Entrepreneurial Exploration and Exploitation in Family Business

Abstract

In entrepreneurship, entrepreneurial exploration and exploitation have been considered central activities for the survival, growth, and renewal of businesses. In this review we systematically examine research on these topics in family business. Our review comprises 59 publications examining exploration and/or exploitation in family firms published between 2001 and 2015 in 32 publications. The article highlights the contributions of family business in this area and reveals additional areas where a stronger connection between these concepts and the family business field could be developed. We suggest several new research directions that may enhance the understanding of these entrepreneurial activities in family business.

Keywords

family business entrepreneurial exploration and exploitation systematic review

Introduction

Entrepreneurship and family business broadly share a means–end relationship. The family business field is predicated on the desire of the family to keep the business family owned (reflected in control, leadership, and involvement in management) and led over successive generations (Chua, Chrisman, & Sharma, 1999). Entrepreneurship has developed as an understanding of the process of opportunity exploration and exploitation relative to changes in the external environment, leading to relatively robust and sustainable business propositions (Shane & Venkataraman, 2000). Thus, entrepreneurship serves as the “means” to the family business’ “end” of long-term survival, sustainability, growth, and renewal. It is therefore not surprising that family business and entrepreneurship are frequently linked together (e.g., Brockhaus, 1994). The long-term ownership of a family business presumes a degree of competency in entrepreneurial exploration and exploitation, without which the family business could not be sustained as a family business (Miller & Le Breton-Miller, 2006). Within the family business field, entrepreneurial exploration and exploitation are represented in and related to outcomes, such as succession (Marchisio, Mazzola, Sciascia, Miles, & Astrachan, 2010), innovation (Carnes & Ireland, 2013; Zahra, 2005), competitive advantage (Zahra, Hayton, Neubaum, Dibrell, & Craig, 2008), wealth creation (Hitt, Ireland, Camp, & Sexton, 2001; Lumpkin, Steier, & Wright, 2011), firm performance (Brannon, Wiklund, & Haynie, 2013), and survival (Moss, Payne, & Moore, 2014).

Parallel to the incorporation of entrepreneurship in the family business field, the field of entrepreneurship has also evolved rapidly in the past two decades. We focus on entrepreneurial exploration and exploitation because these have emerged as central and distinct constructs within the entrepreneurship field (Alvarez & Barney, 2007). Entrepreneurial exploration and exploitation have been distinguished from other entrepreneurial actions because they aim at creating resources and finding new applications for existing resources that are not fully visible due to dispersed knowledge about the means–ends relationship (e.g., see Hayek, 1945; Lee & Venkataraman, 2006). These actions have been conceptualized and are represented by a variety of theoretical perspectives and philosophies, for example, arising from a subjective view of entrepreneurship, as represented by effectuation (Sarasvathy, 2001), the focus toward opportunity creation versus discovery (e.g., Alvarez & Barney, 2007), and the strategic nature of advantage-seeking behavior (Hitt et al., 2001), with potential applications and extensions to the field of family business.

In this article, we focus on the range of activities that constitute entrepreneurial exploration and exploitation and the extent to which these activities have been modeled and tested in family businesses. This approach also serves inter alia to highlight areas where some family firms, in conjunction with other contingencies (e.g., environmental dynamism, generation in charge, etc.), may have unique advantages or obstacles in pursuing one or both of these activities.

The rest of the article is structured as follows. We first describe the extant understanding of entrepreneurial exploration and exploitation to provide a foundation for situating this work in the context of family business research. We then discuss our methodology for the review, report our results, and suggest some promising areas of future research. We conclude with an overview of the contributions of our review primarily to family business research and broader conversations in entrepreneurship.

Exploration and Exploitation in Entrepreneurship

“Entrepreneurship involves identifying and exploiting opportunities” (Hitt, Ireland, Sirmon, & Trahms, 2011, p. 59). These specific actions of exploring novel opportunities and producing value from them are the foundation of wealth creation and sustained competitive advantage through entrepreneurship (Hitt et al., 2001; Ireland, Hitt, & Sirmon, 2003; March, 1991; Venkataraman & Sarasvathy, 2001). An “opportunity” is a situational phenomenon that is influenced by environmental, organizational, and individual factors. It is the end product of an idea that is developed from incomplete information and relies on constructing patterns and concepts that can bridge the gap between nebulous ideas and an opportunity worth exploring (Hunter, 2013). Implicit in the theme of “opportunity” are the actions necessary to identify these opportunities, that is, exploration (Shane & Venkataraman, 2000) and the necessary pursuit and exploitation of the opportunity that follows (Companys & McMullen, 2007; Singh, 2001). To establish the boundaries of this review and provide clarity to the research in family business focusing on entrepreneurial exploration and exploitation, we first offer definitions of each concept as each is a distinct activity. We then articulate the distinctions, benefits, and trade-offs associated with each. To be clear, our intent here is not to offer a new definition of entrepreneurial exploration and exploitation but rather to identify a clear and workable definition of each in order to review family business literature.

We first conducted an extensive review of our selected concepts in the entrepreneurship literature. In this review we found that there appears to be a broad consensus around March’s (1991) seminal work on the concepts of exploration and exploitation and Shane and Venkataraman’s (2000) framework for the field of entrepreneurship consisting of the existence, discovery, and exploration of entrepreneurial opportunities. We review these concepts below.

Exploration

Exploration entails a shift away from an organization’s current knowledge base and skills, directed at new opportunities, technical skills, market expertise, and/or external relationships (Lavie & Rosenkopf, 2006; W. K. Smith & Tushman, 2005). Activities relating to exploration often include searching, risk-taking, discovery, experimentation, prototyping, and flexibility (March, 1991). The focus of such activities is on the ability to reorient organizational competencies toward new opportunities as a source of competitive advantage (Shane & Venkataraman, 2000). The exploration of entrepreneurial opportunities involves reorienting strategies within the organization and is focused on opportunities directed at discovering new means–ends relationships as opposed to pursuing optimization within existing means–ends frameworks (Kirzner, 1997; Shane & Venkataraman, 2000). Although exploration is characterized by high costs in the short term, it is vital to the long-term performance and survival of the firm. This is because new opportunities are uncertain and may involve a long gestation period before they pay off (Bierly & Daly, 2007). While exploration identifies new opportunities, it needs to be complemented with exploitation to leverage existing competencies and reap the rewards (March, 1991; Shane & Venkataraman, 2000).

Exploitation

Alternatively, exploitation is focused on delivering expected outcomes within the organization by using a firm’s current core capabilities (March, 1991; Shane & Venkataraman, 2000). The effort for entrepreneurs here is to strengthen core competencies and leverage them across related existing opportunity sets within the organization (Shane & Venkataraman, 2000). Activities relating to exploitation often include or have the goal(s) of improving quality and efficiency and fostering existing knowledge, skills, technologies, and capabilities in the organization (Benner & Tushman, 2002; Lavie, Stettner, & Tushman, 2010). Exploitation activities enable an organization to benefit from the continuity provided by using known and successful strategies (Lamberg, Tikkanen, Nokelainen, & Suur-Inkeroinen, 2009), which primarily result in short-term gains (Benner & Tushman, 2002). Exploitation alone, however, is not sufficient for long-term survival; without the pursuit or willingness to explore new opportunities, survival is not assured as external environments change while the organization remains static (Lavie et al., 2010; March, 1991). It is therefore important to balance exploitation activities with exploration activities.

