Balancing exploration and exploitation in inventions: Quality of inventions and team composition

Abstract

Building upon the exploration and exploitation framework, this study investigates the antecedents and consequences of inventions that balance new and existing knowledge. Using patent data from the semiconductor industry, this paper evaluates the quality of inventions that involve different levels of exploration. It finds that balanced inventions that combine a firm’s existing knowledge with new knowledge are of higher quality than inventions that are either over-exploratory or over-exploitative. Furthermore, this study investigates how teams can be composed to create balanced inventions. Results show that teams of a moderate size and with a moderate level of invention experience (both general and specific) are more likely to create inventions that balance exploration and exploitation.