Competence Exploration and Exploitation and Innovation

Product innovation is critical for firms to sustain their competitive advantages, and firms need to exploit existing competencies and explore new ones to accomplish innovations successfully. As a result, both competence exploration and competence exploitation play significant roles on the innovations. However, as to the impacts of competence exploration and exploitation on innovation, there are conflicting views. This study provides a more nuanced and in-depth analysis on these relationships that the relationship between competence exploration and radical innovation is positive, and that between competence exploration and incremental innovation is inverse U shaped; in addition, there is a positive relationship between competence exploitation and incremental innovation and an inverse U shaped relationship between competence exploitation and radical innovation.