Relationship Between Exploration and Exploitation

While exploration and exploitation could be seen as opposing activities along a continuum (Lavie et al., 2010), both are important dimensions of entrepreneurial actions that affect firm performance (e.g., Gupta, Smith, & Shalley, 2006) and interact with the firm’s environment (e.g., munificence and dynamism; Jansen, Van den Bosch, & Volberda, 2005) and organizational resources (Lavie et al., 2010; March, 1991). Furthermore, they are guided by management capabilities and preferences (Helfat & Peteraf, 2009). However, while firms may need to do both, exploration/exploitation decisions involve trade-offs that firms may choose deliberately. For example, firms trade off short-term productivity for long-term innovation by devoting specialized resources toward new knowledge and prospective opportunities instead of allocating resources toward leveraging currently available knowledge to address immediate needs (March, 1991). Similarly, by choosing resources to refine existing technologies rather than developing new skills and capabilities, firms seek to achieve immediate reliability but risk becoming irrelevant in the future (Holmqvist, 2004; Lavie et al., 2010). However, given the inherent inconsistencies required to pursue each entrepreneurial activity (Raisch & Birkinshaw, 2008), these tensions can be eased by implementation across loosely coupled units (Koza & Lewin, 2000), leveraging of external resources and partnerships (Katila & Ahuja, 2002), and/or effective governance structures and designs (Miller & Le Breton-Miller, 2006). In doing so, firms are potentially able to offset these trade-offs and pursue a more balanced or ambidextrous strategy (Helfat & Peteraf, 2009). The ability to achieve some level of organizational ambidexterity by pursuing both exploration and exploitation simultaneously is necessary to achieve efficiency (March, 1991), create new knowledge (March, 1991; Tushman & O’Reilly, 1996), spur innovation (O’Reilly & Tushman, 2008), ensure successful performance (He & Wong, 2004), and ultimately survive (Lafuente, Lafuente, Guzman-Parra, & Lafuente, 2013).

The concepts of exploration and exploitation are imbued with added nuances in the context of family businesses. Family businesses are predicated on the dynamic and functional interaction between family and business subsystems with the expectation of the long-term survival of both and a desire to keep the business in the family across generations (Anderson & Reeb, 2003; Chua et al., 1999). Therefore, family businesses generally exhibit a long-term orientation in their decisions (Le Breton-Miller & Miller, 2006). Because of the need to balance and align the concerns of both the family and the business, family businesses have unique resources and governance that affect the decisions they make (Carney, 2005). The decisions in family businesses aim to serve the goals and objectives of both family and business; these goals are often different from nonfamily businesses (Yu, Lumpkin, Sorenson, & Brigham, 2011). These characteristics of family businesses mean that (a) family businesses may place a premium on exploration and exploitation and face different trade-offs to achieve their goal of maintaining family control across generations; (b) family businesses would show significant heterogeneity in the competency with which they explore and/or exploit (because of the unique resources and competencies and the family-specific goals that each family brings to the business; Miller & Le Breton-Miller, 2006; Patel & Fiet, 2011); and (c) relative to nonfamily businesses, family businesses could bring different resources and use them differently at different times to explore and exploit. These aspects make the study of exploration and exploitation in family businesses worthwhile.

Method

Following methods outlined by Higgins and Green (2006) and Short, Ketchen, Shook, and Ireland (2009) for conducting robust reviews on specific topics, we conducted a search for all published publications on family business and exploration and exploitation dimensions of the entrepreneurial process by using the ABI/Inform and Business Source Premier databases, regardless of time period or journal (see also De Massis, Frattini, & Lichtenthaler, 2013; Short et al., 2009, in the context of systematic reviews). To capture publications across the domain of entrepreneurial exploration and exploitation and family business, we used several relevant keywords in our search. Our search included the words “opportunity,” “recognition,” “exploration,” “exploitation,” “ambidexterity,” “discovery,” “creation,” “innovation,” “exit,” “risk-taking,” “entrepreneurial,” and “entrepreneurship” all in conjunction with “family business,” “family firm,” and “family enterprise” (these latter three phrases were used in the title, keywords, or abstract of the publication). Our keyword list was more expansive than just “exploration” and “exploitation” to enable us to capture a wide range of relevant articles. We also examined Chrisman, Chua, and Sharma’s (1996) and De Massis, Sharma, Chua, and Chrisman’s (2012) annotated bibliographies on family business studies to capture other potentially relevant publications that could have been missed in our electronic search. We examined review articles in related areas on other topics (i.e., innovation, entrepreneurship, opportunity, etc.) to help ensure we identified the relevant studies. Finally, to ensure robustness in our review efforts, we examined a list of family business–related books identified by De Massis and Kotlar (2015) for relevant publications. Our selection process excluded publications that covered specific aids or provision of supporting infrastructure to entrepreneurs or for entrepreneurship, for example, provision of equity, debt financing, or tax incentives, which are critical support functions that may themselves be employed via entrepreneurial exploration and exploitation. Additionally, we excluded publications that focused on processes prior to or antecedents of the exploration or exploitation process to ensure the scope and boundary conditions were clearly focused on exploration and exploitation. So, for example, we excluded constructs such as recognition, innovation, risk-taking (or more generally, attitude toward risk), personality or trait, and creativity, which are inputs, moderators, precursors, antecedents, or qualifiers of entrepreneurial exploration and exploitation (Lavie et al., 2010; Raisch & Birkinshaw, 2008). We also excluded publications that primarily focused on the outcomes of exploration and exploitation. For example, we excluded papers focused on new venture creation in new or established markets, strategic renewal via corporate venturing, or spin-offs in family business without an explicit link to entrepreneurial exploration and exploitation. We also excluded publications that dealt primarily with innovation without linking it to exploration and exploitation. While innovation is sometimes considered an important aspect of entrepreneurial action (Stevenson & Gumpert, 1985), Shane and Venkataraman (2000) argue that innovation is only one of the possible drivers and outcomes within the domain of entrepreneurship. Others have also held that innovation in and of itself does not necessarily equate to entrepreneurial exploration and/or exploitation (McKelvie, Haynie, & Gustavsson, 2011). Some may also argue that the literature on “exits” is part of entrepreneurial action (e.g., Nordqvist & Melin, 2010). Exits (e.g., sale of the business by an entrepreneur or a family owner) do provide a unique opportunity to access new resources and the potential for new venture creation by new owners of those assets (DeTienne, 2010). However, from our perspective, the subsequent new entry or creation of a new venture, and not the exit itself, would constitute actual exploration and/or exploitation because only the subsequent entry completes the entrepreneurial process.

Based on the criteria outlined above, a total of 59 publications comprise the basis for our review of the field. These publications were found in 32 different journals or books, 17 of which can be categorized as relating to entrepreneurship, family business, and/or small business. The remainder were primarily in management-focused journals with the exception of a marketing journal (Journal of Marketing Development and Competitiveness), a journal on tourism (Journal of Hospitality & Tourism Research), and a journal related to the food industry (British Food Journal). There was a concentration of articles found in the following four journals: Entrepreneurship Theory and Practice (11 articles, 19%), Family Business Review (8 articles, 14%), Entrepreneurship & Regional Development (4 articles, 7%), and International Journal of Entrepreneurial Behavior & Research (3 articles, 5%). Tables 1 and 2 highlight the articles identified in this review and provide information regarding the theoretical perspectives used, the specific entrepreneurial domain, and some key contributions to the field.

Table 1.

Review of Conceptual Family Business, Exploration, and Exploitation Publications.

