Prof. JP Eggers (New York University)

Programm

• Datum: 15.12.2010
  Zeit: 12:00 UHR
  Ort: Schackstraße 5, Zi. 307

A Question of Timing: Intertemporal Performance Differences for Exploration and Exploitation in the Mutual Fund Industry

This study investigates the performance implications of exploration, exploitation, and ambidexterity through the lens of March's view of the temporal differences between exploration and exploitation. We use the distinction that exploitation produces returns in the short-term while exploration produces long-term benefits to offer a specific sequencing perspective - that exploration provides little to no near-term benefits but is beneficial in that it sets up future opportunities to exploit the knowledge gained. We use data on U.S. mutual fund companies over a forty-year period to create measures of short-term and long-term exploration and exploitation. The results offer support for the sequential view of the returns to exploration and exploitation, but also suggest a limited opportunity for especially focused firms to be successful. We argue that the explicit consideration of the timing differences between the returns to exploration and exploitation is important to further develop our understanding of these concepts.