynamics literature to R&D, and use a theoretical framework to describe and analyse four case studies concerning the largest R&D centres of Italian firms operating in different industrial sectors (telecommunications, automotive, communication and cables, and semiconductors). The different approaches that those private R&D centres have chosen in their recent past are compared and discussed. We analyse the patterns of exploration, technology transfer and commercialization that industrial R&D labs have adopted in order to combine short‐term objectives of exploitation of research results and competencies, and long‐term goals of exploration of new technological trajectories, based upon the use of two dimensions: first, the type of technological change, and second the control of complementary assets and the existence of a dominant design. We argue that the interpretation of the four case studies can represent a useful basis for discussion among R&D managers as well as innovation and technology management scholars.