Article	Literature/theory base	Entrepreneurial domain	Contribution to entrepreneurial exploration/exploitation research	Contribution to family business research
Hiebl (2015)	Agency theory	Exploration/exploitation	Family involvement in ownership and management affects the ability of later generation family businesses to reach high levels of ambidexterity	Provides a framework for how family businesses can predict long-term survival based on their ability to engage in an ambidextrous strategy
Carnes and Ireland (2013)	Resource-based view, innovation	Exploration/exploitation	Provide a framework relating to how family firms are better at engaging in some innovative activities (exploration and exploitation of new opportunities) than nonfamily firms based on their family-specific resource	Integrating theory and insights on familiness, innovation, and resource bundling, the authors provide a more complete model of conditions affecting family firms’ ability to innovate
Gedajlovic, Carney, Chrisman, and Kellermanns (2012)	Review of family business research	Exploration/exploitation	Provide useful linkages between rent creation and appropriation characteristics of the family firm and how they can create new opportunities	Provide a current state of the field in terms of how family firms differ on performance and how institutional conditions influence those relationships
Lumpkin, Steier, and Wright (2011)	Strategic entrepreneurship	Exploration/exploitation	Provide insight into how family plays an important role in strategic entrepreneurship	Develop a framework for addressing the role of family firms in strategic entrepreneurship that highlights the input process–output nature of strategic entrepreneurship in family business
Sharma and Salvato (2011)	Family business and innovation	Exploration/exploitation	Offer a nuanced life cycle model for innovation exploitation and exploration	Provide four innovation pathways that can be pursued by transgenerational entrepreneurial family firms based on the stage in their life cycle
Lumpkin, Brigham, and Moss (2010)	Long-term orientation and entrepreneurial orientation	Exploration/exploitation	Propose direct relationships between long-term orientation and the five dimensions of entrepreneurial orientation and how the relationships will vary	Propose that long-term orientation will be positively associated with innovativeness, proactiveness, and autonomy but negatively associated with risk-taking and competitive aggressiveness in family firms
Nordqvist and Melin (2010)	Commentary on family business research	Exploration/exploitation	Elaborate on the potential for exits to be a key factor facilitating new entrepreneurial entry	Provide a guided framework around three themes: actor, activity, and attitude to give direction for research in entrepreneurship and family firms
Shepherd and Haynie (2009)	Identity control theory	Exploration/exploitation	Opportunities may act as a conflict triggering event for family firms and that resolution of that conflict will influence the expedient nature of pursuing the opportunity	For the family to act expeditiously in response to an opportunity, there must be an understood and shared meaning associated with “who we are as a family business”
Miller and Le Breton-Miller (2006)	Agency and stewardship theory	Exploration/exploitation	Discuss why family firms are different than nonfamily firms in terms of pursuit of exploration or exploitation	Offer a framework for based on both agency and stewardship theory for how family businesses can and do successfully purse exploration, exploitation, or an ambidextrous strategy
Morrison (2006)	Entrepreneurial process and culture, family embeddedness	Exploration/exploitation	The entrepreneurial process in family business is best served by reference to the cultural, industry setting, and organizational context	Industry setting modifiers and the family business interact to produce entrepreneurial outcomes
Aldrich and Cliff (2003)	Family embeddedness	Exploration/exploitation	Transformations in the degree of family embeddedness may lead to the emergence and recognition of new entrepreneurial opportunities	The venture creation process and new venture outcomes will influence family system characteristics
Habbershon and Pistrui (2002)	Family business research	Exploration/exploitation	Assert a family-as-investor mind-set where entrepreneurial exploration/exploitation becomes the psychological predisposition of the family ownership group centered toward wealth creation	Identified the family ownership group as the appropriate unit of analysis for a transgenerational perspective of family influence wealth creation
Blenkinsopp and Owens (2010)	Family embeddedness and copreneurship	Exploitation	Offer a perspective on how entrepreneurial activities are supported in a dynamic context	Provides a framework and definitional understanding of where “copreneurship” fits in family business research
Le Breton-Miller and Miller (2008)	Corporate governance	Exploitation	Exploitation expectations apply mainly to lone or unrelated founder businesses whose owners, unencumbered by family distractions, embrace growth and outperform	Utility maximization expectations apply when there are multiple family owners; these parties are argued to be harvest-oriented, mediocre performers, especially for a new generation
Hegde and Narahari (2009)	Entrepreneurial and skill development and primer value theorem	Exploration	There is less need for attaching higher weight, importance, and constraint to skill development when it is inherited; entrepreneurial skills can be developed over time	The maximization of family business entrepreneurial value is evidenced with due importance to technology acquisition

Table 2.

Review of Empirical Family Business, Exploration, and Exploitation Publications.

