Coping with uncertainty - exploration, exploitation, and collaboration in R&D

This paper studies the formation of and the motives for research and development (R&D) activities. In it, we explore the linkages between explorative and exploitative R&D activities and the different types of governance structures firms use when organising R&D. Additionally, we analyse the relationship between different kinds of firm-external uncertainties arising from the operating environments and the organisation of R&D activities. Finally, we scrutinise the impact of the collaboration mode on a firm's innovative performance, and stress the important role of knowledge sharing as a generator of success in innovative performance. We employ survey data from our sample of 299 Finnish companies. The findings indicate that a firm's choice of R&D governance structure is partly affected by the selection of an explorative or exploitative strategy, which in turn depends on the degree of firm-internal uncertainty. External dynamism is an additional factor affecting the choice of the preferred governance structure.