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ABSTRACT
There is a strong interrelationship between innovation and entrepreneurship and central in the founding of a new business is the focus on innovation. Start-ups, as innovative organizations per se, face extreme tensions that evolve around their intense search for new knowledge versus their need to generate revenues to ensure survival in the short run. At the same time, start-ups face with several constraints affecting their dynamic learning processes, in particular time constraints. Exploration and exploitation are twin processes both requested to sustain learning and innovation over time. This research aims at understanding whether and how start-ups manage the tension between exploration and exploitation during their life.
Keywords: Start-up life, exploration and exploitation, ambidexterity, learning organization, case studies.
1. Introduction
According to the well-known definition by Steve Blank (Blank, 2010), a start-up is a company, a partnership or a temporary organization designed to search for a repeatable and scalable business model. Through the start-up phase, new ideas are brought to the market and transformed in economically sustainable enterprises.
Start-ups face extreme tensions that evolve around "their intense intellectual curiosity for new technology and knowledge versus their need to generate income and revenues to ensure survival in the short run" (Groen et al 2008). They continuously manage tensions to achieve various types of goals: "long versus short term, exploration versus exploitation, speed versus novelty, manufacturability versus ever-changing demands" (Groen et al 2008). These tensions characterize the life of start-ups as a journey (Van der Ven et al., 1989), in which different contingencies can occur, determining the need to learn and adapt (Deakins, Freel 1998).
Learning and innovation are the premises for the success of start-ups (Almeida, Kogut 1997; Almeida et al. 2003). As Hitt et al. (2001) suggest, "there is a strong interrelationship between innovation and entrepreneurship".
Central in the process of learning and innovation is the balance between exploration and exploitation. As claimed by the seminal paper of James March of 1991 and as discussed by the following debate in the literature (Gupta et al 2006), exploration and exploitation are twin processes both requested to sustain innovation over time (Benner, Tushman 2002; He, Wong 2004). Two main strategies for balancing exploration and exploitation (Gupta et al. 2006) have been documented in the literature: the...