Article	Literature/theory base	Entrepreneurial domain	Method/sample	Key family business and entrepreneurial variables examined	Findings
Moss, Payne, and Moore (2014)	Strategic consistency	Exploration/exploitation	(Quantitative) 205 publicly traded firms (95 family businesses) across multiple industries)	ROA, ROE (DV); Exploration and Exploitation via content analysis of 10 K narratives; Strategic Consistency (IV); Size, Munificence, Dynamism (Moderators)	Higher strategic consistency/continuity with past exploration/exploitation strategies stemming from managerial intentionality—yields higher levels of performance.
Schepers, Voordeckers, Steijvers, and Laveren (2014)	Socioemotional wealth and entrepreneurial orientation	Exploration/exploitation	(Quantitative) 232 private family firms in Belgium; multiple industries	ROA (DV); EO (Miller, Covin, & Slevin, 1989; IV); Socioemotional Wealth (STRATOS [Strategic Orientations of Small- and Medium-Sized Enterprises] questionnaire)	The positive effect of EO on financial performance decreases as the level of SEW preservation increases.
Allison, McKenny and Short (2014)	Innovation and organizational adaptation	Exploration/exploitation	(Quantitative) 149 publicly traded family firms in the S&P 500	Relative Exploration Orientation (DV), Technological Opportunity (Hitt, Hoskisson, Johnson, & Moesel, 1996); Temporal, Firm, Industry Variation (IV)	Family firm ambidexterity is stable over time, punctuated by dramatic changes.
Ciambotti, Demartini, and Palazzi (2012)	Corporate governance	Exploration/exploitation	(Qualitative) 2 medium-sized Italian manufacturing family businesses	Growth and Development (DV); Methods of Financing, Goals, Risk-Taking, Open Ownership of the Firm, Financial Culture, Financial Environment (IV)	Self-financing and short-term small- scale debt can help sustain adequate levels of business growth, while financing through larger institutional formats allows for long-term development and rapid growth.
Zainol, Daud, and Muhammad (2012)	Entrepreneurial orientation	Exploration/exploitation	(Quantitative) Bumiputera SMEs in Malaysia in multiple industries	Entrepreneurial Orientation (DV); Family Influence (F-PEC); Government Aided Programs (IV)	For Malay family firms to be entrepreneurial, the power, experience, and culture distinctiveness of family firms are not enough.
Hallak, Assaker, and O’Connor (2012)	Entrepreneurial self-efficacy	Exploration/exploitation	(Quantitative) 158 nonfamily-owned businesses, 143 family-owned tourism-related businesses in Australia	Performance (Profitable, Growth, Sales, Performance, Expectations; DV); Entrepreneurial Self-Efficacy (Developing New Opportunities, Building Innovative Environments, Initiating Investor Relationships, Defining Core Purpose, Coping With Unexpected; IV)	It was found that the “entrepreneurial self-efficacy” of business owners (regardless of whether or not the business is family-owned) is an important predictor of business performance and suggested that managers and policy makers need to support the entrepreneurial self-efficacy of local tourism business owners.
Stubner, Blarr, Brands, and Wulf (2012)	Organizational ambidexterity	Exploration/exploitation	(Quantitative) 104 family firms in Germany	Organizational Ambidexterity, Relative Firm Performance (DV); Family Influence (F-PEC; IV)	Family influence leads to higher degrees of ambidexterity especially through family power and cultural alignment between family and firm interests.
Hall, Melin, and Nordqvist (2001)	Organizational culture, corporate entrepreneurship strategic change	Exploration/exploitation	(Qualitative) Two Swedish family firms	Entrepreneurial Action (DV); Family Firm Dynamics (Degree of Cultural Openness, Degree of Cultural Explicitness, Family Dominant Culture; IV)	To encourage and foster a process of radical change, family firms need to strive for explicit and open cultures.
Shepherd and Zacharakis (2000)	Behavioral economics	Exploration/exploitation	(Quantitative) 59 U.S. possible future leaders of family businesses (students)	Risky Investments Decisions (DV); Sunk Cost, Fungibility (IV)	High financial and behavioral sunk costs, as well as the requirement to “earn” the right to lead the family business result in the future leader valuing the business more highly.
Leenders and Waarts (2003)	Strategic orientation	Exploration	(Mixed method) 220 Dutch family businesses in multiple industries	Trust, Social Control, Employee Motivation, Manager Control, Conflict Resolution, Continuity, Atmosphere (DV); Family Orientation, Business Orientation (IV)	Differences in family and business orientation result in different advantages and disadvantages with respect to performance indicators such as motivation, conflict resolution and continuity.
Craig, Pohjola, Kraus, and Jensen (2014)	Entrepreneurial orientation	Exploration	(Quantitative) 532 Finnish firms in food, media, and ship-building industries (224 family firms)	Innovation Output (New Product Introduced in Past 3 Years; DV); Proactivity, Risk-Taking (IV)	Risk-taking does not affect innovation output in family firms, whereas in nonfamily firms, innovation output is increased through risk-taking. Also, proactive family firms influence their innovation output more positively than proactive nonfamily firms do.
Colli, García-Canal, and Guillén (2013)	International entrepreneurship	Exploration	(Qualitative) 6 histories of Italian and Spanish Multinational family firms from multiple industries	International Expansion (DV), Autonomy of Managers, Facilitation of Business model to Foreign Markets, Governance Structures (IV)	Being a family firm may contribute to the international expansion of the new multinationals in three ways: (1) granting more freedom to the managers of the company to develop their business model; (2) facilitating the transfer to, and exploitation of, this model in foreign markets; and (3) making the adoption of governance structures based on trust easier.
Brundin and Vigren-Kristoferson (2013)	Institutional theory	Exploration	(Qualitative) 6 South African family-owned vineyards	Entrepreneurial Exploration (DV); Family Heritage (Legitimacy; IV)	While on surface entrepreneurial exploration appears to be taking place, the institutional pressures from the family actually limit the level of true entrepreneurial exploration.
Brannon, Wiklund, and Haynie (2013)	Social identity theory and entrepreneurial teams	Exploration	(Quantitative) 295 new venture teams using PSEDI data	Achieving First Sale (DV); Biological Linkage, Couples, Nonfamily Teams, Investment of Financial Capital (IV)	Couples were more likely than other teams in achieving first sales, whereas the opposite applied to teams with blood relations. Couples are likely better able to adapt both family and entrepreneurial roles.
De Massis, Frattini, Pizzurno, and Cassia (2013)	Resource-based view, agency theory, stewardship theory, behavioral theory	Exploration	(Qualitative) 10 small-sized Italian firms (5 family firms)	Product Innovation Process (DV); Strategy (Radical vs. Incremental, closed vs. open), Climate (Risk-taking vs. Risk Averse, High vs. Low Formalization), Organization (Cross-Functional Team vs. Fictional Organization, High vs. Low Decisional Autonomy)	Family businesses differ from nonfamily ones on product innovation strategies and organization of the innovation process. Family businesses have a more incremental and open approach to innovation, are more risk-averse and have lower formalization, and are more functional organizations with high decisional autonomy that nonfamily firms.
Spriggs, Yu, Deeds, and Sorenson, (2013)	Resource-based view, configurational perspective	Exploration	(Quantitative) 199 family firms	Comparison of Growth or Decline in Industry, Profitability, and Market Share of past 3 to 5 Years, Characterize Profit and Growth Over Past 5 Years (DV); Innovative Capacity, Ownership Dispersion, Collaborative Network Orientation (IV)	Two configurations enhance the innovative capacity–performance link: (1) concentrated ownership combined with high collaborative network orientation and (2) dispersed ownership and low collaborative network orientation.
Classen, Van Gils, Bammens, and Carree (2012)	Family business and innovation	Exploration	(Quantitative) 167 Belgium and the Netherlands (82 family firms)	Search Breadth (Innovation Partners; DV); Family Control and Involvement, Education of CEO, Nonfamily in TMT, Educational Diversity of TMT (IV)	Family SMEs have a lower search breadth than their nonfamily counterparts. Results suggest family firms may be disadvantaged when it comes to external ties that might challenge the family’s discretion and cognitive capacity.
Cassia, De Massis, and Pizzurno (2011)	Family business and innovation (NPD)	Exploration	(Qualitative) 4 family firms in Northern Italy	NPD Process (DV); Long-Term Orientation, Shared family Values, Family Reputation, Family Communication, Low Agency Cost, Family Conflict, Risk Aversion, Professionalization, Ownership Dispersion (IV)	Family firms with shared family values, a high desire to raise the family name and reputation, high level of communication among family members, and low agency costs are likely to experience more successful NPD processes.
Hamilton (2011)	Entrepreneurial learning	Exploration	(Qualitative) 5 English family firms	Entrepreneurial Learning (DV); Communities of Practice, Cycles of Reproduction and Transformation, Generation (IV)	Founders bring accumulated learning from a number of communities of practice including their own families and their work-based and educative communities of practice.
Salvato, Chirico and Sharma (2010)	Succession and firm exit strategies	Exploration	(Qualitative) 1 family manufacturing firm in Italy	Innovation Implementation (DV); Lifecycle Dynamics, Market and Technology Change (IV)	Critical incidents acted interactively with the firm’s life cycle stage and its approach to family versus business, to either act as a catalyst for developing radical innovation or maintain the status quo.
Fletcher (2010)	Copreneurship	Exploration	(Qualitative) 26 couples starting or managing a new venture	Copreneurship (DV); Opportunity Identification and Exploitation (IV)	Offers a new reformulated conceptualization of copreneurship as an alignment of certain characteristics that are assessed as having market value and lead to creation or repositioning of a venture.
Williams (2010)	Pecking order theory and resource perspective	Exploration	(Quantitative) 250 family-owned enterprises in Jamaica in multiple industries	Internal/External Financing (DV); Firm Size, Age, Information Transparency (Education and Type of Business; IV)	Internal sources of financing are usually used to finance business start-up while external sources are used to finance business growth.
Puig and Pérez (2009)	International entrepreneurship	Exploration	(Qualitative) 146 Spanish family firms	Growth, Internationalization (DV); Family Ownership, Regional Embeddedness, Collaboration, Adaptation to Change (IV)	Internationalization of Spanish family firms is the result of a long learning process that has been visibly influenced by the country’s natural and human endowments and the opportunities created by the changing institutional domestic environment, and the ongoing globalization process.
Zahra (2005)	Agency theory	Exploration	(Quantitative) 209 family firms	Entrepreneurial Risk (Domestic Alliances, Foreign Alliances, Entering New Foreign or Domestic Markets, Investing in Radical Tech., Radical Product Innovation (DV); CEO is Founder, CEO Tenure, Family Ownership, Number of Family Generations	Family ownership and involvement promote exploration, whereas the long tenures of CEO founders have the opposite effect.
Bhaskaran (2004)	Entrepreneurial process	Exploration	(Qualitative) 1 small-scale family farming enterprise in Australia	Opportunity Recognition and Exploration, Networks, Risk-Taking, Environmental Support (National Culture)	The family firm expressed classic entrepreneurial behaviors in their effective use of personal relationships, risk-propensity, and innovativeness and creative approaches to decision making.
Kenyon-Rouvinez (2001)	Serial entrepreneurship and family embeddedness	Exploration	(Qualitative) 9 family firms across the United States, Europe, and Australia; multiple industries	Business Re-Creation (DV); Family Involvement, Ownership, Governance (IV)	Family business re-creation follows a three-stage process that is influence by family dynamics, business strategy, and firm governance. Varying reasons for sell a business will influence the structure, dynamic, and family involvement of the re-created business.
Tran and Santarelli (2014)	Resource dependency theory	Exploitation	(Quantitative) 1721 Vietnamese private manufacturing firms from 2003 to 2006	Gross Profit and Sales growth (DV); Education, Industry/Self-Employment Experiences (Human Capital), Emotional/Financial Family Support and Business Network Participation, Size, and Intensity (Social Capital), Capital Constraints (IV)	Firms suffering capital constraints performed substantially better. Human capital improves entrepreneurial performance. Effect of social capital stemming from strong ties and weak ties is limited: Strong ties bring emotional support and weak ties give nonfinancial benefits from regular and useful business contacts.
Alsos, Carter, and Ljunggren (2014)	Entrepreneurial growth process	Exploitation	(Qualitative) 4 farm-based families in Norway and Scotland	Entrepreneurial Growth (DV); Household Dynamics, Kinship, Resource Base (IV)	Entrepreneurial households play a role in the evolution of business creation and growth, the process aspects of entrepreneurial growth, the interactions between business activities and households and development of portfolios.
Bobillo, Rodríguez-Sanz, and Tejerina-Gaite (2013)	Internationalization strategies	Exploitation	(Quantitative) 338 Spanish family firms across multiple industries from 2000 to 2009	Financial Performance, Internationalization (DV); Family Activism, Life Cycle Duration of the Family Firm (IV)	Economic value creation, leverage, and international diversification in family firms are conditioned not only by the ownership structure and size of the company but also by the firm’s current point in the business life cycle, the generation that is in charge, and activism from other family members.
Sifneos (2013)	Family culture and values, strategic flexibility	Exploitation	(Qualitative) Greek family firms in the Azov Sea region from 18501917	Adaptation, Internationalization, Family Culture, Shared Values, Social Network	Resilience and flexibility in adapting to environmental changes resided in their family culture, shared values, and social network support that added value to their international performance.
Cruz, Justo, and De Castro (2012)	Family embeddedness and socioemotional wealth	Exploitation	(Quantitative) 392 small family firms in the Dominican Republic in multiple industries	Sales Growth (increase in sales), Profitability (ROA; DV); Family Employment, Gender, Family Funding (IV)	Findings suggest that employing family members in micro enterprises contributes to increased sales but decreases profitability.
Trevinyo-Rodríguez and Chamiec-Case (2012)	Bottom of the pyramid and family business research	Exploitation	(Quantitative) 455 changarros owners in Mexico	Profit, Scale, License and Credit Availability (DV), Potential to Close, Perceived Competition, Succession Plan (IV)	There is a potential win–win business relationship between these BOP family-owned and -run microenterprises and large family-owned groups (convenience stores), in which convenience stores could provide financial and even (re)stocking services to changarros—which they could use to grow, develop, and/or survive.
Chirico and Nordqvist (2010)	Family business research and dynamic capabilities	Exploitation	(Qualitative) 4 private family firms from Italy and Switzerland in the wine and spirts industry	Entrepreneurial Performance (DV); Dynamic Capabilities, Entrepreneurial Orientation, Family Inertia, Paternalism, Knowledge, Transgenerational Value (IV)	Knowledge—principally enhanced by high levels of social capital and emotional involvement in the business—and features of the organization’s culture—i.e., EO or paternalism and its relation to family inertia—are crucial for family businesses’ transgenerational value creation.
Marchisio, Mazzola, Sciascia, Miles, and Astrachan (2010)	CV	Exploitation	(Qualitative) 3 chemical manufacturing family firms in Italy	Performance (DV); CV, Succession Process, Family Cohesion, Human Capital, Affective Commitment, Financial Impact (IV)	CV may enhance or reduce some resources and competencies at both the individual and family levels. CV process may increase the incumbents’ capability to run the process of family member selection and development as well as human capital.
Toledano, Urbano, and Bernadich (2010)	Institutional economics	Exploitation	(Qualitative) 2 manufacturing family firms in Spain	Corporate Entrepreneurship (DV), Network Development (IV)	Arenas for promoting personal trust in the organization’s context, networks or informal institutions are generated within the businesses.
Ng and Thorpe (2010)	Distributed leadership	Exploitation	(Qualitative) 1 family-controlled bank in Singapore	Corporate Acquisition (DV); Distributed Leadership (IV)	An extended system of leadership involving different levels of managers is developed that successfully completed the acquisition and produced significant growth from the combined businesses.
Robertson, Hoek, and Kallman (2008)	Strategic planning	Exploitation	(Qualitative) 1 family firm in Peru in the beverage industry	International Expansion (DV); Strategic Planning	Insight is provided on specific tactics for strategic planning for family businesses to expand into Latin America markets.
Khavul, Bruton, and Wood (2009)	International strategy	Exploitation	(Qualitative) 8 informal businesses founded in Kenya and Uganda	New Venture Formation, Growth (DV); Family Ties, Economic Informality (IV)	East African entrepreneurs not only use both strong family and strong community ties to establish and grow businesses but also use strong community ties to counterbalance the obligations that strong extended family ties create.
Sirmon, Arregle, Hitt, and Webb (2008)	Resources-based view	Exploitation	(Quantitative) 2531 French SMEs in multiple industries	Performance (DV); Imitability, Family Influence, R&D Investment, Internationalization (IV)	R&D investment and internationalization actions mediate the relationship between imitability and performance. However, when threatened, family-influenced firms reduce R&D and internationalization significantly less than nonfamily firms.
Zahra, Hayton, Neubaum, Dibrell, and Craig (2008)	Stewardship theory and strategic flexibility	Exploitation	(Quantitative) 248 U.S. family firms in the food processing industry	Strategic Flexibility (DV); Family Culture of Commitment, Stewardship-Oriented Culture (IV)	A family firm’s culture of commitment to the business is positively associated with its strategic flexibility—the ability to pursue new opportunities and respond to threats in the competitive environment.
Klyver (2007)	Network theory	Exploitation	(Quantitative) 732 Danish firms from the GEM follow-up survey in 2003	Identification of Social Network, Family Member (DV); Entrepreneur Characteristics (Age, Gender, Education), Nature of Relationship (Gender of Alter, Strength of Tie, Encouragement, Content of Relation), Entrepreneurs in Discovery (IV)	Family members are most strongly involved in the emergence phase when the final decision to start or not has to be made. Furthermore, involvement of family members is most common when entrepreneurs are young and have higher education of no more than 3 years duration.
Short (2007)	Entrepreneurial process	Exploitation	(Qualitative) 1 family-owned custom guitar manufacturer	Opportunity Recognition (DV), Succession (IV)	It provides a classic illustration of the “aha” moment of insight when recognizing and exploiting new opportunities. Additionally, it provides a unique example of succession of craft business from father to daughter.
Zahra, Hayton, and Salvato (2004)	Resource-based view	Exploitation	(Quantitative) 536 U.S. family firms in high- and low-technology industries	Entrepreneurship (DV); Family Firm Culture (IV)	Results show a nonlinear association between the cultural dimension of individualism and entrepreneurship. Furthermore, there are positive linear relationships between entrepreneurship and external orientation, an organizational cultural orientation toward decentralization, and a long- versus short-term orientation.

