Knowledge exploitation, knowledge exploration, and competency trap

Abstract It is no surprise that knowledge exploitation and knowledge exploration have become the consistent theme in organizational learning literature. Strategy and organization theorists have similarly observed the dynamic capabilities anchored in a firm's ability to simultaneously exploit current technologies and resources to secure efficiency benefits, and creating variation through exploratory innovation. While some studies argue that excessive exploration or excessive exploitation can lead to a competency trap, the ‘competency trap’ component actually has received less empirical scrutiny. This paper provides a study about how competency traps are formed in the process of knowledge exploration and exploitation as well as their effects on business performance. The paper includes three main sections: First, the theoretical interpretation of the ‘competency trap’ construct is broadened by investigating the formation of competency traps based on organizational learning theory; second, factors leading to the formation of different competency traps are identified; and third, the relationship between an organization's competency trap and business performance is investigated. The article ends with a discussion of implications for the organizational learning literature. Copyright © 2006 John Wiley & Sons, Ltd.