Publication Type
Journal Article
Version
submittedVersion
Publication Date
7-2016
Abstract
The relationship between firm age and innovation has been an enduring topic of interest. We contribute to this research by studying how the effect of firm age on the quality of explorative and exploitative innovations is affected by the firm-specific and industry tenure of the talent resources (employees) that the firm utilizes. We start with the baseline predictions that firm age is related to the development of better exploitative innovations and worse explorative innovations. However, the tenure of employees intervenes in these relationships, by way of bringing in new knowledge, mental models, and beliefs. We predict that longer firm-specific and industry tenure of employees enhances the positive effect of firm age on the quality of exploitative innovations, while amplifying the negative effect of firm age on the quality of explorative innovations. In addition, for both the baseline and the moderating effect, we also formulate a prediction comparing the quality of explorative innovations with those of exploitative innovations. We find support for the moderating effects of human capital tenure for the quality of explorative innovations, but not for the quality of exploitative innovations. We reason that the latter may be due to the need for some level of exploration even in exploitative innovations, at least in the setting we study—the video game industry. Our results suggest that the negative effects of firm age on the quality of explorative innovations can be mitigated by talent resources (employees) the firm uses who have lower firm-specific and industrywide tenure.
Keywords
exploration, exploitation, innovation, inertia, creative industries
Discipline
Strategic Management Policy | Technology and Innovation
Research Areas
Strategy and Organisation
Publication
Organization Science
Volume
27
Issue
4
First Page
873
Last Page
892
ISSN
1047-7039
Identifier
10.1287/orsc.2016.1067
Publisher
INFORMS (Institute for Operations Research and Management Sciences)
Citation
TSCHANG, F. Ted and Gokhan ERTUG.
New blood as an elixir of youth: Effects of human capital tenure on the explorative capability of aging firms. (2016). Organization Science. 27, (4), 873-892.
Available at: https://ink.library.smu.edu.sg/lkcsb_research/5036
Copyright Owner and License
Authors
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.
Additional URL
https://doi.org/10.1287/orsc.2016.1067