Note. ROA = return on assets; ROE = return on equity; DV = dependent variable; IV = independent variable; F-PEC = Family Influence on Power, Experience, and Culture; PSEDI = Panel Study of Entrepreneurial Dynamics I; SME = small- and medium-sized enterprise; TMT = top management team; NPD = new product development; CV = corporate venturing.

The 59 articles included in our review consist of 43 empirical and 16 conceptual publications (which included other review manuscripts). The research design across the empirical publications varied significantly, employing quantitative, qualitative, and mixed methodologies for analysis. These ranged from single and comparative case studies to surveys and the use of large nationwide and global databases (e.g., Panel Study of Entrepreneurial Dynamics, Global Entrepreneurship Monitor, World Business Environment Survey). The research also examined exploration and/or exploitation in family businesses in very different contexts. Eleven of the empirical publications included U.S.-based populations in the sample and 32 non-U.S. samples (20 of which were based on European samples). Research was also found from other geographical contexts (e.g., across Asia, Australia, Africa, and South America), as detailed in Table 3.

Table 3.

Characteristics of Methodologies Used in Empirical Publications.

Method information	No. of publications	% of total empirical publications^a
Research method
Qualitative	21	49
Quantitative	21	49
Mixed	1	2
Sample location
U.S. location	10	23
Non-U.S. location	31	72
Single country	37	86
Multicountry	4	9
Europe	20	47
Asia	3	7
Africa	2	5
Australia	2	5
Latin American and Caribbean	4	9
Sample sizes
<100	21	49
101-500	16	37
>500	6	14
Industry		0
Single	19	44
Multiple	24	56
Comparison study
Family firms only	31	72
Family vs. nonfamily	12	28

This percentage is based on the 43 empirical publications in the review sample.

Results

Overall, our systematic review reveals several areas of disconnect between research on family business and entrepreneurial exploration and exploitation—by this we mean that the meaning, application, and measures of the concepts of entrepreneurial exploration and exploitation are not always the same between the two fields of family business and entrepreneurship. We discuss the findings of our analysis and outline these aspects below, detailing theoretical perspectives and themes. Our study revealed several perspectives emerging from the field of family business that may inform and assist in developing a deeper understanding of entrepreneurial exploration and exploitation and thus may be of interest to entrepreneurship scholars.

Theoretical Perspectives and Issues

Lack of an Explicit Definition of Entrepreneurial Exploration and Exploitation

A general pattern observed was that family business studies do not use or provide an explicit conceptual definition of entrepreneurial exploration and exploitation, which frames the subsequent inquiry (e.g., Carney, 2007; Chen, Hou, Li, Wilson, & Wu, 2014; Fletcher, Helienek, & Zafirova, 2009; Van Auken & Werbel, 2006; Yang, 2012). There are a few notable exceptions. For example, Miller and Le Breton-Miller (2006) offer a clear definition of both actions, underscoring the importance they have for the growth and survival of family firms. Additionally, they offer a useful framework for conditions under which a family firm, through family governance and culture, may have advantages over nonfamily firms in pursuing these actions. Hiebl (2015), Moss et al. (2014), and Stubner, Blarr, Brands and Wulf (2012) also offer explicit definitions of both actions by placing their research in the context of the organizational ambidexterity literature (March, 1991) and linking it to a family firm’s supposed long-term orientation (Le Breton-Miller & Miller, 2006; Lumpkin, Brigham, & Moss, 2010). By doing so, they were able to focus on how differences in family versus nonfamily firms may be reflected in activities related to exploration and/or exploitation processes (e.g., search, discovery, refinement, increasing efficiency).

