The exploration & exploitation dilemma revisited: How does it apply to innovation in professional service firms?

The simultaneous management of exploratory and exploitative learning has become a central topic in innovation management research. Although several researchers presented pathways how organizations can approach this difficult task, our literature review reveals that this research mainly focuses on innovation in the manufacturing context. Clearly, not only in manufacturing but also within services, and especially within Professional Service Firms (PSFs), the exploration/exploitation dilemma is highly present as PSFs need to simultaneously sense emerging markets and to accomplish daily project-work. However, PSFs own distinct characteristics like project-organization, or client-co-production and it has not been explored yet how prior findings on exploration/exploitation may apply to this idiosyncratic context. Hence, we inquire via exploratory case-study research, how PSFs can achieve a good balance between exploration and exploitation. More specifically, we inquire on the basis of first results of two studies in engineering and business consultancies, how these PSFs balance exploratory and exploitative learning. First evidence shows that those enablers for ambidexterity which have been found in other industries also may apply to the PSF context. Further, we perceived difficulties for PSF to engage in active project portfolio management in order to balance exploitative with exploratory project assignments. Finally, the data reveals tentative themes that the enablers for ambidexterity may exist either inside the PSF or inside the respective client-organization, depending upon where the PSF's "Laboratory" is located.