RESOLVING THE COMPETENCE EXPLORATION-EXPLOITATION PARADOX IN NEW PRODUCT INNOVATION: THE EFFECTS OF NATIONAL AND ORGANIZATIONAL CULTURES

The question of how firms deal with the competence exploration-exploitation paradox in new product innovation remains under-research. We conceptualize and empirically examine the interaction effects of national and organizational cultures on competence exploration and exploitation, which in turn affect radical and incremental product innovation. Based on a survey of 150 UK and 242 Chinese high-tech firms, we find that organizational culture (i.e. organizational diversity and shared vision) plays a more important role than national culture (i.e. individualism-collectivism) in resolving the exploration-exploitation dilemma in new product innovation. Specifically, in a collective society (i.e. China), a high level of organizational diversity is required for competence exploration, while in an individualistic society (i.e. UK), a high level of organizational diversity is negatively associated with competence exploitation. Moreover, shared vision is required for both competence exploration and exploitation in both UK and Chinese firms.