The lack of an explicit definition of exploration/exploitation in family business studies leads to two issues that may influence the overall contribution of studies in the context of entrepreneurship. First, some studies use one of the characteristics or outcomes of entrepreneurial exploration and exploitation (e.g., creativity, recognition, innovation, change, or wealth creation) and substitute it for the full gamut of constituent activities of entrepreneurial exploration and exploitation (e.g., Davis & Harveston, 2000; Pistrui, Murphy, & Deprez-Sims, 2010). This could contribute to construct and measurement deficiencies since the studies do not tap into the entire range of entrepreneurial exploration and exploitation constructs. Second, some studies measure the outcomes of entrepreneurship (i.e., performance or outcome measures) and impute entrepreneurial exploration or exploitation from these outcomes (e.g., Littunen & Hyrsky, 2000; Wang & Poutziouris, 2010). While this may lead to cleaner measures, it also makes for a less precise model since the entrepreneurial process becomes a black box in these studies. This can be especially troublesome when outcomes attributed to entrepreneurial exploration and exploitation may have alternative explanations. On the other hand, Marchisio et al. (2010) provide a useful delineation of exploration versus exploitation when discussing differences in corporate venture and strategic renewal in the corporate setting. Additionally, Gedajlovic, Carney, Chrisman and Kellermanns (2012) offer a framework for explaining the entrepreneurial process in terms of how varying goals of a family firm will influence opportunity recognition, evaluation, and exploitation by means of appropriation. These last two studies offer good exemplars of incorporating contemporary entrepreneurship approaches into family businesses and contributing to both fields.

Predominantly a “Resource” Lens

The largest proportion of research, that is, 15% of the publications reviewed, used a resource lens either implicitly or explicitly. The understanding of resources in family business is slightly different from the understanding of resources in the resource-based view in strategic management, where certain resources have explicit characteristics that provide a firm a competitive advantage (Peteraf, 1993). In family business research, family is imputed to have a bundle of resources that lead or are conducive to some kind of behavior or orientation that could be a component of entrepreneurship (Leenders & Waarts, 2003). Many of the resources modeled are family personnel (structure, gender, generation) and the quality of their relationships (e.g., conflict or harmony; Brannon et al., 2013; Mitchell, Hart, Valcea, & Townsend, 2009; Shepherd & Haynie, 2009). There are also a several studies that emphasize family or organizational culture and family values (Chirico & Nordqvist, 2010; Garcia-Alvarez & Lopez-Sintas, 2001; Morrison, 2006; Zahra et al., 2008). Miller and Le Breton-Miller (2006) detailed unique governance resources and managerial capabilities that could provide advantages to family businesses in exploration and exploitation.

As pointed out earlier however, there are differences in resources that are deployed for exploration and exploitation, and decisions made by firms reflect these trade-offs. For example, firms trade off short-term productivity for long-term innovation (March, 1991). Similarly, firms seek to achieve immediate reliability but risk becoming irrelevant in the future (Holmqvist, 2004; Lavie et al., 2010). However, these trade-offs are more severe at a specific point of time, whereas exploration and exploitation are expected to be complementary over time since firms that explore more would create more opportunities to exploit in the future (Lavie et al., 2010). Given that family businesses are predicated on survival across multiple generations in time, studies that explicitly model the moderation of these cross-sectional trade-offs over time could be illuminating to both fields. In family business research, the trade-offs between the two; the way these trade-offs are tempered via governance, management, and other resources; and the contingencies in family firms that enable or prevent such decisions could be teased out further. We provide more specific future research questions later in this article.

The emphasis of family in entrepreneurial exploration and exploitation is an important theme that supports the movement away from the “lone, heroic” entrepreneur stereotype in the entrepreneurship field. For example, while studies in family business corroborated findings that entrepreneurs were motivated by the need for independence and flexibility, they also found that these entrepreneurs relied heavily on the family as sources of finance or labor—without this tangible family support, entrepreneurial intentions were curbed (e.g., Fletcher et al., 2009).

Sensitivity to Transmission of Tacit Knowledge

There are also a few themes in family business studies that could benefit entrepreneurship scholars in the realm of entrepreneurial exploration and exploitation and perhaps advance scholarship in entrepreneurship. Family business scholars dwell considerably, implicitly or explicitly, on the transmission of tacit knowledge within the family and the business, especially across generations over an extended period of time (e.g., Nordqvist, Wennberg, Bau’, & Hellerstedt, 2013; Pistrui et al., 2010; Salvato, Chirico, & Sharma, 2010). The tacitness of both knowledge and its transmission process is an important aspect of entrepreneurial exploration and exploitation since tacitness in these aspects could lead to both entrepreneurial outcomes and competitive advantages for the firm (Grant, 1991; Hitt et al., 2001; Sharma, 2011). Family firms tend to use storytelling and narratives as ways to conceptualize and organize the knowledge structure within which the tacit knowledge can be packaged and communicated (e.g., see Dalpiaz, Tracey, & Phillips (2014) in the context of succession). Future research could focus on studying these elements further to see how families manage the narrative to create resources that are specialized in entrepreneurial exploration or exploitation or that strike a balance between the two.

While entrepreneurship scholars have also attempted to tease out the linkage between tacit knowledge and opportunities, they have used different correlates of knowledge. In entrepreneurship, identification of tacit opportunities is based primarily on experience (B. R. Smith, Matthews, & Schenkel, 2009) and relational capabilities (Collins & Hitt, 2006; Pina-Stranger & Lazega, 2011). With respect to the former, for example, tacit opportunities are more likely to be identified due to prior experience, whereas opportunities that are more codified are more likely to be discovered through systematic research (B. R. Smith et al., 2009). In addition, a higher stock of relational capabilities and deep personalized ties are also associated positively with transfer and transmission of tacit knowledge (Collins & Hitt, 2006; Pina-Stranger & Lazega, 2011). These arguments could lead to additional refinement in the context of exploration and exploitation activities in family business.

Focus on Specific Goals and Values of Entrepreneurial Actors

In addition, because the family business field emerges from an intersection of family and business domains, scholars in the field are generally more deliberate and sensitive in their studies about the specific goals (Carney, 2007; Gedajlovic et al., 2012) and values (Chirico & Nordqvist, 2010; Garcia-Alvarez & Lopez-Sintas, 2001; Yang, 2012; Sifneos, 2013) of the entrepreneurial actor (i.e., the family). A family’s goals and values that it brings to entrepreneurial exploration and exploitation—may be more varied and nuanced and may accommodate many stakeholders without any conflicting. For instance, entrepreneurial exploration and exploitation of family businesses may incorporate elements of sustainability, social entrepreneurship, environmental entrepreneurship, or other more family-centered, noneconomic goals (Chrisman, Chua, Pearson, & Barnett, 2012) alongside those of wealth generation in a more parsimonious manner that is consistent with the owning family’s goals and founding values. The family’s exploration activities may account for the family’s goals to support a family member’s interests and passions. Exploration of these goals may serve the twin purpose of keeping the family member in the family and using the exploration activities as a teaching and learning opportunity for the entire family. On the other hand, a family may use its exploitation activities to socialize the next-generation family members in the family’s legacy and trigger the communication and transfer of tacit knowledge. This could be an important aspect ensuring the family firm’s continuity and longevity—in the process of exploiting the current opportunities, the tacit “recipe” of the family firm may also be refreshed and contemporized by the next generation. We do know, for example, that goal diversity becomes more complex when the family and family-centered goals are incorporated, which gives rise to the need for effective management of the goal-setting process (Kotlar & De Massis, 2013). Family business scholars may wish to link specific aspects of families’ goal-setting process as it relates to exploration and exploitation activities. It is likely, for example, that the pursuit of some goals makes the family ambidextrous or specialized in exploration or exploitation. On the other hand, the field of entrepreneurship tends to separate exploration and exploitation into different kinds of entrepreneurial processes without allowing the entrepreneur to have multifaceted goals. Since the field of entrepreneurship is moving toward making the founding values of the entrepreneurs endogenous to entrepreneurial exploration and exploitation (e.g., Harris, Sapienza, & Bowie, 2009), entrepreneurship field may be well served by abstracting the more complex goal setting from family business studies.

