Exploration/exploitation and Firm Performance Relationship: Literature Review

Despite the considerable amount of studies on exploration and exploitation and their relationship with firm performance, there is no common point of view regarding the phenomena. This work is aimed at a critical review of scientific works on the identified issues based on the empirical analysis of factors influencing exploration and exploitation as well as the relationship between exploration and exploitation and firm performance, classification of the main approaches for investigation of this scientific problem, and suggesting directions for further research. Using the systematic literature review method the author has analyzed 143 articles from 19 leading journals in the area of management, business, and entrepreneurship in the period from 1991 to 2019. As a result, the main research directions were distinguished, which investigate (1) formation of exploration and exploitation in organizations, (2) the direct relationship between exploration and exploitation and firm performance; (3) moderators, and (4) mediators in the relationship between exploration and exploitation and firm performance. Moreover, based on the analysis of the literature, the author classified approaches for exploration and exploitation definition. The author highlights the following perspective research directions: (1) investigation of the institutional environment influence on both formation factors and relationship between exploration / exploitation and firm performance, (2) investigation of exploration and exploitation in the context of small and medium business and (3) analysis of the stages of business structures development through exploration and exploitation phenomena.