infonet-economy

Research on ambidexterity suggests that managers should place equal emphasis on exploitation and exploration activities. Based on system dynamics modeling, we were able to support the general ambidexterity hypothesis that a decision-making focus favoring either exploitation or exploration at the expense of the other yields negative outcomes. However, our findings challenge the assumption that an equal emphasis on the two activities is most beneficial. Instead, we find that managers' operational decisions biased towards exploitation lead to higher long-term profits than an identical preference for exploitation and exploration. Such a bias generates higher profits in the short run, leads to higher disposable funds for future investments, and increases available resources for both exploitation and exploration in the long run.