Suggestions for Future Research

Based on our review of the intersection between family business and entrepreneurial exploration and exploitation, several areas of future research emerged. Broadly, our review suggests that there is a lot of scope to model entrepreneurial exploration and exploitation more systematically and rigorously in family firms. We outline some of these directions below.

To begin with, modeling entrepreneurial exploration and exploitation in family businesses would involve a more deliberate delineation of specific activities, processes, resources, and competencies associated with exploration and exploitation. As we have reviewed above, exploration and exploitation are said to require different antecedent conditions in organizations. A broad between-group question would be whether there are differences between family and nonfamily businesses in their competency to explore and exploit and whether one group is systematically better at one or the other or, conversely, more ambidextrous than the other. This question can be refined to account for specific institutional contexts (different institutional contexts may have different payoffs related to exploration versus exploitation) and controlling for the age of the firms (older firms may be more inertial and generally more inclined and able to exploit than explore).

More specific between-group questions could come from the business and ownership subsystems. An important aspect within the business subsystem is the difference in organizational culture and identity between family and nonfamily firms. These differences are likely to become stark as the firms age and systems become more established. An interesting issue to study would be how the differences in organizational culture and identity between the two kinds of firms affect exploration and exploitation activities. One likely aspect that could lead to differences between the two kinds of firms is the pressure the family businesses may face to stay true to their legacy and founding conditions. This could affect resources family firms devote to exploration/exploitation/ambidexterity. Nonfamily firms may have more freedom to axe their legacy and make wholesale changes by, for example, changing their top management. HR practices between the two kinds of firms could also lead to differences in exploration/exploitation activities. For instance, how does access to family employees as a resource in the family business affect exploration or exploitation activities relative to nonfamily businesses that do not have access to this resource? If family firms are able to adopt more flexible and informal HR practices relative to nonfamily firms, does it help the family firms to be better “explorers” and the nonfamily firms to be better “exploiters”? Family firms may also develop idiosyncratic and unique resources and leverage these resources differently over time relative to nonfamily businesses. Both differences in these resource bundles and differences in the way that these resources are leveraged may affect exploration and exploitation differently in family and nonfamily firms—this could be an interesting area to study using extant understanding of resources and competencies.

Some between-group research questions also emerge from the ownership subsystem. For instance, how does the difference among owners themselves (i.e., family principals vs. nonfamily principals, e.g., activist investors, private equity owners, institutional investors, and other small investors) affect exploration or exploitation activities? Is one type of owner-principal better at guiding/rewarding exploration of new opportunities or sustained exploitation of proven opportunities? Additionally, when family firms bring in nonfamily investors, do they become better or worse at exploration or exploitation? In terms of governance aspects within the ownership subsystem, we know that family firms are governed with an eye to the firm’s multifaceted goals that influence the value and time horizon of the projects that the firm pursues. On the other hand, nonfamily firms may have a more proscribed and transparent set of goals, and a shorter time horizon over which the opportunities need to pay off. These differences could affect the value (and accountability) placed on exploration versus exploitation by the respective governance bodies in these firms.

Another set of interesting research questions could address the within-group differences among family firms in exploration and exploitation since family firms exhibit significant heterogeneity. For example, at a macro level, since there are trade-offs and resource constraints involved in investing in exploration and exploitation, scholars can study whether, and in what conditions, leaders or family firms choose to enhance the activity they are better at or choose to invest in ambidexterity by investing in their “weaker side.” We have arranged other questions in terms of the three subsystems in family business: family, business, and ownership subsystems (see Table 4). These questions are offered as first-order, direct questions to spur thinking in this area—actual studies would, of course, need models with additions of several controls and interaction effects. Adding the differential effects of entrepreneurial exploration and exploitation to each element (individually and collectively) of these subsystems provides many additional areas of future research involving sequential and simultaneous (ambidextrous) pursuit of these actions. Please see Table 4 for specific within-group research questions.

Table 4.

Examples of Potential Future Research on Exploration/Exploitation Within Family Businesses.

Group design		Possible research questions
Family business heterogeneity (within-group)		For various subsystems within family businesses (Family, Business, and Ownership) scholars can explore the following:
		• Whether the respective antecedent conditions have differential effects on exploration and exploitation
		• Whether the respective antecedent conditions, individually and in a configuration, affect a family business’ competency in simultaneously or sequentially undertaking exploration and exploitation
Family business system	Specific academic discipline	Possible research questions
Family subsystem	Family psychology	How does the family’s interpersonal dynamics, as well as affective, cognitive, and behavioral characteristics affect exploration and exploitation differently? Conversely, how is the family affected on these dimensions by these entrepreneurial processes? How do specific parenting and family education and development issues play a role in exploration and/or exploitation? How does a family’s self-image influence its exploration and exploration behavior?
	Family therapy	How do family conflicts affect the quality of exploration and exploitation? What is the role of family’s overall psychological health and well-being on exploration and exploitation? How do family “outliers” or “difficult” family members affect the family’s outlook and competency in exploration and exploitation?
	Family sociology	How does the family or family leader’s identity influence the decisions to pursue exploration and/or exploitation strategies? How do changes in family structure (e.g., marriages, divorce, etc.) influence resources and personnel available for pursing exploration and/or exploitation?
Business subsystem	Leadership	How does the leadership style of the family business leader affect exploration and/or exploitation processes in the family business? Are family leaders across generations better than nonfamily executive managers in exploration and exploitation, and what are the associated contingencies that influence the process?
	Strategy	How does a family business’ long-term business and corporate–level strategy affect the choice of domains where it operates? What specific aspects of the family constitute the repository of its competencies relative to exploration and/or exploitation? What are the industry and competitive effects on resources devoted to exploration and exploitation?
	Marketing	Do family businesses that strive to build an affective bond between the family and consumers perform better on opportunity exploration and exploitation? Are these businesses perceived to be more innovative or entrepreneurial by the consumers/customers?
	Finance/accounting	How does long-term orientation of family firms affect the distribution of resources to exploration and exploitation? How do organizational inertia and founder’s imprint affect resources devoted to exploration and exploitation?
	Human resource management	What kind of organizational/career trajectory of family members leads to variations in exploration and/or exploitation? How does the interaction of family and nonfamily employees affect exploration and/or exploitation? How do HR outcomes valued and rewarded by family owners (e.g., loyalty) affect exploration and/or exploitation among nonfamily employees? What is the effect of multiple generations working in the family business on exploration versus exploitation?
Ownership subsystem	Governance	Do family businesses with formal governance systems (e.g., board of directors), external directors, and separation of directors from management perform better on exploration and/or exploitation? Do formal structures for managing the family and business (e.g., family council, ownership council, next-generation group, board of directors) help improve exploration and/or exploitation or reduce the capacity to explore and/or exploit? How does having nonfamily investors in the family business affect exploration and exploitation?

Family Subsystem

The generation in charge is typically a critical variable in family business studies. The research question here would be whether there are generation effects that predict exploration and exploitation activities differently. For example, it is likely that the founder generation, attributed with entrepreneurial rationality (Miller, Le Breton-Miller, & Lester, 2011), is more skilled and devotes more resources to exploration activities than exploitation activities in order to find and harness new opportunities. This may also involve accumulating particular kinds of resources (e.g., social capital to develop and legitimize the new business and slack resources to find new opportunities and protect the emerging organizational core) that favor exploration over exploitation. Later generations may choose to exploit in order to maintain continuity, grow the family business, and satisfy familial demands on the business, for example, by putting in place systems for increasing scale and reliability and exploiting opportunities that are contiguous to the family business. Another question related to this issue concerns the parenting style that develops the next generation. Are different parenting styles (Darling & Steinberg, 1993) related to differential effects on skill development relative to exploration and exploitation in the next generation?

