Ph.D Thesis

Ph.D StudentBerenson Ayala
SubjectThe Effect of Short and Long Term Performance Feedback on
Exploitation and Exploration Strategies: The
Moderating Role of Top Management Team's
Motivations and Learning
DepartmentDepartment of Industrial Engineering and Management
Supervisors PROF. Shmuel Ellis
Full Thesis textFull thesis text - English Version


In dynamic environments, the pursuit of both exploration and exploitation strategies is a major factor in determining an organization’s survival and long-lasting performance. Exploration and exploitation strategies differ in their goals’ time horizon. Whereas exploration strategy promotes future performance, exploitation strategy improves current performance. Therefore, top management teams (TMTs) continuously learn from performance feedback (PF) and dynamically manage the balance between organizations’ exploration and exploitation strategies. In this regard, the literature hasn’t considered how TMTs learn from different types of PF, namely, short- and long-term PF. To remedy this gap, I examine the influence of learning from short- and long-term performance feedback (PF) on the decision to advance exploration vs. exploitation strategies, and the moderating effects of the top management teams’ epistemic and financial motivations, as well as their learning capabilities. My analysis is based on survey data from 131 top executives representing 72 high-technology organizations in Israel. The findings demonstrate that the effect of learning from PF on the decision to promote exploration as opposed to exploitation strategies is moderated by the attributes of the TMT. Moreover, I find that under the moderation effect of TMT attributes, managers react differently to short- and long-term PF by promoting exploitation or exploration strategies respectively. This implies that TMTs tend to shift the balance of exploration-exploitation strategies in response to the different short- or long-term challenges organizations face. My study offers novel insights to the exploration-exploitation literature, organizational learning from PF literature and top management team literature. Perhaps most significantly, my findings stress that future research should consider the unique characteristics of the TMT as well as varied organizational goals when examining organizational learning and their varied strategic outcomes.