Case Studies in Knowledge Intensive Entrepreneurship
Edited by Maureen McKelvey and Astrid Heidemann Lassen
Chapter 2: How tensions between exploration and exploitation drive the development process of KIE: the case of Sensor Inc.
One of the topics often highlighted in both entrepreneurship literature and innovation management literature is related to the difficulties experienced by many knowledge intensive entrepreneurship (KIE) ventures in creating balance between research and development (R & D) activities and activities that focus on bringing products efficiently to market (for example, Lassen and Nielsen, 2009). The difficulties in making a transition from being primarily R & D oriented to being market oriented are found in the fact that, for example, the human resources and the organizational structures and processes that favor research are very different from those required for efficient production. This conflict is what March (1991) referred to as the conflict or tension between exploration and exploitation; both processes are greatly needed, but they have fundamentally different objectives, which require very different mindsets and set-ups. In particular, in KIE ventures these opposing forces often cause the firm to change once the technology is mature enough and ready for production. Typically supported by venture capital, the transition from R & D facility to production company is a very difficult stage in the KIE venturing process. In this case study, we describe the development process of a small high-tech venture, which originated as a corporate spin-off company based on a radical rethinking of the technology for carbon dioxide (CO2) sensoring. The case study emphasizes how the tensions between exploration- and exploitation-oriented interests influence the strategic development of a venture. In this sense, the strategic development of the venture is based on dynamic development, flexibility and the ability to design opportunities in step with development.
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