How Firms Undertake Organizational Changes to Shift to More-exploratory Strategies: A Process Perspective

Firms’ organization of exploratory research has interested scholars of both research policy and organization theory, yet we still know too little about how firms undertake organizational changes to shift to more-exploratory strategies. Adopting a process perspective, we explore this question through a longitudinal, comparative case study of a Danish pharmaceutical firm and a French-Italian semiconductor firm. We demonstrate how firms adjust their organizational structures to increase exploration, a process of constantly addressing countervailing organizational and interorganizational demands by deploying, combining, and changing balancing mechanisms at the organizational and managerial levels. Moreover, our findings show that firms’ different organizational structures affect their adaptations to exploratory outcomes. These findings advance theory because they illuminate the dynamic interplay between firms’ adjustments of organizational structures and their movements toward more exploration. We use a recursive process model to theorize our findings.