Untangling the effects of overexploration and overexploitation on organizational performance: The moderating role of environmental dynamism

Because a firm's optimal knowledge search behavior is determined by unique firm and industry conditions, organizational performance should be contingent oil the degree to which a firm's actual level of knowledge search deviates from the optimal level. It is thus hypothesized that deviation from the optimal search, in the form of either overexploitation or overexploration, is detrimental to organizational performance. Furthermore, the negative effect of search deviation oil organizational performance varies with environmental dynamism: that is, overexploitation is expected to become more harmful. whereas overexploration becomes less so with all increase in environmental dynamism. The empirical analyses yield results consistent with these arguments. Implications for research and practice are correspondingly discussed

Perceived environmental uncertainty; PEU; REF 2014

NoAn important contribution to the literature on perceived environmental uncertainty (PEU) is Milliken’s distinction between state uncertainty, effect uncertainty, and response uncertainty. However, despite its appealing logic in capturing the types of uncertainty managers may experience as they seek to understand and respond to changes in an organization’s environment, there has been no full and rigorous psychometric development and testing of scales to measure the three constructs. Using a two-phase empirical study, this research seeks to develop and test such scales in terms of dimensionality, reliability, and validity (including nomological validity). The results suggest that managers do make a meaningful distinction between different types of uncertainty, that it is worthwhile measuring all three constructs (as they have differential impacts on outcome variables), and that there are linkages between them. Managerial contributions and implications for future research are also discussed