Exploration, Exploitation, and Growth Through New Product Development: The Moderating Effects of Firm Age and Environmental Adversity

This study investigates how firm age and environmental adversity influence exploration and exploitation and whether the balance between them increases new product development. We also examine if new product development in new and mature firms leads to equivalent growth rates. Empirical results obtained from a survey of small- and medium-sized technology-based manufacturing firms in Korea show that while relative exploration generally remains lower in mature firms than in new firms, it more rapidly increases in mature firms when they operate in adverse environments. Interestingly, our results show that mature firms achieve lower growth rates through new product development than new firms in adverse environments. These empirical findings advance our understanding of the age-dependent antecedents and consequences of new product development.