Do new ventures explore, exploit or both? A case-based analysis of six innovative Italian start-ups

Abstract

Purpose

The purpose of this paper is to contribute to the debate on exploration–exploitation trade-off in the context of new ventures creation, where, particularly at the empirical level, there is a limited understanding of whether and how this trade-off is achieved and how start-ups performances are affected by the way in which they face the exploration–exploitation dilemma.

Design/methodology/approach

A qualitative case study approach has been adopted as a methodology to conduct the research. Six Italian innovative start-ups were selected and analyzed through in-depth interviews with founders and data collection to understand whether and how start-ups adopt exploration and exploitation solutions to face critical events in their business lives.

Findings

The most evident result of this study is that start-ups adopt more frequently a temporal separation of exploration and exploitation activities as the preferred mode for balancing learning and innovation tension. They do not seem to exhibit a defined or a common path in the way they realize the temporal separation between exploration and exploitation. Instead, they mostly oscillate. The ambidextrous solution is selected in only a few cases and not consecutively. The pre-entry knowledge profile seems to influence the choice of start-ups at the beginning of their lives.

Practical implications

This research has implications for the whole start-up’s ecosystem, comprising incubators/accelerators, advisors, intermediaries, venture capitalists, new venture founders and policymakers. For example, by knowing the typology of knowledge and competence gaps start-ups usually aim to fill when they face particular events, intermediaries (such as incubators) could better plan initiatives and strategies supporting new ventures in the process of growth and stabilization. Furthermore, the venture capitalists can benefit from this research, by planning specific interventions for each critical event based on specific resources and competencies gaps and guiding for more promising start-ups.

Originality/value

This paper presents a novel application of entrepreneurial learning approach in the context of new venture creation. To reach this aim, a classification of exploration/exploitation solutions has been developed.

Citation

Rippa, P., Ponsiglione, C., Bocanet, A., Capaldo, G. and Zollo, G. (2019), "Do new ventures explore, exploit or both? A case-based analysis of six innovative Italian start-ups", International Journal of Entrepreneurial Behavior & Research, Vol. 25 No. 7, pp. 1515-1536. https://doi.org/10.1108/IJEBR-12-2018-0817