Building organizational knowledge in corporate entrepreneurship: role of time and commonality

Abstract

Purpose

How much should existing firms explore while venturing into new businesses? This study builds an organizational learning-based model for corporate entrepreneurship by applying and extending the seminal March (1991) simulation model. This paper aims to analyze the impact of the exploitation-exploration mix (commonality) on organizational knowledge across the short- and long-term.

Design/methodology/approach

The study uses a two-stage stochastic simulation approach to model adaptive processes related to learning within organizations. In Stage 1, an organization with no initial knowledge is allowed to achieve equilibrium against the realities associated with the first business. In Stage 2, a new reality is introduced, corresponding to the new business. The new corporate venture is, then, allowed to achieve a new equilibrium knowledge by varying commonality across time.

Findings

The findings suggest that, in the long term, increasing exploitation builds optimal knowledge only when the new and old businesses are very similar. Organizations where employees learn slowly from the organization (low socialization rate) while the organization learns fast from employees (high organizational learning rate) generate optimal steady-state organization knowledge. However, firms face a temporal dilemma. In the short term, firms with low socialization rates and high organizational learning rates fare worse than other configurations.

Research limitations/implications

Corporate entrepreneurship efforts encompass various conflicts between knowledge sharing and temporality. These conflicts are especially important in technology-driven industries and firms. The study adds a detailed understanding regarding various learning configurations using which firms can respond to new business opportunities and their impact (across time) on knowledge.

Practical implications

The study provides important inputs to managers and academics, alike, on the tricky nature of managing and maximizing corporate entrepreneurship efforts in knowledge-intensive and technology industries. This paper isolates specific firm knowledge-based dilemmas on the optimal approach toward corporate entrepreneurship ventures over time and commonality.

Originality/value

The study extends March’s seminal 1991 study on a single business to corporate entrepreneurship settings using a set of stochastic simulations. In doing so, the study adds to the corporate entrepreneurship as well as knowledge management literatures. This paper explores various scenarios emerging from time, organizational code commonality and match between business realities and arrive at optimal knowledge configurations for each scenario.

Citation

Snehvrat, S. and Dutta, S.K. (2025), "Building organizational knowledge in corporate entrepreneurship: role of time and commonality", International Journal of Organizational Analysis, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/IJOA-04-2024-4419