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How CEO exploration orientation affects firm performance

How CEO exploration orientation affects firm performance
How CEO exploration orientation affects firm performance
In this study, we aim to challenge the traditional assumption that balancing exploration and exploitation results invariably in superior performance. Specifically, we draw on the attention-based view to argue that CEO relative exploration orientation will mobilize efforts towards allocating valuable resources to R&D activities that will, in turn, allow the firm to renew its resource and product portfolio and thereby attain superior performance. We further build on agency theory and identify two central corporate governance mechanisms that operate as boundary conditions in the way CEO relative exploration orientation is channeled to performance through R&D intensity: CEO power, which strengthens this indirect relationship, and outside board members’ power that conversely attenuates these indirect effects. We find support for our predictions using a comprehensive panel dataset of 283 manufacturing, information, and professional, scientific and technical services firms in the S&P 500 index from 2007 to 2013. Our study, therefore, offers a new approach in understanding the relationship between exploration, exploitation and performance.
2151-6561
14980
Kostopoulos, Konstantinos christos
a6d0bc7f-01a7-4e2d-bf0b-8c7be6febbf5
Syrigos, Evangelos
b1c15e33-35b2-4c6a-ba96-02938a9b5174
Andriopoulos, Konstantinos
3fbd0608-3dd2-4570-9f37-506af2328011
Filatotchev, Igor
0b0bb28c-d536-41be-81f6-4e89634ea5a1
Kostopoulos, Konstantinos christos
a6d0bc7f-01a7-4e2d-bf0b-8c7be6febbf5
Syrigos, Evangelos
b1c15e33-35b2-4c6a-ba96-02938a9b5174
Andriopoulos, Konstantinos
3fbd0608-3dd2-4570-9f37-506af2328011
Filatotchev, Igor
0b0bb28c-d536-41be-81f6-4e89634ea5a1

Kostopoulos, Konstantinos christos, Syrigos, Evangelos, Andriopoulos, Konstantinos and Filatotchev, Igor (2017) How CEO exploration orientation affects firm performance. Academy of Management Proceedings, 2017 (1), 14980. (doi:10.5465/AMBPP.2017.14980abstract).

Record type: Article

Abstract

In this study, we aim to challenge the traditional assumption that balancing exploration and exploitation results invariably in superior performance. Specifically, we draw on the attention-based view to argue that CEO relative exploration orientation will mobilize efforts towards allocating valuable resources to R&D activities that will, in turn, allow the firm to renew its resource and product portfolio and thereby attain superior performance. We further build on agency theory and identify two central corporate governance mechanisms that operate as boundary conditions in the way CEO relative exploration orientation is channeled to performance through R&D intensity: CEO power, which strengthens this indirect relationship, and outside board members’ power that conversely attenuates these indirect effects. We find support for our predictions using a comprehensive panel dataset of 283 manufacturing, information, and professional, scientific and technical services firms in the S&P 500 index from 2007 to 2013. Our study, therefore, offers a new approach in understanding the relationship between exploration, exploitation and performance.

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More information

Published date: 1 August 2017

Identifiers

Local EPrints ID: 495723
URI: http://eprints.soton.ac.uk/id/eprint/495723
ISSN: 2151-6561
PURE UUID: bcfe5e71-f10b-4b40-8360-abab61bbdb57

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Date deposited: 20 Nov 2024 18:13
Last modified: 20 Nov 2024 18:13

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Contributors

Author: Konstantinos christos Kostopoulos
Author: Evangelos Syrigos
Author: Konstantinos Andriopoulos
Author: Igor Filatotchev

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