Does Spatial Ambidexterity Pay off? On the Benefits of Geographic Proximity between Technology Exploitation and Exploration

Abstract

While most scholars tend to agree that it is worthwhile for firms to strive for ambidexterity, less consensus exists on how to organize simultaneously for exploration and exploitation. Although firms increasingly conduct R&D activities in multiple locations and countries, prior ambidexterity research has ignored a geographical dimension in explaining the ambidexterity-performance relationship. In this article, we develop and validate the concept of ‘spatial ambidexterity’ which we define as the degree to which firms pursue technology exploration and exploitation in proximate locations. We argue that both activities benefit from proximity as firms will increase their ability to enact cross fertilization opportunities and synergies between explorative and exploitative technological activities. Relying on a panel dataset (1995-2003) of the technological activities of 156 large R&D intensive European, US and Japanese firms, we examine the degree to which technology exploration and exploitation activities are pursued simultaneously in similar or different geographical regions. Patent data are used to construct indicators of technology exploration and exploitation activities. Spatial ambidexterity is measured as the degree to which global technology exploration and exploitation activities are pursued in proximity. Our analysis confirms that firms exhibiting greater geographic proximity between technology exploration and exploitation activities display an elevated level of technological performance. Both technology activities of an explorative and exploitative nature appear to benefit from spatial proximity.