While there is considerable literature in the field of entrepreneurship treating exploration and exploitation as firm-level constructs, they can also be considered as an individual-level phenomenon, for example, tied to an entrepreneur or a firm leader. In family businesses, treating these as individual-level phenomenon could lead to questions that may sharpen our understanding of how these actions and associated competencies are nurtured by the family business founder or leader. For instance, do family leaders whose skills, expertise, preferences, or traits are naturally more in tune with exploration prefer successors similar to themselves or do they choose successors who are better at exploitation of opportunities? Do differences between leaders and successors in these individual attributes (i.e., differences in skills, expertise, preferences, or traits relative to exploration/exploitation) predict other outcomes, such as family employment, leader–successor harmony/conflict, and the successor’s willingness and commitment to the family business?

Several research questions can be explored by using family structures, cohesion, and identity. For example, related to family structures, is it more likely that competition among siblings is more conducive to exploration as each sibling tries to outdo others and pursue his/her own path? Or is cooperation among siblings more conducive to exploitation as siblings work together on different aspects of an opportunity to mine its full potential? Questions using family cohesion could develop and test arguments linking cohesion with exploration, exploitation, and ambidexterity. While of course several other contextual variables would be involved, it is likely that a very high level of cohesion is associated with exploitation as the family members feel obligated to mine a collective opportunity to enact the cohesion, the moderate level of cohesion associated with ambidexterity, and the low level of cohesion associated with exploration as they feel loosely coupled to the family and enjoy more freedom to pursue new opportunities with the help of family resources. Related to family cohesion, family identity can also become fragmented over generations. In later generations, depending on the state of family cohesion, family members could identify either with the founder family identity or with their own immediate family. The former may face more legacy and inertial pressures and thus may choose to pursue more exploitation activities, whereas the latter may be freer to explore using their claim on extant family resources. Family identity that favors one (e.g., exploration) over the other could serve as a template for other family members’ willingness to join the family business, reinforcing the family’s expertise in that area.

From the perspective of social capital, one can ask whether a family’s social capital makes the family more inclined or able to explore versus exploit. Management scholars and sociologists have conceptualized different kinds of social capital, including structural, relational, cognitive (Nahapiet & Ghoshal, 1998), bridging (Burt, 1982), and bonding social capital (Coleman, 1988), and linked it to differential values in different institutional and action contexts. Literature on family firms on this topic suggests that they may develop different kinds of social capital via long-term commitment to develop deep roots in their communities and spheres of influence across generations (Arregle, Hitt, Sirmon, & Very, 2007). Future research may endeavor to link the specific and distinct kinds of social capital that families develop over time linked to their exploration, exploitation, and ambidextrous tendencies.

Business Subsystem

Decisions to engage in exploration and exploitation are often influenced by the current leadership, resources, and orientation of the organization (Miller & Le Bretton-Miller, 2006). Family business researchers have the opportunity to examine the decision of how and when to engage in exploration and/or exploitation across the gamut of administrative and functional domains in an organization (e.g., leadership, strategy, marketing, finance/accounting, human resource management, etc.). For example, future research can examine the influence of the leadership style of family business leaders on the exploration/exploitation activities and if certain leadership styles are associated with or favor one or the other. Additionally, scholars could address whether family leaders across generations are better than nonfamily managers in exploration or exploitation, accounting for specific contingencies (e.g., industry, environmental conditions, and institutional factors such as the national regulatory and political environment) that may influence these activities.

From the perspective of strategy, a central research question would be as follows: Does a family business’ long-term business and corporate-level strategy affect the specific customer segments, domains, or geographic areas where it operates and are there specific areas and structures in the family where its competencies relative to exploration or exploitation are developed and stored? These questions are important since it is likely that decisions related to the strategic orientation of the organization regarding whether to purse exploration, exploitation, or ambidextrous strategies are aligned with meeting the goals of both the family and the business.

There are several interesting questions from the human resource management domain as well. For example, does hiring more nonfamily professional management improve the exploitation ability of the family business? Professional management is likely to be specialized in a specific area or function, appraised on specific goals. Furthermore, it may be hired for specific purposes and may have more specific task responsibilities. Having more well-defined and formal task responsibilities is likely to increase the general management of current operations and thus could be more closely related to exploitation rather than to exploration. On the other hand, exploration activities may require less formal task responsibilities, which could be more suited to family managers, who may both prefer and be expected to be more flexible in terms of their responsibilities to the business.

Ownership Subsystem

Does formality in governance (having a board, independent directors on the board, and formal board meetings and procedures) affect exploration and exploitation differently? For instance, it is likely that more scrutiny of family management via a formal board may reduce exploration activities and increase exploitation activities. Another research question could explore the value of formal structures and artifacts of governance in the family (e.g., family councils, family assemblies, family constitutions): Do these formal structures and artifacts institutionalize exploration, exploitation, or ambidexterity of the family or the family firm?

Some interesting research questions involve the decision of the family to include nonfamily investors in the family business. For example, does having nonfamily equity holders in the family business encourage more exploration? It is likely that other, nonfamily owners may encourage or push the family businesses in exploring other opportunities where the family’s identity, vision, and values may be profitably deployed. Scholars could also study the context around the family’s decision to offer stakes to nonfamily owners. Does the family make this decision to complement or enhance its competency in exploration or exploitation? It is likely that family leaders with foresight make these decisions deliberately to reinforce the competitive advantage of their firms and to shore up their perceived weaknesses in entrepreneurship.

More generally, family business research would benefit from incorporating more established components/dimensions of entrepreneurial exploration and exploitation around which there is consensus in the entrepreneurship field. While work in family business has begun to incorporate some of these components/dimensions conceptually (Hiebl, 2015; Miller & Le Breton-Miller, 2006) and empirically (Moss et al., 2014; Stubner et al., 2012), more effort could be made to tease out the nuances associated with exploration, exploitation, and ambidextrous strategies in the family business context. Both Raisch and Birkinshaw (2008) and Lavie et al. (2010), for example, offer useful frameworks for how work in these areas can move forward in terms of examining specific organizational antecedents, such as structure, context, and/or leadership. Incorporating these more nuanced aspects may also lead to uncovering how families use their unique resources and capabilities to idiosyncratically deviate from these dimensions to enable sustainable entrepreneurial exploration and exploitation across generations and time. While the domain of family business spans family and business systems, the work on entrepreneurial exploration and exploitation in family firms mainly focuses on outcomes that can be related primarily to the business system. On the other hand, a focus on entrepreneurial exploration and exploitation as a starting point is broad enough that it may allow family business scholars to capture entrepreneurship that may arise in either the family or the business domain and thus contribute back to the entrepreneurship field. For example, this allows for scholars to develop models that capture families behaving entrepreneurially within the family system in their decisions about progeny, choices of immigration/emigration, changes to family structure, and so on. These decisions can be tied to exploration/exploitation directly and also be antecedents to subsequent exploration/exploitation. At the same time, families or family business leaders can be entrepreneurial in the business system by their choice of new business domains, adoption of new technologies, introduction of new products/services, and so on. In addition, there are many interactions between the family and the business systems that could influence entrepreneurial exploration and exploitation, some of which are already reflected in extant research.

Conclusion

Our review of family business research in the area of entrepreneurial exploration and exploitation revealed some areas of opportunity to bridge the two fields and advance knowledge in family business area. At the same time, entrepreneurship research on family business has the potential to enrich conversations about these entrepreneurial actions in the entrepreneurship field. Based on our review, we propose several specific areas of future research to family business scholars. We believe these efforts will illuminate both fields with useful conceptualizations for further knowledge development and usable knowledge for pedagogy and practice.

Footnotes

Declaration of Conflicting Interests

The author(s) declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.

Funding

The author(s) received no financial support for the research, authorship, and/or publication of this article.

Author Biographies

Sanjay Goel is an Associate Professor of Strategic Management and Entrepreneurship in the Labovitz School of Business and Economics at the University of Minnesota Duluth.

Raymond J. Jones, III is an Assistant Professor of Entrepreneurship in the Labovitz School of Business and Economics at the University of Minnesota Duluth. Raymond received his Ph.D. from the University of North Texas and MBA from St. Bonaventure University. His research has published in journals such as Management Decisions, Journal of Business Strategies, Journal of Business and Management, Journal of Leadership, Accountability and Ethics, and the Family Business Case Book. His research interests include opportunity development and entrepreneurial action in family enterprises, and social innovation.

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